Lecture 5 Creating Customer Value, Satisfaction and Loyalty By: Dr Shahinaz Abdellatif
Creating Customer Value,Satisfaction and Loyalty
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Transcript of Creating Customer Value,Satisfaction and Loyalty
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Customer value
Customer life time value
Customer satisfaction
Measurement of customer satisfaction
Customer relationship management
Customer loyalty
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Topmanagement
Middlemanagement
Front-line people
CUSTOMERS
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CUSTOMERS
Front-line people
Middlemanagement
Topmanagement
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Customer perceived value (CPV): is the differencebetween the prospective customers evaluation of allthe benefits and all the costs of an offering and theperceived alternatives.
Total customer value: perceived monetary value of
the bundle of economic, functional and psychologicalbenefits customers expect from a given marketoffering.
Cost: is the bundle of costs customer expects to incurin evaluating, obtaining, using and disposing of thegiven market offering , including time, energy and thepsychic cost.
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Improving customer value:1. By improving customer value2. Reducing non-monetary cost3. Reducing monetary cost
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Value proposition: whole cluster of benefits company promises to provide.
Value-delivery system: includes all the experiences
customer will have on the way to obtaining and usingthe offering .
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Customer lifetime value (CLV): net present value of the stream of future profits expected over thecustomers lifetime purchases.
Expected revenues - expected costs
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Satisfaction means a persons feelings of pleasureor disappointment resulting from comparing aproducts perceived performance/outcome in
relation to his/her expectations.
Performance < Expectation => Dissatisfiedcustomer
Performance = Expectation => Satisfied customer
Performance > Expectation => Delighted customer
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Formed by past buying experience, friends advice,marketers information & promises.
If expectations are too high, buyers may be
disappointed. If expectations are too low, not enough buyers, but
those who buy will be satisfied.
Examples: GM, JetBlue Airways
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Customers decision to be loyal or to defect is the sumof many small encounters with the company.
Companies need to create a branded customerexperience.
Example: Joie de Vivre Hospitality Inc.
Customer Loyalty
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Many companies systematically measure customersatisfaction & factors shaping it.
Example: IBM tracks how satisfied customers are witheach IBM salesperson they encounter. This is a factorin each salespersons compensation.
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Customer satisfaction is the key to customer retention.
Highly satisfied customers-
Stay loyal to the company
Buy more as company introduces new/upgraded
products Talks favorably about company & its products
Pays less attention to competing brands
Offer product or service ideas to company
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Customer satisfaction is not proportional to customer
loyalty.
Customer satisfaction on a scale of 1-5,
Level 1 - Customer likely to abandon
company Level 2-4 - Customer is fairly satisfied, but will
switch if theres a better offer
Level 5 - Customer is delighted & very likely
to repurchase
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High satisfaction or Customer delight creates anemotional bond of the customer with thebrand/company.
Example: Xerox found that completely satisfiedcustomers are 6 times more likely to repurchase over18 months than very satisfied customers.
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Periodic surveys-
y Track customer satisfaction directly
y Can measure repurchase intention & willingness to
recommend company/brand to othersy Example: Paramount conducted 55 Web-based surveys
on its theme parks in 1 year & received 100,000 responseson topics including rides, dining, shopping, games &shows.
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Customer Loss Rate-
y Companies can monitor the Customer Loss Rate, i.e.,the number of customers a company loses over a specificperiod of time.
y This helps to contact customers who have stoppedbuying their products or who have switched to anothersupplier to learn why this happened.
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Mystery Shoppers-
y Companies can hire mystery shoppers to pose aspotential buyers & report on strong & weak pointsexperienced.
y This can also be used for competitors products.
y Managers can pose as mystery shoppers themselves toexperience first-hand the treatment they receive or the way their concerns are handled.
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For Customer Satisfaction surveys, its important to askthe right questions.
The most important question- Would yourecommend this product or service to a friend?
Usually surveys are focused on brand image, pricing,product features etc.
If customer recommends product/company to afriend, it means he/she is satisfied & that reflects allfunctional areas which contribute to a customersexperience.
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Competitors performance : although a goodpercentage of your customers are satisfied, for othercompanies this percentage may be higher than yours.
Internet : dissatisfied or angry customers might useinternet to voice their bad experiences and negativereviews regarding a product or company.
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CRM is the process of carefully managing detailedinformation about individual customers and allcustomer touch points to maximize customer
loyalty.
T ouch point any occasion on which the customerencounters the brand or product.
CRM enables companies to provide excellent real timecustomer service through the effective use of individual account information.
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IDENTIFY Y OUR PR OSPECTS AND CUSTOMERS
DIFFEREN
TIA T
E CUSTO
MERS INT
ERMSO
FT
HEIR NEEDS AND VALUES TO Y OUR COMPANY
INTERACTWITH INDIVIDUAL CUSTOMERS TO IMPR O VE Y OUR KNO WEDGE ABOUT THEIR INDIVIDUAL NEEDS AND TO BUILD STR ONGER RELA TIONSHIPS
CUSTOMIZE PR ODUCTS,SERVICES AND MESSAGE TO EACH CUSTOMER
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REDUCING THE RA TEOF CUSTOMER DEFECTION
INCREASING THE LONGEVIT Y OF THE CUSTOMER
RELA TIONSHIP ENHANCING THE GR O W TH POTENTIALOF EACH
CUSTOMER
MAKING LO W-PR OFIT CUSTOMERS MORE
PR OFIT ABLEOR TERMINA TING THEM FOCUSING DISPR OPOR TIONA TE EFFOR T ON
HIGH VALUE CUSTOMERS
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POTENTIA LS
PROSPE
CT
S
FIRST TIME CUSTOMERS
R EPEAT
CUST
OME
RS
CLIENTS
MEMBERS
AD VOC ATES
PAR TNERS
DISQU A LIFIEDPROSPECTS
INA CTI V E OR EX -
CUSTOMERS
STEPS IN
ATTR A CTING AND R ETAINING
CUSTOMERS
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Acquiring new customer can cost five times more thansatisfying and retaining current customers. It requiresa great deal of effort to induce satisfied customers toswitch away from their current suppliers.
The average company loses 10% of its customer each year.
A 5% reduction in the customer defection rate canincrease profits by 25% to 85% depending on theindustry.
The customer profit rate tends to increase over the lifeof the retained customer due to increased purchases,referrals , and price premiums and reduced operatingcosts to service.
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1. Hog tales magazine2.A tourism handbook
3.Emergency road service4.Special designed insurance program5. Theft reward services6. Discount hotel rates7. Fly & ride program
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THANK Y OU
Presented by :
Akshay o jha
Divya satheeshMasna majeed
Sheeza ashraf