E-Marketing Unit 2 2013/2014. Creating Customer Value, Satisfaction, & Loyalty.
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Transcript of E-Marketing Unit 2 2013/2014. Creating Customer Value, Satisfaction, & Loyalty.
E-MarketingUnit 2
MS. SAFAA S.Y. DALLOUL
2013/2014
Creating Customer Value, Satisfaction, & Loyalty
Customer Perceived Value
Consumers are more educated and informed than ever, and they
have the tools to verify companies' claims and seek out superior
alternatives.
How then do they ultimately make choices? Customers tend to be
value-maximizes.
Customer perceived value (CPV) is the difference between the
prospective customer's evaluation of all the benefits and all the
costs of an offering and the perceived alternatives.
Customer Perceived Value
Total customer value is the perceived monetary value of the bundle
of economic, functional, and psychological benefits customers
expect from a given market offering.
Total customer cost is the bundle of costs customers expect to incur
in evaluating, obtaining, using, and disposing of the given market
offering, including monetary, time, energy, and psychic costs.
Customer Perceived Value
Customer perceived value is thus based on the difference between
what the customer gets and what he or she gives for different
possible choices.
The customer gets benefits and assumes costs.
Delivering High Customer Value Consumers have varying degrees of loyalty to specific brands,
stores, and companies.
Oliver defines loyalty as "A deeply held commitment to re-buy or
re- patronize a preferred product or service in the future despite
situational influences and marketing efforts having the potential
to cause switching behavior.
The key to generating high customer loyally is to deliver high
customer value.
Delivering High Customer Value The value proposition consists of the whole cluster of benefits the
company promises to deliver; it is more than the core positioning
of the offering.
For example, Volvo's core positioning has been "safety," but the
buyer is promised more than just a safe car; other benefits include
a long-lasting car, good service, and a long warranty period.
The value-delivery system includes all the experiences the
customer will have on the way to obtaining and using the offering.
Total Customer Satisfaction
Whether the buyer is satisfied after purchase depends on the
offer's performance in relation to the buyer's expectations.
In general, satisfaction is a person's feelings of pleasure or
disappointment resulting from comparing a product's perceived
performance (or outcome) in relation to his or her expectations.
Total Customer Satisfaction
If the performance falls short of expectations, the customer is
dissatisfied.
If the performance matches the expectations, the customer is
satisfied.
If the performance exceeds expectations, the customer is highly
satisfied or delighted.
Customer Expectations
How do buyers form their expectations?
From past buying experience, friends' and associates' advice, and
marketers' and competitors' information and promises.
Customer Expectations
If marketers raise expectations too high, the buyer is likely to be
disappointed. However, if the company sets expectations too low,
it won't attract enough buyers (although it will satisfy those who
do buy).
Some of today's most successful companies are raising
expectations and delivering performances to match.
Measuring Satisfaction
Many companies are systematically measuring customer
satisfaction and the factors shaping it.
For example, IBM tracks how satisfied customers are with each
IBM salesperson they encounter, and makes this a factor in each
salesperson's compensation.
Measuring Satisfaction
A company would be wise to measure customer satisfaction
regularly because one key to customer retention is customer
satisfaction.
A highly satisfied customer generally stays loyal longer, buys more
as the company introduces new products and upgrades existing
products
Measuring Satisfaction
Suppose customer satisfaction is rated on a scale from one to five.
At a very low level of customer satisfaction (level one), customers are likely to abandon the company and even bad-mouth it.
At levels two to four, customers are fairly satisfied but still find it easy to switch when a better offer comes along.
At level five, the customer is very likely to repurchase and even spread good word of mouth about the company.
The link between customer satisfaction and customer loyalty, however, is not proportional.
Measuring Satisfaction
Periodic Surveys can track customer satisfaction directly.
Respondents can also be asked additional questions to measure repurchase intention and the likelihood or willingness to recommend the company and brand to others.
Companies can monitor the customer loss rare and contact customers who have stopped buying or who have switched to another supplier to learn why this happened.
A number of methods exist to measure customer satisfaction.
Measuring Satisfaction
Companies can hire mystery shoppers to pose as potential buyers and report on strong and weak points experienced in buying the company's and competitors' products.
In addition to tracking customer value expectations and satisfaction, companies need to monitor their competitors' performance in these areas.
A number of methods exist to measure customer satisfaction.
Product and Service Quality
• Satisfaction will also depend on product and service quality.
• Quality is the totality of features and characteristics of a product
or service that bear on its ability to satisfy stated or implied needs.
• A company that satisfies most of its customers' needs most of the
time is called a quality company.
• Total quality is the key to value creation and customer satisfaction.
Product and Service Quality
Why do you think the TQM is an important?
Because total quality management is the key to value creati on and customer sati sfacti on.
Total Quality Management
• The quest to maximize customer satisfaction led some firms to adopt total quality management principles.
• Product and service quality, customer satisfaction, and company profitability are intimately connected.
Total quality management (TQM) is an organization-wide
approach to continuously improving the quality of all the
organization's processes, products, and services.
Total Quality Management
• Higher levels of quality result in higher levels of customer satisfaction, which support higher prices and (often) lower costs.
• Studies have shown a high correlation between relative product quality and company profitability.
Product Quality “Lead to” Company Profitability
Customer Relationship Management (CRM)
This is the process of managing detailed information about
individual customers and carefully managing all customer
"touch points" to maximize customer loyalty.
Attracting, Retaining, and Growing Customers
≡ Customers are becoming harder to please.
♦ They are smarter,
♦ More price conscious,
♦ More demanding,
♦ Less forgiving, and
♦ They are approached by many more competitors with equal or better
offers.
≡ It is not enough, however, to attract new customers; the
company must keep them and increase their business.
Building Loyalty
• How much should a company invest in building loyalty so that the costs do
not exceed the gains?
• We need to distinguish five different levels of investment in customer
relationship building:
Basic marketing. The salesperson simply sells the product.
Reactive marketing. The salesperson sells the product and
encourages the customer to call if he or she has questions,
comments, or complaints.
Building Loyalty
• We need to distinguish five different levels of investment in
customer relationship building:
Accountable marketing. The salesperson phones the
customer to check whether the product is meeting
expectations. The salesperson also asks the customer for
any product or service improvement suggestions and any
specific disappointments.
Building Loyalty
• We need to distinguish five different levels of investment in
customer relationship building:
Proactive marketing. The salesperson contacts the customer
from time to time with suggestions about improved product
uses or new products.
Building Loyalty
• We need to distinguish five different levels of investment in
customer relationship building:
Partnership marketing. The company works continuously
with its large customers to help improve their performance.
(General Electric, for example, has stationed engineers at
large utilities to help them produce more power.)
Building Loyalty
Most companies practice only basic marketing when their markets contain many customers and their unit profit
margins are small.
Discuss this Sentence
Creating Customer Value Online
Why do you think the customers purchasing from Online Store?
Creating Customer Value Online• Let’s face it. Customers do not come to shop at an online store
because it uses the latest technology or has stunning video and
graphics. They come hoping the store offers solutions to their
problems and needs. They are looking for value, as they see it!
• Customers arrive thinking in terms of activities and solutions, but too
often companies respond with products and services. While you may
be anxious to tell visitors about your product’s newest features or
your service’s great benefits, they simply want to know how you can
solve their problems.
Creating Customer Value Online• Companies who can help customers solve problems by
providing offerings which fulfill customer needs, not just a list
of features and benefits, will prevail because customers see
them as providing real value.
Value Chains Create Value
• Creating customer value is frequently illustrated as a value chain, a
series of steps that change raw inputs into finished goods and
services.
• A company creates value for its customers by adding unique features,
benefits, services, etc. at each step in this process.
Value Chains Create Value
• This is a linear value chain in that each step follows from the
previous one. Additions made at each step in the chain must be
seen by the customer as adding to the overall value to the
offering.
Value Chains Create Value
• The Changing Online Value Chain
Value Chains Create Value
• When moving online, the value chain changes from a linear flow of
physical goods and services to a multi-directional information flow.
• At each step in the production process, information is collected,
analyzed and distributed to others. Over and above the goods and
services themselves, this information can also be used to produce
real customer value.
Why the people purchase from online store
• Save time. Help people find the goods and services they want quickly
and easily.
• Lower risk. Provide complete information to help each customer make
the best buying decision for them.
• Things they love. Offer things people really want to have.
• Status. Create communities with special offerings not available to
everyone.
Value Chains Create Value
• All of these depend on having good information about products,
services, customers, markets and partners.
• Collecting, processing and distributing this information in ways your
customers find useful for themselves can be a powerful way to
create value.
Several ways to create customer value
• Releasing Trapped Value delivers increased efficiency. Creating more
efficient markets where people can find goods and services easier and
at better prices has been done many times online.
• eBay is a classic example which transformed the local Saturday garage
sale into a 24-hour worldwide marketplace.
• Providing new ways to do routine tasks also creates value, such as
offering immediate downloads for important documents rather than
have them sent by post.
Several ways to create customer value
• New-to-the-World Value creates something entirely new that
consumers will find useful and valuable. Who knew that we had to
carry a thousand songs in our pockets until the iPod™ was introduced
by Apple?
• Other ways to create new value include providing customized
offerings for each visitor, enabling people to build communities of
shared interests, and enabling collaboration among people separated
by time and distance.
Several ways to create customer value
• Combinations of different value creators can produce some of
the most powerful ways to create new value. The online world is
a flexible place where companies can try new offerings and
quickly see what works best.
• Combinations can be used to disrupt current pricing structures
while extending reach and access around the world.
Finding Places to Create Value
• Where does one go to find places to create value? An excellent place
is activities which are ready for a change from current practices such
as:
No one else is doing this
Unique experience for each visitor
Special prices, packaging, delivery
Use innovations from another business sector
Help frustrated consumers complete a process
Finding Places to Create Value
• Many of these activities also involve connections: within a company,
to outside partners, suppliers and competitors, and to customers.
Improving these connections with better information can create
lasting value.
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