Unit 1.3 Building Customer Value, And Retention

8/3/2019 Unit 1.3 Building Customer Value, And Retention

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705721 Marketing Management

EK [email protected]

Department of Marketing

Faculty of Business Administration

Chiang Mai University

Building Customer Satisfaction,Building Customer Satisfaction, Value, and Retention Value, and Retention

VIT business school



1.Customer Satisfaction

The level of a person¶s felt state resulting from

comparing a product¶s perceived performance in

relation to the person¶s expectations

P < E P = E P > E

Dissatisfied Satisfied Delighted

(Highly satisfied)



What A Hig

hly Satisfied Customer Does

Stays loyal longer

Buys more as the company introduces new products

and upgrades existing products Talks favorably about the company and its products

Pays less attention to competing brands and

advertising and is less sensitive to price

Offers product/service ideas to the company

Costs less to serve than new customers because

transactions are routinized



How Customers Handle Dissatisfaction Take no action

Take some form of public action

Seek redress directly from business firms Take legal action to obtain redress

Complain to business, public, or governmentalagencies

Take some form of private action Stop buying product/brand or boycott seller

Warn friends about the product and/or seller



Met hods of Tracking and Measuring

Customer Satisfaction

Complaint

and

suggestionsystems

Customer

satisfaction

survey

Ghost

shopping

Lost

customer

analysis



2.Customer Perceived Value

The difference between total customer value and total customer cost

Total Customer Value The bundle of benefits customers expect from a

given product or service

Total Customer Cost

The bundle of costs customers expect to incur inevaluating, obtaining, and using the product or service



Total customer cost Total customer value

Determinants of Customer Perceived Value

Product

value

Services

value

Personnel

value

Image

value

Monetary

cost

Time

cost

Energy

cost

Psychic

cost

Customer perceived

value



Profit

Margin

Customer

Services

Marketing

& Sales

Outbound

LogisticsOperationsInbound

Logistics

Firm Infrastructure

Human Resource Management

Technology Development

Procurement

P r i m a r y

A c t i v i t i e s

S u p p o r t

A c t i v i t i e s Value C

h

ain



3.Retaining Customer

The need for customer retention

Off ensive marketing typically costs more than de f ensive marketing

Offensive marketing is designed to obtain an objective, usually market

share, from a target competitor.

Whereas, Defensive marketing warfare strategies are a type of

marketing warfare strategy designed to protect a company's market

share, profitability, product positioning, or mind share.

It requires much effort and cost to induce satisfied customers to switch

away from their current suppliers



Customer Development

Process

Suspects

1st-time

customers

Disqualified

prospects

Repeat

customers

Advocates

Partners

Clients

Attracting

New

Customers

Prospects

Inactive or

ex-customers

Retaining

Customers

Retaining

Customers

Retaining

Customers



New ProductAdoption Process

Customer Relationship Management (CRM)

The task of creating strong

customer loyalty and

retaining customers

Trial

Interest

Adoption

Evaluation

Awareness



L

evels of CRM

Accountable ReactiveBasic or

Reactive

Proactive Accountable Reactive

Partnership Proactive Accountable

High margin Medium margin Low margin

Many customers

Medium number of customers

Few customers



Customer Equity The aim of CRM is to produce high customer equity

The more loyal customers, the higher customer equity

Three drivers of customer equity: Value equity

Brand equity

Relationship equity



(a) Value Equity The customer¶s objective assessment of the utility of

an offering based on perceptions of its benefits

related to its costs Subdrivers of value equity:

Quality

Price

Convenience



(b) Brand Equity The customer¶s subjective and intangible assessment

of the brand, above and beyond its objectively

perceived value Subdrivers of brand equity:

Brand awareness

Customer attitude toward the brand

Customer perception of the brand ethics



(c) Relationship Equity

The customer¶s tendency to stick with the brand,

above and beyond objective and subjective

assessments of its worth Subdrivers of relationship equity:

Loyalty programs

S pecial recognition and treatment programs

Community building programs

Knowledge building programs



Retention Building Approaches

Adding financial benefits

Frequency programs

Club membership programs Adding social benefits

Customization and customerization

Adding structural ties

Create long-term contracts Charge a lower price to consumers who buy more

Turn the product into a long-term service



4.Total Quality Marketing Strategy

Quality

The totality of features and characteristics of a product or service that bear on its ability to satisfystated or implied needs

Performance quality

Conformance quality

Total Quality Management (TQM) An organization-wide approach to continuously

improving the quality of all the organization¶s processes, products, and services



Roles of Marketers in

Total Quality Marketing Management Marketers bear the major responsibility for correctly

identifying the customers¶ needs and requirements

Marketers must communicate customer expectations

correctly to product designers




Total Quality Marketing Management Marketers must make sure that the customers¶ orders

are filled correctly and on time

Marketers must check that customers have received

proper instructions, training, and technical assistance

in the use of the product




Total Quality Marketing Management Marketers must stay in touch with customers after the

sale to make sure that they are satisfied and remain

satisfied

Marketers must gather and convey customer ideas for

product and service improvements to the appropriate

company departments



5.Internal

Marketing

The task of successfully

hiring, training, and

motivating ableemployees who

want to serve the

customers well

Company

Employees Customers

Interactive Marketing



A High-Performance Business Environment

Employee Satisfaction

Internal Marketing

Higher-quality products and services

Customer Satisfaction

Stockholder Satisfaction

Breakthrough

innovations

Continuous

improvements

Business

growth

Sales

& Profits

Unit 1.3 Building Customer Value, And Retention

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