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Chapter 3

Chapter 3. Building Customer Satisfaction, Value, and Retention. PowerPoint by Karen E. James Louisiana State University - Shreveport. Objectives. Understand how companies deliver customer value and satisfaction. Identify the factors that make a high performance business.

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Chapter 3

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  1. Chapter 3 Building Customer Satisfaction, Value, and Retention PowerPoint by Karen E. James Louisiana State University - Shreveport To accompany A Framework for Marketing Management, 2nd Edition

  2. Objectives • Understand how companies deliver customer value and satisfaction. • Identify the factors that make a high performance business. • Understand how companies attract and retain customers. To accompany A Framework for Marketing Management, 2nd Edition

  3. Objectives • Realize how companies can improve both customer and company profitability. • Understand how companies can deliver total quality. To accompany A Framework for Marketing Management, 2nd Edition

  4. Customer Value • Customers seek to maximize value by • estimating which offer (product/firm) delivers the most value (CPV) • forming an expectation of value and acting upon it (purchase) • evaluating their usage experience against the expectations • Satisfaction results when expectations are equaled or surpassed To accompany A Framework for Marketing Management, 2nd Edition

  5. Customer Perceived Value • Perception of delivered value is a function of: • Total customer costs • Total customer value • Firms at a disadvantage must: • Reduce perceptions of costs or enhance perceptions of value To accompany A Framework for Marketing Management, 2nd Edition

  6. Customer Satisfaction • Satisfaction is defined as . . . “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.” To accompany A Framework for Marketing Management, 2nd Edition

  7. Customer Satisfaction • To maximize satisfaction . . . • Don’t exaggerate the product / service’s capabilities in advertising or other communications • Dissatisfaction will result • FTC may become involved • Don’t set expectations too low • Market size will be limited To accompany A Framework for Marketing Management, 2nd Edition

  8. Keys to Success Stakeholders Processes Resources Organization Identify several stakeholder groups for your University How might the needs of these groups conflict with each other? High Performance Businesses To accompany A Framework for Marketing Management, 2nd Edition

  9. Keys to Success Stakeholders Processes Resources Organization New product development Customer attraction and retention Order fulfillment Reengineering work flows Building cross functional teams High Performance Businesses To accompany A Framework for Marketing Management, 2nd Edition

  10. Keys to Success Stakeholders Processes Resources Organization Resources include labor, materials, machines, energy, and information Outsourcing vs. ownership: Own and nurture core competencies High Performance Businesses To accompany A Framework for Marketing Management, 2nd Edition

  11. Keys to Success Stakeholders Processes Resources Organization Organization refers to the organization’s policies, structures, and corporate culture Corporate culture: shared experiences, stories, beliefs, and norms within an organization High Performance Businesses To accompany A Framework for Marketing Management, 2nd Edition

  12. Core Business Practices • Market Sensing • Customer Acquisition • Customer Relationship Management • Fulfillment Management • New Offering Realization To accompany A Framework for Marketing Management, 2nd Edition

  13. Customer Retention • Reducing customer churn (defection) is highly desirable • Define and measure retention rate • Identify causes of attrition • Estimate profit lost from customer defection (customer lifetime value) • Estimate cost to reduce defection; take appropriate action To accompany A Framework for Marketing Management, 2nd Edition

  14. Drivers of Customer Equity • Brand Equity • Relationship Equity • Value Equity To accompany A Framework for Marketing Management, 2nd Edition

  15. Keys to Success Adding Financial Benefits Adding Social Benefits Adding Structural Ties Frequency programs Club memberships Strong Customer Bonds To accompany A Framework for Marketing Management, 2nd Edition

  16. Keys to Success Adding Financial Benefits Adding Social Benefits Adding Structural Ties Personalize customer relationships Strong Customer Bonds To accompany A Framework for Marketing Management, 2nd Edition

  17. Keys to Success Adding Financial Benefits Adding Social Benefits Adding Structural Tie Create long-term contracts Charge less for ongoing purchases Link product to long-term service Strong Customer Bonds To accompany A Framework for Marketing Management, 2nd Edition

  18. 20 – 80 – 30 Rule 20% of your customers 20 80 Generate 80% of your profit 30 Half of your profit is lost serving the bottom 30% of your customer base To accompany A Framework for Marketing Management, 2nd Edition

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