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Customer value, satisfaction and loyalty

Customer value, satisfaction and loyalty. Outline. Types of Customer Value Customer Perceived Value Satisfaction Loyalty Customer Satisfaction and Marketing Performance. Customer Perceived Value (CPV).

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Customer value, satisfaction and loyalty

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  1. Customer value, satisfaction and loyalty

  2. Outline • Types of Customer Value • Customer Perceived Value • Satisfaction • Loyalty • Customer Satisfaction and Marketing Performance

  3. CustomerPerceivedValue (CPV) • The difference between the prospective customer’s evaluation of all the benefits and all the costs of an offering and the perceived alternatives • Determinants of Customer Perceived Value • Hierarchies of Values (Means-end Chains)

  4. Determinants ofCustomerPerceivedValue Customer Perceived Value

  5. Means-end chain for Belgian meat consumption

  6. Satisfaction and Loyalty Expectations =>< Satisfaction Loyalty (Repurchase) Performance

  7. Loyalty • A deeply held commitment to re-buy or repatronize a preferred product or service in the future despite situational influences and marketing efforts having the potential to cause switching behavior

  8. Satisfaction and Loyalty (Commitment) Satisfaction Commitment Repurchase

  9. Satisfaction and Loyalty (Commitment) Satisfaction ? Commitment Repurchase ?

  10. Satisfaction and Loyalty (Commitment) Satisfaction Quality of Alternatives Commitment Repurchase ?

  11. Satisfaction and Loyalty (Commitment) Satisfaction Quality of Alternatives Commitment Repurchase Investments in the Relationship

  12. CustomerSatisfaction and Marketing Performance • A Key Marketing Performance Metric

  13. Ex. Satisfactionscale Satisfaction measured on a six-point scale like the one presented below. Based on this scale we can create a Customer Satisfaction Index ranging from 0 to 100. The Customer Satisfaction Index gives you an idea on how satisfied the customers are on average. Lets assume 10 respondents: 1:0, 2:5, 3:2, 4:4, 5:4, 6:5, 7:5, 8:4, 9:4, 10:3= SUM: 31, Average: 3.1, what about the index? All very satisfied: SUM:50; average:5, Index set to 100 All very dissatisfied: SUM:0; average:0, Index set to 0 All satisfied: SUM:40, average:4, Index set to 80 (SUM/(Max scale point x N))x100=Index score, in our example: 31/50 x 100 = 62

  14. DistributionofCustomerSatisfaction Scores

  15. CustomerSatisfaction and Profitability

  16. CustomerSatisfaction and Profitability

  17. Retained 95% 133,000 Satisfied 70% (140,000) Not retained 5% -7,000 Retained 90% 5,400 Do Complain 10%(6,000) Not Retained 10% Customer Base 200,000 -600 Dissatisfied 30% (60,000) Retained 22% 11,800 Don’t Complain 90% (54,000) Not Retained 78% -42,120 New Customers Needed 24.86% 49,720

  18. “The gulf between satisfied and completely satisfied customers can swallow a business” (Jones and Sasser, 1994.) Einar.breivik@ttu.edu

  19. How likely are you to buy this product or brand again on your next purchase?

  20. Customer Life Expectancy and Customer Retention Customer Life (N) (given rate of customer retention) Customer Life (purchase periods) CR = Customer Retention Rate Retention rate

  21. LifetimeValueof a Customer PV=1/(1+DR)N

  22. Sources • Kotler, P. & K.L. Keller: Ch. 2 & Ch. 4 • Holbrook, M.B. (1999): Introduction to Consumer Value, in Consumer Value: A Framework for Analysis and Research, London: Routledge, 1-28 • Best, Roger J. (2009): Market-Based Management: Strategies for Growing Customer Value and Profitability, 5th ed., Pearson Prentice Hall, New Jersey (ISBN-13: 978-0-13-233653-6)

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