BUILDING CUSTOMER SATISFACTION VALUES AND RETENTION (TOPIC 2)

1. MKTG131 – Marketing Management BUILDING CUSTOMER SATISFACTION VALUES AND RETENTION (TOPIC 2)

2. To understand how companies deliver customer value and satisfaction. To identify the factors that make a high performance business. To understand how companies attract and retain customers. To realize how companies can improve both customer and company profitability. To understand how companies can deliver total quality. WHY STUDY CUSTOMER SATISFACTION VALUES AND RETENTION?

3. 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 WHAT IS CUSTOMER VALUE?

4. 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 CUSTOMER PERCEIVED VALUE

5. Identify the major attributes and benefits customer value. Assess the quantitative importance of the different attributes and benefits. Assess the company’s and competitors’ performances on the different customer values against their rated importance. Examine how customers in a specific segment rate the company’s performance against a specific major competitor on an individual attribute or benefit basis. Monitor customer values over time. STEPS IN CUSTOMER VALUE ANALYSIS

6. 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. CUSTOMER SATISFACTION DEFINED

7. 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 HOW TO MAXIMIZE CUSTOMER SATISFACTION?

8. 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 WHAT IS CUSTOMER RETENTION?

9. Product and service quality, customer satisfaction and company profitability are intimately connected. Higher levels of quality result in higher levels of customer satisfaction, which supports higher prices and often lower costs. IMPACT OF QUALITY

10. Reducing the rate of customer defection Increasing the longevity of the customer relationship Enhancing the growth potential of each customer through “share of wallet”, cross-selling and up-selling. Making low-profit customers more profitable or terminating them. Focusing disproportionate effort on high-profit customers. HOW TO MANAGE YOUR CUSTOMER BASE

11. Create superior products, services, and experiences for the target market. Get customer feedback. Provide good customer service. Organize and make accessible a database of information on individual customer needs, preferences, contacts, purchase frequency and satisfaction. Provide benefits and loyalty programs to purchasing customers. FORMING STRONG CUSTOMER BONDS

12. Reminder: Group #2 reporters to present “Setting the Product and Branding Strategy” on next meeting. Homework: Submit a summary of the consumer analysis for the marketing plan assigned to your group (submission is by group). END OF PRESENTATION