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Service Profit Chain Ch. 3 Managing by C ustomer V alue E quation

Service Profit Chain Ch. 3 Managing by C ustomer V alue E quation. Car accident and repair experience The Components of CVE Results (Service Outcomes) Process Quality* Price to the Customer Cost of Acquiring the Service. Figure 1-2 Elements of the Service Profit Chain. 1. Employee:

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Service Profit Chain Ch. 3 Managing by C ustomer V alue E quation

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  1. Service Profit Chain Ch. 3Managing by Customer Value Equation • Car accident and repair experience • The Components of CVE • Results (Service Outcomes) • Process Quality* • Price to the Customer • Cost of Acquiring the Service

  2. Figure 1-2Elements of the Service Profit Chain 1. Employee: Productivity of Output Quality of Output Loyalty Satisfaction Capability 2. Customer Value Equation* = Results + Process Quality _______________ Price + Customer Access Costs 3. Customer Satisfaction Customer Loyalty Revenue Growth Profitability

  3. Service Profit Chain Ch. 3Managing by Customer Value Equation III. Customers’ Views of Service Process Quality 1. Service quality is relative. 2. It is determined by the customer. 3. It varies from one customer to another. 4. Service quality can be enhanced by meeting or exceeding customer expectations or controlling such expectations.

  4. Service Profit Chain Ch. 3Managing by Customer Value Equation III. Two Examples 1. USAA 2. British Airways* IV. What does it take to manage by CVE? 1. Understanding Customer Needs 2. Determine the Link between Needs and CVE 3. Establish a Return on Value-enhancing Investments 4. Different Packages for Various Market Segments 5. Single-minded emphasis on value

  5. Service Profit Chain Ch. 4: Rethinking Marketing • Story of Intuit Corporation • What is different about Intuit’s Marketing?* • II. PIMS and Service Industry • PIMS: market share and profitability  customer loyalty and profitability • 4Ps + 3Rs • III. Estimating Lifetime Value of a Customer • 1. Retention • 2. Related Sales • 3. Referrals (Five versus Eleven)

  6. Service Profit Chain Ch. 4Rethinking Marketing • IV. Managing by the Three Rs • 1. Measuring andCommunicating the Lifetime Value of Customers. • 2. Identifying, Creating, and Enhancing Listening Posts* • 3. Create Incentives to Build Customer Loyalty • 4. Customer Defections as Learning Opportunity • V. Potential-Based Marketing* • Identify share of purchase by loyal customers • Calculate economic impact of customer behavior change • Lengthen customer relationships

  7. Service Profit Chain Ch. 4Rethinking Marketing • * Figure 4-3 on Current and Full Potential: • Number of relationships, relationship profitability and • Relationship duration • VI. Mining Customer Data • To achieve mass customization • Vertical database for one service • Horizontal database for multiple services* • VII. Organizational Implications • Utilize information from multiple sources • Cross-functional teams (to particular segments) • More Latitude to teams

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