mm_delivering value

CREATING CUSTOMER VALUE,

SATISFACTION AND LOYALTY

Chapter 5

Customers tend to be value-maximizers, within the bounds of search costs, limited knowledge, mobility and income.

Customer estimate which offer will deliver the most perceived value and act on it.

Customer perceived value (CPV)The difference between all benefits and all costs of an offering as perceived by the customers.

Benefits:Monetary value of the

bundle economic, functional and

psychological benefits of a product.

Costs:Bundle of costs customer

expect to incur in evaluating, obtaining, using

and disposing a product.Including monetary, time,

energy and psychic costs.

FB is measured in moneymoney, time, durationor physical measures

PB gives to the customer a pleasant feeling such as

self esteem, feeling of power, pleasant view and

so on.

MKTG PLAN !MKTG PLAN !

What value/benefits that

are important to customers ?

Performance < Expectation = Dissatisfied

Performance = Expectation = Satisfied

Performance > Expectation = WOW (Delighted)

A person’s feelings of pleasure or

disappointment resulting from comparing

a product’s perceived performanceperformance in

relation to his/her expectationsexpectations.

If expectation is raised too high, the buyer

is likely to be disappointed.

However, if the expectation is set too low,

it wont attract enough buyers

100 DissatisfiedCustomers

4% complain

96% don’t complain

75% retained

25% exit

5% retained

95% exit

3

1

5

91100

CCustomer Dissatisfaction

and Customer Exit

Ronni have already made a reservation

for a standard room at Tunas Hotel and

the booking has been confirmed.

However, when he arrived at the hotel a

week later, he was told that all standard

room has been taken up on that day.

He insisted to see the customer service

manager (CSM).

As a CSM, what your actions would

look like?

A Highly Satisfied Customer Generally:

a. Stays loyal longer

b. Buys more as the company introduces new

products and upgrades existing products

c. Talks favorably about the company and its

products

d. Pay less attention to competing brands

e. Less sensitive to price

f. Offers product or service ideas to company

g. ????????????????????????????

A Highly Satisfied Customer Generally:

a. Stays loyal longer

b. Buys more as the company introduces new

products and upgrades existing products

c. Talks favorably about the company and its

products

d. Pay less attention to competing brands

e. Less sensitive to price

f. Offers product or service ideas to company

g. Costs less to serve than new customers

because transactions are routine.

Methods to Measure Customer

Satisfaction:

• Customer complaint and

recommendation system

• Periodic surveys using standard

questionnaires

• Lost customer analysis (exit

interview)

• Mystery shoppers (ghost

shopping)

Although the customer-centered firm seeks to create high customer

satisfaction, that shouldn’t be their ultimate goal.

Why?

The company must operate on the philosophy that it is

trying to deliver a high level of customer satisfaction

subject to delivering acceptable levels of

satisfaction to the other stakeholders

The key to customer

satisfaction/loyalty or customer

retention is:

Relationship MarketingRelationship Marketing

Relationship marketing is about

forming a strong customer

bonds.

20-80 rule20-80 rule

The top 20% of the customers may

generate as much as 80% of the company’s

profits.

3 RETENTION-BUILDING APPROACHES:

1. Adding financial benefits

a. Frequency programs (FPs) – to

rewards customers who buy frequently

and in substantial amounts.

b. Club membership programs – open to

everyone who purchase a product or it

can be limited to an affinity group or to

those willing to pay a small fee.

2. Adding social benefits

- Cementing social bonds with customers by individualizing or

personalizing customer relationships

3. Adding structural ties

- Company may supply customers with special equipment or

computer links that help customers manage orders, payroll, and

inventory.

- More to B2B marketing

3. Adding structural ties

- Company may supply customers with special equipment or

computer links that help customers manage orders, payroll, and

inventory.

- More to B2B marketing