kelleyfall 2001 marketing management 1291 how to get customer satisfaction defining customer...
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KelleyFall 2001 Marketing Management 129
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How to Get Customer Satisfaction Defining Customer Satisfaction Performance Measures of Service
Quality Retaining Customers Measuring Customer Satisfaction Applying Customer Satisfaction Customer Database
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Customer Satisfaction
Rule 1: The customer is always right!Rule 2: If the customer is ever wrong,
reread Rule 1.Stew Leonard’s Dairy Store
Norwalk, Connecticut
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Customer Satisfaction Facts
Expectations = Performance (satisfied)
Performance > Expectations (extremely satisfied, positive word-of-mouth, 1 will tell 3)
Expectations > Performance (extremely dissatisfied, negative word-of-mouth, 1 will tell 11)
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Customer Satisfaction Facts
About 15% of those who are dissatisfied would be impossible to satisfy under any circumstances
Satisfaction is influenced by situational factors (time, degree of inconvenience, emergency)
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Performance Variables of Service Quality Reliability - ability to deliver what is
promised, dependably and accurately Responsiveness - willingness to
promptly help customers Assurance - ability to convey trust,
competence and confidence Empathy - individual attention to
customers Tangibles - physical facilities,
equipment and your own appearance
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Ten Deadly Sins of Customer Service
1. “I don’t know” 2. “I don’t care”3. “I can’t be bothered”4. “I don’t like you”5. “I know it all”
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Ten Deadly Sins of Customer Service
6. “You don’t know anything”7. “We don’t want your kind here”8. “Don’t come back”9. “I’m right and you’re wrong”10. “Hurry up and wait”
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The Good, the Bad, and the Ugly
There are no “bad” customers; some are just harder to please than others.
Someone who never waited on a customer in his or her life
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Customer Retention
80/20 Rule 80% of your sales will come from 20%
of your customers Organizations lose 20% of their
customers each year
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Customer Retention
$5 to attract a new customer, $1 to retain an existing customer
1998 survey found “attracting customers” was mentioned as a priority twice as often as “keeping customers”
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Determining the Lifetime Value of Your Customers
What percentage of your customers do you lose each year, fully or partially?
Do you know the average cost of each lost customer?
What is the profit value of a loyal customer over a lifetime? Lifetime Value of a Customer (LVC)
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Determining the Lifetime Value of Your Customers Profit Streams of Longtime
Customers The better your customers know you,
the more they buy from you The better you know your customers,
the better you can serve them If you have loyal customers, you can
charge more Satisfied customers provide word-of-
mouth advertising
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Determining the Lifetime Value of Your CustomersAverage customer $ per year Average return on sales x Number of years average customer stays with you x Profit from your average customer = How much average customer
increases orders each year + How much costs decrease each year + $ value of referrals each year +
Price increase without losing loyal customers + Total
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Measuring Customer Satisfaction Satisfaction Surveys
“To understand what John Brown buys, you must look at John Brown through John Brown’s eyes”
Questionnaire should be built on what is important to the customer
Survey results need to be compared to something (year, competition, industry average)
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Measuring Customer Satisfaction
Complaint letters Only 4% of dissatisfied customers
write letters of complaint Between 55 - 70% of complaining
customers will buy again from you if you respond quickly
The rate climbs to 95% if you respond quickly and well
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Define Your Customers
Customer #1 Customer #2
What WhyWhoWhenWhereHow
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What Matters to Your Customers? List the performance variables that
cause customers to buy from you.1. 2. 3. 4. 5.
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What Matters to Your Customers? List the performance variables that
cause customers to buy from your competitors.
1. 2. 3. 4. 5.
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Determine What Must Be Done to Retain Existing Customers Measure Customer Satisfaction
1. List the customer satisfaction measures that you take?
2. How often do you take each customer satisfaction measure?
3. Interpret each customer satisfaction measure.
4. Use the customer satisfaction information to improve marketing performance.
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Determine What Must Be Done to Retain Existing Customers
Measure Frequency
Results How Used
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Determine the Lifetime Value of Your CustomersAverage customer $ per year Average return on sales x Number of years average customer stays with you x Profit from your average customer = How much average customer
increases orders each year + How much costs decrease each year + $ value of referrals each year +
Price increase without losing loyal customers + Total