Customer SatisfactionQuality, Service, and Value

Customer Value and Satisfaction

• A happy customer was a satisfied customer, a happy customer will be a repeat customer, and a repeat customer is a loyal customer.

What does it take to satisfy a customer?

Customer Value and Satisfaction

Customers are…• Estimate which offer will deliver the most value• Value Maximizers• Form an expectation of value

Customer Value and Satisfaction

Customer Value- the difference between the total customer value

and total customer cost.

Sources of Value• product• services• personnel• image

Customer Value and Satisfaction

Customer Delivered

Value

Product Value

Service Value

Personnel Value

Image Value

Monetary Price

Time Cost

Energy Cost

Psychic Cost

Total Customer

Cost

Total Customer

Value

Customer Value and Satisfaction

Satisfaction- level of a person’s felt state from comparing a

product’s perceived performance in relation to the person’s expectations

Delivering Customer Value and Satisfaction

Value Chain – a company tool for identifying ways to create

more customer value- a firm’s collection of activities that are performed

to design, produce, market, deliver, and support its product

Delivering Customer Value and Satisfaction

…to deliver Value you need…Core Business Processes• Product Realization Process – identifying, researching,

developing, and successfully launching new products with speed, high quality, and target cost attainment.

• Inventory Management Process – developing and managing the right inventory locations or raw materials and finished products.

• Order-to-remittance process – receiving orders, approving, shipping, and payment collection.

• Customer Service Process – after-sales services

Delivering Customer Value and Satisfaction

Cost of Lost Customers• Define Retention Rate – how much customers you keep• Causes of Attrition• How much profit you loose per customer lost – (customer

lifetime value)How much cost would it take to reduce defection rate.

Delivering Customer Value and Satisfaction

Levels of Customer Relations• Basic – no contact after sale is made• Reactive – seller encourages customer for contact after

sale is made• Accountable – seller contacts customer after sale is made

if satisfied• Proactive – seller contacts customer from time to time• Partnership – company continuously work with

customers to improve products and after-sales services

Delivering Customer Value and Satisfaction

A Profitable Customer… - a customer that yields a revenue stream over time, exceeding by an acceptable amount the company cost stream of attracting, selling, and serving that customer.

Delivering Customer Value and Satisfaction

• Rule #1. The Customer is always right• Rule #2. If Customer is wrong, see rule#1.

Delivering Customer Value and Satisfaction

Total Quality Management

Quality – totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs

Delivering Customer Value and Satisfaction

• Premises about TQM1. Quality must be perceived by Customers2. Quality must be reflected in every company activity3. Quality requires total employee commitment4. Quality requires high quality partners5. Quality can always be improved6. Quality improvement requires quantum leaps7. Quality do not cost more8. Quality is necessary but may nit be sufficient9. Quality drive cannot save a poor product.

Reading Assignment

• Developing Corporate Mission, Vision, and Objectives• The Boston Consulting’s Group Growth-Share Mix• Business Strategic Planning