4. customer value, satisfaction

Connecting With Customer

Creating Customer Value, Satisfaction, And Loyalty

Chapter -5

Building Customer Value, Satisfaction, and Loyalty

• Customer Perceived Value

• Total Customer Satisfaction

• Measuring Satisfaction

• Product and Service Quality

• Total Quality Management

Every Customer is Purchasing Benefit Not of Product

Customer Perceived Value (CPV)

• Customer perceived value is the difference between the prospective customer’s evaluation of all the benefits and all the costs of an offering and the perceived alternatives. Customer

Delivered Value

Total Customer Value

Total Customer Cost

Product Value

Service Value

Personal Value

Image Value

Monetary Cost

Time Cost

Energy Cost

Psychic cost


• Applying Value Concepts• Choices and Implications• Delivering High Customer Value

Steps in a Customer Value Analysis

• Identify major attributes and benefits that customers value

• Assess the qualitative importance of different attributes and benefits

• Assess the company’s and competitor’s performances on the different customer values against rated importance

• Examine ratings of specific segments• Monitor customer values over time


• Applying Value Concepts Decision Making TheoryHow I Bought Orbitrex Elite?Purpose : Calorie Burn – Weight LossOption 1: Daily Walk, Jag, Cycling, Swimming and Other ExerciseOption 2: Using Weight Loss MachineOption 3: Removing Cholesterol through Operation/ Medical Treatment

Customer Perceived Value (CPV)• Applying Value Concepts Decision Making Theory

Option 1: Daily Walk, Jag, Cycling, Swimming and Other Exercise

Burn 60 to 70 CLWalk : 2hrs

Jagging : 1Hr (Depends speed)

Possibility to take break incase some unavoidable situation

Investment Almost Nil


Option 2: Using Weight Loss Machine

Criteria Electric Power Based Non Electric Power Based

Products Tread MillVibrator

Stationary BikesCycling, Orbitrex, Abcircle, And Other Tammy Trimmer

Initial Investment 8, 000 + AMC (Approx.)

14,000 + AMC(Approx.)

Maintenance EB Charges and Regular maintenance + Spares

Regular maintenance + Spares

Replacement Period Longer Period (10 Years)

Medium Period(4-5 Years)

Suitability Time Value

http://www.medicinenet.com/script/main/art.asp?articlekey=77030&page=2


Option 3: Removing Cholesterol through Operation/ Medical Treatment

Criteria Medical Some Products through Teleshoping

Products Surgery Slim Oil, Slim Tea, Slim Capsules

Investment 15,000 2,000 – 3,000 Per Mont

Reoccurrence High Possibility High Possibility

Suitability Time Value and Physical Inability


• Choices and Implication• The buyer might be under orders to buy at the lowest price• The buyer will retire before the company realizes• The buyer enjoys a long-term friendship


• Delivering High Customer Value• Loyalty

– Loyalty is a deeply held commitment to re-buy or re-patronize a preferred product or service in the future despite situational influences and marketing efforts having the potential to cause switching behavior.

• Value Proposition– Consists of the whole cluster of benefits the company promises to deliver

• Value Delivery System– The value delivery system includes all the experiences the customer will

have on the way to obtaining and using the offering

Total Customer Value

Functional Value

Emotional Value

Self Expressive Value

Customer Paying to

satisfyLoyalty

Total Customer Satisfaction

Satisfaction is a person’s feeling of pleasure or disappointment that result from comparing a

product’s perceived performance to their expectations.

If the performance falls short of expectation the customer is dissatisfied.

If the performance matches the expectation the customer is satisfied

If the performance is exceeds expectations the customer is highly satisfied or delighted

Measuring Satisfaction

Periodic SurveysPeriodic Surveys

Customer Loss RateCustomer Loss Rate

Mystery ShoppersMystery Shoppers

Monitor Competitive Performance

Monitor Competitive Performance

Product or Service Quality

Quality is the totality of features andcharacteristics of a product or

service that bear on its ability to satisfy

stated or implied needs.

Structure Matrix

Function

Vriables 1 2 3

SMS .729* -.187 -.311

MMS .303 .758* -.003

TV Channels -.013 .593* -.203

Voice Mail .210 .577* .224

Roaming Charges -.085 .326* .301

Internet Connection .051 .237* .119

STD Rates -.154 .176* .025

Message Rates .144 -.166* -.090

Table no: 24aTests of Equality of Group Means

Variables Wilks' Lambda F df1 df2 Sig.

Functional Benefit .981 .838 3 127 .475

Emotional Benefit .966 1.506 3 127 .216

Self Expressive Benefit .985 .640 3 127 .590

Table no: 24bEigen values Canonical correlation for Value Perception

Function Eigen value % of Variance Cumulative % Canonical Correlation

1 .069a 93.9 93.9 .254

2 .004a 6.1 100.0 .067

3 .000a .0 100.0 .006

Table no: 24cWilks' Lambda Chi-Square for value perception

Test of Functions Wilks' Lambda Chi-square df Sig.

1 .932 8.971 9 .440

2 .996 .568 4 .967

3 1.000 .004 1 .948

Maximizing Customer Lifetime Value

Customer Profitability

Customer Equity

LifetimeValue

Maximizing Customer Life Time Value

• Customer Profitability – Customer Profitability Analysis

• Activity-Based Costing

• Measuring Customer Lifetime ValueAnnual Customer Revenue = Rs. 500Average Number of Loyal Years : 20Company Profit Margin : 0.10Customer Lifetime Value : Rs. 1,000

• Customer EquityValue EquityBrand EquityRelationship Equity

Attracting a New Customer is 5 times Cost than Retaining an Old Customer


• Customer Profitability Who is Profitable Customer?Profitable Customer is a person, household, or company, that over time yields a revenue stream that exceeds by an acceptable amount the company’s cost stream.

– Customer Profitability Analysis• Activity-Based Costing

– Customer Portfolios• Deferent groups of customers defined in terms of their

loyalty, profitability, and other factors


• Customer Life Time Value (CLV)– CLV describes the net present value of the steam of future profits

expected over the customer’s lifetime purchase.

Products

C1 C2 C3

P1 + + + Highly Profitable Product

P2 + Profitable Product

P3 - - Losing Product

P4 + - Mixed-bag Product

High Profit Customer

Mixed –bag Customer

Losing Customer

Platinum Customer – High Profitable

Gold Customer – Profitable

Silver/Iron Customer – Low Profitable but Desirable

Lead Customers – Unprofitable and Undesirable

What is Customer Relationship Management?

CRM is the process of carefully managing detailed information about individual

customers and all customer touchpoints to maximize customer loyalty.

Cultivating Customer Relationships

Mass Marketing Strategy

Mass Customization

One to One Marketing Strategy

(Individualize Marketing)

What is Customer Relationship Management?

CRM is the process of carefully managing detailed information about individual

customers and all customer touchpoints to maximize customer loyalty.

Cultivating Customer Relationships

Mass marketing Strategy

One to one

Marketing Strategy

Mass Customization

Cultivating Customer Relationships• Customer Relationship Management (CRM)• Attracting, Retaining, and Growing Customers

Suspects

Prospects

First time Customer

Repeat Customer

Clients

Members

Advocates

partners

Disqualified Prospects

Inactive or Ex Customer

Cultivating Customer RelationshipsBuilding Loyalty

High Margin Medium Margin Low Margin

Many Customers/Distributors Accountable Reactive Basic or Reactive

Medium Number of Customers/

DistributorsProactive Accountable Reactive

Few Customers/Distributors Partnership Proactive Accountable

Cultivating Customer Relationships• Reducing Customer Defection• Forming a Strong Customer Bond

• Adding Financial Benefit• Adding Social Benefit• Adding Structural Ties

» Create Long-Term Contracts» Charge a Lower Price to consumer who buy larger

supplies» Turn the product into a long-term service

BUILDING CUSTOMER LOYALTY

Through Promised Services

Managing Product Support Service

Ordering Ease

Delivery

Installation

Customer Training

Customer Consulting

Maintenance and Repair

Value we are going to Deliver to Customer

Functional Emotional

Wheel Of Customer Loyalty

Customer

Loyalty

1. Build a foundation for

Loyalty- Segment the market to match Customers need

- Be Selective

-- Manage the Customer Base Via Effective Tiering of Services

- Deliver Quality Service2. Core Loyalty BondsBuild Higher Level Bonds

Social

Customization

Structural

Give Loyalty Rewards

Financial

Non Financial

Recognition and appreciation

Deepening the Relationship

Cross-Selling

Bundling

3. Reduce Churn Drivers

Conduct churn diagnostic

Address Key Churn Drivers Proactive Retention Reactive Retention

Put Effective Compliant Handling and Service recovery

Increase Switching Cost

The Wheel Enabled Through

Frontline Staff Accounts Manager Membership Program CRM System

Service Brand Identity System

Easy Awareness

Build Confidence

Establish True Perfection

Through Promised Service

4. customer value, satisfaction

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