BUILDING CUSTOMER SATISFACTION VALUES AND RETENTION (TOPIC 2)

MKTG131 – Marketing Management

WHY STUDY CUSTOMER SATISFACTION VALUES AND RETENTION?

To understand how companies deliver customer value and satisfaction.

To identify the factors that make a high performance business.

To understand how companies attract and retain customers.

To realize how companies can improve both customer and company profitability.

To understand how companies can deliver total quality.

WHAT IS CUSTOMER VALUE?

Customers seek to maximize value by estimating which offer (product/firm)

delivers the most value (CPV) forming an expectation of value and acting

upon it (purchase) evaluating their usage experience against

the expectations Satisfaction results when expectations

are equaled or surpassed

CUSTOMER PERCEIVED VALUE

Perception of delivered value is a function of: Total customer costs Total customer value

Firms at a disadvantage must: Reduce perceptions of costs or enhance

perceptions of value

STEPS IN CUSTOMER VALUE ANALYSIS Identify the major attributes and benefits customer

value. Assess the quantitative importance of the different

attributes and benefits. Assess the company’s and competitors’ performances

on the different customer values against their rated importance.

Examine how customers in a specific segment rate the company’s performance against a specific major competitor on an individual attribute or benefit basis.

Monitor customer values over time.

CUSTOMER SATISFACTION DEFINED

Satisfaction is defined as a person’s feelings of pleasure or disappointment resulting from comparing a product’s perceived performance (or outcome) in relation to his or her expectations.

HOW TO MAXIMIZE CUSTOMER SATISFACTION?

Don’t exaggerate the product / service’s capabilities in advertising or other communications Dissatisfaction will result FTC may become involved

Don’t set expectations too low Market size will be limited

WHAT IS CUSTOMER RETENTION?

Reducing customer “churn” (defection) is highly desirable Define and measure retention rate Identify causes of attrition Estimate profit lost from customer

defection (customer lifetime value) Estimate cost to reduce defection; take

appropriate action

IMPACT OF QUALITY

Product and service quality, customer satisfaction and company profitability are intimately connected. Higher levels of quality result in higher levels of customer satisfaction, which supports higher prices and often lower costs.

HOW TO MANAGE YOUR CUSTOMER BASE Reducing the rate of customer defection Increasing the longevity of the customer

relationship Enhancing the growth potential of each

customer through “share of wallet”, cross-selling and up-selling.

Making low-profit customers more profitable or terminating them.

Focusing disproportionate effort on high-profit customers.

FORMING STRONG CUSTOMER BONDS Create superior products, services, and

experiences for the target market. Get customer feedback. Provide good customer service. Organize and make accessible a database of

information on individual customer needs, preferences, contacts, purchase frequency and satisfaction.

Provide benefits and loyalty programs to purchasing customers.

END OF PRESENTATION

Reminder: Group #2 reporters to present “Setting the Product and Branding Strategy” on next meeting.

Homework: Submit a summary of the consumer analysis for the marketing plan assigned to your group (submission is by group).