BUILDING CUSTOMER SATISFACTION, VALUE, AND RETENTION

What Is Customer Satisfaction?

Satisfaction is
a persons feeling of pleasure or disappointment resulting from comparing a products perceived performance in relation to his or her expectations

How are expectations formed?

From
past buying experiences

advice from friends & relatives

marketers and competitors information and promises

How to Satisfy Customers???

Design
a competitively superior value proposition aimed backed by a superior value delivery system
All the experiences the customer will have in the process of obtaining the value proposition Whole cluster of benefits the company promises to deliver

at a specific market segment

Customer Satisfaction and Customer Loyalty

The link between satisfaction and customer loyalty is not proportional.

Only a totally satisfied customer will be very loyal!!!

Satisfaction Loyalty Link

In depth satisfaction studies of customers at Xerox Corporation revealed that :
Its totally satisfied customers were six times more likely to repurchase Xerox products over the next 18 months

than its satisfied customers

Determine the most appropriate strategies for raising customer satisfaction

A dissatisfied customer is probably having problems with the Core value of the companys product Absence of service support Absence of a recovery process

How to listen to Customers

Customer satisfaction indices : surveying customers about
their level of satisfaction and plotting the results

Feedback : customer comments, complaints and questions Market research : to ascertain the specific factors that actually sparked
the decision to try the product

Frontline Personnel : they are the ones who have direct contact with
the customer. They should capture information and pass it along to the rest of the

company

Strategic activities : involving customers in the designing process,

meetings of executives, annual conferences, etc.

Customer Perceived Value

Customers are value maximizers. They form an expectation of value and act on it.

Buyers will buy from the firm that they perceive to offer the highest customer delivered value
The difference between total customer value and total customer cost

Customer Perceived Value

Is the difference
between the prospective customers evaluation

of all the benefits and all the costs

of an offering

and the perceived alternatives

Customer Perceived Value

(as applied to air conditioners) Figs. Rupees
Attributes Cooling efficiency Electricity Consumption Remote Control Oscillating Louvres Grill design Heating Eco - friendly Extended Warranty Image Worth of offer Price Customer Perceived Value LG Value 10000 800 1000 500 1000 500 13800 13000 800 Carrier Value 10000 1000 1000 1000 800 1000 500 15300 14300 1000 Hitachi Unbranded Value Value 12000 9500 1200 1000 1000 800 1000 1000 1000 500 1000 19500 10500 20000 10400 -500 100

Cultivating Customer Relationship

Objective of Customer Relationship Management : 1. Differentiate customers in terms of their i. Needs
ii. Value to the company

2. Retain customers/reduce customer defections 3. Make low profit customers more profitable or terminate them

Knowing your Customers

Data Warehouse : organized
storage of customer data

Data Mining : extracting useful

information

Why Satisfied Customers Defect?

False Beliefs held by Managers :
1. A level of satisfaction below complete or total satisfaction is acceptable 2. The investment required to change customers from satisfied to completely satisfied will not provide an attractive financial return 3. Firms with a relatively high average rating (3.5 to 4.5) should focus on customers in its lowest satisfaction categories (1 to 2.5).

A Companys Best Friends and Worst Enemies

Depending on their unique behavioral attributes intensity of satisfaction/dissatisfaction ability to act on their satisfaction/dissatisfaction Customers behave in one of four ways : Loyalist and the Apostle Defector and the Terrorist Mercenary Hostage

Building Profitable Relationships

Superior customer value
Total company effort to satisfy customers Customer acquisition

Profitable relationships with customers Customer retention

Customer satisfaction

Unless you have 100% customer satisfaction and I dont mean that they are just satisfied, I mean that they are excited about what you are doing you have to improve. And if you have 100% customer satisfaction, you have to make sure that you listen just in case they change.. so you can change with them
Horst Schulze President and COO, Ritz Carlton Hotel Company 1992 winner of the Malcolm Baldridge National Quality Award

Delivering Customer Value and Satisfaction

Benchmarks

Core Business Processes

The market sensing process The new offering realization process The customer acquisition process The customer relationship management process The fulfillment management process

Attracting and Retaining Customers

Forming Strong Customer Bonds: The Basics
Cross-departmental participation Integrate the Voice of the Customer into all business decisions Create superior offering for the target market

Attracting and Retaining Customers

Organize and make accessible a database of customer information Make it easy for customers to reach the appropriate personnel Reward outstanding employees

Adding Financial Benefits

Frequency programs (FPs)

Attracting and Retaining Customers

Adding Structural Ties
Create long-term contracts Charge lower price to high volume customers Turn product into long-term service

The CustomerDevelopment Process

Attracting and Retaining Customers

The Need for Customer Retention Measuring Customer Lifetime Value (CLV) Customer Relationship Management (CRM): The Key
Customer equity
The total combined customer lifetime values of all the companies customers

Create Value for customers

Understand the marketplace and the customer needs and wants (Marketing information and customer needs) Design a customer-driven marketing strategy (STP- Value proposition) Construct an integrated marketing program that delivers superior value (4ps) Build profitable relationships and create customer delight-CRM and PRM Increase share of Market and Share of Customer