4. Customer Value, Satisfaction
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Transcript of 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
Customer Perceived Value (CPV)
• 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
Customer Perceived Value (CPV)
• 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
Customer Perceived Value (CPV)• Applying Value Concepts Decision Making Theory
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
Customer Perceived Value (CPV)• Applying Value Concepts Decision Making Theory
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
Customer Perceived Value (CPV)
• 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
Customer Perceived Value (CPV)
• 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
Maximizing Customer Life Time Value
• 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
Maximizing Customer Life Time Value
• 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