Building Customer Satisfaction, Value, and Retention Chapter 3 Building Customer Satisfaction, Value, and Retention PowerPoint by Karen E. James Louisiana State University - Shreveport To accompany A Framework for Marketing Management, 2nd Edition

To accompany A Framework for Marketing Management, 2nd Edition Objectives Understand how companies deliver customer value and satisfaction. Identify the factors that make a high performance business. Understand how companies attract and retain customers. To accompany A Framework for Marketing Management, 2nd Edition

To accompany A Framework for Marketing Management, 2nd Edition Objectives Realize how companies can improve both customer and company profitability. Understand how companies can deliver total quality. To accompany A Framework for Marketing Management, 2nd Edition

To accompany A Framework for Marketing Management, 2nd Edition 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 To accompany A Framework for Marketing Management, 2nd Edition

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 To accompany A Framework for Marketing Management, 2nd Edition

Customer Satisfaction 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.” To accompany A Framework for Marketing Management, 2nd Edition

Customer Satisfaction To maximize 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 To accompany A Framework for Marketing Management, 2nd Edition

High Performance Businesses Keys to Success Stakeholders Processes Resources Organization Identify several stakeholder groups for your University How might the needs of these groups conflict with each other? To accompany A Framework for Marketing Management, 2nd Edition

High Performance Businesses Keys to Success Stakeholders Processes Resources Organization New product development Customer attraction and retention Order fulfillment Reengineering work flows Building cross functional teams To accompany A Framework for Marketing Management, 2nd Edition

High Performance Businesses Keys to Success Stakeholders Processes Resources Organization Resources include labor, materials, machines, energy, and information Outsourcing vs. ownership: Own and nurture core competencies To accompany A Framework for Marketing Management, 2nd Edition

High Performance Businesses Keys to Success Stakeholders Processes Resources Organization Organization refers to the organization’s policies, structures, and corporate culture Corporate culture: shared experiences, stories, beliefs, and norms within an organization To accompany A Framework for Marketing Management, 2nd Edition

Core Business Practices Market Sensing Customer Acquisition Customer Relationship Management Fulfillment Management New Offering Realization To accompany A Framework for Marketing Management, 2nd Edition

To accompany A Framework for Marketing Management, 2nd Edition 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 To accompany A Framework for Marketing Management, 2nd Edition

Drivers of Customer Equity Brand Equity Relationship Equity Value Equity To accompany A Framework for Marketing Management, 2nd Edition

To accompany A Framework for Marketing Management, 2nd Edition Strong Customer Bonds Keys to Success Adding Financial Benefits Adding Social Benefits Adding Structural Ties Frequency programs Club memberships To accompany A Framework for Marketing Management, 2nd Edition

To accompany A Framework for Marketing Management, 2nd Edition Strong Customer Bonds Keys to Success Adding Financial Benefits Adding Social Benefits Adding Structural Ties Personalize customer relationships To accompany A Framework for Marketing Management, 2nd Edition

To accompany A Framework for Marketing Management, 2nd Edition Strong Customer Bonds Keys to Success Adding Financial Benefits Adding Social Benefits Adding Structural Tie Create long-term contracts Charge less for ongoing purchases Link product to long-term service To accompany A Framework for Marketing Management, 2nd Edition

To accompany A Framework for Marketing Management, 2nd Edition 20 – 80 – 30 Rule 20 20% of your customers 80 Generate 80% of your profit 30 Half of your profit is lost serving the bottom 30% of your customer base To accompany A Framework for Marketing Management, 2nd Edition