0. 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

1. 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

2. 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

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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

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

12. 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

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

14. 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

15. 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

16. 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

17. 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