1. Chapter 2 Building Customer Satisfaction, Value, and Retention by
Chapter 2 Building Customer Satisfaction, Value, and Retention by Ung Veasna, DBA candidate

2. Customer Delivered Value
What the customer gets
(total customer value)
What the customer gives
(total customer cost).

3. Defining Customer Value and Satisfaction
Customer Perceived Value (CPV)
Total customer value
Total customer cost

4. Determinants of Customer Delivered Value
Image value
Personnel value
Services value
Product value
Total
customer
value
Customer
delivered
value
Monetary cost
Time cost
Energy cost
Psychic cost
Total
customer
cost

5. Defining Customer Value and Satisfaction
Total Customer Satisfaction
Satisfaction
Customer Expectations
Delivering High Customer Value
Value proposition
Value-delivery system
Measuring Satisfaction

6. Satisfied Customers: Are loyal longer
Buy more (new products & upgrades)
Spread favorable word-of-mouth
Are more brand loyal (less price sensitive)
Offer feedback
Reduce transaction costs

7. The Nature of High Performance Business

8. High Performance Business
Stake-
holders
Set strategies to satisfy key...
Processes
By improving
critical business...
Resources
Organization
and
aligning...

9. The Nature of High Performance Business
Stakeholders
Processes
Resources
Core competency
Distinctive capabilities
Organization and Organizational Culture
Organization
Corporate culture
Scenario analysis

10. Delivering Customer Value and Satisfaction
Value Chain
Value chain
Benchmarks

11. Delivering Customer Value and Satisfaction The Generic Value Chain
Firm infrastructure
Out-
bound
Logistics
Inbound
Logistics
Opera-
tions
Market-
ing
and
sales
Margin
Primary Activities
Support
Activities
Human resource management
Technology Development
Procurement
Serv-
ice

12. Delivering Customer Value and Satisfaction
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

13. Delivering Customer Value and Satisfaction
The Value Delivery Network (Supply Chain)

14. Customer Development Suspects Prospects Clients Advocates Partners
First-time
customers
Repeat
customers
Clients
Advocates
Partners
Inactive or
ex-customers
Disqualified
prospects

15. Attracting and Retaining Customers
Partner relationship management (PRM)
Customer relationship management (CRM)

16. Attracting and Retaining Customers
Attracting Customers
Computing the Cost of Lost Customers
Customer churn
Lifetime value

17. Attracting and Retaining Customers
The Need for Customer Retention
Measuring Customer Lifetime Value (CLV)
Customer Relationship Management (CRM): The Key
Customer equity
Three drivers of customer equity
Value equity
Brand equity
Relationship equity

18. Attracting and Retaining Customers
Five levels of investment in customer relationship building
Basic marketing
Reactive marketing
Accountable marketing
Proactive marketing
Partnership marketing

19. Figure 3-6: Levels of Relationship Marketing

20. 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

21. 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)

22. Attracting and Retaining Customers
Adding Social Benefits

23. Attracting and Retaining Customers
Adding Structural Ties
Create long-term contracts
Charge lower price to high volume customers
Turn product into long-term service

24. Competitive advantage
The Profit Triangle
Profit
Value creation
Internal operations
Competitive advantage

25. Value Relationships
Good management practice leads to () added value and employee satisfaction
Adding value  Customer satisfaction
Customer satisfaction  repeat business
Repeat business  profitability/growth
Profits/growth  stockholder wealth
Stockholder wealth  investment

26. Quality #1 Quality is what the customer says it is!
Quality is conformance to customer requirements. #1

27. The Importance of Quality and Customer Satisfaction
Quality…the degree of excellence or superiority of an organization’s goods and services.
Not only includes the physical traits of product but also:
Customer Satisfaction…the ability of a good or service to meet or exceed the buyer’s needs and expectations.
“Quality and customer satisfaction directly affect company profitability and are critical to organization’s continued existence.”

28. Total Quality Management (TQM)
…an approach that involves all employees in continually improving products and work processes to achieve customer satisfaction to achieve world class performance.
Deming… “better quality and lower prices with a little ingenuity in marketing will create a market.”

29. TQM and the Marketing Mix
TQM and Product Strategy…
involves selection of tangible and intangible characteristics of product that meets the needs of a target customer.
Guarantees of quality that you stand behind.

30. TQM and Distribution Strategy…
Developed “Value Link” to reduce inventory cost and improve supply distribution.
Same day shipping is key into product distribution.

31. TQM and Promotional Strategy…
Accuracy in advertising is critical.
Don’t make unbelievable claims about performance.
Build trust with programs that deliver quality product and then advertise it.

32. TQM and Pricing Strategy…
Lower prices can be delivered with high quality if efforts are properly directed to reduce the cost of quality.
Compaq has become leading seller of PCs at lower price by formulating ways to reduce price without lowering quality of components.

33. Marketing managers have two responsibilities in a quality centered company.
First, they must participate in formulating strategies and policies designed to help the company win through total quality excellence.
Second, they must deliver marketing quality alongside production quality.