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Chapter 5Building Customer Satisfaction, Value and Retention and Loyalty

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What is a Customer?

“The customer is value-maximizer, within the bounds of search costs and limited knowledge, mobility and income.”

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What is needed by the Customer?

• Value

• Satisfaction

• Retention

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Customer Value

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Customer Value

Customer Delivered Value = Total Customer Value - Total Customer Cost

• What is Customer Delivered Value?

“ Is the bundle of benefits expected”

Customer Cost“ Is the bundle of costs expected”

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Customer Delivered Value

Total Customer Value Total Customer Cost

Product Value

Service Value

Personnel Value

Image Value

Money Cost

Time Cost

Energy Cost

Psychic cost

Determinants of Customer Delivered Value

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What are the factors that may hinder or stop the full implementation of the Customer Delivered Value System?

• The buyer might be under orders to buy at the lowest cost.

• Concentrating on the short-term benefits and over looking

long term costs.

• The effect of the Relation between the sales persons and the consumer.

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Customer Satisfaction

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What is Satisfaction?

• It is a person’s feeling of pleasure or disappointment resulting from comparing a product’s perceived performance (or outcome) in relation to his or her expectations.

Satisfaction = function (perceived performance /expectations)

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What are the tools for tracking and measuring Customer Satisfaction

• Complaint and Suggestion system

• Customer Satisfaction Surveys

• Ghost Shopping

• Lost Customers Analysis

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Attracting and Retaining Customers

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Benefits of Highly Satisfied Customer

• Stays Loyal Longer

• Buys more

• Talks favorably about the company

• Offer products and services ideas to the company

• Costs less to serve than new customer

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Why retain Customers?

• Acquiring a new customer costs 5 times retaining an old one.

• The average company loss about 10% of its customers annually

• Customer rate increase with time.

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What are the types of marketing?

• Basic Marketing: selling the product• Reactive Marketing: selling the product

and encouraging further contact• Accountable Marketing: Follow up on

Customers satisfaction.• Proactive marketing: involving customers

in product and company improvements• Partnership marketing: encouraging the

customer to become a stakeholder in the company

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Tools to improving the marketing impact

• Adding financial benefits– Adding social benefits– Individualizing and personalizing

customer relationship