Building Customer Satisfaction, Value,and Retention
Customer perceived value (CPV):difference between the prospectivecustomer’s evaluation of all the ________and all the _____ of an offering and theperceived alternatives
Customer Satisfaction
Satisfaction: a person’s feelings of pleasureor disappointment resulting from comparinga product’s perceived ___________ (oroutcome) in relation to his/her __________.
Delivering Customer Value andSatisfaction
Value chain: tool for identifying ways to______ more customer value.
Examine costs and performance in eachvalue-creating activity and look for ways toimprove
Attracting and Retaining Customers
Value of a highly satisfied customer:
loyal, purchases more, talks favorably aboutcompany, pays less attention to competitors,less price-sensitive, costs less to serve thannew customers because transactions areroutine
Attracting and Retaining Customers
Implications:
•acquiring new customers can cost five timesmore than the cost of satisfying andretaining current customers
•need to deliver high customer satisfaction
Customer Relationship Building
•Most companies practice only _______________ when their markets containmany customers and their unit profitmargins are small.
•In markets with few customers and highprofit margins, most sellers move to___________ _________ .
Forming Strong Customer Bonds
•Frequency programs: reward customerswho buy frequently and/or in substantialamounts
•Adding social benefits: personalizecustomer relationships
•Adding structural ties: increaseconsumer’s proclivity to repurchasecompany’s brand
The Profitable Customer
20-80-30 rule:
the top 20 percent of customers generate 80percent of the company’s profits, half of which islost serving the bottom 30 percent of unprofitablecustomers.
Therefore, company can improve profits by“firing” its worst customers.
The Profitable Customer
Profitable Customer:
Person, household, or company that overtime yields a revenue stream that _______by an acceptable amount the company’s____ of attracting, selling, and servicingthat customer
Application
Traditional Retail Marketing
Loyal Customers: 20 percent of all customers;80 percent of profits.
Secondary: 30 percent of all customers; 15percent of profits.
Deal Seekers: 50 percent of all customers; 5percent of all profits.
Application
Traditional Retail Marketing
For Thanksgiving, sell turkeys below cost toattract “deal seekers.”
Profits are disappointing
Application
Customer Focused Marketing
Offer free turkey for those that spend 500.00or more the previous two months beforeThanksgiving
Result: Number of customers spending 500.00or more increases by 25 percent
Build customer loyalty