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Customer Satisfaction Value and Retention (PowerPoint)

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					Customer Satisfaction, Value,
and Retention
Recall:
   When offerings deliver value and satisfaction to the
    buyer, they are successful.
   Value = Benefits/Cost ($, time, energy, psych)


   How can value be enhanced?
       Raising benefits.
       Reducing costs.
       Raising benefits while lowering costs.
       Raising benefits by more than the increase in costs.
       Lowering benefits by less than the reduction in costs.
    Customer Value
   Customers seek to maximize value by:
       estimating which offer (product/firm) delivers the
        most value
       forming an expectation of value and acting upon it
        (purchase)
       evaluating their usage experience against the
        expectations
Customer Value
 Determinants of Customer Delivered Value
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.”
     i.e., Performance - Expectation

   Satisfaction results when expectations
    are equaled or surpassed.
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
  Satisfaction Trade-offs

High


         Strong       Satisfied or   Dissatisfaction
       Satisfaction     Neutral


Low


       Low            Market Size             High
High Performance Businesses
High Performance Businesses
     Porter’s Generic Value Chain
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
Customer Development Process
Strong Customer Bonds?

   Adding Financial Benefits
       Frequency programs, Club memberships
   Adding Social Benefits
       Personalize customer relationships
   Adding Structural Ties
       Create long-term contracts
       Charge less for ongoing purchases
       Link product to long-term service
    Strong Customer Bonds

The U.S. Harley
Davidson site
promotes the
benefits of
joining H.O.G.
(Harley Owners
Group)
 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
Implications of 80/20 rule

   Increase share of customer rather
    than market share
   Serve current customers rather
    than focus on acquiring new
    customers
Customer Profitability Analysis
Customer Relationship
Management (CRM)
   Customer Relationship Management
    (CRM):
       “A holistic process of identifying, attracting,
        differentiating, and retaining customers.”

   CRM Stakeholders:
       Employees
       Supply Chain Partners
       Lateral Partners
       Customers
Paradigm shift from acquiring
“customers” to maintaining “clients”
“The Relationship People”
                               Quality

   Quality: totality of all features and characteristics of
    product or service that satisfy stated or implied
    needs.
   Understanding the Role of Quality
       The core product is not enough
       Supplemental products are critical
   Delivering Superior Quality (four issues)
       Understand customers’ expectations, needs, and wants
       Translate customer research into specifications for quality
       Deliver on specifications
       Promise only what can be delivered
Quality and Total Product Offering
        Summary: Retaining Customers
        Over the Long Term
   Satisfaction vs. Quality vs. Value
       Expectations

   Customer Satisfaction and Customer Retention
       Understand what can go wrong
       Focus on controllable issues
       Manage customer expectations
       Offer satisfaction guarantees
       Make it easy for customers to complain
       Create loyalty programs
       Make customer satisfaction measurement an ongoing
        priority
Examples of Satisfaction Guarantees
       Customer Satisfaction Metrics

   Lifetime Value of a Customer (LTV)
   Average Order Value (AOV)
   Customer Acquisition/Retention Costs
   Customer Conversion Rate
   Customer Retention Rate
   Customer Attrition Rate
   Customer Recovery Rate
   Referrals
   Viral Marketing

				
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posted:5/16/2012
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