Creating value, satisfaction, & loyalty.pdf
- 1. Creating Customer Value, Satisfaction & Loyalty
- 2. Customer Value, Satisfaction, & Loyalty Marketer must- • Inform • Engage • Energize Creating loyal customers is at the heart of every business.
- 3. Traditional Organization vs. Customer-Oriented Organization
- 4. Customer- perceived value Total customer benefit Total customer cost Product benefit Monetary cost Services benefit Time cost Personnel benefit Energy cost Image benefit Psychological cost Customer Perceived Value Customer-perceived value (CPV) is the difference between the prospective customer’s evaluation of all the benefits and all the costs of an offering and the perceived alternatives. Total customer benefit - The perceived monetary value of the bundle of economic, functional, and psychological benefits customers expect from a given market offering. Total customer cost - The perceived bundle of costs customers expect to incur in evaluating, obtaining, using, and disposing of the given market offering. Determinants of CPV
- 5. Customer Perceived Value Evaluating Obtaining Using Disposing Total Customer Cost Total Customer Benefit Customer- perceived Value Functional Economic Psychological
- 6. Customer Value analysis Very often, managers conduct a customer value analysis to reveal the company’s strengths and weaknesses relative to those of various competitors. Steps in Customer value analysis • Identify the major attributes and benefits customers value • Assess the quantitative importance of the different attributes and benefits. • Assess the company’s and competitors’ performances on the different customer values against their rated importance • Examine how customers in a specific segment rate the company’s performance against a specific major competitor on an individual attribute or benefit basis. • Monitor customer values over time.
- 7. Delivering High Customer Value Core positioning: • Safety Volvo Other benefits: • Good performance • Design • Environmentally friendly Value Proposition Value proposition consists of the whole cluster of benefits the company promises to deliver.
- 8. Value Proposition Core positioning: • Strongest Other benefits: • Highest melting capability with water • Manufactured by German technology • Capability to protect the internal material(steel) of infrastructure. • BUET tested Basundhara Cement
- 9. Customer Satisfaction A person’s feelings of pleasure or disappointment that result from comparing a product’s perceived performance to (or outcome) to expectations. For customer-centered companies, customer satisfaction is both a goal and a marketing tool.
- 11. Customer Satisfaction Expectations Previous purchases Friends advice Marketers’ / competitors
- 12. Customer Lifetime Value 20% of Customers 80% of Profits CLV (Customer Lifetime Value) is a prediction of all the value a business will derive from their entire relationship with a customer.
- 13. Customer Profitability Customer Profitability Analysis Profitable Unprofitable A person, household, or company that over time yields a revenue stream exceeding by an acceptable amount the company’s cost stream for attracting, selling, and serving that customer. A Profitable Customer
- 14. Customer Profitability Analysis Customer-Product Profitability Analysis
- 15. Customer Profitability Analysis Activity-based costing (ABC) ABC tries to identify the real costs associated with serving each customer. Also, both variable and overhead costs are tagged back to each customer Total Customer Revenue – Total Customer Costs
- 16. “A deeply held commitment to rebuy or repatronize a preferred product or service in the future despite situational influences and marketing efforts having the potential to cause switching behavior.” -- Oliver Customer Loyalty
- 17. Customer relationship management (CRM) is a system for managing a company’s interactions with current and future customers. Cultivating Customer Relationships CRM enables companies to provide excellent real-time customer service through the effective use of individual account information
- 18. Increasing Value of the Customer • Reducing the rate of customer defection. • Increasing the longevity of the customer relationship. • Enhancing the growth potential of each customer through “share-of-wallet,” cross selling and up selling. • Making low profit customer more profitable or terminating them. • Focusing effort on high value customers. Managing the Customer Base Retention is important! • Acquiring new customers can cost five times more than satisfying and retaining current ones. • A 5 percent reduction in the customer defection rate can increase profits by 25 percent to 85 percent, depending on the industry