CREATING CUSTOMER value, satisfaction and loyalty

CREATING CUSTOMER value, satisfaction and loyalty CONNECTING WITH CUSTOMER

Presented by:

SAYED SAJJAD HUSSAIN SHAH

ROADMAP

1. What are customer value, satisfaction, and

loyalty, and how can companies deliver them?

2. What is the lifetime value of customers, and

how can marketers maximize it?

3. How can companies attract and retain the right

customers and

cultivate strong customer relationships?

4. What are the pros and cons of database

marketing?

Building customer value, satisfaction and loyalty

Creating loyal customer is the heart of every business.

Businesses succeed by getting, keeping and growing customers

Customer are the only reason to build factories, hire employees etc.

Organizational Charts

Customer perceived value

CPV : the prospective consumer’s evaluation of all benefits and the perceived alternatives.

Total customer value: the perceived monetary value of the benefit of economic, functional and psychological benefits.

Total customer cost: the bundle of costs customers expect to incur in evaluating, using and disposing

Customer perceived value

Determinants of Customer perceived value

Total Customer

Cost

Customer Perceived Value

Total Customer Benefit

Product Benefit

Time Cost

Product Cost

Service Benefit

Personnel

Benefit

Psychological Cost

Image Benefit

Energy Cost

Customer Value and Satisfaction

Total Customer Satisfaction

Satisfaction: feelings of pleasure or disappointment

Customer Expectations : 12/ 24 hours guarantee

Delivering High Customer Value

Value proposition: benefits the company promise such as Volvo -> gaining from customer experience

Value-delivery system -> all experiences the customer obtaining and using

Measuring Satisfaction

Total Customer satisfaction

Customer Value analysis

Tools for Tracking and Measuring Customer Satisfaction

A customer-centered organization makes it easy for customers to register suggestions and complaints. Some customer-centered companies-P&G, General Electric, Whirlpool—establish hot lines with toll-free numbers. Companies are also using Web sites and e-mail for quick, two-way communication.

Studies show that although customers are dissatisfied with one out of every four purchases, less than 5 percent will complain. Most customers will buy less or switch suppliers. Responsive companies measure customer satisfaction directly by conducting periodic surveys. While collecting customer satisfaction data, it is also useful to ask additional questions to measure repurchase intention and to measure the likelihood or willingness to recommend the company and brand to others.

Complaint and suggestion systems:

Customer satisfaction surveys:

Creating Long-term Loyalty Relationships

Define

d

A person’s feelings of pleasure or

disappointment that result from

comparing a product’s perceived performance to (or

outcome) to expectations.

Satisfaction

Define

d

Customer Satisfaction

Dissatisfied Satisfied Delighted

Expectations

Dissatisfied :/

Customer Expectations

Expectations

Previous purchasesFriends

adviceMarketers’ / competitors

Monitoring Satisfaction

Customer Complaints

Measurement Techniques

Influence of Customer Satisfaction

Measurement TechniquesCustomer Loss Rate

Mystery Shopper

Surveys

Are You Satisfied With Out Customer Service

Influence of Customer Satisfaction

Customer satisfaction

Speed of communication

Customer Complaints

25%Dissatisfied

5%Complain

95%Stop buying

54% - 70%Buy again if resolved

95%If resolved quickly

Tell 5 people

Tell 11people

Complaints

Product and Service Quality

Quality

Profitability

Satisfaction

Performance Conformance

Maximizing Customer Lifetime Value

20% of Customers

80% of Profits

Customers

Customer Profitability

 

Customer Lifetime Value

Customer Profitability Analysis

Profitable

Unprofitable

Define

d

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

Figur

e

5.3

Customer-Product Profitability Analysis

CRM Strategies To Increase The Value Of Customer Base

Reduce the rate of defectionReduce the rate of defection

Increase longevityIncrease longevity

Enhance “share of wallet”Enhance “share of wallet”

Terminate low-profit customers

Terminate low-profit customers

Focus more effort on high-profit customersFocus more effort on high-profit customers

Customer Retention

Acquisition of customers can cost five times more than retaining current customers.

The average customer loses 10% of its customers each year.

A 5% reduction to the customer defection rate can increase profits by 25% to 85%.

The customer profit rate increases over the life of a retained customer.

The Customer Development Process

Prospects

Suspects

Disqualified

First-timecustomers

Repeatcustomers Clients Members

PartnersEx-customers

Using the Database

To identify prospectsTo identify prospects

To target offersTo target offers

To deepen loyaltyTo deepen loyalty

To reactivate customersTo reactivate customers

To avoid mistakesTo avoid mistakes

Estimating Lifetime Value

Annual customer revenue: $500

Average number of loyal years: 20

Company profit margin: 10

Customer lifetime value: $1000

Steps for Creating Customer Evangelists

Customer plus-delta

Napsterize your knowledge

Build the buzz

Create community

Make bite-size chunks

Create a cause

Database Key Concepts

Customer database

Database marketing

Mailing list

Business database

Data warehouse

Data mining

Don’t Build a Database When

The product is a once-in-a-lifetime purchase

Customers do not show loyalty

The unit sale is very small

The cost of gathering information is too high