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Building Customer Satisfaction, Value, and Retention

The document discusses building customer satisfaction, value, and retention. It defines customer perceived value as the benefits of an offering minus the costs, which is determined by total customer value and total customer cost. There are three ways to increase perceived value: by improving product benefits or reducing monetary or non-monetary costs. Customer satisfaction depends on how well an offering meets a customer's expectations. Delivering high customer value through a superior value proposition is key to generating loyalty. This involves understanding, creating, delivering, capturing, and sustaining customer value using a company's value chain and partner networks. Effective customer relationship management integrates customer feedback and maximizes customer equity, loyalty, and bonds across departments.

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Akarsh
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107 views

Building Customer Satisfaction, Value, and Retention

The document discusses building customer satisfaction, value, and retention. It defines customer perceived value as the benefits of an offering minus the costs, which is determined by total customer value and total customer cost. There are three ways to increase perceived value: by improving product benefits or reducing monetary or non-monetary costs. Customer satisfaction depends on how well an offering meets a customer's expectations. Delivering high customer value through a superior value proposition is key to generating loyalty. This involves understanding, creating, delivering, capturing, and sustaining customer value using a company's value chain and partner networks. Effective customer relationship management integrates customer feedback and maximizes customer equity, loyalty, and bonds across departments.

Uploaded by

Akarsh
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Building customer satisfaction, value, and retention: difference

between the prospective customer„s evaluation of all benefits and all the cost of an offering
and the perceived alternatives. Customer perceived value (CPV) = Total Customer Value (
TCV)-Total Customer Cost (TCC) Total Customer Value : the perceived monetary value of
the bundle of economic, functional and psychological benefits customer expect from a given
market offering. Total Customer Cost : the bundle of costs customers expect to incur in
evaluating, obtaining, using and disposing of the given market offering.

(Fig) Based on this decision making theory, there are three (3) ways to making success
in selling to the buyer : 1. Increasing total customer value by improving product, services,
personel, and/or image benefits. 2. Reducing the buyer‟s non monetary cost by reducing the
time, energy, and psychic cost. 3. Reducing it‟s product monetary cost to the buyer.Total
Customer Satisfaction The customer satisfaction is depend on the offer‟s performance in
relation to the customer‟s expectation. Satisfaction : a person‟s feelings of pleasure or
dissappoinment resulting from comparing a product‟s perceived performance (outcome) in
relation to his or her expectations.Delivering High customer value: important key to
generating high customer loyalty is delivering high customer value. A company must design a
competitively superior value proposition aimed at a specific market segment (Michael
Lanning). The value proposition : consits of whole cluster of benefits the company promises
to deliver ; it is more than the core positioning of the offering. In a hypercompetitive economy
a company can only win the competition by creating and delivering superior values. This
involves 5 capabilities : 1. Understanding customer value 2. Creating customer value 3.
Delivering customer value 4. Capturing customer value 5. Sustaining customer value To
succeed, a company needs to use the concepts of a value chain and a value delivery network.

Value Chain Value chain: a tool for identifying was to create more customer value. Every
firm is a synthesis of activities that are performed to design, produce, market, delivery and
support its products. The value chains identifies nine strategically relevant activities that
create value and cost in a specific business. These nine value creating activities consists of
five primary activities and four support activities. The primary activities represent the
sequence of bringing materials into the business (inbound logistics), converting them into final
products (operations), shipping out final products (outbond lohistics), marketing , and servicing
them.. The support activities: procurement, technology, human resource management, and
firm infrastructure are handled in certain specialized departments, but not only there. For
example: several departments may do some procurements and hiring of people. The firm
task is to examine its cost and performance in each value creating activity and to look for ways
to improve it. The firm should estimate its competitors cost and performance as benchmarks
against which to compare its owns cost and performances. The firm success depends not
only on how well each departments performs its works, but also on how well the various
departmental activities are coordinated. Too often, company departments act to maximize their
interests. For example: a credit department may take a long time to check prospective
customers‟credit so as not to incur bad debts, mean while the customer waits and the sales
person is frustrated.Value delivery Network: To be succesful a firm also needs to look for
competitive advantages beyond its own operations, into value chains of its supliers, distributors
and customers. Many companies today have partnered with specific suppliers and
distributors to create a superior value delivery network (supply chain) For example: Levi
Strauss & Company and connections with its suppliers and distributors. One of levi‟s major
retailers is Sears. Every nights levi‟s learns the sizes and styles of its blue jeans sold through
Sears and other major outlets. Levi‟s then electronically orders more fabric for next day
delivery from Miliken andCompany, its fabric suplier. Miliken, in turn , relays an order for more
fiber to Dupont, its fibre supplier. In this way, the partners in the supply chain use the most
current sales information to manufacture what is selling, rather than for a forecast that may not
match current demand. In this system, the goods are pulled by demand rather than pushed by
supply.Attracting and Retaining Customers Customer Relationship Management The
process of managing detailed information about individual customers and carefully managing
all the customer “touch points” with the aim of maximizing customer loyalty. The aim of CRM
: is to produce high customer equity ( value equity, brand equity and relationship
equity).Forming strong customer Bonds: 1. Get cross-departmental participation in planning
and managing the customer satisfaction and retention process. 2. Integrate the voice of
customers in all business decisions. 3. Organize and make accesible a database of
information on individual customer needs, preferences, contacts, purchase frequency and
satisfaction. 4. Make it easy for customers to reach approriate company personel and express
their needs, perceptions, and complaints. 5. Run award programs recognizing outstanding
employees.

( Building
customer satisfaction, value, and retention page 2)

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