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The document discusses the importance of customer perceived value (CPV) and satisfaction in building customer loyalty and retention. It highlights the cost-effectiveness of retaining existing customers compared to acquiring new ones and emphasizes strategies like frequency programs and personalized relationships to strengthen customer bonds. Additionally, it outlines the '20-80-30 rule' indicating that a small percentage of customers generate the majority of profits, suggesting that companies should focus on their most profitable customers.

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Dr. Abdelrahman Abdelghani
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2 views

ch3class

The document discusses the importance of customer perceived value (CPV) and satisfaction in building customer loyalty and retention. It highlights the cost-effectiveness of retaining existing customers compared to acquiring new ones and emphasizes strategies like frequency programs and personalized relationships to strengthen customer bonds. Additionally, it outlines the '20-80-30 rule' indicating that a small percentage of customers generate the majority of profits, suggesting that companies should focus on their most profitable customers.

Uploaded by

Dr. Abdelrahman Abdelghani
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Building Customer Satisfaction, Value,

and Retention
Customer perceived value (CPV):
difference between the prospective
customer’s evaluation of all the ________
and all the _____ of an offering and the
perceived alternatives
Customer Satisfaction
Satisfaction: a person’s feelings of pleasure
or disappointment resulting from comparing
a product’s perceived ___________ (or
outcome) in relation to his/her __________.
Delivering Customer Value and
Satisfaction
Value chain: tool for identifying ways to
______ more customer value.

Examine costs and performance in each


value-creating activity and look for ways to
improve
Attracting and Retaining Customers

Value of a highly satisfied customer:


loyal, purchases more, talks favorably about
company, pays less attention to competitors,
less price-sensitive, costs less to serve than
new customers because transactions are
routine
Attracting and Retaining Customers

Implications:
• acquiring new customers can cost five times
more than the cost of satisfying and
retaining current customers
• need to deliver high customer satisfaction
Customer Relationship Building

• Most companies practice only _____


__________ when their markets contain
many customers and their unit profit
margins are small.
• In markets with few customers and high
profit margins, most sellers move to
___________ _________ .
Forming Strong Customer Bonds

• Frequency programs: reward customers


who buy frequently and/or in substantial
amounts
• Adding social benefits: personalize
customer relationships
• Adding structural ties: increase
consumer’s proclivity to repurchase
company’s brand
The Profitable Customer
20-80-30 rule:
the top 20 percent of customers generate 80
percent of the company’s profits, half of which is
lost serving the bottom 30 percent of unprofitable
customers.

Therefore, company can improve profits by


“firing” its worst customers.
The Profitable Customer
Profitable Customer:
Person, household, or company that over
time yields a revenue stream that _______
by an acceptable amount the company’s
____ of attracting, selling, and servicing
that customer
Application
Traditional Retail Marketing
Loyal Customers: 20 percent of all customers;
80 percent of profits.
Secondary: 30 percent of all customers; 15
percent of profits.
Deal Seekers: 50 percent of all customers; 5
percent of all profits.
Application
Traditional Retail Marketing
For Thanksgiving, sell turkeys below cost to
attract “deal seekers.”

Profits are disappointing


Application
Customer Focused Marketing
Offer free turkey for those that spend 500.00
or more the previous two months before
Thanksgiving
Result: Number of customers spending 500.00
or more increases by 25 percent
Build customer loyalty

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