Creating value, satisfaction and loyalty

Topic questions • What are – – – –

Quality? Customer value? Satisfaction? Loyalty?
How can companies deliver them?

• How can companies attract customers? • How can companies retain customers?

Organizational charts, where the value is created?

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Customer perceived value • Customer benefits – – – –

Product Service Image Personal (emotional,...)

• Customer costs – – – –

Monetary Time Energy Psychological (can also be a benefit)

Customer value analysis • Identify major attributes and benefits that customers value • Assess the qualitative importance of different attributes and benefits • Assess the company’s and competitor’s performances on the different customer values against rated importance • Examine ratings of specific segments • Monitor customer values over time

Measuring satisfaction and quality • • • •

Periodic surveys Customer loss rate Mystery shoppers Montioring competitive performance – Market share – Profitability

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What is quality? • Quality is the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs. – Functional dimension – Durability dimension

• Always a perception of the customer.

Satisfaction • Satisfaction is determined by two components – Expectations • Solution to a problem • Marketing communications • Other information sources

– Performance • Some post purchase events may alter the satisfaction – Tendency to back ones own decisions – Reinforcement/decline e.g. fashion industry

The marketer’s promise dilemma • The more customer’s you want to attract, the more you have to promise. • The more you promise, the higher expectations you create. • Expectations > performance
Disappointment • Expectations = performance
Satisfaction • Expectations < performance
Delight


Word of mouth effect

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Customer retention and profitability • Acquisition of customers can cost five times more than retaining current customers. • The average company loses 10% of its customers each year. • A 5% reduction to the customer defection rate can increase profits by 25% to 85%. – Re-production/corrective actions – Compensating – Handling complaints

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

Customer loyalty • Searching and evaluating alternatives takes time • Once a satisfactory solution is found, the customers tend to stick with it
Routinized buying and brand loyalty
Importance of continuous improvement and avoidance of defects

Build on the marketing plan! • Create a compelling value proposition for your offering
Define all the customer benefits and costs. • Describe how you will create satisfaction. • How do you build up customer loyalty?

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