copyright 2004 © pearson education canada inc. 3-1 chapter 3 building customer satisfaction, value,...

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Copyright 2004 © Pearson Education Canada Inc.

Chapter Chapter 33Building Customer Satisfaction, Building Customer Satisfaction, Value, and RetentionValue, and Retention

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It is no longer enough to satisfy customers. You must delight them.

Kotler on Kotler on MarketingMarketing

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Chapter ObjectivesChapter Objectives• In this chapter, we will address the following

questions:– What are customer value and satisfaction, and how can

companies deliver them?– What makes a high-performance business?– How can companies both attract

and retain customers?– How can companies improve both customer and

company profitability?– How can companies practice total quality

management?

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Defining Customer Value and Defining Customer Value and SatisfactionSatisfaction

• Customer Perceived Value (CPV)– Total customer value– Total customer cost

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Figure 3.1: Figure 3.1: Determinants of Determinants of Customer Delivered Customer Delivered ValueValue

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• Total Customer Satisfaction– Satisfaction

• Customer Expectations

• Delivering High Customer Value– Value proposition– Value-delivery system

• Measuring Satisfaction

Defining Customer Value and Defining Customer Value and SatisfactionSatisfaction

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Table 3.1: Tools for Tracking and Measuring Customer Table 3.1: Tools for Tracking and Measuring Customer SatisfactionSatisfaction

Complaint and suggestion systems:

Customer satisfaction surveys:

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.

See text for complete table

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Would you feel more brand loyalty for a Would you feel more brand loyalty for a company that tried to immediately resolve company that tried to immediately resolve a complaint via E-mail, or a company that a complaint via E-mail, or a company that had a customer service representative call had a customer service representative call within two business days to within two business days to resolve the problem over resolve the problem over the phone?the phone?

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Premier Dell.com is a special business-oriented part of the Premier Dell.com is a special business-oriented part of the Dell Web site that allows customers to interact with Dell and Dell Web site that allows customers to interact with Dell and

customize all phases of doing business with Dell.customize all phases of doing business with Dell.

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The Nature of High Performance The Nature of High Performance BusinessBusiness

• High-performance business

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Figure 3.2: The High Performance BusinessFigure 3.2: The High Performance Business

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The Nature of High Performance The Nature of High Performance BusinessBusiness

• Stakeholders• Processes• Resources

– Core competency

– Distinctive capabilities

• Organization and Organizational Culture– Organization

– Corporate culture

– Scenario analysis

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Can you name a company that has Can you name a company that has changed the public’s perception of changed the public’s perception of their corporate culture? Has this their corporate culture? Has this effectively rehabilitated that effectively rehabilitated that company’s image?company’s image?

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Delivering Customer Value and Delivering Customer Value and SatisfactionSatisfaction

• Value Chain– Value chain

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Figure 3.3: The Generic Value ChainFigure 3.3: The Generic Value Chain

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– Benchmarks

• Core Business Processes– The market sensing process– The new offering realization process– The customer acquisition process– The customer relationship

management process– The fulfillment management process

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• The Value Delivery Network (Supply Chain)


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Figure 3.4: Levi Figure 3.4: Levi Strauss’s Value-Strauss’s Value-Delivery NetworkDelivery Network

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Attracting and Retaining CustomersAttracting and Retaining Customers

• Partner relationship management (PRM)

• Customer relationship management (CRM)

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Saturn has gained a customer loyalty rate Saturn has gained a customer loyalty rate of more than 60% by fundamentally of more than 60% by fundamentally changing the buyer-seller relationship. changing the buyer-seller relationship. Can you think of another company that Can you think of another company that has made a change of similar has made a change of similar magnitude? Have they magnitude? Have they had similar results?had similar results?

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• Attracting Customers

• Computing the Cost of Lost Customers– Customer churn– Customer defection rate– Lifetime value

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On the Lands’ End Web site, customers can click a On the Lands’ End Web site, customers can click a button to talk with a customer service representativebutton to talk with a customer service representative

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• The Need for Customer Retention• Measuring Customer

Lifetime Value (CLV) • Customer Relationship Management

(CRM): The Key– Customer equity– Three drivers of customer equity

• Value equity• Brand equity• Relationship equity

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Figure 3.5: The Figure 3.5: The Customer-Customer-Development Development ProcessProcess

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• Five levels of investment in customer relationship building– Basic marketing– Reactive marketing– Accountable marketing– Proactive marketing– Partnership marketing

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Figure 3.6: Levels of Relationship MarketingFigure 3.6: Levels of Relationship Marketing

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• Forming Strong Customer Bonds: The Basics– Cross-departmental participation– Integrate the Voice of the Customer

into all business decisions– Create superior offering for the target

market

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– Organize and make accessible a database of customer information

– Make it easy for customers to reach the appropriate personnel

– Reward outstanding employees

• Adding Financial Benefits– Frequency programs (FPs)


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The H.O.G. Web site presents the benefits of joining.The H.O.G. Web site presents the benefits of joining.

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• Adding Social Benefits

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Table 3.2: Social Table 3.2: Social Actions Affecting Actions Affecting Buyer-Seller Buyer-Seller RelationshipsRelationships

Good Things Bad Things

Initiate positive phone calls

Make recommendations

Candour in language

Use phone

Show appreciation

Make service suggestions

Use “we” problem-solving language

Get to problems

Use jargon or shorthand

Personality problems aired

Talk of “our future together”

Routinize responses

Accept responsibility

Plan the future

Make only callbacks

Make justifications

Accommodative language

Use correspondence

Wait for misunderstandings

Wait for service requests

Use “owe-us” legal language

Only respond to problems

Use long-winded communications

Personality problems hidden

Talk about making good on the past

Fire drill and emergency responsiveness

Shift blame

Rehash the past

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• Adding Structural Ties– Create long-term contracts– Charge lower price to high

volume customers– Turn product into

long-term service

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Customer Profitability, Company Customer Profitability, Company Profitability, and Total Quality Profitability, and Total Quality ManagementManagement

• Measuring Profitability– Profitable customer

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Figure 3.7: Customer-Product Profitability AnalysisFigure 3.7: Customer-Product Profitability Analysis

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Figure 3.8: Allocating marketing investment according to customer valueFigure 3.8: Allocating marketing investment according to customer value

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Customer Profitability, Company Customer Profitability, Company Profitability, and Total Quality Profitability, and Total Quality ManagementManagement

• Increasing Company Profitability– Competitive advantage

• Implementing TQM– Total Quality Management

• Quality

copyright 2004 © pearson education canada inc. 3-1 chapter 3 building customer satisfaction, value,...

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