Creating Customer Value, Satisfaction
&
Loyalty
Customer Value, Satisfaction, & Loyalty
Marketer must-
Creating loyal customers is at • Inform
the heart of every business. • Engage
• Energize
Traditional Organization vs.
Customer-Oriented Organization
Customer Perceived Value
Customer-
perceived value
Customer-perceived value (CPV) is the difference between
the prospective customer’s evaluation of all the benefits Total customer Total customer
and all the costs of an offering and the perceived benefit cost
alternatives.
Product Monetary
Total customer benefit - The perceived monetary benefit cost
value of the bundle of economic, functional, and Services Time
psychological benefits customers expect from a given benefit cost
market offering. Personnel Energy
benefit cost
Total customer cost - The perceived bundle of costs
Image Psychological
customers expect to incur in evaluating, obtaining, benefit cost
using, and disposing of the given market offering.
Determinants of CPV
Customer Perceived Value
Customer-
Economic perceived Value
Evaluating
Functional Obtaining
Using
Psychological Disposing
Total Customer Total Customer
Benefit Cost
Customer Value analysis
Steps in Customer value analysis
Very often, managers conduct a • Identify the major attributes and benefits
customer value analysis to reveal customers value
the company’s strengths and • Assess the quantitative importance of the
weaknesses relative to those of different attributes and benefits.
various competitors. • Assess the company’s and competitors’
performances on the different customer values
against their rated importance
• Examine how customers in a specific segment rate
the company’s performance against a specific
major competitor on an individual attribute or
benefit basis.
• Monitor customer values over time.
Delivering High Customer Value
Value Proposition Core positioning:
Value proposition consists of • Safety
the whole cluster of benefits the
company promises to deliver.
Other benefits:
• Good performance
• Design
• Environmentally
friendly
Volvo
Value Proposition
Basundhara
Core positioning:
• Strongest
Cement
Other benefits:
• Highest melting
capability with water
• Manufactured by
German technology
• Capability to protect the
internal material(steel)
of infrastructure.
• BUET tested
Customer Satisfaction
A person’s feelings of pleasure or
disappointment that result from
comparing a product’s perceived
performance to (or outcome) to
expectations.
For customer-centered companies,
customer satisfaction is both a goal
and a marketing tool.
Customer Satisfaction
Expectations
Customer Satisfaction
Previous purchases
Friends advice
Marketers’ / competitors
Expectations
Customer Lifetime Value
CLV (Customer Lifetime
Value) is a prediction of all
20% of 80% of
the value a business will
derive from their entire Customers Profits
relationship with a customer.
Customer Profitability
A Profitable Customer
A person, household, or company that Customer Profitability Analysis
over time yields a revenue stream
exceeding by an acceptable amount
the company’s cost stream for Profitable
attracting, selling, and serving that
customer.
Unprofitable
Customer Profitability Analysis
Customer-Product Profitability Analysis
Customer Profitability Analysis
Activity-based costing (ABC)
ABC tries to identify the real costs associated
with serving each customer. Also, both variable
and overhead costs are tagged back to each
customer
Total Customer Revenue – Total Customer Costs
Customer Loyalty
“A deeply held commitment
to rebuy or repatronize a
preferred product or service
in the future despite
situational influences and
marketing efforts having the
potential to cause switching
behavior.”
-- Oliver
Cultivating Customer Relationships
Customer relationship management
(CRM) is a system for managing a
company’s interactions with current and
future customers.
CRM enables companies to provide excellent
real-time customer service through the
effective use of individual account information
Managing the Customer Base
Retention is important! Increasing Value of the Customer
• Reducing the rate of customer defection.
• Acquiring new customers
• Increasing the longevity of the customer
can cost five times more
relationship.
than satisfying and retaining
current ones. • Enhancing the growth potential of each
customer through “share-of-wallet,”
• A 5 percent reduction in the cross selling and up selling.
customer defection rate can
• Making low profit customer more
increase profits by 25
profitable or terminating them.
percent to 85 percent,
depending on the industry • Focusing effort on high value customers.
