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Building customer satisfaction , value and retention

Class 2

Some interesting facts of customer retention

Acquisition of customers can cost 5 times more than retaining current customers. The average customer loses 10% of its customers each year. A 5% reduction to the customer defection rate can increase profits by 25% to 85%. The customer profit rate increases over the life of a retained customer.

Real scenario to motivate employees to serve the customer well

Displays the following posters around the office-

What is customer?
1. A customer is the most important person ever in the office. 2. A customer is not dependent on us- we are dependent on him 3. We are not doing a favor by serving himhe is doing us a favor by giving us the opportunity to do so.

 Nobody ever won an arguments with a customer. A customer is a person who brings his wantsits our job to handle them profitably to him and to ourselves. A customer is not the interruption/outcome of our work..he is the propose of it.

Delivering customer value and satisfaction

In a hyper competitive economy with rational buyers a company can win only by delivering superior customer value. This is possible through five capabilities
Understanding customer value Creating customer value Delivering customer value Capturing customer value Sustaining customer value

Delivering customer value and satisfaction

1. Value chain: Michael Porter of Harvard Value chain as a tool for identifying ways to create more customer value. He add five primary and four supporting activities in the value chain.

Delivering customer value and satisfaction

2. Value delivery network/supply chain: Value delivery network is a companys supply chain and how it partners with the specific suppliers and distributors to make products and bring them to markets.

Attracting and retaining customers

ATTRACTING CUSTOMER: Today customer are harder to please because They are smarter They are more price conscious They are more demanding They are less forgiving They are approached from so many competitors with equal or better services.

Steps in attracting customer

Three ladder Find out prospects Produce the list of suspect from the prospects Send the salesperson to the suspects.

Computing the cost of lost customer

Customer can switch due to several reasons Like They get better product They get product by less cost They get more concentration from suppliers Etc.

READ IT Compute the loses of profit from lost customer Profit margin of IDLC is 10%. IDLC had 64000 accounts, Company lost 5% of the accounts due to poor services. The average loss accounts represented a 40000 tk loss in revenue. Ans: 1,28,00000 taka.

Steps in reducing the defections rate

Define and measure retention rate Distinguish causes of customer attrition Estimate profit loss associated with loss of customers Assess cost to reduce defection rate Gather customer feedback

Need for customer retention

Buyers s loyalty Increasing sales Facing competition Attaining idea of products or services Reducing cost of services

Customer lifetime value

Customer lifetime value describes the present value of future profit expected over the customer lifetime purchases.

Estimating Lifetime Value

Annual customer revenue: $500 Average number of loyal years: 20 Company profit margin: 10 Customer lifetime value: $1000