Creating Customer Value,

Satisfaction & Loyalty

 Introduction
The only value your company will ever create is
the value that comes from customers the ones
you have now and the ones you will have in the
future. Businesses succeed by getting, keeping,
and growing customers. Customers are the only
reason you build factories, hire employees,
schedule meeting, etc. Without customers, you
dont have a business.

Don Peppers & Martha Rogers

 New Concept-market development
Educate/persuade to buy
Personal Selling-Eurochamps
Word of mouth publicity relationship with
customers
Gift of Smile customer confidence & trust
Superior brand experience- intenstive training &
retraining + customer feedback
Long term success commitment to building
relationships
Success of AquaGuard
Several Awards for best practices
Traditional Organization Vs. Modern Customer Centric Organization
 Customer Perceived Value
Customers are:
Value-maximizers
Form value expectation & act on it
Buy from firm perceived to offer highest
customer delivered value, defined as

customer perceived value = total customer

benefits - total customer cost
Fig : Determinants of Perceived Customer
Value

Total customer benefit Total customer cost

Product benefit Monetary cost

Services benefit Time cost

Personnel benefit Energy cost

Image benefit Psychological cost

 Customer perceived value (CPV) :difference between
prospective customers evaluation of all benefits &
costs of an offering & perceived alternatives

Total customer value-perceived monetary value of the

bundle of economic, functional & psychological
benefits expected from a market offering because of
product, service, service, people and image

Total customer cost Perceived bundle of costs to

obtain, use, maintain, own & dispose an offering,
including monetary, time, energy & psychological costs
 How to Increase CPV?
Raising economic,social emotional benefits
Reducing one/more costs

Customer :Two value offering V1 & V2

Favour V1 if V1/v2>1

Favour V2 of V1/V2 < 1

Indifferent if V1=V2
 Steps in Customer Value Analysis
1. Identify major attributes and benefits that customers
value

2. Assess the qualitative importance of different attributes

and benefits

3. Assess the companys and competitors performances on

the different customer values against rated importance

4. Examine ratings of specific segments

5. Monitor customer values over time

 Delivering High Customer Value
The Customer value proposition consists of the whole
cluster of benefits the company promises to deliver, it
is more than the core positioning of the offering.

The customer value-delivery system includes all the

experiences the customer will have on the way to
obtaining and using the offering
 Total Customer Satisfaction
Persons feeling of pleasure or disappointment
that result from comparing a products
perceived performance to the expectations.

Dissatisfied/satisfied/Delighted

Expectations ?- marketers promises/past buying

experience/friends advice etc.

Expectations high/low
 Tracking Customer Satisfaction
Companies can monitor the customer loss rate and
contact customers who have stopped buying and learn
why this happened.

Companies can hire mystery shoppers to pose a

potential buyers and report on strong and weak points
experienced in buying the companys and competitors
products.

In addition to tracking customer value expectations

and satisfaction, companies need to monitor their
competitors performance in these areas as well.
 Customer Loyalty
A deeply held commitment to re-buy or re-
patronize a preferred product or service in the
future despite situational influences and
marketing efforts having the potential to cause
switching behavior.
 Top Brands in Customer Loyalty
Apple iPhone Google
Clairol Amazon
Samsung Bing
Mary Kay J.Crew
Grey Goose AT&T Wireless
Clinique Discover Card
Avis Verizon Wireless
Wal-Mart Cheerios
 Product & Service 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.

Product and service quality -customer

satisfaction -company profitability

Quality is the key to value creation and customer

satisfaction.
 Forms
Conformance quality
Performance quality
 Marketers Role in Delivering Quality

Correctly identifying customers needs and

requirements

Communicate customer expectations properly

to product designers

Be sure orders are filled correctly and on time

 Provide customers with proper instructions,
training, and technical assistance

Stay in touch with customers after the sale

Gather customer ideas for improvements and

convey them to the appropriate departments
 Marketing Debate
Online Vs.Offline Privacy
As more firms practice relationship marketing and develop
customer databases,privacy issues are emerging as an
importrant topic.Consumers and public interest groups are
scrutinizing and sometimes criticizing the privacy
policies of firms and raising concerns about theft of online
credit card information .Others maintain online privacy
fears are unfounded and that security issues are as much a
concern offline.Theyargue that the opportunity to steal
information exists virtually everywhere,and its up to
consumers to protect their interets.
 Customer Lifetime Value
80-20 rule

Firm can improve profilts by firing its worst

customers

Customer Profitability :A profitable customer is a

person, household, or company that over time
yields a revenue stream that exceeds by an
acceptable amount the companys cost stream of
attracting, selling, and servicing that customer.
 Jandhan Yojana in Indian Banks losing money
because of unprofitable bank accounts

Important to measure customer profitability

along with customer satisfaction.

Customer Lifetime Value : Describes the net

present value of the stream of future profits
expected over the customers lifetime purchases.
Customer-Product Profitability Analysis
 C1-profitable,C2-mixed profitabilty,C3-
unprofitable

Firm Strategies:
Raise price of unprofitable products/eliminate
Sell profitable products to C2 & C3

Unprofitable customers should be encouraged to

switch or defect.
 Example
Platinum customers (most profitable).

Gold customers (profitable).

Iron customers (low profitability but desirable).

Lead customers (unprofitable and undesirable).