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Top 10 Concepts

Ch 5 and Creating Customer Value,
      Satisfaction & Loyalty


              Joan Soliven
               April 8, 2011



       http://joansoliven.blogspot.com/
Outline

1.   Customer Perceived Value
2.    Customer Satisfaction
3.   Quality
4.   Maximize Customer Lifetime Value
5.   Customer Relationship Management
6.   Increase Value of Customer



            http://joansoliven.blogspot.com/
Outline

7.    Customer Development Process
8.    Customer Retention
9.    Customer Loyalty
10.   Database




             http://joansoliven.blogspot.com/
Customer Perceived Value

 Difference between what the customer
 gets and what he or she gives for
 different possible choices.




        http://joansoliven.blogspot.com/
Consumers are more educated and
 informed, they seek out superior
           alternatives
Dell offering better service than HP, they
beginning to outpace Dell in terms of
customer perceived value
Successful Companies follow the
Modern Customer-oriented Org. Chart

                 Customers




              Front-line people



                  Middle
                Management



                   Top
                Management




        http://joansoliven.blogspot.com/
Everyone in the company has their own
 role that aims to satisfy the customer



                                 meet serve and satisfy
                                 customers

                                 support the frontline
                                 people

                                 Hire and support good middle
                                 Managers



          http://joansoliven.blogspot.com/
What do customer perceived
          as valuable?
       Image                                       Psychological


      Personnel                                       Energy


       Services                                        Time


      Products                                      Monetary


Total Customer Benefit                         Total Customer Cost



                         http://joansoliven.blogspot.com/
5 steps to determine
   Customer Value

 Identify major attributes and benefits that customer
 value

 Assess the importance of different attributes and
 benefits

 Assess the company’s and competitor’s performance


 Examine ratings of specific segments


 Monitor customer values over time

  http://joansoliven.blogspot.com/
Companies that are Good in
Delivering Customer Value




      http://joansoliven.blogspot.com/
2. Customer Satisfaction

The feeling of satisfaction or dissatisfaction of
the customer from a product’s outcome versus
customer’s expectation.




            http://joansoliven.blogspot.com/
Measurement for
Customer Satisfaction

 Periodic Surveys


 Customer Loss Rate


 Mystery Shoppers


 Monitor Competitive Performance


 http://joansoliven.blogspot.com/
Measurement for
                      Customer Satisfaction




Periodic Surveys Customer Loss              Mystery               Monitor
                      Rate                  Shopper              Competitive
-Track customer
satisfaction                             - experience
                                                                Performance
                  -To find out why
                  they stop buying       company’s          - find out the customer
                                         & competitor’s     Satisfaction rate of
                                         Products & service Competitors.


                          http://joansoliven.blogspot.com/
3. Customer Satisfaction
    depends on Quality

Quality is the totality of features and
characteristics of a product or service
that bear of its ability to satisfy needs.




         http://joansoliven.blogspot.com/
Impact of Quality
These 3 are interrelated with each other

                    Product and
                      Service
                      Quality



            Company            Customer
           Profitability      Satisfaction



                 http://joansoliven.blogspot.com/
4. Maximize Customer
    Lifetime Value



             Customer
            Profitability




 Customer                   Lifetime
   Equity                       Value

    http://joansoliven.blogspot.com/
Customer Profitability in relation
    to 80-20 or 150-20 Rule

 20% of the customer often generates 80% or
 more of the company’s profits.



 20% most profitable customers generate as
 much as 150% of the profits of a company;
 the 20% least profitable lose 100% of the
 profits.

         http://joansoliven.blogspot.com/
5. Customer Relationship Management

The process of carefully managing detailed
information about individual customers and all
customer ”touch points” to maximize customer
loyalty.




           http://joansoliven.blogspot.com/
Excellent Real-time Customer Service
through the effective use of information



                   Market offerings
                      Services
                     Programs
                      Messages
                       Media
Maximize Costumer Loyalty through
 Customer Relationship Mgmt by:
   Identifying your prospects and customers
   Differentiating customers by their needs and their
    value to company
   Interacting with customers
   Customizing for each customer.




               http://joansoliven.blogspot.com/
6. Increasing Value of
                    Customer Base by:
   Reduce the rate of               Terminate low-profit
    defection                         customers



   Increase longevity of
    relationship                     Focus more effort on high
                                      profit customers
   Enhance ”share of wallet”



                   http://joansoliven.blogspot.com/
How does Customer Value Works?
   Reduce the rate of defection = Knowledgeable employees
                                    to answer customer
                                    satisfactorily

   Increase longevity of relationship = Treat customers
                                         as partners


   Enhance ”share of wallet” = Increase sales by
                                providing new offerings
                                An opportunities.


                   http://joansoliven.blogspot.com/
7.Customer Development Process


                                                  Inactive or
                                                Ex-customers



                         First-time
Potentials               customers                  Clients             Advocates




             Prospects                   Repeat               Members               Partners
                                        Customers




                                      http://joansoliven.blogspot.com/
Behavior of Customer in the
                    Customer-Development Process

            Potentials – interested
            Prospects – motivated
            First-time & repeat customers – needs to be
             encourage through marketing efforts
                         First-time
Potentials               customers                  Clients             Advocates




             Prospects                   Repeat               Members               Partners
                                        Customers




                                      http://joansoliven.blogspot.com/
Behavior of Customer in the
                         Customer-Development Process

                Clients - needs to be treated special
                Members – enjoying the benefits
                Advocates – recommending the product
                Partners
                          First-time
Potentials                customers                  Clients             Advocates




             Prospects                    Repeat               Members               Partners
                                         Customers




                                       http://joansoliven.blogspot.com/
8. Maintaining Customer is better
    than Acquiring Customer

   Acquiring customers can cost 5X more than
    retaining them.
   The average customer loses 10% of its
    customer each year.
   A 5% reduction to the customer defection
    rate can increase profits by 25% to 75%.
   The customer profit rate increases over the
    life of a retained customer.

            http://joansoliven.blogspot.com/
10. Five Ways in Using Database

To identify prospects


To target offers

To deepen loyalty


To reactive customers

To avoid mistakes

             http://joansoliven.blogspot.com/
Summary

   The company should meet the customer
    perceived value in order to satisfy the total
    customer benefits and total customer cost.
   The company should constantly evaluate if
    the costumer needs & wants are met
    High satisfaction leads to high customer
    loyalty.
   Maintaining customer is easier than acquiring
    new costumer.
             http://joansoliven.blogspot.com/
Conclusion

The heart of satisfying and maintaining
customer is to meet their expectations on the
product/services and create good relationship
thus creates customer loyalty.




           http://joansoliven.blogspot.com/
Thank you!

Ch 5 and Creating Customer Value,
      Satisfaction & Loyalty


              Joan Soliven
               April 8, 2011



       http://joansoliven.blogspot.com/

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Creating customer value, satisfaction & loyalty

  • 1. Top 10 Concepts Ch 5 and Creating Customer Value, Satisfaction & Loyalty Joan Soliven April 8, 2011 http://joansoliven.blogspot.com/
  • 2. Outline 1. Customer Perceived Value 2. Customer Satisfaction 3. Quality 4. Maximize Customer Lifetime Value 5. Customer Relationship Management 6. Increase Value of Customer http://joansoliven.blogspot.com/
  • 3. Outline 7. Customer Development Process 8. Customer Retention 9. Customer Loyalty 10. Database http://joansoliven.blogspot.com/
  • 4. Customer Perceived Value Difference between what the customer gets and what he or she gives for different possible choices. http://joansoliven.blogspot.com/
  • 5. Consumers are more educated and informed, they seek out superior alternatives Dell offering better service than HP, they beginning to outpace Dell in terms of customer perceived value
  • 6. Successful Companies follow the Modern Customer-oriented Org. Chart Customers Front-line people Middle Management Top Management http://joansoliven.blogspot.com/
  • 7. Everyone in the company has their own role that aims to satisfy the customer meet serve and satisfy customers support the frontline people Hire and support good middle Managers http://joansoliven.blogspot.com/
  • 8. What do customer perceived as valuable? Image Psychological Personnel Energy Services Time Products Monetary Total Customer Benefit Total Customer Cost http://joansoliven.blogspot.com/
  • 9. 5 steps to determine Customer Value Identify major attributes and benefits that customer value Assess the importance of different attributes and benefits Assess the company’s and competitor’s performance Examine ratings of specific segments Monitor customer values over time http://joansoliven.blogspot.com/
  • 10. Companies that are Good in Delivering Customer Value http://joansoliven.blogspot.com/
  • 11. 2. Customer Satisfaction The feeling of satisfaction or dissatisfaction of the customer from a product’s outcome versus customer’s expectation. http://joansoliven.blogspot.com/
  • 12. Measurement for Customer Satisfaction Periodic Surveys Customer Loss Rate Mystery Shoppers Monitor Competitive Performance http://joansoliven.blogspot.com/
  • 13. Measurement for Customer Satisfaction Periodic Surveys Customer Loss Mystery Monitor Rate Shopper Competitive -Track customer satisfaction - experience Performance -To find out why they stop buying company’s - find out the customer & competitor’s Satisfaction rate of Products & service Competitors. http://joansoliven.blogspot.com/
  • 14. 3. Customer Satisfaction depends on Quality Quality is the totality of features and characteristics of a product or service that bear of its ability to satisfy needs. http://joansoliven.blogspot.com/
  • 15. Impact of Quality These 3 are interrelated with each other Product and Service Quality Company Customer Profitability Satisfaction http://joansoliven.blogspot.com/
  • 16. 4. Maximize Customer Lifetime Value Customer Profitability Customer Lifetime Equity Value http://joansoliven.blogspot.com/
  • 17. Customer Profitability in relation to 80-20 or 150-20 Rule 20% of the customer often generates 80% or more of the company’s profits. 20% most profitable customers generate as much as 150% of the profits of a company; the 20% least profitable lose 100% of the profits. http://joansoliven.blogspot.com/
  • 18. 5. Customer Relationship Management The process of carefully managing detailed information about individual customers and all customer ”touch points” to maximize customer loyalty. http://joansoliven.blogspot.com/
  • 19. Excellent Real-time Customer Service through the effective use of information Market offerings Services Programs Messages Media
  • 20. Maximize Costumer Loyalty through Customer Relationship Mgmt by:  Identifying your prospects and customers  Differentiating customers by their needs and their value to company  Interacting with customers  Customizing for each customer. http://joansoliven.blogspot.com/
  • 21. 6. Increasing Value of Customer Base by:  Reduce the rate of  Terminate low-profit defection customers  Increase longevity of relationship  Focus more effort on high profit customers  Enhance ”share of wallet” http://joansoliven.blogspot.com/
  • 22. How does Customer Value Works?  Reduce the rate of defection = Knowledgeable employees to answer customer satisfactorily  Increase longevity of relationship = Treat customers as partners  Enhance ”share of wallet” = Increase sales by providing new offerings An opportunities. http://joansoliven.blogspot.com/
  • 23. 7.Customer Development Process Inactive or Ex-customers First-time Potentials customers Clients Advocates Prospects Repeat Members Partners Customers http://joansoliven.blogspot.com/
  • 24. Behavior of Customer in the Customer-Development Process  Potentials – interested  Prospects – motivated  First-time & repeat customers – needs to be encourage through marketing efforts First-time Potentials customers Clients Advocates Prospects Repeat Members Partners Customers http://joansoliven.blogspot.com/
  • 25. Behavior of Customer in the Customer-Development Process  Clients - needs to be treated special  Members – enjoying the benefits  Advocates – recommending the product  Partners First-time Potentials customers Clients Advocates Prospects Repeat Members Partners Customers http://joansoliven.blogspot.com/
  • 26. 8. Maintaining Customer is better than Acquiring Customer  Acquiring customers can cost 5X more than retaining them.  The average customer loses 10% of its customer each year.  A 5% reduction to the customer defection rate can increase profits by 25% to 75%.  The customer profit rate increases over the life of a retained customer. http://joansoliven.blogspot.com/
  • 27. 10. Five Ways in Using Database To identify prospects To target offers To deepen loyalty To reactive customers To avoid mistakes http://joansoliven.blogspot.com/
  • 28. Summary  The company should meet the customer perceived value in order to satisfy the total customer benefits and total customer cost.  The company should constantly evaluate if the costumer needs & wants are met  High satisfaction leads to high customer loyalty.  Maintaining customer is easier than acquiring new costumer. http://joansoliven.blogspot.com/
  • 29. Conclusion The heart of satisfying and maintaining customer is to meet their expectations on the product/services and create good relationship thus creates customer loyalty. http://joansoliven.blogspot.com/
  • 30. Thank you! Ch 5 and Creating Customer Value, Satisfaction & Loyalty Joan Soliven April 8, 2011 http://joansoliven.blogspot.com/

Notas do Editor

  1. At the top are customers; next in importance are frontline people who meet, serve, and satisfy customers; under them are the middle managers, whose job is to support the frontline people so they can serve customers well; and at the base is the top management, whose job is to hire and support good middle managers.
  2. The implication is that a company could improve its profitability by “firing” its worst customers