Customer Value, Satisfaction and Loyalty

The Marketing Process

Choosing value Communicate value

Provide value

1. Customer segmentation 1.Product development 2. Market selection 2. Service development 3. Value positioning 3. Pricing 4. Sourcing/making 5. Distributing/ servicing

1. Sales force 2. Sales promotion 3. Advertising

Customer Perceived Value

Difference between the prospective customers evaluation of all the benefits and the costs of an offering and the perceived alternatives

Customer Perceived value

Total customer benefit Value =

-----------------------------------------------------

Total customer cost

Determinants of Customer Perceived Value

Total customer benefit Total customer cost

Product benefit

Monetary cost

Services benefit

Time cost

Personnel benefit

Energy cost

Image benefit

Psychological cost

Theory of Life concept:

Developed by Erik Erikson in 1923 this theory explains how people develop their value systems. Value systems are the drivers of our aspirations and motivations.

Destiny or Karma

Individual Attributes.

Your Theory of what your life should be

Transformation Due to systematic Learning.

Socio Cultural influence

Steps in a Customer Value Analysis

Market research Interpreting needs Co create value Examine ratings of specific segments Monitor customer values over time

Enhance customer value

Innovative features Complete solutions Value at lesser cost Removing pain points Use of technology

Customer Satisfaction
Expectation Perception
Purchase

Experience
Satisfaction Dissatisfaction

Expectation are created

Past experience Promotional claims Third party information Media

Customer perception

Service Marketing

Promise Marketing Operations

Consumer expectations

Delight Satisfaction Satisfaction Dissatisfaction

Service delivery system

Execution Of promise

Customer experience

Irritation
Anger. Execute recovery plan if necessary

Disappoin tment

Monitor

and Control

Measuring customer satisfaction

Complaint and suggestion system Customer satisfaction surveys Ghost shopping Lost customer analysis

Customer satisfaction has negative impact on customer complaints and positive impact on customer loyalty

Retaining customers

Need for customer retention

Acquisition can cost 5 times more than retaining current customers 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 (Lifetime value of customer)

Customer loyalty
Commitment to re-buy a preferred product or service again in future despite situational influences or marketing efforts having the potential to cause switching behavior

 Re-buy or buy more Less or no price sensitive Pay less or no attention to competitors advertising Servicing existing customers are cheaper Spread positive word of mouth

Project Saraswati Project Disha

Project Swayam
Project Suvarna

Delighting a customer

Incorporate elements that customers value more Focus on customer experience Going out of the way

CEO - Howard Schultz

Customer Relationship Marketing

Process of carefully managing detailed information about individual customers and all customer touch-points to maximize customer loyalty

Three stages in CRM

Customer acquisition Customer retention (creating loyalty) Customer development

Types of Customers
Loyalists Apostles Defectors Terrorists Hostages Mercenaries

Customer Pyramid
Platinum tier

Gold tier

Iron tier Lead tier

CRM Strategies
Reduce the rate of defection Increase longevity Enhance share of wallet Terminate low-profit customers Focus more effort on highprofit customers

Customers buy from

People they know People they trust People they respect People they feel comfortable with or People buy from people who deserve their business

Sellers should sell to

Buyers they know Buyers they trust Buyers they respect Buyers they feel comfortable with or We should sell to people who deserve our business.