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Consumer Satisfaction
Consumer Satisfaction
Think of an incident in which you were surprised and delighted as a satisfied customer. How did that happen? Think of another situation where you were very disappointed as a customer, and you did not return or you told others about your negative experience. How did that happen?
Another satisfied customer!
Customer (dis)satisfaction
the average business loses 10-30% of its customers each year (without knowing which, when or why lost) its more costly to win a new customer than to lose an existing one (5-7 times greater); it takes 12 positive incidents to make up for a negative one Customers are three times more likely than service providers to recall the quality of the personal element in a transaction 96% of dissatisfied customers never complain to the business, but 91% will not make return purchases 70-85% of dissatisfaction is due to customer service not product; 68% of customers who stop buying do so because they perceive an employee as discourteous or indifferent dissatisfied customers on average tell 12 friends of the poor service; satisfied people tell 5 friends (2:1 ratio) 70% will return if complaint is resolved, and 95% of customers would do business again if a problem is resolved quickly and effectively highly effective companies spend 10% of their operations budget on fixing problems related to customer complaints; ineffective ones spend 40%
75% of complaints reported to front line person do not get reported to management
Only 20% of complaints are directed to the manager by customers 800# doubles calls to corporate, but only 1 per 100/500 get addressed by a senior executive Quick resolution results in higher satisfaction & loyalty than multiple contacts losing customers is strongly related to employee turnover; Fortune magazine found that the companies with the happiest employees also produced the highest returns to shareholders by a substantial margin, 27.5 percent vs. 17.3 percent for run-of-the-mill companies.
ACSI Components
(American Customer Satisfaction Index)
Perceived quality
refers to overall quality, reliability, and the extent to which a product or service meets the customers needs; this shows the greatest impact on customer satisfaction.
Customer expectations
influence the evaluation of quality and forecast (from customers pre-purchase perspective) how well the product or service will perform.
Customer hopes & asks but doesnt expect; if met then delighted. Unlikely to cause dissatisfaction. Build customer loyalty
Meeting basic respect & courtesy needs; dissatisfaction if not met; indifference if met
Benefits above & beyond expectations; identify and suggest innovations with new products
Reliability: Keeping your promise, doing what you said you will do. Doing things
right the first time.
Assurance: Making the customer feel safe in their dealings with you, being
thoroughly professional and ethical.
Within 14 months (the fifth cycle of the ever-growing list of mothers) Pampers had moved to the number one position with 49% market share. Each percentage point was worth US$1million over the life usage of the product. That's $29mil just by staying in touch with the same base, within 3 months over and over.
Terminal
Males 7.8 14.6 8.3 3.8 13.6 8.9 3.8 4.9 7.9 11.1 12.6 9.2 14.1 9.9 8.2 13.8 9.6 8.5 Females 10 15.8 9.4 3.0 13.5 8.3 3.8 6.1 7.4 9.8 12.3 9.8 15 7.3 7.4 15 9.1 7.7
Basic design of the Hierarchical Values Map for Means-Ends Chain Analysis
Avoid negatives of alcohol: More feminine: Socially acceptable Not too drunk Not too tired
carbonation
crisp
expensive
Filling
Laddering practice: form pairs (or triads) and take turns constructing value ladders for each others purchases identify some product you purchase to which you have had some degree of brand loyalty over the years. start by describing the attributes of the product then link those to the benefits you obtain from it then link to the (instrumental) values it satisfies and finally, link to the terminal values it supports
< price elasticity (tolerate price increases) < transaction costs (not spend as much to attract new customers) < product failure costs < resources due to handling & returning < reworking defective items, handling complaints
Increased Word of Mouth > reputation of business Repeat Sales > effective advertising > frequent purchases help introduce new products via instant awareness > purchase volume lower buyers risk of trial > other goods/services + relationship with key suppliers, distributors & allies < switching enhance halo effect insulate against short term adverse events
Customer Satisfaction
Price Elasticity
Factors Affecting the Price Elasticity of Demand Availability of substitutes: the more possible substitutes, the greater the elasticity.
Degree of necessity or luxury: luxury products tend to have greater elasticity. Some products that initially have a low degree of necessity are habit forming and can become "necessities" to some consumers.
Proportion of the purchaser's budget consumed by the item: products that consume a large portion of the purchaser's budget tend to have greater elasticity. Time period considered: elasticity tends to be greater over the long run because consumers have more time to adjust their behavior.
Permanent or temporary price change: a one-day sale will elicit a different response than a permanent price decrease.
Price points: decreasing the price from $2.00 to $1.99 may elicit a greater response than decreasing it from $1.99 to $1.98.
ACSI results provide: an economic indicator of the quality of economic output calculation of the net present value of their companys customer base as an asset over time information for strategic business applications a predictor of consumer spending & corporate earnings