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Presented by:
Syed Hussain Raza Naqvi
&
Sardar Dost Muhammad Leghari

MBA 2nd Morning(A)

Institute of Southern Punjab

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 Ch# 5
CREATING
CUSTOMER VALUE,
SATISFACTION AND
LOYALTY
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 Traditional vs Modern
Organizational Chart

• Traditional Organizational Chart puts Top Management

at the top, then Middle Management, Front-line people
and finally Customers.

• Modern Customer-Oriented Organizational Chart puts

Customer at the top, then Front-line people who are in
contact with the customers, then Middle managers,
then finally Top managers. The managers at every
level must be personally involved in knowing, meeting
and serving customers.

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Figure 5.1 Organizational Charts

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Figure 5.2 Determinants of
Customer Perceived Value

Total customer benefit Total customer cost

Product benefit Monetary cost

Services benefit Time cost

Personal benefit Energy cost

Image benefit Psychological cost

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 What is Loyalty?
Loyalty is 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.

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The Value Proposition

The whole cluster of benefits the

company promises to deliver.

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Measuring Satisfaction
Periodic
Periodic Surveys
Surveys

Customer
Customer Loss
Loss Rate
Rate

Mystery
Mystery Shoppers
Shoppers

Monitor
Monitor Competitive
Competitive
Performance
Performance

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What is 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.

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Maximizing Customer
Lifetime Value

Customer
Profitability

Customer Lifetime
Equity Value

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Estimating Lifetime Value

• Annual customer revenue: $500

• Average number of loyal years: 20
• Company profit margin: 10
• Customer lifetime value: $1000

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 What is Customer
Relationship Management?

CRM is the process of carefully

managing detailed information about
individual customers and all customer
touch points to maximize customer
loyalty.

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Framework for CRM
Identify prospects and customers

Differentiate customers by needs

and value to company

Interact to improve knowledge

Customize for each customer

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CRM Strategies
Reduce
Reduce the
the rate
rate of
of defection
defection

Increase
Increase longevity
longevity

Enhance
Enhance “share
“share of
of wallet”
wallet”

Terminate
Terminate low-profit
low-profit
customers
customers
Focus
Focus more
more effort
effort on
on
high-profit
high-profit customers
customers
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 Customer Retention
• Acquisition of customers can cost five times
more than retaining current customers.
• The average company 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.

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 Figure 5.5 The Customer
Development Process
Suspects

Prospects Disqualified

First-time Repeat
customers customers Clients Members

Partners
Ex-customers

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Database Key Concepts

• Customer database • Business database

• Database marketing • Data warehouse
• Mailing list • Data mining

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Using the Database
To
To identify
identify prospects
prospects

To
To target
target offers
offers

To
To deepen
deepen loyalty
loyalty

To
To reactivate
reactivate customers
customers

To
To avoid
avoid mistakes
mistakes
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Thank you
very much
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