Chapter Three

Building Customer Satisfaction, Value and Retention

Chapter Objectives and Questions

1.What are customer value and satisfaction, and how can companies
deliver them?
2.What makes a high performance business?
3.How can companies both attract and retain customers?
4.How can companies improve both customer and company
profitability?
5.How can companies deliver total quality?
Introduction
Today’s companies are facing their toughest completion ever .We
argued that companies can outperform the completion if they can
move from a philosophy to make customer the center of their
culture.
Defining Customer Value and Satisfaction
Peter Drucker observed that a company first task is to create
customers .However ,Customers face a vast array of product and
brand choices , prices, and supplies .How do they make their
choices?
Customer perceived Value
Customer perceived Value is the difference between the prospective
customer’s evaluation of all the benefits and all the costs of an
offering and the perceived alternatives.
Total Customer Value
Is the perceived monetary value of the bundle of economics
,functional, and psychological benefits customers expect from a
given market offering.
Total Customer Cost
Is the bundle of cost customers expect to incur in evaluating
,obtaining ,using, and disposing of the given market offering.
Some marketers might argue that the process we have described is
too rational. Suppose the customer chose the Komatsu tractor.
How can we explain this choice? Here are three possibilities:
1.The buyer might be under orders to buy at the lowest price.
2.The buyer will retire before the company realizes that the Komatsu
tractor is more expensive to operate.
3.The buyer enjoys along-term friendship with the Komatsu
salesperson.
Total Customer Satisfaction
Satisfaction is a person’s feelings of pleasure of disappointment
resulting from comparing a product’s perceived performance in
relation to his or her expectation. If the performance falls short of
expectations, the customer is dissatisfied. If the performance
matches the expectations, the customers is satisfied. If the
performance exceeds expectations, the customer is highly
satisfied or delighted.
Customer Expectations
How buyers form their expectations? From past buying experience,
friends, and associates advice, and marketers and competitors
information.
Delivering High Customer Value
The key generating high customer loyalty is to deliver high
customers value.
Measuring Satisfaction
We can measure the satisfaction of the customers when the
companies gave low pricing and increasing the services.
Tools for Tracking and Measuring Customer Satisfaction
1. Complaint and suggestion system.
2. Customer satisfaction survey.
3. Ghost shopping.
4. Last Customer analyses.
The Nature of High Performance Business
1. Stakeholders.
Includes suppliers, distributers, and employees.
2. Process.
Includes all company procedures to finish customer's transactions
and benefits.
3. Resources.
Includes labor power, materials, machines, information and energy.
4. Organization and Organizational Culture.
Organizations consists of all structures, polices and corporate culture
changing in business.
Corporate culture describe the beliefs, norms, and characterize in
organization during the job.
Delivering Customer Value and Satisfaction
1. Value Chain
Refers to the tools for identifying ways to create more customer
value such as speed, price, diversity of the goods and services
present to the customers.
2.The Value Delivery Network
To be successful a firm to look for competitive advantages its
operations with the suppliers, distributers, and customers.
Attracting and Retaining Customers
1. Attracting Customers
2. Computing the Cost of lost Customers
3. The Need for Customer Retention
4. Measuring customer Lifetime Value.
5. Customer Relationship Management (CRM)
Includes Value equity, brand equity, and relationship equity.
6. Forming Strong Customer Bonds the Basics.
Customer Profitability ,Company Profitability, and Total Quality
Management
1. Measuring Profitability
2. Increasing Company Profitability
Competitive advantage is a company’s ability to perform in one or
more ways that competitors cannot or will not match.
3. Implementing Total Quality Management
Total quality management is an organization wide approach to
continuously improving the quality of all the organization’s
process, products, and services.