CH-3 MKT 301

Chapter 3
Building Customer
Satisfaction, Value, and
Retention
by
PowerPoint by
Milton M. Pressley
University of New Orleans
1-62
www.bookfiesta4u.com
Kotler on
Marketing
It is no longer
enough to satisfy
customers. You must
delight them.
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Chapter Objectives
In this chapter, we will address the
following questions:
What are customer value and satisfaction,
and how can companies deliver them?
What makes a high-
high-performance business?
How can companies both attract
and retain customers?
How can companies improve both customer
and company profitability?
How can companies deliver total quality?
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Defining Customer Value
and Satisfaction
Customer Perceived Value (CPV)
Total customer value
Total customer cost
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Figure 3-1:
Determinants
of Customer
Delivered
Value
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Defining Customer Value
and Satisfaction
Total Customer Satisfaction
Satisfaction
Customer Expectations
Delivering High Customer Value
Value proposition
Value
Value--delivery system
Measuring Satisfaction
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Table 3-1: Tools for Tracking and Measuring
Customer Satisfaction
Complaint A customer-
customer-centered organization makes it easy for
and customers to register suggestions and complaints.
suggestion Some customer-
customer-centered companies-
companies-P&G, General
Electric, Whirlpool—
Whirlpool—establish hot lines with toll-
toll-free
systems:
numbers. Companies are also using Web sites and
e-mail for quick, two-
two-way communication.
Studies show that although customers are dissatisfied

Customer with one out of every four purchases, less than 5
percent will complain. Most customers will buy less or
satisfaction
switch suppliers. Responsive companies measure
surveys: customer satisfaction directly by conducting periodic
surveys. While collecting customer satisfaction data, it
is also useful to ask additional questions to measure
repurchase intention and to measure the likelihood or
willingness to recommend the company and brand to
others.
See text for complete table1-68
Would you feel more brand loyalty for a
company that tried to immediately resolve
a complaint via E-
E-mail, or a company that
had a customer service representative call
within two business days to
resolve the problem over
the phone?
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Premier Dell.com is a special business-
business-oriented part of the
Dell Web site that allows customers to interact with Dell and
customize all phases of doing business with Dell.
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The Nature of High
Performance Business
High
High--performance business
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Figure 3-2: The High Performance Business
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The Nature of High
Performance Business
Stakeholders
Processes
Resources
Core competency
Distinctive capabilities
Organization and Organizational Culture
Organization
Corporate culture
Scenario analysis
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Can you name a company that has
changed the public’s perception of
their corporate culture? Has this
effectively rehabilitated that
company’s image?
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Delivering Customer Value
and Satisfaction
Value Chain
Value chain
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Figure 3-3: The Generic Value Chain
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and Satisfaction
Benchmarks
Core Business Processes
The market sensing process
The new offering realization process
The customer acquisition process
The customer relationship
management process
The fulfillment management process
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and Satisfaction
The Value Delivery Network
(Supply Chain)
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Figure 3-4:
Levi
Strauss’s
Value-
Delivery
Network
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Attracting and Retaining
Customers
Partner relationship
management (PRM)
Customer relationship
management (CRM)
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Saturn has gained a customer loyalty rate
of more than 60% by fundamentally
changing the buyer-
buyer-seller relationship.
Can you think of another company that
has made a change of similar
magnitude? Have they
had similar results?
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Customers
Attracting Customers
Computing the Cost of
Lost Customers
Customer churn
Lifetime value
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On the Lands’ End Web site, customers can click a
button to talk with a customer service representative
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Customers
The Need for Customer Retention
Measuring Customer
Lifetime Value (CLV)
Customer Relationship Management
(CRM): The Key
Customer equity
Three drivers of customer equity
Value equity
Brand equity
Relationship equity
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Figure 3-5:
The
Customer-
Development
Process
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Customers
Five levels of investment in
customer relationship building
Basic marketing
Reactive marketing
Accountable marketing
Proactive marketing
Partnership marketing
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Figure 3-6: Levels of Relationship Marketing
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Customers
Forming Strong Customer Bonds:
The Basics
Cross-
Cross-departmental participation
Integrate the Voice of the Customer
into all business decisions
Create superior offering for the
target market
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Customers
Organize and make accessible a
database of customer information
Make it easy for customers to
reach the appropriate personnel
Reward outstanding employees
Adding Financial Benefits
Frequency programs (FPs)
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The H.O.G. Web site presents the benefits of joining.
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Customers
Adding Social Benefits
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Good Things Bad Things
Table 3-2: Initiate positive phone calls Make only callbacks
Social Actions Make recommendations Make justifications
Affecting Candor in language Accommodative language
Buyer-Seller Use phone Use correspondence
Relationships Show appreciation Wait for misunderstandings
Make service suggestions Wait for service requests
Use “we” problem-
problem-solving Use “owe-
“owe-us” legal language
language Only respond to problems
Get to problems Use long-
long-winded
Use jargon or shorthand communications
Personality problems aired Personality problems hidden
Talk of “our future together” Talk about making good on
Routinize responses the past
Accept responsibility Fire drill and emergency
Plan the future responsiveness
Shift blame
Rehash the past
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Customers
Adding Structural Ties
Create long-
long-term contracts
Charge lower price to high
volume customers
Turn product into
long--term service
long
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Customer Profitability,
Company Profitability, and
Total Quality Management
Measuring Profitability
Profitable customer
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Figure 3-7: Customer-Product Profitability Analysis
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Figure 3-8: Allocating marketing investment
according to customer value
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Customer Profitability,
Company Profitability, and
Increasing Company Profitability
Competitive advantage
Implementing TQM
Quality
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Chapter 3

Studies show that although customers are dissatisfied

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