Principles of Marketing

Name of Learner: _________________________________ Date:_____________

Grade Level/ Section:____________________________ Quarter 1- Week 5

The Value of Customer Relations and Customer Service

I. BACKGROUND INFORMATION FOR LEARNERS:

Customer satisfaction is the extent to which customers are satisfied with their
purchase. Satisfaction can be measured in terms of the gaps between what customers
expect and what they perceive they have received. Marketers can avoid unfavorable
service gaps by keeping in touch with the needs of current and potential customers. They
must also look beyond traditional performance measures and explore the factors that
determine purchasing behavior to formulate customer-based missions, goals, and
performance standards.
There are two ways marketers can keep customers happy , (1) Marketers keep
customers through Frequency Marketing—frequent-buyer or -user marketing programs that
reward customers with cash, rebates, merchandise, or other premiums, (2) through Affinity
marketing—a marketing effort sponsored by an organization that solicits responses from
individuals who share common interests and activities.
Based on customer’s experience, if goods and services are better than expected,
loyal customers can be created; if worse than expected, firms lose their customers.
Remember any method that makes it easier for customers to complain actually benefits a
firm because customer complaints can be seen as opportunities to prove commitment to
service. Marketers often need to look beyond traditional performance measures to keep in
touch with customers and avoid service gaps. To discuss this, there are three major steps
for customer satisfaction:

Three major steps for customer satisfaction:

1. Understanding customer needs, wants, and expectation serves

as central concern in building relationships

2. Obtaining customer’s feedback ( in reactive way like

taking complaints / or proactive way by visiting, calling,
mailing surveys, or reading blogs )

3. Setting up an ongoing program to ensure customer’s satisfaction

through various methods of marketing research.
Reasons Why Good Customer Service Is Important
Customer service is the direct one-on-one interaction between a consumer making a
purchase and a representative of the company that is selling it. Most retailers see this direct
interaction as a critical factor in ensuring buyer satisfaction and encouraging repeat
business.
1. Good Work Results in Higher Profits. Providing good customer service means both
the client and the operation benefit. When a company provides quality work and
services during an initial interaction, the customer is happy because they save time
by having the work completed correctly the first time. This also benefits the
operation, as it saves labor, parts and materials that could be needed if work needs
to be re-done to correct mistakes.
2. Word-of-Mouth Is a Powerful Tool. Satisfied customers are more likely to refer their
friends to the business. Warren Buffett once said, "It takes 20 years to build a
reputation and five minutes to ruin it. If you think about that, you'll do things
differently."
3. Build Loyalty. When customers know they are going to have a good experience
when working with a company, they are more likely to do additional business with
them. This can lead to more return business, which can create a more stable
economic environment for the operation. Having return customers also helps the
company build relationships with clients.
4. Create Less Staff Turnover or Less Employees Turnover. Knowing that their work is
appreciated helps keep staff members content. Employees know customers are
satisfied with their performance, which helps give them purpose at work each day.
This can encourage them to continue working for the operation long-term. Dealing
with happy customers is also easier on employees than trying to calm upset clients,
which makes work more enjoyable – and less stressful -- for staff members.
5. Take Pride in Helping Others Succeed. Companies that provide good customer
service can take pride in the fact that their work is helping others succeed.

What is Customer Value?

Customer Value is the incremental benefit which a customer derives from consuming
a product after paying in return. The term value signifies the benefits that a customer gets
from a product. It is the difference between the benefits (sum of tangible and intangible
benefits) and the cost.
The customer value can be calculated in two ways : Desired Value and Perceived
Value. Desired value is what customer expects without still buying the product whereas
perceived value includes cost into calculation. The concept of value is vital for any marketer
as any product or service can be sold only if the customer is getting some value out of it.
Hence, marketing itself is defined as, the creation, communication and delivery of value.
In addition, the following parameters can be used by the sellers to define the
customer value they want their product or service to deliver. These are: quality, price,
service, marketing/ branding, social influence, and past experience with the product.

Customers as Advocates
Firms can start by focusing not on sales and profits but on customer satisfaction—
the gap between what customers expect and what they perceive they have received.
Favorable impressions result in regular customers. Firms can then develop relationships,
understand and listen to customers, satisfy their wants and needs, and foster loyalty until
they become not only loyal customers but advocates for the product or service, telling
others about it and bringing in new customers. Customers can also become advocates
through grassroots marketing, viral marketing, and buzz marketing.
 a. Grassroots marketing involves connecting directly with existing and potential
customers through nonmainstream channels. It uses flexible and
unconventional or nontraditional strategies. The hallmark of Grassroot
marketing is the ability to develop long-lasting relationship
b. Viral marketing lets satisfied customers spread the word about products to
other consumers by forwarding emails or video clips or the use social media
to others. ( It is similar to spreading a computer virus) .
c. Buzz marketing gathers volunteers or involves soliciting volunteers to try
products and then encouraging them to talk about their experiences thus
creating a “ buzz”. Influencers or adopter of products are ideal carrier of Buzz
marketing messages because their credibility makes their choices valuable
among their peers.

Customer Relationship Management ( CRM)

It is a combination of strategies and technologies that empower relationship
programs and reorient an entire firm toward customer satisfaction. CRM represents a shift
in thinking for everyone involved with a firm—from the CEO down and encompassing all
other key stakeholders, including suppliers, dealers, and other partners.

Benefits of Customer Relationship Management (CRM)

Using CRM systems are a great way to ensure that business keep in touch with
customers. It can be used to track previous interactions and keep customers updated with
news about offers and new improved services. Keeping in touch can help to create
personal relationships with customers.
A CRM system can be used to track customer needs, by making a record of their
opinions and feedback it makes it easier to assess their needs and offer them the
product/service they really want.
CRM software systems can interpret the vast amount of data collected using
different technologies. These systems simplify complex business processes while keeping
the best interests of customers at heart.

Retrieving and Retaining Customers/ Customer win-back

Customer win-back is the process of rejuvenating lost relationships of business with
customer. Retaining customers is cheaper and more profitable than constantly finding new
customers. Once a loyal customer base is in place, less money is needed to be spent on
marketing.
Customers quit buying a firm’s goods for a number of reasons. They might be bored,
they might have moved away, they might not need the product anymore, they want more
than expected or they might have tried—and preferred—competing products.
Marketers can rejuvenate a lost relationship by changing the marketing/ product mix,
if necessary, or changing some of their processes.

Evaluating customer relationship programs

Lifetime value of a customer refers to the revenues and intangible benefits, such as
referrals and customer feedback, a customer brings to the seller over an average lifetime of
their relationship, less the amount the company must spend to acquire, market to, and
service the customer. Long-term customers are usually more valuable assets than new
ones because they buy more, cost less to serve, refer other customers, and provide
valuable feedback.
Other techniques used to evaluate relationship programs are reviewing customer
comments and feedback on social media , tracking rebate requests, coupon redemptions,
credit-card purchases, and product registrations and monitoring returned merchandise and
analyzing why customers leave.

II. LEARNING COMPETENCY WITH CODE:

The learner will be able to explain the value of customers by continuing satisfying customer
needs, wants and expectations and learn what customer value in making purchases.
 Explain the value of customers ABM_PM11-1c-d-6

III. DIRECTIONS: Read the instructions carefully in answering the given activities.
ACTIVITY 1: Read and understand the statements below and write True or False after
each statements.
1. The first step in measuring customer satisfaction involves comparing actual sales to
forecasted sales. _______

2. Customer satisfaction can be measured in terms of the gaps between what customers
expect and what they perceive they have received. _______

3. One of the steps involved in measuring customer satisfaction is compiling feedback from
customers regarding present performance. _______
4. As compared to happy customers, unhappy customers typically talk less about their
buying experiences. _______

5. Frequency marketing programs are promotional efforts sponsored by organizations that

solicit involvement by individuals who share common interests and activities. _______

6. Affinity marketing consists of frequent-buyer or user marketing programs that reward

customers with cash, rebates, merchandise, or other premiums. _______

7. Affinity marketing programs focus on creating extra value for consumers. _______

8. Marketers can use grassroots marketing approach to develop long-lasting, individual

relationships with loyal customers. _______

9. Viral marketing involves efforts that allow satisfied customers to spread the word about
products to other customers. _______

10. The cost of acquiring a new customer is equivalent to that of retaining a loyal customer.
________

ACTIVITY 2
Identification. Write in the Answer box the terms/ words correspond to the given
question.
QUESTION ANSWER
1. In the, the revenues and intangible benefits that a
customer brings to the seller over an average
lifetime—less the amount the company must spend to
acquire, market to, and service the customer—are
calculated.
 2. The process of rejuvenating lost relationships with
customer
3. It is a combination of strategies and technologies that
empower relationship programs and reorient an entire
firm toward customer satisfaction

4. It is the extent to which customers are satisfied with

their purchase
5. It lets satisfied customers spread the word about
products to other consumers (like computer virus)
6. —a marketing effort sponsored by an organization
that solicits responses from individuals who share
common interests and activities.
7. Involves connecting directly with existing and potential
customers through nonmainstream channels.
8. are usually more valuable assets than new ones
because they buy more, cost less to serve, refer other
customers, and provide valuable feedback
9. -is the direct one-on-one interaction between a
consumer making a purchase and a representative of
the company that is selling it
10. -is the incremental benefit which a customer derives
from consuming a product after paying in return.

ACTIVITY 3
Encircle the letter of the correct answer

1. The first step in measuring customer satisfaction is:

a. testing market response for new products through controlled experiments.
b. hiring a first-rate market research firm.
c. finding out what customers need, want, and expect.
d. searching the blogs and discussion groups on the Internet to obtain
customer feedback.

2. _____ describes the extent to which buyers of a product or a service are content with their
purchases.
a. Average propensity to consume
b. Customer satisfaction
c. Customer lifetime value
d. Market cognizance

3. Proactive methods a firm might use to assess customer satisfaction would include:
a. visiting, calling, or mailing written surveys to clients.
b. setting up customer service helplines to receive customer complaints.
c. offering gifts and reward points to appease a dissatisfied customer.
d. quickly replacing defective products with new products after receiving
complaints from customers.
4. Customers prefer to have continuing relationships with businesses or suppliers because:
a. it helps the consumers in the process of benchmarking.
b. by nature, customers are resistant to change and prefer preexisting
relationships with businesses.
c. the decision-making process becomes easier with the reduction in the
number of choices.
d. most businesses have low switching costs which make them attractive to
have continued relationships with.

5. Best Buy Rewards Program tracks customer sales, and periodically issues coupons to
customers based on the values of prior purchases. This marketing effort by Best Buy can
be regarded as _____ marketing.
a. Affinity
b. Database
c. Frequency
d. Societal

ACTIVITY 4

Directions: Answer briefly. This activity has something to do with you, as a

loyal customer in a particular brand of products/ or services offered.

1. As a student think of a service provider/ supplier to whom you are loyal

a. What indicates you that you are loyal ( in terms of behavior, action, feelings)
b. Why are you loyal to this provider/ supplier?
c. What do you think are the factors that have influenced the formation of your
loyalty?

ANSWER: ____________ ANSWER: _____________ ANSWER: _____________

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2. Why do you think that multitude of different types of shampoos in the market shelves,
many of which are from the same manufacturer?
_______________________________________________________________
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 Criteria for grading:
Content ( reflects the essential info & are logically arranged) 40%
Mastery (accurately interpret evidence/ reasons/ claims) 30%
Relevance (relates,/ justifies key results/ assumptions/reasons ) 30%

IV. REFLECTION:
What I have learned:
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
How can this lesson will help me in dealing with customers in the future?
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
V. REFERENCES:
Boone, Louise E. , Kurtz, David L. Contemporary Marketing 13 th Edition, South
Western- Cenpage Learning. 2013.
Kotler, Philip. Principles of Marketing 14 th Edition. Financial Times Prentice
Hall. 2005.
https://tallyfy.com/customer-lifecycle/

https://www.investopedia.com/terms/c/customer-service.asp

ANSWER KEY:
ACTIVITY 1
1. False 6. False
2. True 7. True
3. True 8. True
4. False 9. True
5. False 10. False

ACTIVITY 2
Identification
1. Lifetime value of customer 6. Affinity Marketing
2. Customer win-back 7. Grassroots Marketing
3. Customer Relationship Management (CRM) 8. Long-term customer(s)
4. Customer satisfaction 9. Customer service
5. Viral Marketing 10. Customer Value
ACTIVITY 3
1. C 2. B 3. A 4. C 5. C
ACTIVITY 4
1. Students may vary their answer/ reaction.
As to behavior – if they are impulsive buyer, or are they meticulous to details and
style
As to action- are they aggressive, solicits responses and share common interest
As to feelings- are they easily satisfied with the products or services
Why loyal? Maybe because of quality, or satisfied with the excellent product /
services
What factors? Maybe students will answer- its because of good marketing strategies,
promotional activities, or treated as family that’s why customer’s loyalty was built.

2. To cater the needs, wants, and expectation of the customers. To stay in business,
there’s always a need to innovate, make a breakthrough, and find new ways to
satisfy or even “delight” the customer. Repeat business with the customer is very
important.

Prepared by:

FLORENCE M. SERRANO
T-II Maliwalo National High School