Customer Value, Satisfaction

Loyalty & CRM

VALUE

The offering will be successful if it delivers value & satisfaction. The

buyer chooses between different offerings on the basis of which is
perceived to deliver the most value

Value is primarily a combination of Quality, Service & Price

(QSP), called the Customer Value Triad

Value increases with quality & service and decreases with price

Value can be defined as a ratio between what the customer gets

and what he gives – the customer gets benefits for a cost
VALUE

Value = Benefits = Functional Benefits + Emotional Benefits

Costs Monetary Cost + Time Cost + Energy Cost + Psychic Cost

P-S-P-I

The marketer can increase the value of the offering to customers

in several ways;

Raise benefits
Reduce costs
Raise benefits and reduce costs
Raise benefits by more than the raise in costs
Lower benefits by less than the reduction in costs
VALUE

CUSTOMER VALUE ANALYSIS

Identify the major attributes and benefits that customers value

Assess the Quantitative importance of the different attributes and benefits

Compare Company’s and Competitors performance on the different

customer values against their rated importance

Monitor Customer Values over Time

CUSTOMER SATISFACTION
CUSTOMER SATISFACTION
What is Customer Satisfaction?

Customer Satisfaction is the customer’s perception that a company has met

his / her expectation FULLY, EFFICIENTLY & PROMPTLY

Factors Affecting Customer Satisfaction

• Product: efficiency, quality, price, performance, durability etc.

• Customer service
• Ability to meet commitments
• Complaint handling
• Life cycle of product
• Company response

In other words;

1. Company behaviour
2. Product & service performance
CUSTOMER SATISFACTION

Customer Satisfaction

Human Factors Product Factors

•Response •Performance
•Service •Efficiency
•Adherence to Commitment •Price
•Complaint Handling •Quality
•Customer Importance •Durability
•Orientation •Availability
•Attitude
CUSTOMER SATISFACTION

Measurement

Business Customer
Related Related

Customer Satisfaction
Measurement
Reasons

Competitor Company
Related Related

Performance
Related
CUSTOMER SATISFACTION

Measurement
Business Related

•Judge the effectiveness of its business- how much customer-centric is the company
•Provides quantified information on;
How many customers have been lost?
How much business has been lost?
How much profit has been lost?
•Satisfied customers can be the extended marketing arm of the company
•Unsatisfied customers can be affect the company business
•Unsatisfied customers is lost without giving the company an opportunity to undo
the damage
•Loss of customer is loss of business opportunity and profitability
•Chanalises the company’s resources to bridge the gap in customer satisfaction
CUSTOMER SATISFACTION

Measurement
Customer Related

•How many customers have been lost?

•Which customers has been lost?
•Why and where they have been lost?
•Identifying preventive measures
•To identify value the customer assigns to company’s product & services
•Customer’s decision making factors
•Customer needs and requirements
•Develop empathy- to become customer-centric company
CUSTOMER SATISFACTION

Measurement
Company Related

•Feedback on strengths & weaknesses and also on the competitors

•Identify core competencies to develop future business strategies
•Company’s market image and standing
•Customer’s perception on the company
•Company’s position vis-à-vis benchmark

Competitors Related

•Loss of company is gain of competitor

•Identify strengths & weaknesses of competitors to chart suitable strategies
•Relative position of competitors w.r.t benchmark to anticipate type of competiton
CUSTOMER SATISFACTION

Measurement
Performance Related

•Opportunity to improve existing products and services

•The actual cost of customer turnover
•How the company is performing from customer’s perception?
•How sharp is the company’s competitive edge
CUSTOMER LOYALTY
CUSTOMER LOYALTY

A customer can be satisfied, he may even be delighted but he may or

may not be loyal.

Customer satisfaction is an emotional and sentimental issue. It is a

feeling, a feeling of satisfaction over a job well done in the past.

Loyalty is related to the act of the customer in future.

CUSTOMER LOYALTY

Reasons for satisfied but disloyal customer

Entrepreneur (Creates more options to get more

benefits or value for money)
Customer

Satisfied but
Disloyal
Customer
Outdated Lead by other
Company competitors
(Feels that for his new requirements (Has better options due to new
The co’s products & services is outdated) competitors)
CUSTOMER LOYALTY

Reasons for unsatisfied but loyal customer

(May not have alternatives or

Lack of Options
monopoly segment)

Dissatisfied
but Loyal
Customer
Improved Customer
Company Inertia
(Impressed due to improved (Averse to change)
performance by the co.)
CUSTOMER LOYALTY

Customer Satisfaction – Loyalty Grid

H Retrospect Leader
Satisfaction

L Lost Trapped

L H

Loyalty
CUSTOMER LOYALTY

Advantages of Loyalty

Business Growth

Loyalty Reduced Mktg.

Profitability
Advantages Expenditure

Business
Ambassadors
CUSTOMER LOYALTY

Drivers of Customer Loyalty

Attitude Products & Services

•Emotional •Highly differentiated

•Rational •Multi-product offerings
•Entrepreneur •High service component
•Inertia
CUSTOMER LOYALTY

Customer Loyalty Breakers

•Dissatisfaction
•Intense competition
•High expectation
•New options
CUSTOMER LOYALTY

Customer Value Assessment

Value of Customer – Customer Loyalty Grid

Pitfalls Patrons
Value of Customer

L Neglected Premium

L H

Customer Loyalty
CRM
 Customer

A Customer is the most important Visitor in Our Premises.

He is not Dependent on us. We are Dependent on Him.
He is not an Interruption in our Work. He is the Purpose of it.
He is not an Outsider to our Business. He is Part of it.
We are not doing Him a Favour by Serving Him. He is doing Us
a Favour by Giving Us the Opportunity to do so.
Factors that ushered in CRM

Marketing Developments : Ps & Cs

Customer Solution Customer Cost

Product Price

Promotion Place
Communication Convenience

7 Ps
Factors that ushered in CRM

• We are in business because we have customers to serve

• Selling to Marketing

• Production to Business Realisation

• Intense competition

• Increasing customer expectation

• Fleeting loyalty

• Increasing cost of customer acquisition & retention

• Access to technology development

Factors that ushered in CRM

• Internet and the overall information proliferation

• Rise of the value savvy customers

• Increase in wealth & liberalisation

• Rise of competition & market fragmentation

• Increasing pace of innovation

• Shortening PLC or product obsolescence

• Increasing input costs and constraints in end pricing

Why CRM?

Unsatisfied customers will tell more people than

satisfied customers (viral marketing)

Only few unhappy customers complain while most simply

switch over their loyalty to other products/comptition

Loss of customer is loss of business, loss of opportunity to

grow and loss of profitability

Therefore feedback from customers is essential for marketers

to ascertain how the products and services are rated by the
customers and how they can be improved
What is Customer Relationship Management (CRM)?

CRM is “the development and maintenance of mutually beneficial

long-term relationships with strategically significant customers”

CRM is “an IT enhanced value process, which identifies, develops,

integrates and focuses the various competencies of the firm to the
‘voice’ of the customer in order to deliver long-term superior
customer value, at a profit to well identified existing and potential
customers”.
What is Customer Relationship Management (CRM)?

Information-Technology enabled Strategy aimed at identifying, targeting,

acquiring, and retaining the best mix of Customers.

CRM helps in Profiling Prospects, understanding their Needs & Wants, and in
Building Relationships with them by providing the most-suitable Products
and a very High level of Customer Service.

It Integrates back and Front-office Systems to Create a Database of customer

Contacts, Purchases, Information requested, Technical Support, etc.

This database helps the Firm in presenting a unified-face to its customers,

and Improve the Quality of the relationship.
What is Customer Relationship Management (CRM)?

CRM is a business philosophy based upon individual customers

and customised products and services supported by open lines
of communication and feedback from the participating firms that
mutually benefit both buying and selling organisations.

The buying and selling firms enter into a “learning relationship”,

with the customer being willing to collaborate with the seller and
grow as a loyal customer. In return,, the seller works to maximize
the value of the relationship for the customer’s benefit.

In short, CRM provides selling organisations with the platform

to obtain a competitive advantage by embracing customer needs
and building value-driven long-term relationships.
What is Customer Relationship Management (CRM)?
Traditional Focus on Transactions shifting to Relationship Marketing

Transactions Focus Relationship Focus

Orientation to single sales Orientation to customer retention

Discontinuous customer contact Continuous customer contact

Focus on product features Focus on product benefits

Short time scale Long time scale

Little emphasis on customer service High customer service emphasis

Limited commitment to meeting High commitment to meeting

Customer expectations Customer expectations

Quality is the concern of production staff Quality is the concern of all staff
Objectives of CRM

To identify & establish, maintain & enhance and when necessary,

terminate relationship with customers at a profit so that the objectives
of all parties involved are met; and this is done by mutual exchange
and fulfillment of promises.

TO DO BUSINESS PROFITABLY
Determinants of CRM

TRUST
The willingness to rely on the ability, integrity and motivation of
one company to serve the needs of the other company as agreed
upon implicitly and explicitly.

VALUE
The ability of a selling organisation to satisfy the needs of the
Customer at a comparatively lower cost or higher benefits than
That offered by competitors and measured in monetary,
Temporal, functional and psychological terms.
Determinants of CRM

In addition to Trust & Values;

Understand customer needs and problems

Meet their commitments
Differential pricing
Availability of products & services

Provide superior products / after sales services / support

Make sure that the customer is always told the truth
Establish dialogue / feedback on a continued basis
Have a passionate interest in establishing and retaining
a long-term relationship/perspective
The Customer Progression Ladder

Suspects

First-time Repeat
Prospects Customers Customers
Clients Advocates Partners

Rejects
Stages in the Development of Customer Relationship

Partners

High
Degree of Involvement

Advocates

Clients

Repeat
Customers
1st Time
Customers

Low

Transactional Collaborative

Nature of Customer Relationship

Life Cycle of Customer Relationship

High Cooperation
Low Competition

Low Cooperation Pre-Relationship Development Maturity Severance

High Competition Stage Stage Stage Stage

Time
What should the FOCUS & MAIN ACTIVITIES
of a sales person be in each stage of the
Relationship Development Process?
Managing Customer Relationships

The salesperson must be involved in the following activities in order to initiate, develop
and enhance the process that is aimed at building trust and commitment with the
customer.

Initiating the relationship

• Engage in strategic prospecting and qualifying

• Gather and study pre-call information
• Identify buying influences
• Plan the initial sales call
• Demonstrate an understanding of the customer’s needs
• Identify opportunities to build a relationship
• Illustrate the value of a relationship with the customer
Managing Customer Relationships

Developing the relationship

• Select an appropriate offering

• Customise the relationship
• Link the solutions with the customer’s needs
• Discuss customer concerns
• Summarize the solution to confirm benefits
• Secure commitment
Managing Customer Relationships

Enhancing the relationship

• Assess customer satisfaction

• Take action to ensure satisfaction
• Maintain open, two-way communication
• Work to add value and enhance mutual opportunities
Managing Customer Relationships

High
Use a non Build a strong
customised and lasting
Opportunities for

approach relationship
Adding Value

Seek better Focus on

opportunities loyalty-building
elsewhere programme
Low

Low Potential Profitability High

of Customer
Facets of CRM

• Customer needs
• Customer response and influence
• Customer satisfaction
• Customer loyalty
• Reclaiming lost customer
• Customer complaints
• Customer service
 Should I buy a
Buying Process & vacuum No
cleaner?
Role of CRM Yes
Considerations;
•Social segment
•Economic status
CRM
•Home environment
•Couple’s working status
•Availability of domestic help

CRM Scout the market to identify vacuum cleaners types and meet representatives

Deciding factors & evaluation ;

•Product features & benefits
•Image
•Cost
CRM •Past experience with company
•Service & maintenance facility
•Quality & Durability
•Complaint redressal
•Paying capacity & Financing

CRM Short listing and Demonstration

Final
Postpone / Don’t buy
Assessment
Buy