Customer satisfaction and loyalty

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High customer loyalty is one of the most important indicators of good performing companies. Since customer satisfaction is directly linked to customer loyalty it is evident`that measuring customer …

High customer loyalty is one of the most important indicators of good performing companies. Since customer satisfaction is directly linked to customer loyalty it is evident`that measuring customer satisfaction without taking customer loyalty into account and vice versa would be misleading.

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  • 1. M a r k e t i n g , S t r a t e g y & M a n a g e m e n t Ronald van Haaften MBA www.van-haaften.nl High customer loyalty is one of the most important indicators of good performing companies. Since customer satisfaction is directly linked to customer loyalty it is evident that measuring customer satisfaction without taking customer loyalty into account and vice versa would be misleading. This is best done using a causal model approach where the drivers of satisfaction as well as its resulting effects on loyalty are explicitly introduced. The approach outlined in this presentation offers such a framework. Customer Satisfaction & Loyalty
  • 2. M a r k e t i n g , S t r a t e g y & M a n a g e m e n t What gets measured….gets done! 21-7-2013 2 “Where there is individual accountability, things get done. What get measured creates accountability. With no standard reliable customer satisfaction metric, employees can’t be held accountable for them and relationships gets lost in shadows.” “As far as customers are concerned you are the company. This is not a burden, but the core of your job. You hold in your hands the power to keep customers coming back, perhaps even to make or break the company.” Focus your core intention on doing the right things.
  • 3. M a r k e t i n g , S t r a t e g y & M a n a g e m e n t Customer Satisfaction and loyalty? Start Listening to Your Customer! 21-7-2013 3 There will always, one can assume, be need for some selling. But the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells it self. Ideally, marketing should result in a customer who is ready to buy. All that should be needed then is to make the product or service available. (Kotler)
  • 4. M a r k e t i n g , S t r a t e g y & M a n a g e m e n t Customer Satisfaction and Loyalty The Backbone of Your Sales Process 21-7-2013 4 Find customers Win customers Keep customers Finding Winning Keeping Its all about finding, winning and keeping customers…
  • 5. M a r k e t i n g , S t r a t e g y & M a n a g e m e n t The Art of Keeping Customers 21-7-2013 5 How to keep customers? What to do? - What is the problem? Keeping customers… …is an activity to build loyalty …is built on mutual trust and integrity …is something you do together …is a must …is only 1/5th of the Finding + Winning cost!! First things first… Where is the problem? Find customers Win customers Keep customers Finding Winning Keeping
  • 6. M a r k e t i n g , S t r a t e g y & M a n a g e m e n t Keeping Customers: Cause & Effect Are Often Distant In Time And Space 21-7-2013 6 Purchase Characteristics Quality Improvements Win customers Keep customers Winning KeepingPlan, Do, Check, Act F o c u s y o u r c o re i n t e n t i o n o n d o i n g t h e r i g h t t h i n g s .
  • 7. M a r k e t i n g , S t r a t e g y & M a n a g e m e n t Customer Satisfaction & Loyalty First Some facts to be aware of…. 21-7-2013 7 It is a highly personal matter for the customer, which is influenced by a number of factors. Customer satisfaction is directly linked to customer loyalty, hence it is evident that measuring customer satisfaction without taking customer loyalty into account and vice versa would be misleading. Customer satisfaction is a multidimensional concept; what is needed is: 1. a way of measuring customer satisfaction in an inter-relational Environment… 2. where relevant factors for determining satisfaction and also loyalty are measured simultaneously. Measurement of customer satisfaction thus needs to take a number of interrelated factors into account. This is best done using a causal model approach where the drivers of satisfaction as well as its resulting effects on loyalty are explicitly introduced. High customer loyalty is one of the most important indicators of good performing companies.
  • 8. M a r k e t i n g , S t r a t e g y & M a n a g e m e n t Secondly, What is Customer Satisfaction? 21-7-2013 8 Satisfaction represents a veritable key of modeling the acquisition behavior of the customer, being supported by three groups of variables: 1. Cognitive variables, based on the qualitative superiority of the products given by the performance. 2. Affective variables, based on the emotions produced to the customers. 3. Conative variables, based on the interaction between the provider and the customer in the buying act. Customer satisfaction is an overall customer attitude towards a service provider, or an emotional reaction to the difference between what customers anticipate and what they receive, regarding the fulfillment of some need, goal or desire.
  • 9. M a r k e t i n g , S t r a t e g y & M a n a g e m e n t General Characteristics of Customer Satisfaction. 21-7-2013 9 General characteristics involve features or qualities related to customer satisfaction serving to identify this phenomenon among other customer relationship management propositions. 1. Customer satisfaction is a highly variable personal assessment that is greatly influenced by individual expectations based on his/her own information, expectations, direct contact and interaction, and circumstances (time, location and environment). 2. Customer satisfaction involves the sum of personal (product and service) experiences driven by its antecedents. 3. Customer satisfaction is most often related to purchase, loyalty and retention behavior with a effect on an organizations profitability. a. A totally satisfied customer contributes 2.6 times as much revenue to a company as a somewhat satisfied customer. b. A totally satisfied customer contributes 17 times as much revenue as a somewhat dissatisfied customer. c. A totally dissatisfied customer decreases revenue at a rate equal to 1.8 times what a totally satisfied customer contributes to a business. 4. Customer satisfaction characterizes itself by a high degree of word-of-mouth where satisfied customers are most likely to share their experiences with other people to the order of perhaps five or six people. Equally well, dissatisfied customers are more likely to tell another ten people of their unfortunate experience.
  • 10. M a r k e t i n g , S t r a t e g y & M a n a g e m e n t General Criterion of Customer Satisfaction 21-7-2013 10 1. A criterion for this purpose is seen as dimensions for the customers’ satisfaction assessment. I have drawn 23 criteria from the theory as studied. 2. The criteria can be classified in multiple groups which could fulfill a significant antecedent function in causal models towards customer satisfaction.
  • 11. M a r k e t i n g , S t r a t e g y & M a n a g e m e n t Cause & Effect From Purchase to Quality Improvement 21-7-2013 11 PurchaseCharacteristics QualityImprovements What’s happening where and why? Do you focus your core intention on doing the right things? Do you really know what’s motivating your customers?
  • 12. M a r k e t i n g , S t r a t e g y & M a n a g e m e n t Customer Satisfaction and Loyalty Improvement Hurdles 21-7-2013 12 PurchaseCharacteristics QualityImprovements O P E R A T I O N A L I Z E
  • 13. M a r k e t i n g , S t r a t e g y & M a n a g e m e n t From Purchase to Quality Improvement Cause & Effect model 21-7-2013 13 • Basic building blocks taken from European Customer Satisfaction Index (ECSI) • Suitable for consultative B2B & B2C business models • Variation of SCSB1992, ACSI1994, NCSB1996 • Proven model, since 2000 across Europe • EU benchmark PurchaseCharacteristics QualityImprovements
  • 14. M a r k e t i n g , S t r a t e g y & M a n a g e m e n t Cause & Effect model Raising expectation 21-7-2013 14 PurchaseCharacteristics QualityImprovements Promises you have made…. Positioning the brand in highly over-communicated B2B environments could easily fail when the minds of customers and prospect obviously get confused. Trout suspects that people discriminate information to access their mind as a self-defence mechanism. For this reason, management needs to understand five mental elements in the positioning process, to position the brand successful in the mind of customers and prospects (Trout, 1995:3-8) 1. Minds are limited 2. Minds hate confusion 3. Minds are insecure 4. Minds don't change 5. Minds can lose focus
  • 15. M a r k e t i n g , S t r a t e g y & M a n a g e m e n t Cause & Effect model Minds hate confusion 21-7-2013 15 PurchaseCharacteristics QualityImprovements Promises you have made…. needs to be delivered… The proof of the pudding is in the eating!
  • 16. M a r k e t i n g , S t r a t e g y & M a n a g e m e n t Cause & Effect model Walk the talk! 21-7-2013 16 PurchaseCharacteristics QualityImprovements Promises you have made…. needs to be delivered….to keep your customers Keep customers Keeping
  • 17. M a r k e t i n g , S t r a t e g y & M a n a g e m e n t Cause & Effect model Purchase Characteristics 21-7-2013 17 PurchaseCharacteristics QualityImprovements Why? What is the primary reason for purchase i.e. purchase characteristic? Importance? What is the extent of importance of possible purchase reasons?
  • 18. M a r k e t i n g , S t r a t e g y & M a n a g e m e n t Cause & Effect model Driver 1 - Corporate Image 21-7-2013 18 PurchaseCharacteristics QualityImprovements How does your customer perceive the general image of your organization in terms of products and services?...be careful….this is your latent promise in the mind of your customer!
  • 19. M a r k e t i n g , S t r a t e g y & M a n a g e m e n t Cause & Effect model Driver 2 - Customer Expectations 21-7-2013 19 PurchaseCharacteristics QualityImprovements Based on your customer previous experience what does he/she expect from your organization and to what degree does your customer consider that your organization fulfils all their expectations?
  • 20. M a r k e t i n g , S t r a t e g y & M a n a g e m e n t Cause & Effect model Driver 3 - Perceived Product Quality 21-7-2013 20 PurchaseCharacteristics QualityImprovements How would your customer rate their own experience concerning the product quality during the Last purchase, delivered by your organization?
  • 21. M a r k e t i n g , S t r a t e g y & M a n a g e m e n t Cause & Effect model Driver 4 - Perceived Service Quality 21-7-2013 21 PurchaseCharacteristics QualityImprovements How would your customer rate their own experience concerning the (customer/project) service quality during the last purchase, delivered by your organization?
  • 22. M a r k e t i n g , S t r a t e g y & M a n a g e m e n t Cause & Effect model Driver 5 - Perceived Value 21-7-2013 22 PurchaseCharacteristics QualityImprovements Consider the product, service and support your customer have received from your organization. How would your customer rate this in relation to the prices your organization have charged?
  • 23. M a r k e t i n g , S t r a t e g y & M a n a g e m e n t Cause & Effect model Result 1 - Customer Satisfaction 21-7-2013 23 PurchaseCharacteristics QualityImprovements Consider your customer current experiences, how satisfied is your customer and to what degree does he/she consider that your organization presently fulfils all their expectations? Imagine an ideal organization, how close to this ideal would your customer rate your organization?
  • 24. M a r k e t i n g , S t r a t e g y & M a n a g e m e n t Cause & Effect model Result 2 - Customer Loyalty 21-7-2013 24 PurchaseCharacteristics QualityImprovements If your customer were to purchase the same product/service again; how likely is it that your customer would buy from your organization again and how likely is it that he/she recommend your organization to a friend or colleague? Why does your customer feel that way about recommending your organization?
  • 25. M a r k e t i n g , S t r a t e g y & M a n a g e m e n t Cause & Effect model Quality Improvement 21-7-2013 25 PurchaseCharacteristics QualityImprovements What suggestions would your customer have to improve their satisfaction (and loyalty) with the product/service of your organization?
  • 26. M a r k e t i n g , S t r a t e g y & M a n a g e m e n t Remember…..remember……remember…..remember… 21-7-2013 26 PurchaseCharacteristics QualityImprovements
  • 27. M a r k e t i n g , S t r a t e g y & M a n a g e m e n t Customer Information & Feedback 21-7-2013 27 The level of analysis is high and gives good guide to your business eg: – Identifying why customers choose your product/service – Image, branding and positioning in the mind of customers (USP match or mismatch) – Pricing levels (perceived value for money) – Perceived level of customer service – Possible gaps in product and/or service line-up – Extent of customer satisfaction and maybe even more important the reason why – Extent of customer loyalty and maybe even more important the reason why – Identifying customer future service and/or product and/or organizational needs – Do you focus your core intention on doing the right things or on doing things right?
  • 28. M a r k e t i n g , S t r a t e g y & M a n a g e m e n t More literature Information, White Paper and Survey Model Questionnaire…and so on 21-7-2013 28 What to expect? • Empirical research structure • Full detailed model questionnaire • How to calculate and analyze customer feedback & NPS • Extensive literature study • Model review: ASCI, NCSB, SCSB, ECSI • Database & report process mapping www.van-haaften.nl click on the link
  • 29. M a r k e t i n g , S t r a t e g y & M a n a g e m e n t Feedback? > Twitter @rovaha Thank‘s for joining me on this journey Slides available on: www.slideshare.net www.van-haaften.nl 21-7-2013 29