The document discusses how companies can build customer satisfaction, value, and retention. It covers understanding customer value and perceived value, delivering high customer satisfaction, keys to success for high performance businesses, and core practices for customer acquisition, relationship management, and retention. Specifically, it outlines factors that influence customer perceived value and satisfaction, how to maximize satisfaction, keys to success like stakeholders, processes, resources and organization, and methods for strengthening customer bonds and reducing customer churn.

1. Chapter 3
©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 1 of 18
Building Customer
Satisfaction, Value,
and Retention
PowerPoint by Karen E. James
Louisiana State University - Shreveport

2. Objectives
©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 2 of 18
 Understand how companies
deliver customer value and
satisfaction.
 Identify the factors that make a
high performance business.
 Understand how companies
attract and retain customers.

3. Objectives
©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 3 of 18
 Realize how companies can
improve both customer and
company profitability.
 Understand how companies can
deliver total quality.

4. Customer Value
©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 4 of 18
 Customers seek to maximize value by
– estimating which offer (product/firm)
delivers the most value (CPV)
– forming an expectation of value and acting
upon it (purchase)
– evaluating their usage experience against
the expectations
 Satisfaction results when expectations
are equaled or surpassed

5. Customer Perceived Value
©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 5 of 18
 Perception of delivered value is a
function of:
–Total customer costs
–Total customer value
 Firms at a disadvantage must:
–Reduce perceptions of costs or
enhance perceptions of value

6. Customer Satisfaction
©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 6 of 18
 Satisfaction is defined as . . .
“a person’s feelings of pleasure or
disappointment resulting from
comparing a product’s perceived
performance (or outcome) in
relation to his or her
expectations.”

7. Customer Satisfaction
©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 7 of 18
 To maximize satisfaction . . .
–Don’t exaggerate the product /
service’s capabilities in advertising
or other communications
Dissatisfaction will result
FTC may become involved
–Don’t set expectations too low
Market size will be limited

8. High Performance Businesses
Keys to Success
 Stakeholders
 Processes
 Resources
 Organization
 Identify several
stakeholder
groups for your
University
 How might the
needs of these
groups conflict
with each other?
©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 8 of 18

9. High Performance Businesses
Keys to Success
 Stakeholders
 Processes
 Resources
 Organization
 New product
development
 Customer attraction
and retention
 Order fulfillment
 Reengineering work
flows
 Building cross
functional teams
©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 9 of 18

10. High Performance Businesses
Keys to Success
 Stakeholders
 Processes
 Resources
 Organization
 Resources include
labor, materials,
machines, energy,
and information
 Outsourcing vs.
ownership: Own
and nurture core
competencies
©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 10 of 18

11. High Performance Businesses
Keys to Success
 Stakeholders
 Processes
 Resources
 Organization
 Organization refers
to the organization’s
policies, structures,
and corporate culture
 Corporate culture:
shared experiences,
stories, beliefs, and
norms within an
organization
©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 11 of 18

12. Core Business Practices
©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 12 of 18
 Market Sensing
 Customer Acquisition
 Customer Relationship
Management
 Fulfillment Management
 New Offering Realization

13. Customer Retention
©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 13 of 18
 Reducing customer churn (defection)
is highly desirable
– Define and measure retention rate
– Identify causes of attrition
– Estimate profit lost from customer
defection (customer lifetime value)
– Estimate cost to reduce defection; take
appropriate action

14. Drivers of Customer Equity
©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 14 of 18
 Brand Equity
 Relationship Equity
 Value Equity

15. Strong Customer Bonds
Keys to Success
 Adding Financial
Benefits
 Adding Social
Benefits
 Adding Structural
Ties
 Frequency
programs
 Club
memberships
©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 15 of 18

16. Strong Customer Bonds
Keys to Success
 Adding Financial
Benefits
 Adding Social
Benefits
 Adding Structural
Ties
 Personalize
customer
relationships
©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 16 of 18

17. Strong Customer Bonds
Keys to Success
 Adding Financial
Benefits
 Adding Social
Benefits
 Adding Structural
Tie
 Create long-term
contracts
 Charge less for
ongoing
purchases
 Link product to
long-term service
©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 17 of 18

18. 20 – 80 – 30 Rule
©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 18 of 18
Half of your profit is lost
serving the bottom 30%
of your customer base
20% of your customers
Generate 80% of your profit
80
3
0
20