This document discusses key concepts related to customer satisfaction, loyalty, and customer relationship management. It defines customer satisfaction as a measure of how well a company's products and services meet customer expectations. Customer loyalty is described as a commitment to rebuy from or repatronize a preferred brand. The benefits of loyalty include higher profits and less marketing costs. Building loyalty requires satisfying customers and creating incentives like rewards programs. Customer relationship management involves collecting detailed customer data to personalize marketing and better understand customer needs. The goal is enhancing the bottom line by attracting and retaining profitable long-term customers.

1. Prof. Aparna Kanchan
Customer Satisfaction, Loyalty and
Customer Relationship Management
1

2. Learning Objectives
 Basic Marketing Concepts
 Understanding customer satisfaction and its
measurement
 Having insights on customer loyalty, importance
and benefits
 Insights on how to build loyal customers
 Understanding customer databases, customer
relationship management and strategies
2

3. Kotler on Marketing
It is no longer
enough to
satisfy
customers. You
must delight
them.
3

4. The Marketing Concept
• Holds that achieving organizational goals depends on
determining the needs and wants of target markets and
delivering the desired satisfactions more effectively and
efficiently than competitors do.
• Customer focus and value are paths to sales and profits
• The marketing and selling concepts are often confused. The
primary differences are:
• The selling concept takes an “inside-out” perspective
(focuses on existing products and uses heavy promotion
and selling efforts).
• The marketing concept takes an “outside-in” perspective
(focuses on customer needs, values, and satisfaction).
4

5. Customer Satisfaction and Loyalty - the Backbone of
Company’s Sales Process
Find customers Win customers Keep customers
Finding Winning Keeping
Its all about finding, winning and keeping customers…
5

6. Customer Satisfaction and its Measurement
6

7. Core Marketing Concept
7
Need
Want
Demand
Value &
Satisfaction
Market
Products
Services
Ideas
Transaction &
Relationship
Profitable
Customer
Relationship
Building and maintaining profitable customer relationships by delivering superior
customer value and satisfaction
- Philip Kotler

8. Customer-Orientations
8

9. Customer Satisfaction
9
What is
customer
satisfaction? • Customer satisfaction (CSAT)
is a measure of how well a
company’s products and
services meet customers’
expectations.
• It reflects your business’
health by showing how well
your products are resonating
with buyers.

10. What is Customer Satisfaction?
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.
10

11. Customer Satisfaction
Satisfaction is a person’s feelings of pleasure or
disappointment that result from comparing a product’s
perceived performance(or outcome) to expectations.
If the performance falls short of expectations, the customer
is dissatisfied.
If it matches expectations , the customer is satisfied.
If it exceeds expectations, the customer is highly satisfied or
delighted.
11

12. Customer satisfaction and Product/ Service Quality
Satisfaction will also depend on product and service quality
But what is Quality?
 Fitness for use
 Conformance to requirements
 Freedom from variation
 Totality of features and characteristics of a product or
service that bear on its ability to satisfy stated or
implied needs
12

13. Customer Satisfaction Requirements
13
 Proper research before hand
 Proper offering
 Proper pricing
 Proper availability

14. How do buyers form their expectations
14
 Past buying experiences
 Advice from friends and associates
 Marketer’s information and promises
 Competitors information and promises

15. Total Customer Satisfaction
15

16. Measuring Satisfaction
 Periodic surveys
 Customer loss rate
 Mystery shoppers
 Monitor competitive performance
 Customer Complaints
16

17. The Generic Value Chain
17

18. What is Customer Perceived Value?
Customer perceived value is the difference between
the prospective customer’s evaluation of all the
benefits and all the costs of an offering and the
perceived alternatives.
18

19. Determinants of
Customer Perceived Value
Image benefit Psychological cost
Personal benefit Energy cost
Services benefit Time cost
Product benefit Monetary cost
Total customer benefit Total customer cost
19
CPV = TCB- TCC

20. Dell Re-established its Commitment to Value
20

21. Steps in a Customer Value Analysis
• Identify major attributes and benefits that customers
value
• Assess the qualitative importance of different
attributes and benefits
• Assess the company’s and competitor’s
performances on the different customer values
against rated importance
• Examine ratings of specific segments
• Monitor customer values over time 21

22. Establishing Value
22

23. Customer Loyalty, its Importance and
Benefits
23

24. What is Loyalty?
Loyalty is a deeply held commitment to re-buy
or re-patronize a preferred product or service
in the future despite situational influences and
marketing efforts having the potential to cause
switching behavior.
24

25. Importance of Customer Loyalty
 More size of the wallet
 High conversion rate
 Higher profitability
 Less costly
 Higher volume and frequency
 Resource planning
25

26. BENEFITS OF HAVING A LOYAL CUSTOMER
 Loyal customers are not actively searching for different
suppliers.
 Loyal customers are not open to pitches from competing
companies.
 When a customer has brand loyalty, they are not easily
influenced by low price. They are willing to pay more for
the same quality product or service that they are
accustomed to and enjoy.
 Loyal customers are open to other goods or services
provided by particular business. 26

27. How to build Customer Loyalty
How to keep customers?
What to do? - What is the problem?
1) Create a Customer
Loyalty Program
2) Referral Program
3) Encourage Customer
Feedback
First things first…
Where is the problem?
Find customers Win customers Keep customers
Finding
27
Winning Keeping

28. 28

29. Types of Customer Loyalty
Behavioral Measures: Customer’s regularity and
frequency of purchases as a sign of loyalty.
Attitudinal Measures: Use of attitudinal data to indicate
the emotional and psychological connection
Composite Measures: Combination of first two
measurements.
29

30. Attracting & Retaining Customers
30

31. Customer Retention – Ways to reduce churn
31
Equip staff with better training and tools
Prompt response to customer complaints
Design processes of least resistance
Effective organization structure to address customer
complaints
Provide incentives to effective staff

32. Need for Customer Retention
32

33. Customer Relationship Management
33

34. Customer Relationship Management
Process of carefully managing detailed information about
individual customers and all customer “touch points” to maximise
loyalty
A customer “touch point” is any occasion on which a customer
encounters the brand/ product
Actual experience
Personal and mass communication
Casual observation
Companies use information gathered
 Personalized marketing
 Permission marketing
 Customer empowerment
34

35. Framework for CRM
• Identify prospects and
customers
• Differentiate customers by
needs and value to company
• Interact to improve
knowledge
• Customize for each
customer
35

36. CRM Dimensions
36

37. How does CRM Help an Organization?
• Enhance the bottom-line
• Generation of leads
• Increased Referrals
• Customer Support
• Improve Product and Services
37

38. Attracting and Retaining Customers
• Reduce the rate of defection
• Increase longevity
• Enhance share of wallet
• Terminate low-profit customers
• Focus more effort on high-profit customers
38

39. Loyalty Programs
39

40. Remember…..remember……remember…..remember…
Purchase
Characteristics
Quality
Improvements
40