2. Meaning
♦ Satisfaction is a feelings of pleasure or
disappointment resulting from comparing a product ‘s
perceived performance in relation to his expectations.
♦ Customer Satisfaction is a measure of how products
and services supplied by a company meet or surpass
customer expectation. It is seen as a key performance
indicator within business
♦The provision of goods or services which fulfill the
customer's expectations in terms of quality and service,
in relation to price paid.
♦ Customer satisfaction results when an exchange
meets the needs and expectations of the buyer

3. Customer Value- Customers estimate which offer will
deliver the most value. They are the value-maximizes.
Customer deliver Value is the difference between total
customer value & total customer cost. Total Customer
value is the bundle of benefits customers expect from a
given product. Total Customer Cost is the bundle of
costs customers expect to incur in evaluating, obtaining,
using & disposing of the product.
Customer perceived Value is the difference between
the prospective customer’s evaluation of all the benefits
& all the costs of an offering and the perceived
alternatives.
Customer Loyalty- loyalty is created only when
customers perceive fairness, equity and transparency in
his relationship with the seller.

4. Customer
delivered
value
Total Total
customer customer
value cost
Product value Monetary cost
Service value Time cost
Personnel value Energy cost
Image value Psychic cost
Determinants of Customer Delivered Value

7. Tools for tracking & Measuring satisfaction
Measuring Satisfaction is the toughest of the
jobs of a marketer.
♦Complaint & suggestion Systems- A customer-
centered organization makes it easy for customers to
register suggestions & complaints. Customer-centered
companies – P&G, GE, whirlpool establish hotlines with
toll-free numbers, they are also using websites.
♦Customer satisfaction surveys- studies show that
only one out of every four purchases, dissatisfied
customers will complain. Most customers will buy less
or switch suppliers. Cos. Measure of customer
satisfaction directly by conducting periodic surveys.

8. They send questionnaires /make telephone calls to a
random sample of recent customers, ask additional
questions to measure repurchase intention and
willingness to recommended the co. & brand.
♦Ghost Shopping- companies hire persons to pose as
potential buyers to report on strong and weak points
experienced in buying the company’s competitor’s
products.
♦Lost customer analysis- Companies contact
customers who have stopped buying / switched to
another supplier to learn why this happened. IBM

9. elivering Customer Value & Satisfaction
company only win by creating & delivering superior value in
yper competition. A company needs to use the concepts of
alue chain & a value-delivery network to succeed.
Value Chain: a tool for identifying ways to create more cust
alue.
very firm is a collection of activities that are performed to de
oduce, market, deliver & support its product.
ne strategically value-creating activities consist of five prim
ctivities & four support activities.
imary activities represents the sequence of bringing materi
to the business (inbound), converting them into final produc
perations), shipping out final products (outbound), marketin
em (marketing & sales and servicing them (service).

10. Support activities (procurement, Technology
developments, human resource management, & firm
infrastructure) are handled in certain specialized depatts.
The firm task is to examine its cost & performance in
each value creating activity & to look for ways to improve
it. Success of the firm depends on each depart.
Performs its work & activities of departments are
coordinated.
To solve the problem of value chain the emphasis must
be on smooth management of core business processes
It Include:
♦New-product realization
♦Inventory management
♦Customer acquisition & retention
♦Customer service
♦Order-to-remittance

11. Firm Infrastructure
Margin
Support Human Resource
Activities Technology development
Permanent
Inbound Service
Logistics Operations Outbound Marketing
& sales Margin
logistics
Primary Activities

12. Value-Delivery Network- also known as supply chain
firm needs to look for competitive advantages
beyond its own operation, into the value chains of its
suppliers, distributors to customers.
Attracting customers- to please the customers is a
tough task. They are smarter, price conscious, more
demanding, less forgiving & approached more
competitors. Cos. have to spend a considerable time
& resources searching for new customers. Customer
acquisition requires substantial skills in lead
generation, lead qualification, account conversion.
♦Developments of ads Direct mails, phone calls &
participation in trade shows to reach new prospects,
♦ Produce a list of suspects, interweaving them,
check their financial standings & graded them.

13. ♦ Pick the hot, presentations, answering objections
& negotiating final terms.
Computing the Cost of lost Customers
Many cos. are suffering from very high customer
defection rate. There are some steps to reduce this.
=The co. must define & measure it retention rate.
= Co. must distinguish the causes of customer
attrition & identify those that can be managed better.
Eg. 14% customer lost due to out of business,
16%switched because they found better product,
15% found cheaper product, 55% left due to poor
supply/quality. Co. needs to examine the %ages of
customers who defect from different reasons.
= Co. needs to estimate how much profits it loses
due to customer defection. Eg.
♦A Co. had 64,000 accounts. It lost 5% of its

14. accounts this year due to poor service. This was a
loss of 3,200 accounts (.05*64000).
The average lost account represented a $40,000 loss
in revenue. So the co. lost $ 128,000,000 in revenue
(3,200*$40,000). The companies profit margin is
10%the co. lost $12,800,000 (.10*$128,000,000) this
year. Because the customers left permanently, the
company ‘s actual loss over time is much greater.
= The co. needs to figure out how much it would
cost to reduce the defection rate.
= different companies successfully using various
tools to retain customers.
♦The key customer retention is customer
satisfaction. A highly satisfied customer:
- stay loyal longer
- buys more as the co. introduces new products and

15. -Talks favorably about the company and products.
-Pay less attention to competing brands & ads, less
sensitive to price.
-Offers product or service ideas to the company.
Some Interesting facts bearing on customer
retention
■ Acquiring new customers can cost five times more
than the costs involved in retaining current
customers.
■ The average company loses 10% of its customers
each year.
■ A 5% reduction in the customer defection rate can
increase profits by 25% to 85%, depending on the
industry.
■The customer profit rate tend to increase over the
life of the retained customer.

16. Marketing Memo- To create effective retention
programs, marketing need to identify patterns among
customer defections. This analysis should start with
internal records, such as sales logs, pricing records,
& customer survey results. The next step is
extending defection research to outside sources,
such as statistics from trade associations. Some
question may be ask: ■ Do customers defect at
different rates during rates during the year?
■ Does retention vary by office, region, sales
representative, or distributor?
■ What is the relationship b/w retention rates &
changes in prices?
■What happen to lost customers & where do they go
■What are the retention norms for your industry?
■ Which co. in your industry retentions customers

17. Measuring Customer Life-time value (CLV)
■CLV describes the present value of the stream of
future profits expected over the customer’s life time
purchases. The co. must subtract from the expected
revenues the expected costs of attracting, selling &
servicing that customer. Eg. Suppose company’s
acquisition cost of new customer:
Cost of an average sales call (including all expenses)= Rs.200
Average no. of sales calls to convert an average prospects into a
customer = x5
Cost of attracting a new customer = Rs.1000
now, suppose the co estimates average customer lifetime value:
Average customer revenue = Rs.5000
Average no. of loyal Years = x3
Company profit margin = 10%
So, Customer Lifetime Value = Rs.1500
This co. is spending more to attract new customers.

18. Customer Relationship Management
(CRM)

19. Suspects
Relationship Marketing: The
Disqualified
Prospects Key
prospects
First time
customers
Repeat
customers Inactive or
ex-customers
Clients
Members Customer-Development
Process
Advocates Partners

20. Five different levels of investment in Customer-
relationship building:
■ Basic marketing: simply sell the product.
■ Enactive marketing: sells the product &
encourages the customer to call if he has questions,
comments, or complaints.
■ Accountable Marketing: sales person phones the
customer short time after the sale to check whether
the product is meeting expectations. Salesperson
also asks about the any suggestions.
■ Proactive marketing: Salesperson contacts the
customer from time to time with suggestions about
improved product uses or helpful new products.
■ Partnership marketing: co. works continuously
with the customer to discover ways to perform
better.