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customer satisfaction
This chapter discusses building customer satisfaction, value, and retention. It addresses customer value and satisfaction, what makes a high-performance business, attracting and retaining customers, and improving customer and company profitability through total quality management. The chapter defines customer value and satisfaction, examines how to deliver value through the value chain and business processes, and explores tools for measuring satisfaction like surveys and complaint systems. It also looks at attracting and retaining customers through relationship marketing, lifetime customer value, and reducing customer churn.
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customer satisfaction
- 1. CChhaapptteerr 33 BBuuiillddiinnggCCuussttoommeerr SSaattiissffaaccttiioonn,, VVaalluuee,, aanndd RReetteennttiioonn 3-1 Copyright 2004 © Pearson Education Canada Inc.
- 2. 3-2 It isno longer enough to satisfy customers. You must delight them. Copyright 2004 © Pearson Education Canada Inc. KKoottlleerr oonn MMaarrkkeettiinngg
- 3. CChhaapptteerr OObbjjeeccttiivveess •In this chapter, we will address the following questions: – What are customer value and satisfaction, and how can companies deliver them? – What makes a high-performance business? – How can companies both attract and retain customers? – How can companies improve both customer and company profitability? – How can companies practice total quality management? 3-3 Copyright 2004 © Pearson Education Canada Inc.
- 4. DDeeffiinniinngg CCuussttoommeerr VVaalluueeaanndd SSaattiissffaaccttiioonn • Customer Perceived Value (CPV) 3-4 – Total customer value – Total customer cost Copyright 2004 © Pearson Education Canada Inc.
- 5. 3-5 Copyright 2004© Pearson Education Canada Inc. FFiigguurree 33..11:: DDeetteerrmmiinnaannttss ooff CCuussttoommeerr DDeelliivveerreedd VVaalluuee
- 6. DDeeffiinniinngg CCuussttoommeerr VVaalluueeaanndd SSaattiissffaaccttiioonn • Total Customer Satisfaction – Satisfaction • Customer Expectations • Delivering High Customer Value – Value proposition – Value-delivery system • Measuring Satisfaction 3-6 Copyright 2004 © Pearson Education Canada Inc.
- 7. TTaabbllee 33..11:: TToooollssffoorr TTrraacckkiinngg aanndd MMeeaassuurriinngg CCuussttoommeerr SSaattiissffaaccttiioonn 3-7 Copyright 2004 © Pearson Education Canada Inc. Complaint and suggestion systems: Customer satisfaction surveys: A customer-centered organization makes it easy for customers to register suggestions and complaints. Some customer-centered companies—P&G, General Electric, Whirlpool—establish hot lines with toll-free numbers. Companies are also using Web sites and e-mail for quick, two-way communication. Studies show that although customers are dissatisfied with one out of every four purchases, less than 5 percent will complain. Most customers will buy less or switch suppliers. Responsive companies measure customer satisfaction directly by conducting periodic surveys. While collecting customer satisfaction data, it is also useful to ask additional questions to measure repurchase intention and to measure the likelihood or willingness to recommend the company and brand to others. See text for complete table
- 8. Would you ffeeeellmmoorree bbrraanndd llooyyaallttyy ffoorr aa ccoommppaannyy tthhaatt ttrriieedd ttoo iimmmmeeddiiaatteellyy rreessoollvvee aa ccoommppllaaiinntt vviiaa EE--mmaaiill,, oorr aa ccoommppaannyy tthhaatt hhaadd aa ccuussttoommeerr sseerrvviiccee rreepprreesseennttaattiivvee ccaallll wwiitthhiinn ttwwoo bbuussiinneessss ddaayyss ttoo rreessoollvvee tthhee pprroobblleemm oovveerr tthhee pphhoonnee?? 3-8 Copyright 2004 © Pearson Education Canada Inc.
- 9. Premier Dell.com isa special business-oorriieenntteedd ppaarrtt ooff tthhee DDeellll WWeebb ssiittee tthhaatt aalllloowwss ccuussttoommeerrss ttoo iinntteerraacctt wwiitthh DDeellll aanndd ccuussttoommiizzee aallll pphhaasseess ooff ddooiinngg bbuussiinneessss wwiitthh DDeellll.. 3-9 Copyright 2004 © Pearson Education Canada Inc.
- 10. TThhee NNaattuurree ooffHHiigghh PPeerrffoorrmmaannccee BBuussiinneessss • High-performance business 3-10 Copyright 2004 © Pearson Education Canada Inc.
- 11. 3-11 FFiigguurree 33..22::TThhee HHiigghh PPeerrffoorrmmaannccee BBuussiinneessss Copyright 2004 © Pearson Education Canada Inc.
- 12. TThhee NNaattuurree ooffHHiigghh PPeerrffoorrmmaannccee BBuussiinneessss – Core competency – Distinctive capabilities • Organization and Organizational Culture 3-12 • Stakeholders • Processes • Resources – Organization – Corporate culture – Scenario analysis Copyright 2004 © Pearson Education Canada Inc.
- 13. CCaann yyoouu nnaammeeaa ccoommppaannyy tthhaatt hhaass cchhaannggeedd tthhee ppuubblliicc’’ss ppeerrcceeppttiioonn ooff tthheeiirr ccoorrppoorraattee ccuullttuurree?? HHaass tthhiiss eeffffeeccttiivveellyy rreehhaabbiilliittaatteedd tthhaatt ccoommppaannyy’’ss iimmaaggee?? 3-13 Copyright 2004 © Pearson Education Canada Inc.
- 14. DDeelliivveerriinngg CCuussttoommeerr VVaalluueeaanndd SSaattiissffaaccttiioonn 3-14 • Value Chain – Value chain Copyright 2004 © Pearson Education Canada Inc.
- 15. 3-15 FFiigguurree 33..33::TThhee GGeenneerriicc VVaalluuee CChhaaiinn Copyright 2004 © Pearson Education Canada Inc.
- 16. DDeelliivveerriinngg CCuussttoommeerr VVaalluueeaanndd SSaattiissffaaccttiioonn – Benchmarks • Core Business Processes – The market sensing process – The new offering realization process – The customer acquisition process – The customer relationship 3-16 management process – The fulfillment management process Copyright 2004 © Pearson Education Canada Inc.
- 17. DDeelliivveerriinngg CCuussttoommeerr VVaalluueeaanndd SSaattiissffaaccttiioonn • The Value Delivery Network (Supply Chain) 3-17 Copyright 2004 © Pearson Education Canada Inc.
- 18. 3-18 Copyright 2004© Pearson Education Canada Inc. FFiigguurree 33..44:: LLeevvii SSttrraauussss’’ss VVaalluuee-- DDeelliivveerryy NNeettwwoorrkk
- 19. AAttttrraaccttiinngg aanndd RReettaaiinniinnggCCuussttoommeerrss 3-19 • Partner relationship management (PRM) • Customer relationship management (CRM) Copyright 2004 © Pearson Education Canada Inc.
- 20. Saturn has gainedaa ccuussttoommeerr llooyyaallttyy rraattee ooff mmoorree tthhaann 6600%% bbyy ffuunnddaammeennttaallllyy cchhaannggiinngg tthhee bbuuyyeerr--sseelllleerr rreellaattiioonnsshhiipp.. CCaann yyoouu tthhiinnkk ooff aannootthheerr ccoommppaannyy tthhaatt hhaass mmaaddee aa cchhaannggee ooff ssiimmiillaarr mmaaggnniittuuddee?? HHaavvee tthheeyy hhaadd ssiimmiillaarr rreessuullttss?? 3-20 Copyright 2004 © Pearson Education Canada Inc.
- 21. AAttttrraaccttiinngg aanndd RReettaaiinniinnggCCuussttoommeerrss 3-21 • Attracting Customers • Computing the Cost of Lost Customers – Customer churn – Customer defection rate – Lifetime value Copyright 2004 © Pearson Education Canada Inc.
- 22. On the Lands’End Web site, customers ccaann cclliicckk aa bbuuttttoonn ttoo ttaallkk wwiitthh aa ccuussttoommeerr sseerrvviiccee rreepprreesseennttaattiivvee 3-22 Copyright 2004 © Pearson Education Canada Inc.
- 23. AAttttrraaccttiinngg aanndd RReettaaiinniinnggCCuussttoommeerrss • The Need for Customer Retention • Measuring Customer Lifetime Value (CLV) • Customer Relationship Management (CRM): The Key – Customer equity – Three drivers of customer equity 3-23 • Value equity • Brand equity • Relationship equity Copyright 2004 © Pearson Education Canada Inc.
- 24. 3-24 Copyright 2004© Pearson Education Canada Inc. FFiigguurree 33..55:: TThhee CCuussttoommeerr-- DDeevveellooppmmeenntt PPrroocceessss
- 25. AAttttrraaccttiinngg aanndd RReettaaiinniinnggCCuussttoommeerrss • Five levels of investment in customer relationship building – Basic marketing – Reactive marketing – Accountable marketing – Proactive marketing – Partnership marketing 3-25 Copyright 2004 © Pearson Education Canada Inc.
- 26. 3-26 FFiigguurree 33..66::LLeevveellss ooff RReellaattiioonnsshhiipp MMaarrkkeettiinngg Copyright 2004 © Pearson Education Canada Inc.
- 27. AAttttrraaccttiinngg aanndd RReettaaiinniinnggCCuussttoommeerrss • Forming Strong Customer Bonds: The Basics – Cross-departmental participation – Integrate the Voice of the Customer into all business decisions – Create superior offering for the target market 3-27 Copyright 2004 © Pearson Education Canada Inc.
- 28. AAttttrraaccttiinngg aanndd RReettaaiinniinnggCCuussttoommeerrss – Organize and make accessible a database of customer information – Make it easy for customers to reach the appropriate personnel – Reward outstanding employees • Adding Financial Benefits – Frequency programs (FPs) 3-28 Copyright 2004 © Pearson Education Canada Inc.
- 29. The H.O.G. Website presents tthhee bbeenneeffiittss ooff jjooiinniinngg.. 3-29 Copyright 2004 © Pearson Education Canada Inc.
- 30. AAttttrraaccttiinngg aanndd RReettaaiinniinnggCCuussttoommeerrss 3-30 • Adding Social Benefits Copyright 2004 © Pearson Education Canada Inc.
- 31. 3-31 Copyright 2004© Pearson Education Canada Inc. TTaabbllee 33..22:: SSoocciiaall AAccttiioonnss AAffffeeccttiinngg BBuuyyeerr--SSeelllleerr RReellaattiioonnsshhiippss Good Things Bad Things Initiate positive phone calls Make recommendations Candour in language Use phone Show appreciation Make service suggestions Use “we” problem-solving language Get to problems Use jargon or shorthand Personality problems aired Talk of “our future together” Routinize responses Accept responsibility Plan the future Make only callbacks Make justifications Accommodative language Use correspondence Wait for misunderstandings Wait for service requests Use “owe-us” legal language Only respond to problems Use long-winded communications Personality problems hidden Talk about making good on the past Fire drill and emergency responsiveness Shift blame Rehash the past
- 32. AAttttrraaccttiinngg aanndd RReettaaiinniinnggCCuussttoommeerrss • Adding Structural Ties – Create long-term contracts – Charge lower price to high 3-32 volume customers – Turn product into long-term service Copyright 2004 © Pearson Education Canada Inc.
- 33. CCuussttoommeerr PPrrooffiittaabbiilliittyy,, CCoommppaannyy PPrrooffiittaabbiilliittyy,, aanndd TToottaall QQuuaalliittyy MMaannaaggeemmeenntt 3-33 • Measuring Profitability – Profitable customer Copyright 2004 © Pearson Education Canada Inc.
- 34. 3-34 FFiigguurree 33..77::CCuussttoommeerr--PPrroodduucctt PPrrooffiittaabbiilliittyy AAnnaallyyssiiss Copyright 2004 © Pearson Education Canada Inc.
- 35. ma Figure 3.8:Allocating marrkkeettiinngg iinnvveessttmmeenntt aaccccoorrddiinngg ttoo ccuussttoommeerr vvaalluuee 3-35 Copyright 2004 © Pearson Education Canada Inc.
- 36. CCuussttoommeerr PPrrooffiittaabbiilliittyy,, CCoommppaannyy PPrrooffiittaabbiilliittyy,, aanndd TToottaall QQuuaalliittyy MMaannaaggeemmeenntt • Increasing Company Profitability – Competitive advantage • Implementing TQM – Total Quality Management 3-36 Copyright 2004 © Pearson Education Canada Inc. • Quality