customer satisfaction

1. CChhaapptteerr 33
BBuuiillddiinngg CCuussttoommeerr SSaattiissffaaccttiioonn,,
VVaalluuee,, aanndd RReetteennttiioonn
3-1
Copyright 2004 © Pearson Education Canada Inc.

2. 3-2
It is no 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 VVaalluuee aanndd
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 VVaalluuee aanndd
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:: TToooollss ffoorr 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 ffeeeell mmoorree 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 is a 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 ooff HHiigghh 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 ooff HHiigghh 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 nnaammee aa 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 VVaalluuee aanndd
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 VVaalluuee aanndd
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 VVaalluuee aanndd
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 RReettaaiinniinngg CCuussttoommeerrss
3-19
• Partner relationship
management (PRM)
• Customer relationship
management (CRM)
Copyright 2004 © Pearson Education Canada Inc.

20. Saturn has gained aa 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 RReettaaiinniinngg CCuussttoommeerrss
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 RReettaaiinniinngg CCuussttoommeerrss
• 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 RReettaaiinniinngg CCuussttoommeerrss
• 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 RReettaaiinniinngg CCuussttoommeerrss
• 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 RReettaaiinniinngg CCuussttoommeerrss
– 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. Web site presents tthhee bbeenneeffiittss ooff jjooiinniinngg..
3-29
Copyright 2004 © Pearson Education Canada Inc.

30. AAttttrraaccttiinngg aanndd RReettaaiinniinngg CCuussttoommeerrss
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 RReettaaiinniinngg CCuussttoommeerrss
• 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