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Things to Know … Chapter 5: Customer Relationships : Quality, Value, Satisfaction

Things to Know … Chapter 5: Customer Relationships : Quality, Value, Satisfaction. CRM Value Satisfaction Functions of Marketing Gaining vs. retaining customers. Quality. In the eyes of the beholder - Core product - Customer Service - Symbolic attributes. Value….

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Things to Know … Chapter 5: Customer Relationships : Quality, Value, Satisfaction

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  1. Things to Know … Chapter 5: Customer Relationships : Quality, Value, Satisfaction • CRM • Value • Satisfaction • Functions of Marketing • Gaining vs. retaining customers

  2. Quality • In the eyes of the beholder - Core product - Customer Service - Symbolic attributes

  3. Value… … is the totality of features and characteristics of a product or service that customers expect from a given product or service compared to its cost. #1

  4. Image value Personnel value Total customer value Services value Product value Customer perceived value Monetary cost Time cost Total customer cost Energy cost Psychic cost Determinants of Customer Value

  5. Creating Value • Satisfy needs • More than one organization is required to create value (value chain) • Functions of marketing create value

  6. Satisfaction… … is 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. Gaining Satisfaction

  8. What happens when satisfaction is not achieved? • Lost sale • Lost customer

  9. Computing the Cost of a Lost Customer • Cost to gain vs. cost to retain a customer • Lost sale vs. lost customer

  10. Gaining vs. Retaining a Customer • Acquiring a new customer can cost 5 to 9 times as much as retaining a customer • The average company loses 10% of customers per year

  11. Gaining vs. Retaining a Customer (cont’d) • The customer profit rate increases over the life of a retained customer • A small decrease in lost customers can mean a large increase in profits

  12. Computing the Cost of a Lost Customer • Determine the number of current customers • What percent of customers are “lost” (did not buy this period) • Average amount lost per customer • Times profit percentage • Average number of years as a customer

  13. Computing the Cost of a Lost Customer (cont’d) A local hardware has10,000 customers 0.03 % are lost = 300 lost customers Average purchase over 1 year: $900 Amount lost/year $270,000 Profit Margin 3% $8,000 Over 10 years $80,000, over 25 years $200,000

  14. Satisfied Customers: • Are loyal longer • Buy more (new products and upgrades) • Spread favorable word-of-mouth • Are more brand loyal (less price sensitive) • Offer feedback • Reduce transaction costs

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