Discuss the interrelationships among customer

expectations and satisfaction, perceived value and

customer retention. Why is customer
retention essential?
Customer satisfaction:
Customer satisfaction is defined as a measurement that determines how happy customers are
with a company's products, services, and capabilities. Customer satisfaction information,
including surveys and ratings, can help a company determine how to best improve or changes its
products and services.
Customer expectations:
Customer expectations are created in the minds of customers based upon their individual
experiences and what they have learned, combined with their pre-existing experience and
knowledge. Customers will have both explicit and implicit expectations regarding the product or
service which they have purchased.
Perceived value:
In marketing terminology, perceived value is the customers' evaluation of the merits of a product
or service and its ability to meet their needs and expectations, especially in comparison with its
peers.
Customer retention:
Customer retention refers to the activities and actions companies and organizations take to
reduce the number of customer defections. The goal of customer retention programs is to help
companies retain as many customers as possible, often through customer loyalty and brand
loyalty initiatives.

Companies have to understand the importance of customer satisfaction and then build process
around it. As a satisfied customer will always be a loyal customer. According to the various
research and studies it has been confirmed that consumer will purchase products, which given
them maximum perceived value. This value comes from calculating the cost associated with the
emotional level decision like the brand image, corporate brand, sales personnel image and
functional image. This value converts to total customer cost by including purchase cost and time-
energy in evaluation of product. Companies need to define boundaries of relation with
stakeholders as to get maximum value for every participant. To ensure maximum value,
companies need to develop business processes, which understand and fulfill customer
expectations. Companies need to develop policies and measure at retaining customers along with
attracting new customers. This art of retention can be achieved through customer relationship
management (CRM). In CRM the task is to develop strong consumer based brand equity, which
is done by converting first time buyer to repeat buyer to a client to a member to advocates and
finally to partners.
There are other associated benefits to fostering a lasting relationship with customers, including
the fact that long-term customers are more likely to introduce your business to others via a verbal
referral, they’re more likely to purchase other products from you and if they’re completely happy
with the service.

If the business is maintaining good customer relations and keeping people loyal and satisfied,
this also creates a happy workforce, with increased job satisfaction.