Chapter 5

Building Customer Satisfaction,

Value and Retention and Loyalty

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 What is a Customer?

“The customer is value-maximizer,

within the bounds of search costs
and limited knowledge, mobility and
income.”

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 What is needed by the
Customer?

• Value

• Satisfaction

• Retention

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 Customer Value

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 Customer Value
“ Is the bundle of benefits expected”

Customer Cost
“ Is the bundle of costs expected”

• What is Customer Delivered Value?

Customer Delivered Value = Total
Customer Value - Total Customer
Cost

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 Customer Delivered Value

Total Customer Value Total Customer Cost

Product Value Money Cost

Service Value Time Cost

Personnel Value Energy Cost

Image Value Psychic cost

Determinants of Customer Delivered Value

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 What are the factors that may hinder or
stop the full implementation of the
Customer Delivered Value System?

• The buyer might be under orders to

buy at the lowest cost.
• Concentrating on the short-term
benefits and over looking long term
costs.
• The effect of the Relation between the
sales persons and the consumer.
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 Customer Satisfaction

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 What is Satisfaction?

• It is a person’s feeling of pleasure or

disappointment resulting from
comparing a product’s perceived
performance (or outcome) in relation
to his or her expectations.

Satisfaction = function (perceived

performance /expectations)

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 What are the tools for tracking and
measuring Customer Satisfaction
• Complaint and Suggestion system

• Customer Satisfaction Surveys

• Ghost Shopping

• Lost Customers Analysis

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 Attracting and Retaining
Customers

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 Benefits of Highly Satisfied Customer
• Stays Loyal Longer
• Buys more
• Talks favorably about the company
• Offer products and services ideas to
the company
• Costs less to serve than new
customer

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 Why retain Customers?
• Acquiring a new customer costs 5
times retaining an old one.
• The average company loss about
10% of its customers annually
• Customer rate increase with time.

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 What are the types of marketing?
• Basic Marketing: selling the product
• Reactive Marketing: selling the product
and encouraging further contact
• Accountable Marketing: Follow up on
Customers satisfaction.
• Proactive marketing: involving customers
in product and company improvements
• Partnership marketing: encouraging the
customer to become a stakeholder in the
company

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 Tools to improving the marketing
impact
• Adding financial benefits
– Adding social benefits
– Individualizing and personalizing
customer relationship

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