6

Value for
Customers

Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 6-1

 C HAPTER O BJECTIVES

1. What is customer value? How do

consumers use it to make decisions?
2. When are customers satisfied? What are
the benefits of having satisfied customers?
3. How do companies establish, develop, and
enhance mutually beneficial relationships
with customers?
4. What activities establish, develop, and
maintain customer sales?
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 6-2
 O BJECTIVE 1

What is customer value? How do

consumers use it to make decisions?

Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 6-3

D
Customer Value is the difference
E
F
I
between the benefits a customer
N
E receives and the total cost
D

incurred from acquiring,

using, and disposing
of a product.

Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 6-4

 Customer Value
E
X
P
L
Perceived Perceived Perceived
A Benefits Costs Benefits
I
N
E
D

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 P RODUCT B ENEFITS
A
P
P
L Functional
I
E
D

Benefits Brand

Service

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 P RODUCT C OSTS
A
P
P Purchase
Price
L
I Usage
E Costs
D

Costs

Maintenance

Disposal

Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 6-7

 C USTOMER VALUE
A
P
P
L
I
E
Product
D Customer
Benefits
Value

Service
Benefits Price &
Other
Costs

Brand
Benefits

Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 6-8

 P RICE -P ERFORMANCE VALUE M AP
A
P
P
L
I
E
D

Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 6-9

 O BJECTIVE 2

When are customers satisfied? What are

the benefits of having satisfied
customers?

Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 6-10

D
E
F Customer Satisfaction is the
I
N
E
degree to which a product
D
meets or exceeds customer
expectations.

Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 6-11

 Customer Satisfaction
E
X
Negative Neutral Positive
P
L
A • Dissatisfied • Satisfied • Delighted
I • Defect • Switchable • Loyal
N
E
D

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 C USTOMER S ATISFACTION
A
P Loyalty
P
L
I
E
D
Larger Share Product
of Wallet Champion

Lower Costs

Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 6-13

 M EASURING C USTOMER S ATISFACTION
A
P
P Customer Satisfaction
L
I
E
D

Internal External

JD Power
ACSI

Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 6-14

 C USTOMER L OYALTY
A
P
P
L No
I Loyalty
E
D

Degrees of Loyalty

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 T HE VALUE OF A C USTOMER
A
P
P Profit
L
I
E 80% of Profits No Profits (loss)
D
20% of Customers 20% of Customers

20% of Profits
60% of Customers

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 C USTOMER L IFETIME VALUE
A
P The present value of all profits expected to be
P earned in the future from a customer.
L
I
E
D

Customer Average Cost to

Profit
Lifetime = Purchases
per Year
X Margin - Service the
Customer
Value

Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 6-17

 F IRE Y OUR C USTOMERS
T
H
I
N In 2007, Sprint fired 1,000
K customers for being
A “problematic.”
B
O
U
These customers called an
T average of 90 times per month,
often as much as 12 times a
I
T day, demanding credit to their
account.

Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 6-18

 C USTOMER R ETENTION
A
P
P
L
I
E
D

Former
Customers

New
Customers

Current
Customers
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 S ERVICE R ECOVERY PARADOX
T
H Highly effective service recovery can result
I
N in higher levels of customer satisfaction
K

A than in cases where a service

B
O failure did not exist.
U
T

I
T

Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 6-20

 O BJECTIVE 3

How do companies establish, develop,

and enhance mutually beneficial
relationships with customers?

Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 6-21

D Relationship Marketing is the
E
F
I
organizational commitment to
N
E
D
developing and enhancing long-term,
mutually beneficial
relationships with
profitable or potentially
profitable customers.
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 6-22
 R ELATIONSHIP M ARKETING
E
X
P
L
Loyalty
A
I
N
E
Customer
D Relationships

Retention

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 R ELATIONSHIP M ARKETING
A
P
P
L Reduced
I Anxiety
E
D Added Sense of
Value Belonging

Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 6-24

 O BJECTIVE 4

What activities establish, develop, and

maintain customer sales?

Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 6-25

D
Customer Relationship
E
F
I Management is comprised of the
N
E
D activities that are used to establish,
develop, and maintain
customer sales.

Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 6-26

 Customer Relationship Management
E
X
P
L External
A Gather Information
Processes
I
N
E
D

Internal
Use Information
Processes

Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 6-27

 C USTOMER R ELATIONSHIP M ANAGEMENT
A
P
P Customize
L Products
I
E
D

Establish Identify
Dialogue Customers

Differentiate
Customers

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VISUAL SUMMARY

Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 6-29

 All rights reserved. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording, or otherwise, without the prior written
permission of the publisher. Printed in the United States of America.

Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 6-30