Lec On 24 & 30 July_building Customer Satisfaction

Building Customer Satisfaction A

customer is satisfied when he gets a high Customer Delivered Value.  Customer Delivered Value is the difference or a ratio between Total Customer Value (Benefits) and Total Customer Costs.  Total Customer Value: Product Value + Services Value + Personnel Value + Image Value  Total

Customer Cost: Monetary Cost + Time Cost

+ Energy Cost + Psychic Cost 11

 Satisfaction 

is defined as . . .

“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.”

 Methods

to track or measure Customer Satisfaction:  Complaint

& Suggestion Systems  Customer Satisfaction Surveys  Ghost Shopping  Lost Customer Analysis 21

Factors influencing performance of Business:  Stakeholders:

Customers, Employees, Suppliers, Distributors etc.  Processes  Resources: Include labor, materials, machines, energy, and information.  Organization: refers to the organization’s policies, structures, and corporate culture. 31

Value Chain: What does it take to produce & deliver Customer Value?  Value 

A tool for identifying ways to create more customer value

 Value 

Chain is:

Chain identifies:

Nine strategically relevant activities that create value and cost in a specific business. These activities are divided into:  

Primary Activities Support Activities 41

Generic Value Chain – Given by Porter Activities S U P P O R T

P R I M A R Y

Firm Infrastructure Human Resource Management Technology Development Procurement

Inbound Outbound Marketing Operations Service Logistics Logistics & sales

M A R G I N

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•Value Delivery Network: When apart from its own value chain, the firm tries to influence the value chain of its suppliers, distributors etc. •Attracting Customers: Lead generation, lead qualification and account conversion. •Computing the Cost of lost Customers: • E.g. A Company has 10,000 accounts in one small city • Company losses 10% = 1,000 of these accounts due to poor service • Ave. lost a/c represented Rs. 12,000/- loss in revenue. Thus, the company lost Rs. 1,20,00,000/- revenue • Assuming 20% profit rate, the company lost = Rs. 24,00,000/-

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Need for Customer Retention:  Increased

Revenue  Decrease in cost of selling  Advertising by old, loyal customers  Cross selling possibilities

•William Sherden’s 80-20-30 principle.

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Relationship Marketing:  Refers

to understanding and responding to customer needs and preferences to build more meaningful and long-term connections with customers

Levels of Customer relationship Building: •Basic marketing •Reactive Marketing •Accountable Marketing •Proactive marketing •Partnership marketing 81

Some generic Concepts: • Concept of a Profitable Customer: This is a person, household or company that over time yields a revenue stream that exceed by an acceptable amount the company’s cost stream of attracting, selling and servicing that customer.

• Total Quality Management: An organization-wide approach to continuously improve the quality of all the organization’s processes, products and services. 91