Marketing 5000

1
Marketing 5000
Webster U N I V E R S I T Y

• Week 2 Chapter 3 Customer Value

2
Objectives

• Expectations and Satisfaction
• Customer Value / Retention
• Corporate Mission Statements
• Strategic Analysis
• Group Presentations
• Business Models
• Marketing Mix

3
Customer Perceived Value

• Customer Perceived Value
• customer benefits costs incurred for product
• Total Customer Value
• product value services personnel brand
  image

4
Customer Perceived Value

• Example
• Sears Department Store
• Craftsman Tools
• Customer Perceived Value
• High quality
• Break a tool, free replacement
• National chain store in US
• No time limit, no questions
• Customer Cost
• High priced
• Limited distribution

5
Customer Perceived Value

• Example
• Dell Computer
• Corporate Premier Pages
• Customer Perceived Value
• Special page for my company
• Track computer warranties, configurations,
  purchase dates
• Set up pre-approved purchase policies
• Customer Cost
• Higher price
• All records with Dell, costly to reproduce

6
Customer Satisfaction

• Satisfaction measure of pleasure or
  disappointment compared to expectations
• Performance lt ExpectationsDissatisfaction
• Performance ExpectationsSatisfaction
• Performance gt ExpectationsHigh Satisfaction,
  Delight!
• Xerox very satisfied customers 600 more
  likely to repurchase in next 18 months

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Customer Expectations

• Expectations
• Past experience
• Friends, co-workers
• Marketing information
• If you promise too littlepeople wont try your
  product!
• If you promise too muchcustomers will be
  dissatisfied

8
Measuring Satisfaction

• Complaint System / Telephone Hot Line / Email
• Customer Surveys
• 25 of customers not satisfied
• 5 will complain
• 95 just switch or buy less
• Ghost Shopping / Mystery Shoppers
• Test own stores and people for service
• Managers should visit competitors
• Lost Customer Analysis
• Follow up with customers who have stopped buying
• Monitor lost customer rate

9
Attracting and Keeping Customers

• Computing Cost of Lost Customers (Churn)
• Measure the lost customer rate
• Find the causes, manage them better
• Estimate the profit loss from customer
• Estimate cost of actions to reduce the loss rate
• Consulting company results from several major
  companies (B2B)
• 15 customers found cheaper product
• 15 customers found better product
• 70 left because of poor attention from supplier

10
Measuring Customer Lifetime Value

• Customer Lifetime Value gt Acquisition Cost
• Acquisition Cost
• How much does it cost to get a new customer?
  1,000
• Sales calls
• Samples
• Demonstrations
• Modifications
• Lifetime price
• Years x profit 1,200
• Solution Reduce acquisition costs, increase
  profit margins, increase years of loyalty, or
  combination

11
Homework 1 Customer Retention

• (1) example from each group
• use group members company
• 1-2 PPT slides
• Customer Retention / Loss Rate
• What is rate , why do customers leave?
• Customer Acquisition Cost
• Describe the activities and cost
• Customer Lifetime Value
• Show simple estimate
• 2-3 recommendations to increase retention
• 2-3 recommendations to increase lifetime value

12
Marketing 5000
Webster U N I V E R S I T Y

• Week 2 Chapter 3 Customer Value