Staff Site Universitas Negeri Yogyakarta
BUILDING CUSTOMER
SATISFACTION, VALUE, AND
RETENTION
BY: AGUNG UTAMA
Defining Customer Value and
Satisfaction
Customer perceived value (CPV) : The difference
between the prospective customer‘s evaluation of all
benefits and all the cost of an offering and the
perceived alternatives.
Customer perceived value (CPV) =
Total Customer Value ( TCV)-Total Customer Cost
(TCC)
Total Customer Value : the perceived monetary value
of the bundle of economic, functional and
psychological benefits customer expect from a given
market offering.
Total Customer Cost : the bundle of costs customers
expect to incur in evaluating, obtaining, using and
disposing of the given market offering.
Determinants of Customer Value
Does the customer will always buy the
product which delivering the greater customer
value?
Not Necessarily.
Why?
Because the customer also examines his total
cost of transacting with the product and the
alternative, which consists of more than the
money before making the buying decision.
Based on this decision making
theory, there are three (3)
ways to making success in
selling to the buyer :
Increasing total customer value by improving
product, services, personel, and/or image
benefits.
2. Reducing the buyer’s non monetary cost by
reducing the time, energy, and psychic cost.
3. Reducing it’s product monetary cost to the
buyer.
1.
Total Customer Satisfaction
The customer satisfaction is depend
on the offer’s performance in relation
to the customer’s expectation.
Satisfaction : a person’s feelings of
pleasure or dissappoinment resulting
from comparing a product’s
perceived performance (outcome) in
relation to his or her expectations.
If P < E
If P = E
If P > E
Satisfied/Delighted
P=Performance
E=Expectation
Dissatisfied
Satisfied
Highly
The important key to generating high
customer loyalty is delivering high customer
value.
A company must design a competitively
superior value proposition aimed at a specific
market segment (Michael Lanning).
The value proposition : consits of whole
cluster of benefits the company promises to
deliver ; it is more than the core positioning of
the offering.
In a hypercompetitive economy a company
can only win the competition by creating and
delivering superior values.
This involves 5 capabilities :
1. Understanding customer value
2. Creating customer value
3. Delivering customer value
4. Capturing customer value
5. Sustaining customer value
To succeed, a company needs to use the
concepts of a value chain and a value
delivery network.
Value Chain
Value chain: a tool for identifying was to create more
customer value (Porter,M).
Every firm is a synthesis of activities that are performed
to design, produce, market, delivery and support its
products.
The value chains identifies nine strategically relevant
activities that create value and cost in a specific business.
These nine value creating activities consists of five
primary activities and four support activities.
The primary activities represent the sequence of bringing
materials into the business (inbound logistics), converting
them into final products (operations), shipping out final
products (outbond lohistics), marketing , and servicing
them.
The support activities: procurement, technology,
human resource management, and firm infrastructure
are handled in certain specialized departments, but not
only there. For example: several departments may do
some procurements and hiring of people.
The firm task is to examine its cost and performance in
each value creating activity and to look for ways to
improve it.
The firm should estimate its competitors cost and
performance as benchmarks against which to compare
its owns cost and performances.
The firm success depends not only on how well each
departments performs its works, but also on how well
the various departmental activities are coordinated. Too
often, company departments act to maximize their
interests. For example: a credit department may take a
long time to check prospective customers’credit so as
not to incur bad debts, mean while the customer waits
and the sales person is frustrated.
Firm Infrastucture
In
bound
logistic
s
Operatio
n
Out
bound
logistics
Marketi
ng &
Sales
r
Se
Primary Activities
e
c
i
v
Ma
rg
in
Human Resources Management
Technology Development
Procurement
in
rg
Ma
S
A
V
To be succesful a firm also needs to look for competitive
advantages beyond its own operations, into value chains of its
supliers, distributors and customers.
Many companies today have partnered with specific suppliers
and distributors to create a superior value delivery network
(supply chain)
For example: Levi Strauss & Company and connections with its
suppliers and distributors. One of levi’s major retailers is Sears.
Every nights levi’s learns the sizes and styles of its blue jeans
sold through Sears and other major outlets. Levi’s then
electronically orders more fabric for next day delivery from
Miliken andCompany, its fabric suplier. Miliken, in turn , relays an
order for more fiber to Dupont, its fibre supplier. In this way, the
partners in the supply chain use the most current sales
information to manufacture what is selling, rather than for a
forecast that may not match current demand. In this system, the
goods are pulled by demand rat her than pushed by supply.
Competition is
Between networks,
not Companies.
the winner is the
company with
the better network
DuPont
(Fibers)
Miliken
(Fabric)
Levi’s
(Apparel)
Sears
(Retail)
Customer
Attracting and Retaining
Customers
Customer Relationship Management
The process of managing detailed
information about individual customers and
carefully managing all the customer “touch
points” with the aim of maximizing customer
loyalty.
The aim of CRM : is to produce high customer
equity ( value equity, brand equity and
relationship equity).
1. Get cross-departmental
2.
3.
4.
5.
participation in planning
and managing the customer satisfaction and
retention process.
Integrate the voice of customers in all business
decisions.
Organize and make accesible a database of
information on individual customer needs,
preferences, contacts, purchase frequency and
satisfaction.
Make it easy for customers to reach approriate
company personel and express their needs,
perceptions, and complaints.
Run award programs recognizing outstanding
employees.
SATISFACTION, VALUE, AND
RETENTION
BY: AGUNG UTAMA
Defining Customer Value and
Satisfaction
Customer perceived value (CPV) : The difference
between the prospective customer‘s evaluation of all
benefits and all the cost of an offering and the
perceived alternatives.
Customer perceived value (CPV) =
Total Customer Value ( TCV)-Total Customer Cost
(TCC)
Total Customer Value : the perceived monetary value
of the bundle of economic, functional and
psychological benefits customer expect from a given
market offering.
Total Customer Cost : the bundle of costs customers
expect to incur in evaluating, obtaining, using and
disposing of the given market offering.
Determinants of Customer Value
Does the customer will always buy the
product which delivering the greater customer
value?
Not Necessarily.
Why?
Because the customer also examines his total
cost of transacting with the product and the
alternative, which consists of more than the
money before making the buying decision.
Based on this decision making
theory, there are three (3)
ways to making success in
selling to the buyer :
Increasing total customer value by improving
product, services, personel, and/or image
benefits.
2. Reducing the buyer’s non monetary cost by
reducing the time, energy, and psychic cost.
3. Reducing it’s product monetary cost to the
buyer.
1.
Total Customer Satisfaction
The customer satisfaction is depend
on the offer’s performance in relation
to the customer’s expectation.
Satisfaction : a person’s feelings of
pleasure or dissappoinment resulting
from comparing a product’s
perceived performance (outcome) in
relation to his or her expectations.
If P < E
If P = E
If P > E
Satisfied/Delighted
P=Performance
E=Expectation
Dissatisfied
Satisfied
Highly
The important key to generating high
customer loyalty is delivering high customer
value.
A company must design a competitively
superior value proposition aimed at a specific
market segment (Michael Lanning).
The value proposition : consits of whole
cluster of benefits the company promises to
deliver ; it is more than the core positioning of
the offering.
In a hypercompetitive economy a company
can only win the competition by creating and
delivering superior values.
This involves 5 capabilities :
1. Understanding customer value
2. Creating customer value
3. Delivering customer value
4. Capturing customer value
5. Sustaining customer value
To succeed, a company needs to use the
concepts of a value chain and a value
delivery network.
Value Chain
Value chain: a tool for identifying was to create more
customer value (Porter,M).
Every firm is a synthesis of activities that are performed
to design, produce, market, delivery and support its
products.
The value chains identifies nine strategically relevant
activities that create value and cost in a specific business.
These nine value creating activities consists of five
primary activities and four support activities.
The primary activities represent the sequence of bringing
materials into the business (inbound logistics), converting
them into final products (operations), shipping out final
products (outbond lohistics), marketing , and servicing
them.
The support activities: procurement, technology,
human resource management, and firm infrastructure
are handled in certain specialized departments, but not
only there. For example: several departments may do
some procurements and hiring of people.
The firm task is to examine its cost and performance in
each value creating activity and to look for ways to
improve it.
The firm should estimate its competitors cost and
performance as benchmarks against which to compare
its owns cost and performances.
The firm success depends not only on how well each
departments performs its works, but also on how well
the various departmental activities are coordinated. Too
often, company departments act to maximize their
interests. For example: a credit department may take a
long time to check prospective customers’credit so as
not to incur bad debts, mean while the customer waits
and the sales person is frustrated.
Firm Infrastucture
In
bound
logistic
s
Operatio
n
Out
bound
logistics
Marketi
ng &
Sales
r
Se
Primary Activities
e
c
i
v
Ma
rg
in
Human Resources Management
Technology Development
Procurement
in
rg
Ma
S
A
V
To be succesful a firm also needs to look for competitive
advantages beyond its own operations, into value chains of its
supliers, distributors and customers.
Many companies today have partnered with specific suppliers
and distributors to create a superior value delivery network
(supply chain)
For example: Levi Strauss & Company and connections with its
suppliers and distributors. One of levi’s major retailers is Sears.
Every nights levi’s learns the sizes and styles of its blue jeans
sold through Sears and other major outlets. Levi’s then
electronically orders more fabric for next day delivery from
Miliken andCompany, its fabric suplier. Miliken, in turn , relays an
order for more fiber to Dupont, its fibre supplier. In this way, the
partners in the supply chain use the most current sales
information to manufacture what is selling, rather than for a
forecast that may not match current demand. In this system, the
goods are pulled by demand rat her than pushed by supply.
Competition is
Between networks,
not Companies.
the winner is the
company with
the better network
DuPont
(Fibers)
Miliken
(Fabric)
Levi’s
(Apparel)
Sears
(Retail)
Customer
Attracting and Retaining
Customers
Customer Relationship Management
The process of managing detailed
information about individual customers and
carefully managing all the customer “touch
points” with the aim of maximizing customer
loyalty.
The aim of CRM : is to produce high customer
equity ( value equity, brand equity and
relationship equity).
1. Get cross-departmental
2.
3.
4.
5.
participation in planning
and managing the customer satisfaction and
retention process.
Integrate the voice of customers in all business
decisions.
Organize and make accesible a database of
information on individual customer needs,
preferences, contacts, purchase frequency and
satisfaction.
Make it easy for customers to reach approriate
company personel and express their needs,
perceptions, and complaints.
Run award programs recognizing outstanding
employees.