Customer Value Analysis

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Questions and Answers

What is the main purpose of building a rich customer database?

To identify and understand the needs of individual customers.

To track and measure customer satisfaction.

To ensure that customers are satisfied with the product or service.

To segment and target customers more effectively. (correct)

What is the relationship between customer lifetime value (CLV) and customer retention?

CLV is not directly related to customer retention rate but can be influenced by it.

CLV is independent of customer retention rate.

CLV is directly proportional to customer retention rate. (correct)

CLV is inversely proportional to customer retention rate.

Which of the following is NOT a strategy for increasing customer longevity?

Focusing disproportionate effort on high-profit customers.

Making low-profit customers more profitable or terminating them.

Focusing on attracting new customers to increase market share. (correct)

Enhancing the growth potential of each customer through cross-selling and up-selling.

What is the most important factor in determining the quality of a product or service?

The customer's perception of the product or service. (A) Signup and view all the answers

Which of the following is NOT a customer touchpoint?

A customer's internal discussion about a product with colleagues. (D) Signup and view all the answers

What is the primary focus of customer value analysis?

Identifying major attributes and benefits of customer value (C) Signup and view all the answers

How is customer satisfaction typically measured?

By asking direct questions about performance and future repurchase intentions (C) Signup and view all the answers

What does 'loyalty' signify in a customer context?

A commitment to repurchase a preferred product despite competitive offerings (A) Signup and view all the answers

What do feelings of dissatisfaction typically arise from?

A mismatch between expected and actual performance (C) Signup and view all the answers

Which of the following accurately describes the step regarding competitor performance assessment in customer value analysis?

Comparing company's performance on different customer values (A) Signup and view all the answers

What is meant by the term 'loss rate' in customer analysis?

The rate at which customers cease buying or switch suppliers (D) Signup and view all the answers

What role does CRM play in managing customer relations?

It focuses on managing detailed information to enhance customer loyalty (A) Signup and view all the answers

What type of costs are considered in the perceived bundle of costs from a customer's perspective?

Time, energy, and psychological costs alongside monetary costs (A) Signup and view all the answers

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Study Notes

Customer Value

Customer perceived value is a customer's evaluation of the benefits and costs of a product or service, alongside perceived alternatives
The total benefit is the value of the bundle of economic, functional, and psychological benefits customers expect from a given offering due to the product, service, people, and image involved
The perceived bundle of costs includes monetary, time, energy, and psychological costs customers expect from assessing, obtaining, using, and disposing of the product or service

Determinants of Customer Perceived Value

Total customer benefit includes product benefits, service benefits, personnel benefits, and image benefits
Total customer cost includes monetary cost, time cost, energy cost, and psychological cost

Steps in Customer Value Analysis

Identify the major attributes and benefits of customer value
Assess the quantitative importance of the different attributes and benefits
Compare company's and competitors' performances on the different customer values against their rated importance
Rate specific segment performance against a specific major competitor on an individual attribute or benefit basis
Monitor customer values over time

Measuring Satisfaction

Dissatisfaction results from a perceived performance falling short of expectations
Satisfaction results from a perceived performance matching expectations
Highly satisfied or delighted customers' perceived performance exceeds expectations
Use direct questions to measure satisfaction and likelihood to repurchase or recommend a brand
Contact customers who have stopped buying or switched to another supplier to understand why
Shoppers posing as buyers can report on the strong and weak points experienced in buying the company's and their competitors' products

Competitive Performance Monitoring

Monitor competitive performance

Customer Loyalty

Loyalty is a commitment to re-buy or patronize a preferred product or service in the future, despite potential switching influences and marketing efforts

Customer Loyalty Steps

Target the market
Increase awareness of the brand
Opnin to trial: Open to trying the brand, but not done so in the past; considered as potential customers
Assess for trier: Users who have tried the brand but not done so in the past; considered as potential customers . Assess recent users: Users who have used the product or service recently . Assess regular users: Frequent users who use the product or service regularly . Assess loyal customers: Users who are highly loyal and frequently use the product or service

CRM (Customer Relationship Management)

CRM is the process of carefully managing detailed information about individual customers and all customer touchpoints to maximize customer loyalty
A customer touchpoint is any occasion on which a customer encounters the brand (actual experience, communication, or observation

Maintaining Customer Relationships

Focus on valuable customers
Understand individual customer needs
Create customized products, services, and messages
Facilitate customer interaction through company contact centers and websites

Importance of Retention

Attract new customers, but also retain existing ones by increasing their business
Acquisition of customers can take 5x longer than retaining customers

Retention Strategies

Define and measure your retention rate.
Identify the causes and manage customer attrition.
Compare the value of the customer to the cost of reducing the defect rate

Enhancing Customer Relationships

Increase the longevity of customer relationships
Enhance the growth potential of each customer, share of wallet, cross-selling, and upselling
Make low-profit customers profitable or terminate them

Customer Lifetime Value (CLVs)

Customer Lifetime Value describes the net present value of the stream of future profits expected over the customer's lifetime purchase.

Quality

Quality is the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs

Customer Loyalty Goal

Create loyal customers at the heart of every business

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Description

This quiz delves into the concepts of customer perceived value, focusing on the determinants and steps involved in customer value analysis. Understand how customers evaluate the benefits and costs associated with a product or service. Test your knowledge on what constitutes total customer benefits and costs, and how to assess them effectively.