Customer Value Analysis

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