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
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 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

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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.

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

 Value Chain is:

 A tool for identifying ways to create more customer
value
 Value Chain identifies:
 Nine strategically relevant activities that create
value and cost in a specific business. These
activities are divided into:
 Primary Activities
 Support Activities

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 Generic Value Chain – Given by Porter
Activities

S
Firm Infrastructure
U
P Human Resource Management
P
O M
R
Technology Development
A
T
Procurement R
G
P I
R N
I
Inbound Outbound Marketing
M Operations Service
A
Logistics Logistics & sales
R
Y
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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:
 Refersto 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

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 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.
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