Chapter NO.
Creating Long-term
Loyalty Relationships
Building Customer Value, Satisfaction
and Loyalty
Creating loyal customers is at the heart of
every business.
Customer-Perceived Value
Customer-perceived value (CPV)is the difference
between the prospective customer’s evaluation
of all the benefits and all the costs of an offering
and the perceived alternatives.
Customer Value Analysis
To reveal the company’s strengths and
weaknesses relative to those of various
competitors. The steps in this analysis are:
Identify the major attributes and benefits
customers value
Assess the quantitative importance of the different
attributes and benefits
Assess the company’s and competitors’
performances on the different customer
values against their rated importance
Examine how customers in a specific
segment rate the company’s
performance against a specific major
competitor on an individual attribute or
benefit basis
Monitor customer values over time
Value Proposition
The value proposition consists of the whole
cluster of benefits the company promises to
deliver; it is more than the core positioning of
the offering.
Total Customer
Satisfaction
Satisfaction is a person’s feelings of pleasure
or disappointment that result from
comparing a product’s perceived
performance to expectations
If the performance falls short of
expectations, the customer is dissatisfied
If it matches expectations, the customer is
satisfied
If it exceeds expectations, the customer is
highly satisfied or delighted
Product and Service
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 Profitability
A profitable customer is a person, household, or
company that over time yields a revenue stream
exceeding by an acceptable amount the
company’s cost stream for attracting, selling,
and serving that customer
Attracting and Retaining
Customers
Reducing defection
Retention Dynamics
Managing the Customer
Base
Reducing the rate of customer defection
Increasing the longevity of the customer
relationship
Enhancing the growth potential of each
customer
Making low-profit customers more
profitable or terminating them
Focusing disproportionate effort on high-
profit customers