Marketing Management

Customer Satisfaction

Dr Omkumar Krishnan, IBS,

Bangalore
 Customer Value
• Customers seek to maximize value by
– estimating which offer (product/firm) delivers
the most value (CPV)
– forming an expectation of value and acting
upon it (purchase)
– evaluating their usage experience against the
expectations
• Satisfaction results when expectations are
equaled or surpassed
Dr Omkumar Krishnan, IBS,
Bangalore
 Customer Perceived Value
• Perception of delivered value is a function of:
– Total customer costs
Monetary +Time + Energy + Psychic
– Total customer value
Product + Services + Personnel + Image
CPV = Total customer costs - Total customer value
• Firms at a disadvantage must:
– Reduce perceptions of costs
– enhance perceptions of value
Dr Omkumar Krishnan, IBS,
Bangalore
 Definition
• 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.”

Dr Omkumar Krishnan, IBS,

Bangalore
 Delivering High C Value
• Delivering Profitable Value
• Positioning Vs Value Proposition
• Value Delivery System (All experiences)
• Total Customer Satisfaction ??
• Customer Expectation (Source)

Dr Omkumar Krishnan, IBS,

Bangalore
 Customer Retention
• Reducing customer churn (defection)
– Define and measure retention rate
– Identify causes of attrition
– Estimate profit lost from customer defection
(customer lifetime value)
– Estimate cost to reduce defection; take
appropriate action

Dr Omkumar Krishnan, IBS,

Bangalore
 Customer Equity
• Brand Equity
• Relationship Equity
• Value Equity

Dr Omkumar Krishnan, IBS,

Bangalore
 Value-Cost Relation
Customer Firm

Customer Customer Customer Firms

Cost Value Value Cost

Dr Omkumar Krishnan, IBS,

Bangalore
 Customer Bonds
• Adding Financial Benefits
Membership, points
• Adding Social Benefits
Personalize customer relationships
• Adding Structural Ties
Create long-term contracts
Charge less for ongoing purchases
Link product to long-term service
Dr Omkumar Krishnan, IBS,
Bangalore
 Customer Satisfaction Process

• Customer Life-Cycle
The steps through which Consumer Delight is
achieved by means of customer Satisfaction

• Customer Lifetime Values

The bundle of long term benefits from the
same consumer across various company
products
Dr Omkumar Krishnan, IBS, Source: GS
Bangalore
 Customer Life-Cycle
Partner Source of Feedback, Product Improvement

Advocate Recommending – Word of Mouth

Client Repeat Purchase – Brand Loyalty

Customer Buys 1st Time

Prospect Need Recognition – Potential Customer

Suspect “needs” ???

Dr Omkumar Krishnan, IBS, Source: GS

Bangalore
 Customer Lifetime Values

• Example – First time Insurance Product

1 Year – Marriage
3 Year – Car
5 Year – Kids
8 Year – House

Dr Omkumar Krishnan, IBS, Source: GS

Bangalore