Building Customer Value, Satisfaction and Retention Customer Value

Building Customer Value, Satisfaction and Retention
Customer Value
Customer value is the relationship between benefits and the sacrifice necessary to
obtain those benefits. Customer value is not simply a matter of high quality. A high
quality product that is available only at a high price will not be perceived as a good
value, nor will low quality product selling for a low price. Instead, customers value
goods and services that are of the quality they expect and that are sold at prices they are
willing to pay. A Mercedes Benz and an Iphone fetch for premium prices because
consumers feel they get value in these products. On the other hand, lower income
consumers are price sensitive but they will only pay for a product if the product delivers
a benefit that is worth the money. What sense is in buying a product that is cheaper but
cannot do the job?
Marketers interested in customer value can do the following;
 Offer products that perform – This is the bare minimum requirement and
companies should listen to customers in order to determine the performance
characteristics that are most important to them.
 Earn trust – Earning trust can be achieved by delivering value consistently and
this leads to a loyal customer base which enhances the firm’s ability to grow.
 Avoid unrealistic pricing – Consumers expect the pricing to be realistic based
on the benefits that they will get from the product. Unrealistic prices will chase
customers away.
 Give the buyer facts – Companies must endeavour to give their customers facts
through their sales people so that they can make informed decisions. Sales
people must therefore find out what customers need and work towards finding a
solution.
 Offer organisation-wide commitment in service and after sales-support –
Customer service should be at the centre of an organisation in order to keep up
with customer expectations.
 Co-creation – Some companies and products allow customers to help create
their own experience.
Principles of Marketing Page 1

Customer Satisfaction
Customer satisfaction is the customer’s evaluation of a good or service in terms of

whether that good or service has met the customer’s needs and expectations. Failure to
meet the needs and expectations of customers result in dissatisfaction with the good or
service. Organisations must therefore develop a culture of delighting customers. The
tools below can help in tracking and measuring customer satisfaction;
1. Complaint Suggestion Systems – A customer centred organisation makes it

easy for its customers to deliver suggestions and complaints. This could be done
by providing forms which will include the likes and dislikes or establish hotlines
that are toll free.
2. Customer Satisfaction Surveys – Customer satisfaction must be measured by
conducting periodic surveys as dissatisfied customers do not always come
forward to complain even when complaint suggestion systems are in place.
3. Ghost Shopping – Companies can hire persons to pose as potential buyers to
report on strong and weak points in buying company and competitor products.
4. Lost Customer Analysis – Companies should contact customers who have
stopped buying or who have switched to another supplier in order to learn what
happened.
Customer satisfaction is key to customer retention because customer satisfaction leads

to the following;
 Customer loyalty
 A satisfied customer buys more as the company introduces new products and
upgrades existing products.
 A satisfied customer talks favourably about the company and its products
 A satisfied customer pays less attention to competing brands and advertising and
is less sensitive to price.
 A satisfied customer offers product ideas to the company.
 A satisfied customer costs less to serve than new customers because transactions
are routinized.
Building Customer Retention
Attracting new customers to a business is only the beginning but what matters most is
retaining those customers. The best companies view new customer attraction as the

launching point for developing and enhancing a long term relationship. Companies can
expand their market share in three ways; attracting new customers, increasing business
with existing customers and retaining current customers. It must be said though that it
is cheaper to do business with existing customers than to attract new customers and
building long term relationships becomes cardinal. Long-term relationships can be built
using relationship marketing which is a strategy that focuses on keeping and improving
relationships with current customers.
There are two ways in which customer retention can be achieved and these are outlined
below;
1. Erect High Switching Barriers – Under this method, customers are less likely to
switch to other brands or suppliers because this would involve high switching
costs such as high capital costs, high search costs or the loss of loyal-customer
discounts.
2. Deliver High Customer Satisfaction through Relationship Marketing –
Relationship marketing involves all the steps companies undertake to know and
serve their valued customers better.
While erecting barriers might work for a limited period of time, the best strategies for
retention are relationship marketing strategies. Below are the fundamental principles
that relationship marketing strategies are built on;
 Customer Oriented Personnel – This calls for employees to be customer

oriented in terms of their attitudes and actions. Employees represent their firms
in the eyes of their customer and any negative or positive action will be a
reflection of their firm.
 Employee Training - Leading marketers recognise the role of employee
training in customer service and relationship building. Knowledgeable
employees are not only an asset to an organisation but also to its customers.
 Empowerment – Empowerment is about giving employees more authority to
solve customer problems on the spot. Employees develop ownership attitudes
and feel like part-owners. Empowered employees manage themselves, are more
likely to work hard, account for their own performance and take prudent risks
to build a stronger business and sustain the company’s success.
 Teamwork – Teamwork entails collaborative efforts of people to accomplish
common objectives. Teamwork is fundamental in driving high levels of customer

satisfaction and superior customer value. Teamwork must therefore be
emphasised in intra and inter departmental circles as a way of encouraging
cooperation rather than competition.

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Building Customer Value, Satisfaction and Retention

Marketers interested in customer value can do the following;

Principles of Marketing Page 1

Customer satisfaction is the customer’s evaluation of a good or service in terms of

1. Complaint Suggestion Systems – A customer centred organisation makes it

Customer satisfaction is key to customer retention because customer satisfaction leads

Building Customer Retention

Principles of Marketing Page 2

 Customer Oriented Personnel – This calls for employees to be customer

Principles of Marketing Page 3

Principles of Marketing Page 4

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