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Consumers are more educated and informed than ever, and they have the tools to verify companies’ claims and seek out superior alternatives.
Customers are value Maximizers. They estimate which offer will deliver the most perceived value and act on it. Buyers will buy from the firm that they perceive to offer the highest customer delivered value.
Whether that offer lives up to the expectations affects customer satisfaction and the probability that the customer will purchase the product again!Losing profitable customers can dramatically affect a firm’s profits. The cost of attracting a new customer is estimated to be five times the cost of keeping a current customer happy. The key to retaining customers is relationship marketing.
Marketing managers must calculate customer lifetime values of their customer base to understand their profit implications. They must also determine ways to increase the value of the customer base. A buyer’s satisfaction is a function of the products perceived performance and the buyer’s expectations. Recognizing that high satisfaction leads to high customer loyalty, many companies today are aiming for TCS – Total customer satisfaction. For such companies’ customer satisfaction is both a goal and a marketing tool.
What is CPV?
Customer perceived value is the difference between the prospective customers evaluation of all the benefits and all the costs of an offering and the perceived alternatives. CPV is thus based on the difference between what the customer gets and what he or she gives for different possible choices.
Without customers you don’t have a business. So the perceived value should match with the actual values that seller will offer. The seller must identify the attributes and benefits that customer value, assess those different attributes and benefits and monitor customer values over time.
Delivering high customer value
The value proposition consists of the whole cluster of benefits the company promises to deliver. It is more than core positioning of the offering.
For e.g. Google’s core positioning is Search. But the internet user is promised more than just a search tool. That’s clear with the Google’s product offering and the value that each product gives us. The brand represents a promise about the total experience customers can expect.
India’s largest car maker Maruti Suzuki India has topped customer satisfaction with dealer service for a 14th consecutive year, rated by market research firm JD Power Asia Pacific. According to JD Power Asia Pacific study, in a 1,000-point scale MSI had a score of 876, while the mass market average was 834. The study measured satisfaction among vehicle owners who visit an authorized dealership service center for maintenance or repair work between the first 12 to 24 months of vehicle ownership. Service quality, vehicle pick-up, service adviser, service facility and service initiation were the five factors used for measuring overall customer satisfaction.
The studies of customer dissatisfaction shows that customers are dissatisfied with their purchases about 25% of the time but that only about 5% actually complain. So don’t think that getting a tally of customer complaints will solve the problem of customer dissatisfaction!
Few days back I happened to see a customer complaint against Nissan India dealer at Thrissur, Kerala. The customer had a horrible experience with the Nissan dealer and he has raised a complaint against Nissan India. Such complaints will only bring bad image both to the dealer as well as the brand. This might not be one of an incident. There might be several such incidents. It will be good for Nissan India to look at those charts and evaluate yourself to know why you are at no:9!!!
Increase the customer lifetime value of your customers
It’s not always the company’s largest customers who yield the most profit. The largest customer can demand considerable service and receive the deepest discounts. The smallest customer pay full price and receive minimal service, but the costs of transacting with them can reduce their profitability. The mid size customers who receive good service and pay nearly full price are often the most profitable.
LTV = (Average Order Value) x (Number of Repeat Sales) x (Average Retention Time)
LTV can thus be a valuable tool in your marketing arsenal. You treat customers with high LTV (high expected future profits) differently from those with low LTV. You spend more to retain them. Some customers may even have negative LTV. Why spend a lot of money trying to retain these losers?
This infographic from kiss metrics shows the massive importance of measuring and optimizing for LTV. Have you ever wondered why there are so many Starbucks locations? Or why they have free Wi-Fi and comfy couches? It’s because the Starbucks marketers know that they’re not trying to sell a $5.90 cup of coffee — they’re trying to acquire and maintain a $15k customer. That simple math trick changes a lot about how you approach your marketing.
Your investment into your customers’ happiness will determine the success of your company. Quality is clearly the key to value creation and customer satisfaction. Provide your customers quality product and service. They will be your brand ambassadors and they bring more customers than your marketing department. Always remember customers are value maximizers and a great customer service will build a great company.
Courteous treatment will make a customer a walking advertisement. Remember Word of mouth marketing isn’t about giving customers talking points, as if they were brand spokespeople. It’s about delivering an exceptional customer experience that makes customers want to recommend you. (Courtesy – Deborah Eastman)
References: KissMetrics and Marketing Management byPhilip Kotler.
Thanks I amagree with my colleague’s answers
A person with a maximizer strategy will seek to get the most out of their lives. They live life to the full, making every day and every moment count. They are more likely to have many friends but may also seek intensity in an engrossing hobby.
Maximizers can usually handle complexity and typically have many activities on the go at one time. When one items slows down or they need to wait, they quickly switch to another.
In buying or deciding they research widely before making the best choice. In negotiation they will argue every last point, looking for the very best deal they can hammer out.
Maximizing has its costs and people who take this approach are more likely to suffer from regret, disappointment, envy and self-recrimination.
MinimizingA person who prefers minimizing seeks simplicity over complexity, less over more. They let time flow by, appreciating the moment but not needing to squeeze it dry.
Minimizers will likely have fewer friends and their relationships are less likely to be complex. Their conversations are straightforward and they are more comfortable with silence and their own company.
Minimizers have a lower emotional overload threshold and so may be risk averse and avoid intense emotional experiences.
In buying they seek something that is good enough, which satisfies their basic needs. In negotiation they will either concede easily or see a balanced and sufficient agreement.
Well answer add by Experts.I fully agree,
agree with mr. vinood and mrs. ghada
Agree with the expert answers here
in addition to the answers I would like to comment on your question that in such case we are talking about loyal customers who really appreciate and prefer the company products, hence they could be considered as a product marketers who really maximize the value of the product and may promote it. Therefore and from the other side, having such customers can minimize related risks and be a reliable value in the market !
Thank You
Types of Customers Customers behave in four different ways:
Apostles: Completely satisfied Share the feelings
Terrorists / Defectors: Merely satisfied Most of them can be converted into highly satisfied customer (Concepts developed through Service Recovery Paradox)
Mercenaries: Completely satisfied, but exhibits no loyalty. Expensive to acquire the customer, but depart quickly. Chase low price, buy on impulse, pursue fashion trends…
Hostages: Belongs with monopolistic environment.
