Chapter 2: The Customer in Focus Flashcards
Give me the definition of Customer Relationship Management
The systematic analysis and design of business relationships throughout the entire cycle
What are the goals of Customer Relationship Management
Achieving and Maintaining long-term, profitable relationships with customers by enhancing customer satisfaction and loyalty
What are the 4 central components + interdependencies of the CRM Success Chain
1) Customer Orientation: builds foundations for customer satisfaction
2) Customer Satisfaction: more customer oriented = more customer satisfaction = develop loyalty
3) Customer Loyalty: high customer satisfaction = more loyalty
4) Customer Value: high customer loyalty = higher customer value
What are 3 internal and external moderating factors
1) Customer Orientation -> Customer Satisfaction
2) Customer Satisfaction -> Customer Loyalty
3) Customer Loyalty -> Customer Value
What are 2 external and internal moderating factors for Customer Orientation -> Customer Satisfaction + explain each
Internal: Employee Training and Quality
External: Market Competition and Cultural differences
What are 2 external and internal moderating factors for Customer Satisfaction -> Customer Loyalty + explain each
Internal: Consistency and Personnalisation efforts
External: Competitors and Economic Conditions
What are 2 external and internal moderating factors for Customer Loyalty -> Customer Value + explain each
Internal: Cross-selling and Operational efficiency
External: Pricing Strategies and Tech Advancements
What is Customer Relationship Cycle?
Explain each phase
1) New Customer Acquisition
A) Initial Phase
B) Socialisation Phase
2) Customer Loyalty
A) Growth Phase
B) Mature Phase
3) Customer Recovery
A) Risk Phase
B) Dissolution Phase
C) Abstinence Phase
What is the Causal Relationship between Relationship Oriented & Economic Goals
Customer Satisfaction ->
Customer Loyalty ->
Customer Retention ->
Repeat Business ->
Increased Value ->
Higher Profitability
What are 5 reasons for Customer Satisfaction?
Good Communication
Politeness, Friendliness of employees
Good customer service
Availability of provider
High-quality products
What is the C/D Paradigm ?
It explains customer satisfaction as comparison between expectations and perceived performance
Define Confirmation
Performance matches expectations = satisfaction
What are the 2 types of Disconfirmation?
Positive: performance exceeds expectations => high satisfaction
Negative: performance lower than expectations => dissatisfaction
What is the Kano Model?
It shows the customer needs and how they impact customer needs
What is the Gap Model?
It identifies the 5 gaps in Service Quality
1. Knowledge
2. Design
3. Delivery
4. Communication
5. Customer
What are 3 reactions to Satisfaction?
Repurchase
Positive word-of-mouth
Decreasing price sensitivity
What are 3 reactions to Dissatisfaction?
Boycott
Complaints
Negative word-of-mouth
How does customer satisfaction affect loyalty and willingness to pay?
Willingness to pay depends disproportionately on level of satisfaction
What are 5 implications for market research?
1) Analysis of Employee Skills
2) Analysis of Employee Motivation
3) Location Research
4) Analysis of Customer Satisfaction & Image
5) Complaint Analysis
What are Primary Methods for Service Research?
1) Surveys
2) Observation
3) Experiment
4) Panel
What are the Economic Effects of Customer loyalty?
Increased Value
Reduced costs
Higher lifetime value
Price premium
Positive word-of-mouth
What are Behavioural Effects of Customer Loyalty?
Repeated purchases
Reduced sensitivity to price and competitors
Increased engagement
Tolerance for failures
What are 4 types of Customer Loyalty?
1) Economic Customer Retention
2) Technical-Functional customer retention
3) Contractual customer retention
4) Emotional
What are the determinations of customer loyalty strategy?
Understand customer needs (expectations & preferences)
Reward programs
Ensure consistency
What are 5 customer complaints in the service sector?
1) Service not satisfactory
2) Service too slow
3) Misunderstandings
4) Rude staff
5) Poor communication
What is the complaint management process?
1) Reception
2) Analysis
3) Resolution
4) Feedback
5) Follow-up
What are Complaint Management Objectives?
Restore Customer Satisfaction
Minimize Impact
Identify and Learn
Reduction of Quality costs
How to ensure Complaint Satisfaction?
Issue is resolved fairly and quickly
Compensation & apology is appropriate
Customer is and feels heard and respected
Why is Complaint satisfaction important?
Retain customer loyalty
Brand image
What is Customer Value?
“Customer is King”
Importance of prioritising customer needs, satisfaction & loyalty => essential for business success
What are indicators of Customer Value?
Price-to-quality ratio
Time saving
Personalisation
Convienience
Emotional Benefits
What are the 4 theoretical components of Customer Value?
1) Primary Customer Value: core benefits - essential purpose
2) Secondary: added benefits
3) Tertiary: emotional/social value
4) Quarterly: long-term & recurring benefits over time
What are the different types of customer review procedures?
One-dimensional model: monetary and non-monetary
Multidimensional model: holistic customer value
What is Customer Lifetime Value
Total revenue a customer is expected to generate over a lifetime for 1 business
