Gains in marketing knowledge without application lessen the full impact of learning.
Performance
Impact
Marketing
Application
Marketing
Knowledge
The objective of MarketBased Management is to go beyond theory to provide readers with the necessary concepts and tools to apply what they have learned and understand the performance impact of MarketBased Management.
– Roger J. Best
Copyright Roger J. Best, 2012
Customer Focus, Customer
Performance, and Profit Impact
MBM6
Chapter 1
Very Satisfied Customers Drive Profits
Chapter 1 Objectives
Building a customer focused organization
Measuring customer performance
Profit impact of customer retention and customer loyalty.
Satisfied is not good enough. Completely satisfied—that’s a big deal. A completely satisfied customer is at least three times more likely to return than one who’s just satisfied. ―Andrew Taylor, CEO, Enterprise RentACar
Copyright Roger J. Best, 2012
Customer Focus, Customer
Performance, and Profit Impact
MBM6
Chapter 1
Building a Customer
Focused Organization
In this section we will look at how customerfocused organizations not only outperform their competition over the long term by consistently delivering higher levels of customer satisfaction, they also realize higher profits over the short run.
Copyright Roger J. Best, 2012
Underwhelming Customers
MBM6
Chapter 1
Little or no customer focus translates into an unfocused competitive position and minimal customer satisfaction. The result is a vicious circle of poor performance.
Copyright Roger J. Best, 2012
Top Performers Produce Higher
Investor Returns
MBM6
Chapter 1
Apple, Southwest Airlines, and Clorox would be a part of the top performers in the graph above. Their average stock price index started at 100 and 10 years later was 300. Poor performers started at 100 and 10 years later were still at 100.
Copyright Roger J. Best, 2012
How would this model work differently in Bank of America vs. Southwest Airlines?
Copyright Roger J. Best, 2012
Benchmarking Customer Satisfaction
MBM6
Chapter 1
American Customer Satisfaction Index University of Michigan (www.theACSI.org)
ACSI studies have shown that Customer Satisfaction is a leading indicator of company financial performance. The ACSI database reports all companies by industry.
Copyright Roger J. Best, 2012
Customer Focus, Customer
Performance, and Profit Impact
MBM6
Chapter 1
Measuring Customer
Performance
In this section we will look at how companies that use customer performance metrics are able to identify their unprofitable customers. For any business, knowing which customers not to attract is just as important as knowing which customers to attract.
Copyright Roger J. Best, 2012
Customer Satisfaction
A Key Performance Metric
MBM6
Chapter 1
Very
Satisfied
100
Satisfied
80
Somewhat
Satisfied
60
Somewhat
Dissatisfied
40
Dissatisfied
20
Very Dissatisfied
0
To determine the CSI for a sampling of customers, simply compute the average of the customers’ satisfaction ratings. Customer satisfaction is a forecast of future revenues and profits.
Copyright Roger J. Best, 2012
Customer Satisfaction – WideAngle View
MBM6
Chapter 1
Deaveraging CSI provides a wideangle view of customer satisfaction and allows managers to see more completely the opportunities for improvement.
Copyright Roger J. Best, 2012
Profit Impact of Very Satisfied Customers
Marketing
Performance
Tool 1.1
Deaveraging CSI is critical to understanding customer profitability
