Essay on MBM6 Ch 1 Slides 1

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Market­Based Management

MBM 6th
Edition

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

Customer­Focused Organization

MBM6
Chapter 1

• Senior Mgmt Leadership
• Employee Customer
Training
• Customer Involvement
• Customer Experiences
• Customer Solutions
• Customer Complaints

• Customer Satisfaction
• Customer Retention
• Customer Loyalty

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

“Very satisfied” customers not only buy