Content Prep- Customer Satisfaction and Customer Equity

Please use these questions to guide your preparation.   You do not need to turn in your answers

[UConn] = requires a UConn NetID to access.  [MM] = readings from Iacobucci 2018 Marketing Management. [VPD] = readings from Osterwalder et al 2014 Value Proposition Design

Required Content

[MM] Chapter 14 “Customer Satisfaction and Customer Relationships” (section 14.2)

  • Section 14.2 “How do Consumers Evaluate Products?”
    • Explain the comparative model of customer satisfaction
    • How do marketers believe the model varies across purchases of search, experiential or credence goods?
    • What are four sources of information customers use to develop expectations?
    • When mapping customer experiences, what pattern have marketers found in how customers evaluate their experiences? (do the core/periphery and hygiene/motivating categorizations seem familiar?)

Gupta (2014) Customer Management (in case pack)

  • What is the value to an organization of evaluating customers both on customer experience and customer profitability?
  • Define customer lifetime value. Two important details about customer lifetime value as an analysis tool: it is based on _________ rather than revenues, and it is defined over the ____________. 
  • Describe some of the reasons Gupta provides for why CLV is a useful decision tool.
  • CLV is a discounted cash flow model with two differences: it is calculated at the _______ customer level, and the model accounts for the probability of customer _______
  • Describe the similarities and differences between the general CLV model (Equation 1) and the simplified one (Equation 2)
  • Based on typical retention and discount rates across a number of industries, the margin multiple is between ____ and _____.  This suggests that if the annual margin from a customer is $100, the CLV for that customer is between ______ and _______. 
  • An organization with a discount rate of 12%, with 10 million customers have an average retention rate of 80% and an annual contribution margin of $100 is contemplating a new customer satisfaction program.  The team proposing the program suggests it can improve retention rates to 90%. How much could be spent to implement this satisfaction program? 
  • Discuss some of the challenges in implementing CLV
  • Identify the five broad strategies organizations can use to acquire customers effectively.
  • What is the relationship between retention rate and churn rate (also call customer defection rate)?
  • An organization has an 80% retention rate.  How long is the typical customer lifetime?
  • Identify the three reasons that customers defect, and three strategies organizations can use to reduce defection.
  • Define share of wallet, cross-selling and upselling. 
  • Define customer equity.