THE RELATIONSHIP BETWEEN CUSTOMER VALUE AND MARKETING STRATEGY
Company owners or shareholders are generally not interested in the idea of value and customer satisfaction. For them, the satisfaction of the company owner should be sought, not consumer satisfaction. Providing customer satisfaction means reducing company profits and also means reducing company owner satisfaction.
The above thoughts seem reasonable, but when explored further, actually customer satisfaction and company owner satisfaction can go hand in hand. In other words, if it is managed properly, the increase in customer satisfaction will be followed by an increase in company profitability, which also means an increase in the satisfaction of company owners.
The logic is: the higher the value, the higher the customer satisfaction and loyalty, the higher the consumer equity, and the higher the company's profitability. Here a new term is introduced
'consumer equity'. This concept will be discussed in the next section along with another related concept: customer lifetime value (CLV). For the first opportunity, the relationship between value and customer satisfaction, and loyalty is described.
There have been many studies (including Spiteri and Dion, 2004; Carpenter, 2008) that reveal a positive relationship between customer value, satisfaction, and loyalty so such conclusions at this point can be considered self-accepted or unquestioned. There may indeed be different findings, but such findings are considered special cases.
What's interesting about this relationship is the end result, namely consumer loyalty. From this concept, we can build the concept of consumer profitability. However, before that, let's look at the advantages that companies get from loyal customers. First, the subscription period (customer lifetime) is longer, which also means greater sales potential.
Second, there are up-selling and cross-selling. This is an activity to maximize transactions between companies and customers. Upselling means that the customer buys more or buys a higher version of the product so that the consumer spends more money from his wallet for the company (wallet share).
Cross-selling is an event where a customer buys not only the main product but also other products from the company. For example, the main product of PT. Pos Indonesia is a mail and package delivery service. However, this company also has other services, namely banking through postal banks and internet cafes. Cross-selling occurs when customers also use banking services or internet cafes, in addition to mail and package delivery services. The purpose of cross-selling is also to increase wallet share.
Third, consumers become advocates for other potential consumers. Referral A person or an organization who recommends a company (or its products) to other potential customers. Christopher, Payne, and Ballantyne (2002) distinguish two categories of advocates, namely customers and non-customers. Customer advocates (customer referrals) are further distinguished into loyal advocates (advocacy referrals) and company-initiated advocates (company-initiated customer referrals).
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