Understanding Customer Delight: Ingredients, Strategies, and Impact

Posted on Sep 7, 2024 in Economy

What is Customer Delight?

‘Delighters’ are unexpected characteristics that surprise customers in a positive way. Their absence doesn’t cause dissatisfaction, but their presence elevates the customer experience. In essence, it’s about exceeding expectations with the level of service provided.

Ingredients of Customer Delight

While there are countless ways to delight customers, some common ingredients contribute to success. The key is identifying how these ingredients translate to your specific business and, most importantly, your customers.

I. The ‘Wow’ Factor

This involves providing a level of service that surprises customers. It could be the speed of response, the knowledge and willingness of staff, or the way a problem is resolved. It’s about exceeding industry standards and surpassing competitor offerings.

Example: Singapore Airlines is renowned for its innovation and service. The ‘wow’ effect stems not only from cutting-edge seat gadgets but also from the exceptional service provided by flight attendants and other employees.

II. The Element of Surprise

Customer delight often stems from the unexpected. However, some businesses strategically incorporate ‘spontaneity’ into their operations.

Examples:

• A personalized welcome note in a hotel room.
• A reserved parking space at a supplier’s office.
• A receptionist who remembers your name and preferences.
• A thank-you letter for prompt payment.

This ‘planned spontaneity’ can enhance any stage of the customer journey.

III. Making Customers Feel Valued

Simple gestures can go a long way in making customers feel appreciated.

Examples:

• A genuine ‘thank you’ note.
• A welcome email for a first-time order.
• A personalized card acknowledging a customer’s loyalty.
• A quick phone call to check in or share relevant information.
• Front-line staff demonstrating genuine interest and attentiveness.

IV. Authenticity is Key

Customer delight efforts can backfire if they appear insincere or contrived. Truly customer-centric businesses empower their employees to take ownership and initiative.

Example: Ritz Carlton Hotels empowers every employee to spend up to $2,000 to resolve customer issues without managerial approval.

Benefits of Delighted Customers

• Increased Customer Loyalty: Delighted customers are more likely to become repeat buyers and recommend the business to others.
• Increased Customer Lifetime Value: Retaining satisfied customers leads to higher revenue over the long term.
• Increased Share of Customer: Delighted customers are more receptive to exploring other products or services offered by the business.

Lecture 3: Understanding Customer Value

Desired vs. Perceived Value

Desired customer value is what customers want and are willing to pay for. Perceived value is the benefit customers believe they received after purchasing a product.

Value is subjective and influenced by individual experiences, knowledge, and perceptions. It shapes customer attitudes and influences purchasing decisions.

Example: People choosing to pay a premium for Fiji water over cheaper alternatives perceive it as higher quality due to factors like brand image and packaging.

Five Dimensions of Value

1. Functional Value: The perceived utility of a product, such as reliability, durability, performance, and usability.
2. Emotional Value: The positive feelings associated with owning or using a particular brand.
3. Social Value: The social benefits derived from using a product or service, such as enhanced self-image, status, or belonging.
4. Conditional Value: The value associated with specific situations or occasions, such as holidays, special events, or emergencies.

Value Proposition Model

A value proposition is the utility-creating product or service a company offers to customers.

Partner Roles

• Co-development: Customers participate in the R&D process to help create products that better meet their needs.
• Co-production: Customers assemble part of the product themselves, often in exchange for a lower price.
• Reseller Services: Value-added activities undertaken by resellers, such as promotion and transportation.
• Customer Servicing: Additional services provided to end-users by various value chain members.
• Relative Competitive Positioning: How competing value propositions are perceived by customers. Strategies include focus, differentiation, and generic positioning.

Distinctive Capabilities and Competitive Advantage

• Distinctive Capabilities: Capabilities a company performs better than competitors, providing a competitive edge.
• Competitive Necessities: Essential capabilities for survival in the market.
• Competitive Advantage: Achieved when a company excels in key success areas compared to competitors.

Lecture 5: Customer Perceived Value

Customer perceived value goes beyond satisfaction and focuses on the value customers believe they receive compared to alternatives. Marketers aim to increase perceived value by enhancing benefits, reducing costs, or both.

Real Value vs. Perceived Value

Real value is the actual cost of production, while perceived value is the subjective worth customers assign to a product.

Marketing plays a crucial role in aligning perceived value with real value, especially during a product’s initial lifecycle stages.

Factors Influencing Perceived Value

In the absence of direct experience, consumers rely on external cues to assess quality, such as:

• Price
• Brand Image
• Manufacturer’s Image
• Retail Store Image
• Country of Origin

Example: Consumers often associate higher prices with better quality, even without concrete evidence.

Lecture 6: Relationship Marketing

Relationship marketing emphasizes building long-term customer relationships to foster loyalty and repeat business.

Attracting and Retaining Customers

Relationship marketing involves strategies to attract new customers and retain existing ones. This includes marketing campaigns, quality products, competitive pricing, loyalty programs, and excellent customer service.

Customer Satisfaction Monitoring

Continuous monitoring of customer satisfaction is crucial. Feedback mechanisms, such as surveys, help identify areas for improvement and build upon positive experiences.

Customer Relationship Management (CRM)

– refers to the methodology or process a business uses to study and learn more about customers’ needs and purchasing behaviors in order to develop stronger and longer-lasting relationships with them. Implementing CRM solutions might involve considerable time and expense, but it has many benefits and advantages.  / Improved customer relations One of the prime benefits of using a CRM is obtaining better customer satisfaction. By using this strategy, all dealings involving servicing, marketing, and selling your products to your customers can be carried out in an organized and systematic way. You can also praovide better services to customers through improved understanding of their issues and this in turn helps in increasing customer loyalty and decreasing customer agitation.In this way, you can also receive continuous feedback from your customers regarding your products and services. It is also possible that your customers recommend you to their acquaintances, when you provide efficient and satisfactory services.

Increase customer revenues – By using a CRM strategy for your business you will be able to increase the revenue of your company to a great extent. Using the data collected, you will be able to popularize marketing campaigns in a more effective way. With the help of CRM software, you can ensure that the product promotions reach a different and brand new set of customers, and not the ones who had already purchased your product, and thus effectively increase your customer revenue.

Maximize up selling and cross selling – A CRM system allows up-selling which is the practice of giving customers premium products that fall in the same category of their purchase. The strategy also facilitates cross selling whic his the practice of offering complementary products to customers, on the basis of their previous purchases. This is done by interacting with the customers and getting an idea about their wants, needs, and patterns of purchase. The details thus obtained will be stored in a central database, which is accessible to all company executives. So, when an opportunity is spotted, the executives can promote their products to the customers, thus maximizing up-selling and cross selling.

Better internal communication- Following a CRM strategy helps in building up better communication within the company. The sharing of customer data between different departments will enable you to work as a team. This is better than functioning as an isolated entity, as it will help in increasing the company’s profitability and enabling better service to customers.

Optimize marketing – With the help of CRM, you will be able to understand your customer needs and behavior, thereby allowing you to identify the correct time to market your product to the customers. CRM will also give you an idea about the most profitable customer groups, and by using this information you will be able to target similar prospective groups, at the right time. In this way, you will be able to optimize your marketing resources efficiently. You can also be ensured that you don’t waste your time on less profitable customer groups.

Lecture 8

Value Chain- The sequence of value adding activities that a product goes through before reaching the end-user can be described as a value chain or in another word value chain” refers to the concept that a company is  chain of activities for transforming inputs into outputs with purpose to deliver value to the customers. 

These activities in the value chain are core (primary) and supplementary (secondary or support) activities.

Primary Activities – Those that are directly concerned with creating and delivering a product (e.g. component assembly). Primary activities include the following: / Inbound logistics: This refers to everything involved in receiving, storing and distributing the raw materials used in the production process. / Operations: This is the stage where raw products are turned into the final product./ Outbound logistics: This is the distribution of the final product to consumers. / Marketing and sales: This stage involves activities like advertising, promotions, sales-force organization, selecting distribution channels, pricing, and managing customer relationships of the final product to ensure it is targeted to the correct consumer groups. / Service: This refers to the activities that are needed to maintain the product’s performance after it has been produced. This stage includes things like installation, training, maintenance, repair, warranty and after-sales services./ Support Activities, which whilst they are not directly involved in production, may increase effectiveness or efficiency (e.g. human resource management). For example: Let us explore this with an example. On a typical weekday, I order in a sandwich from a global health food chain for lunch. This simple sandwich is the end product of a long value chain. Bread, butter and fresh vegetables: each of these products comes to the vendor as part of a separate value chain. The creation of the sandwich as a whole is the health food chain’s addition to this value chain, and the final product, i.e. the sandwich, gets delivered to me, the consumer. At every stage of the chain, value is added to the product by making it, processing it, adding to it, or polishing it.

The support activities help the primary functions and include the following: Procurement: This is how the raw materials for the product are obtained./ Technology development: Technology can be used across the board in the development of a product, including in the research and development stage, in how new products are developed and designed, and process automation./ Human resource management: These are the activities involved in hiring and retaining the proper employees to help design, build and market the product./ Firm infrastructure: This refers to an organization’s structure and its management, planning, accounting, finance and quality-control mechanisms./ For example: for operations to produce a product of the exact customer specification, they need the support of the Human Resource Management who will recruit, train and develop people capable of operating the IT to design the products and improve processes through automation