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Case Study: Managing Customer Quality Service

1673 words - 7 pages

Contents1.Lifetime Customer Value....................................................1What would you estimate is the lifetime customer value (LCV) of Laura's business at each of the stores?How would you account for any difference?2.Level of Service..................................................................3How would you rate the level of service provided by the two newsagents? Why?3.Customer Satisfaction and Customer Loyalty.........................4Although Laura shopped at the first newsagent regularly, was she loyal? Do you think the first newsagent confused "satisfaction" or even "nowhere else to go" with loyalty?Why is this dangerous for a business?How would you advise the first newsagent to proceed if she is to retain her customer base?4.Customer's Psychological Needs..........................................6What opportunities are there in a newsagency to provide sensational moments of truth?Bibliography…………………………………………………………………………7Q1) What would you estimate is the lifetime customer value (LCV) of Laura's business at each of the stores? How would you account for any different?LCV is a value to companies for how much a customer will buy from them over a period of time e.g. 5, 10, 15 years or more.{LCV = (Maximum sale x 52 weeks / year) x Period of lifetime}We assume Laura is 35 year-old now and she can live until 75 year-old. Therefore, the LCV of Laura's business at the first newsagent would be (15 x 52) x 40 which is approximately $31,200; and the LCV of Laura's business at the second newsagent would be (22 x 52) x 40 which is approximately $45,760.There are number of reasons show the difference of LCV between these two stores.First of all, when people go in a shop, they look for what they want, and then the first important consideration comes up from their mind is the PRICE.Price is the amount of money that charged for a product or service. In reality, people like comparing prices on the same brand of product from different shops to find out which one can meet their budget.In the case study, Laura spends more amount of money in the second newsagent each week is probably because of its price is higher than the other one.However, "Price alone rarely provides a long-term competitive advantage." (Jacques Horovitz 1990, p.30) This statement emphasises even if a business sells its products at a lower price, but in the long run, the business may still not compete against the other businesses because today's customers want more psychological needs rather than cheap price, and they are increasingly difficult to satisfy. This statement also leads to the next point.Lastly, the element that goes after price would be QUALITY SERVICE. Nowadays, the quality of service is usually twice as important as price and it has become a major factor in many...

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