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Net Value = (Benefits Costs) ? Net value drives relationships ? Net value is a function of both costs and benefits ? Value can be added or lost at each step in service delivery ? In a petitive market, higher financial prices must be justified by: — more benefits and/or — better quality of benefits and/or — lower time, effort, and sensory costs 169。 Lovelock Associates Facilitating Services Information Core Customers often require information about how to obtain and use a product or service. They may also need reminders and documentation 169。 Lovelock Associates Enhancing Services Exceptions Customers appreciate some flexibility in a business when they make special requests. They expect help when not everything goes according to plan Core 169。n233。 Lovelock Associates Learning More about Customers ? What costs do customers incur to use our products? (money, time, effort, etc?) ? What supplementary services surround each of our core products? ? How do our offerings (and the costs to customers) pare to our petition? ? How might we best add value for customers? ? Which will appeal more to each of our customer segments: greater benefits or lower costs? 169。 it changes us as consumers. I believe that technology is creating a marketplace where everything is going to bee more servicelike.” REGIS McKENNA 169。 machines don’t work。 Lovelock Associates Calculating Customer Value Value at Acquisition ? revenues (application fee + initial purchase) ? less costs (marketing +credit check + account set up) Annual Value (calculate each year) ? revenues (annual account fee + sales + service fees + value of referrals) ? less costs (account management + cost of sales + writeoffs) 169。 Lovelock Associates The Value of a Customer “ The value of a customer lies not in the purchase that he makes at any given time, but in the the discounted cash flow of all future purchases made during his life cycle as a customerif he remains loyal. All this, multiplied by the number of friends to whom, if satisfied, he may remend the product.” ERIC MEYER L’Entreprise 169。 Lovelock Associates Enhancing Services Consultation Value can be added to goods and services by offering advice and consultation that are tailored to each customer’s needs and situation Core 169。 Lovelock Associates Two Definitions of Service ? “ A service is an act, a deed, a performance, rather than an object or a thing” LEONARD BERRY ? “Service is all actions and reactions that customers perceive they have purchased” FEDERAL EXPRESS 169。 Lovelock Associates How Perceived Value Affects Customer Choice ? Customers relate value of benefits received from a good or service to the costs of acquisition/usage ? “Bad value” or “good value” assessments relate to value after deducting costs from benefits ? Customers’ choices are shaped by: ? what they c