Chapter Nine
Following Up and
Servicing the
Account: Building
Strategic
Partnerships by
Keeping Customers
Satisfied and Loyal
PowerPoint presentation prepared by
Dr. Rajiv Mehta
Chapter Outline
• The nature of buyer-seller interactions
• What is customer service?
• Importance of customer satisfaction
• Customer follow-up strategies
• Closing with the customer service team
• Keeping up with rising customer service expectations
• Evaluating customer service
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Chapter 9 | Slide 2
Learning Objectives
After reading this chapter, you should understand:
• The different levels of buyer-seller
interactions.
• Why it’s so important to keep customers.
• The concept of customer service.
• Customer service expectations, perceptions,
and satisfaction.
• The importance of customer satisfaction.
• The 8Cs of customer loyalty.
• Why customer loyalty is critical for long-run
profitability.
• Several important post-sale follow-up
activities.
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Chapter 9 | Slide 3
Figure 9.1:
The Personal Selling Process (PSP)
• The seventh step of the professional selling cycle
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Chapter 9 | Slide 4
The Nature of Buyer-Seller Interactions
• Salespeople should attempt to create,
enhance, and maintain mutually profitable
long-term relationships with their
customers that lead to full customer
satisfaction and profitable long term
loyalty.
• As in social relationships, there are
different levels of intensity in business
relationships.
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Chapter 9 | Slide 5
Levels of Buyer-Seller Interactions
• Buyers and sellers develop relationships by conducting interactions
• There are three levels of buyer-seller relationship interactions, which can
be viewed along a continuum
Buyer-Seller Relationship Interactions
Low
Transactional
Selling
Medium
Relationship
Selling
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High
Strategic
Partnerships
Chapter 9 | Slide 6
Transactional Selling:
Key Characteristics
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• Focus on discrete exchanges
• Buyer-seller interactions are determined primarily
by short-term buyer and seller needs; only a onetime purchase agreement is reached, without
considering any future relationship
• This type of selling assigns little value to satisfying
customers, or achieving customer loyalty
• Buyers and sellers negotiate in an arms-length,
opportunistic manner that best advances their
own interests
• Salespeople place their company’s and their own
interests ahead of their customers’ and try to
maximize revenue and/or profits on each
transaction
• There is little possibility of developing long-term
relationships built on trust that lead to repeat
business
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Chapter 9 | Slide 7
Relationship Selling:
Key Characteristics
• As the costs of attracting new customers became higher than the costs
of reselling to current customers, transactional selling evolved to
customer-centric relationship selling (RS), reflecting a paradigm shift in
the marketing discipline
• Key characteristics of Relationship Selling (RS) are:
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•
Focus on developing cost-effective, high-value
ties that generate repeat, high-frequency
transactions
•
High levels of trust, cooperation, and
commitment to “win-win” sales solutions
•
Emphasis on understanding buyer needs
•
Ultimate objective is to achieve both customer
satisfaction and customer loyalty by providing
value-added customer service and sales support
activities
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Chapter 9 | Slide 8
Strategic Partnerships:
Key Characteristics
•
•
•
•
•
•
•
•
•
Firms develop an integrated, symbiotic relationship while still retaining their
independent identities
Partners capitalize on the relative strengths of each other
Emphasis on cooperation rather than on arms-length bargaining
Circumvent the need to excel in all business functions
Share expertise and resources to shore up weaknesses and capitalize on
strengths, thereby making both partners stronger
Frequent, recurring exchange transactions
High levels of communication, relationship openness, closeness, information
sharing, joint problem solving, strategic integration, and mutual learning
Extremely high levels of collaboration, equality, shared visions, benefits and
goals, and very high levels of trust
Very low levels of opportunistic behavior
Chapter Review Question:
Identify and discuss some of the key characteristics that distinguish the three levels of
buyer-seller interactions.
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Chapter 9 | Slide 9
Table 9.1 Levels of Buyer-Seller
Interactions: Attitudinal Dimensions
Note: Please insert new Table 9.1
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Chapter 9 | Slide 10
Table 9.2 Levels of Buyer-Seller
Interactions: Behavioral Dimensions
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Chapter 9 | Slide 11
Table 3 Levels of Buyer-Seller
Interactions: Attitudinal Dimensions
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Chapter 9 | Slide 12
What Is Customer Service?
•
•
Customer Service refers to the performance of value-added activities designed
to enhance and facilitate the sale and fully satisfying use of a product before,
during, and after the sale
Salespeople make calls not always to pursue orders but to ascertain how well
products are performing
CS includes a wide array of activities, such as:
• Providing information, technical assistance and order processing
• Timely delivery, installation, maintenance, and product repair
CS can be seen as:
• A powerful way to build goodwill and engender trust because it shows that
the salesperson is not opportunistic
• An investment in customer retention and future sales
• A strategy for increasing customer satisfaction and customer loyalty
resulting in repeat purchases, increased revenues, and higher profits
Chapter Review Question:
Define and explain the meaning of customer service.
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Chapter 9 | Slide 13
Service Creates Sales
• It's the performance of great
service that persuades them to
become repeat customers – the
key to profits
• Studies show that companies
perceived by customers as having
the highest quality also tend to
garner the highest results by
almost any financial measure—
sales, market share, asset turnover,
or return on investment
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Chapter 9 | Slide 14
How Do You Spell Service?
1.
Satisfaction
7.
Enthusiasm
2.
Expectations
Service
Quality
6.
Concern
5.
Initiative
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3.
Responsiveness
4.
Value
Chapter 9 | Slide 15
Building Customer Relationships
Through Service
•
Service-oriented salespeople can do two things to add value to their product
offerings and enhance buyer-seller relationships
1.
Value-Added Activities
•
seek to simplify order processing
•
help customers become operationally efficient,
e.g., by managing their hardware-parts
inventory for them
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2. Service Differentiation
•
Show how you differ by providing a higher level
of service than other salespeople by going
beyond the “call of duty” – this is your personal
“value added” to the customer’s purchases.
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Chapter 9 | Slide 16
Product and Service Quality
•
Customer service is one of the most powerful ways to shape customer
perceptions of product and company quality
Quality consists of two components:
1. Product quality is the degree to which the product offered
performs as promised in satisfying customer expectations
2.
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Service quality is more difficult to
define or measure, because services
have unique characteristics that
distinguish them from tangible products
Chapter Review Question:
What most influences customer perceptions of
a company’s overall quality?
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Chapter 9 | Slide 17
Dimensions of Service Quality
1. Reliability: The ability to perform the desired service dependably, accurately,
and consistently
2. Tangibles: Physical facilities, equipment, and appearance of sales and
service people
3. Responsiveness: The willingness to provide prompt service and help
customers
4. Assurance: Employees’ knowledge, courtesy, and ability to convey trust and
confidence
5. Empathy: The provision of caring, individualized attention to customers.
Chapter Review Question:
Name and define the five dimensions of customer service quality. Which one of these
dimensions do customers perceive as the most important?
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Chapter 9 | Slide 18
Perceived Service Quality
and Customer Satisfaction
• In most competitive industries, product quality
is eventually matched by other producers, so
the real competition boils down to service
quality, or really customer perceived service
quality
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• Perceived service quality, rather than price or product quality, is the
deciding factor in determining customer satisfaction
• Customer satisfaction results when a
company's perceived service exceeds
customer expectations
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Chapter 9 | Slide 19
Perceived Service Quality
and Customer Satisfaction cont’d
•
When it comes to perceived service quality, salespeople have four basic kinds of
prospects and customers to deal with, each pulling in a different direction
1. Good Customer/Lots of Service
• Working hard to please this customer
should be a joy for you
• If not, you need to change your attitude
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2.
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Bad Customer/Lots of Service
•
Maybe you're providing the wrong
kinds of services to the wrong
people in the buyer organization
•
If the customer used to be "good,"
and turned "bad," you need to find
out why
Chapter 9 | Slide 20
Perceived Service Quality
and Customer Satisfaction cont’d
3.
Good Customer/Little Service
•
Don't take this situation for granted
•
Maybe, the customer needs more service than you're provided
•
Make sure that the appropriate people in the organization are getting the
products and services they need
4.
Bad Customer/Little Service
•
Is the customer "bad," because
you haven't been providing
appropriate services to the
appropriate people
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Chapter 9 | Slide 21
Importance of Customer Satisfaction
• Customer satisfaction (CS) is defined as the “result of an evaluative
process that contrasts pre-purchase expectations with perceptions of
performance during and after the consumption experience.”
• CS depends on the product’s perceived performance relative to a
buyer’s expectations.
• Many organizations proclaim the importance of customer satisfaction
because satisfied customers are the driving force behind their success
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Chapter 9 | Slide 22
The Economics of Customer
Satisfaction
•
•
•
Keeping satisfied customers is a lot cheaper than finding new ones
Studies have shown that it is five to six times more costly to attract new
customers as to keep current ones
Company profits will increase through retention of satisfied, profitable
customers because:
•
•
•
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trying to obtain a new account is much more
costly than keeping a current account
the longer a customer stays with the seller, the
costs to service that customer tend to
decrease (the learning curve of dealing with
the customer becomes less steep over time)
the seller can charge higher prices (even
premium prices) for its products if the
customer has confidence in and loyalty to the
company
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Chapter 9 | Slide 23
The Economics of Customer
Satisfaction cont’d
•
the customer provides free word-of-mouth advertising for the company
•
the customer provides the salesperson with referrals
•
the customer will increase his or her purchases over time
•
reducing customer defections by 5 percent can increase profitability
anywhere from 25 to 95 percent
•
the customer will pay less attention to competing brands and be less
persuaded by competing offerings
•
the customer will purchase other products as the seller adds them to
its product mix
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Chapter 9 | Slide 24
The Economics of Customer
Satisfaction cont’d
•
Dissatisfied customers can have an extremely negative impact on
companies and their salespeople because:
•
Dissatisfied customers are likely to
switch suppliers
• Dissatisfied customers are likely to
tell other people about their bad
experience
• Research shows that dissatisfied
customers tell 11 other people about
their negative experience, but
satisfied customers tell only 6 others
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about their positive experience
•
Customers are less likely to buy again if a problem is not resolved
satisfactorily
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Chapter 9 | Slide 25
The Economics of Customer
Satisfaction cont’d
•
Customer dissatisfaction can lead
to low employee morale;
research indicates that customer
dissatisfaction directly impacts
employee turnover—i.e., the
more customer dissatisfaction
with the company, the less likely
employees are to stay.
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Chapter 9 | Slide 26
Types of Customers Vis-à-vis Their
Satisfaction Levels
•
Six different kinds of customers have been identified based on their
level of satisfaction include:
1.
Loyalists
•
2.
Apostles
•
3.
Are completely satisfied and keep
returning to the company
Are extremely satisfied, whose
experiences with your company far
exceed their expectations and share
their strong feelings with others
Defectors
•
May have been satisfied previously
but have encountered failures left
uncorrected by the firm
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Chapter 9 | Slide 27
Types of Customers Vis-à-vis Their
Satisfaction Levels cont’d
4.
5.
6.
Vigilantes
•
Defectors who have had a bad experience
and are eager to tell others about their anger
and frustration
Mercenaries
•
Are totally satisfied but have almost no
loyalty
•
Seeks low prices, buys on impulse, looks for
fashion trends, or chases something new for
the sake of change. Such customers do not
stay long enough in the relationship to return
a profit, so they are sometimes called
"butterflies" because of their tendency to flit
and flutter from one supplier to another
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Hostages
•
Are trapped customers; experience the
worst the seller has to offer but must just
grin and bear it
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Chapter 9 | Slide 28
Moving Beyond Customer Satisfaction
to Customer Loyalty
• Customer satisfaction is essential to the success of a company, but
measuring customer satisfaction is fraught with difficulty
• Increasingly, firms are seeing customer loyalty as the critical metric that
will determine whether their business thrives, merely survives, or dies in
the fierce competition ahead
• Customer loyalty is defined as a
“favorable attitude toward a brand
resulting in consistent repeat
purchasing of the brand over time.”
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Chapter Review Question:
Why is customer satisfaction not the same
as customer loyalty?
Chapter 9 | Slide 29
The 8Cs of Customer Loyalty
• What drives customer loyalty?
• Research by Srinivasan, Anderson, and Ponnavolu has
identified eight factors, or the 8Cs, that appear to drive
customer loyalty both online and offline
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Chapter 9 | Slide 30
The 8Cs of Customer Loyalty
1. Customization
• the degree to which products, services, and the transactional
environment are tailored to the individual characteristics and
requirements of each customer
2. Contact Interactivity
• the extent to which there is a high quality of mutually desired
communication and interaction with customers
3. Cultivation
• the degree to which salespeople provide desired information
and helpful cross-selling offers to customers
4. Care
• the extent to which a salesperson demonstrates special concern
for the customer's welfare in all pre- and post-purchase
interactions
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Chapter 9 | Slide 31
The 8Cs of Customer Loyalty
5. Community
• the degree to which customers are given opportunities to share
opinions among themselves about a company's products and
services
6. Choice
• the extent to which customers are offered a broad selection of
desired products and services
7. Convenience
• the ease with which a customer is able to conduct negotiations
and transactions with a seller
8. Character
• the image and reputation that a seller projects to customers
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Chapter 9 | Slide 32
Moderators of the 8Cs of Customer
Loyalty
• Although the 8Cs directly affect customer loyalty, two critical
moderating variables, customer trust and customer
satisfaction, affect the overall effectiveness of the 8Cs
• Unless businesses and their salespeople can maintain a
bond of trust with customers and continuously provide
cumulative full satisfaction, customer loyalty will suffer even
when the 8Cs are highly positive
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Chapter 9 | Slide 33
Customer Follow-up Strategies
• To maximize customer satisfaction after a sale, salespeople should
consider the following basic service strategies:
• Express appreciation for the customer's
business
• Make sure products are delivered and
installed on time
• Assist customers with credit
arrangements
• Help customers with warranty or service
contracts
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Chapter 9 | Slide 34
Customer Follow-up Strategies cont’d
• Represent customers in solving their
problems with your company
• Keep customers informed
• Ask customers about their level of
satisfaction
• Think of prospects and customers as
individuals expecting and needing service
• Ask customers how else you might help
them when handling complaints
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Chapter Review Question:
Name some basic customer follow-up strategies.
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Chapter 9 | Slide 35
Handling Customer Complaints
• Customer complaints are opportunities to improve relationships with
customers
• Some guidelines for handling customer complaints are:
•
Anticipate customer complaints and resolve them
before the customer expresses them
•
Listen closely to complaint without interrupting
•
Never belittle a complaint
•
Encourage customers to talk and fully express their
feelings
•
Never argue with customers or take their complaints
personally
•
Record the facts as the customer sees them
•
Let customers know you understand their
complaints
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Chapter 9 | Slide 36
Handling Customer Complaints
•
•
•
•
•
•
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•
Empathize with the customer and see the
problem from his or her view
Don't make excuses for service problems
nor criticize service personnel
Resolve problems quickly and fairly even
if that means the sale will become
unprofitable
Reassure customers that you will resolve
their problems promptly and get back to
them regularly to report progress
Thank customers for voicing their complaint
Follow up after the complaint has been
resolved to make sure that everything is
okay
Keep a record of all customer complaints
and their outcomes
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Chapter 9 | Slide 37
Table 9.4 Basic Rules for Handling
Customer Complaints
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Chapter 9 | Slide 38
Table 9.4 Basic Rules for Handling
Customer Complaints Terms cont’d
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Chapter 9 | Slide 39
Table 9.4 Basic Rules for Handling
Customer Complaints Terms cont’d
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Chapter 9 | Slide 40
Closing with the
Customer Service Team
•
•
When asking for the prospect's business, salespeople should know
post-sale details, such as:
•
product availability
•
delivery schedules, and
•
if customer will be able to get credit approval
Immediately, before closing or confirming the sale, the salesperson
should once again check to proactively resolve any potential difficulties
ahead of time with colleagues on:
(1) customer credit,
(2) order-processing, and
(3) delivery teams
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Chapter 9 | Slide 41
Closing with the
Customer Service Team
1. Credit Team
•
Customer credit approvals are so essential to
successful selling that every salesperson ought to
think of the credit department as an internal
organizational customer
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2. Order processing and product delivery teams
•
Salespeople can cultivate good relationships with
people in order processing and transportation by
carefully checking customer order forms to correct
any errors, minimize potential misunderstandings,
and keep customer service people informed about
any unique customer requirements
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Chapter 9 | Slide 42
Table 9.5 Potential Conflicts
Between Credit and Sales
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Chapter 9 | Slide 43
Table 9.5 Potential Conflicts
Between Credit and Sales cont’d
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Chapter 9 | Slide 44
Table 9.6 Some Common
Customer Service Complaints
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Chapter 9 | Slide 45
Table 9.6 Some Common
Customer Service Complaints cont’d
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Chapter 9 | Slide 46
Table 9.6 Some Common
Customer Service Complaints cont’d
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Chapter 9 | Slide 47
Keeping Up with Rising Customer
Service Expectations
•
To provide quality service, salespeople and their backup customer
service teams must stay close to customers and their ever increasing
expectations
•
Staying close to customers means keeping the following basic
concepts in mind:
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
Only customers can define customer
satisfaction

Front-line people are most aware of
customer service problems and
opportunities

Everyone in the organization serves an
internal customer and ultimately the
external customer

Customer service is a partnership with the
customer
Chapter 9 | Slide 48
Evaluating Customer Service
• Salespeople and their companies should be very concerned about how
well they are servicing their customers
• Unsatisfactory service will drive customers to other suppliers
• Therefore, salespeople should regularly monitor customers about
their perceptions of the customer service they’re receiving
• An easy way of making this assessment is to have customers complete
a brief Customer Service Questionnaire
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Chapter 9 | Slide 49
Customer Service Questionnaire
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Chapter 9 | Slide 50
Key Terms
• Follow-up
• Customer service provided not just after the sale is closed, but
throughout the selling process.
• Customer Service
• The performance of a broad spectrum of value-added activities
designed to enhance and facilitate the sale and use of a product.
• Customer Service Segmentation
• A strategy for grouping customers with similar service expectations
into service segments and then developing a service plan for each
segment.
• Product Quality
• Perceived performance of the tangible product in satisfying customer
expectations.
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Chapter 9 | Slide 51
Key Terms cont’d
• Service Quality
• All activities supporting the sale, from the initial contact through the
post-sale servicing, that meet or exceed customer expectations and
enhance the value of a product.
• Reliability
• Ability to perform the desired service dependably, accurately, and
consistently; the single most important component of customer service.
• Perceived Service Quality
• The quality of service individual customers believe they deserve and
expect to receive relative to what they actually perceive receiving.
• 8Cs
• Eight factors (customization, contact interactivity, cultivation, care,
community, choice, convenience, and character) that have been found
to drive customer loyalty. These 8Cs are moderated by customer trust
and satisfaction.
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Chapter 9 | Slide 52
Chapter Review Questions
1. What characteristics of intangible services make them
different from durable products?
2. Do most dissatisfied customers actually complain? Why or
why not?
3. What is the major reason why customers switch to
competitors?
4. Name some basic customer follow-up strategies.
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Chapter 9 | Slide 53
Chapter Review Questions cont’d
5. List some positive and some negative actions that can
affect post-purchase relationships with customers.
6. Why should customer service markets be segmented?
7. About what percentage of customers who complain will
buy again from the seller if their complaints are resolved
promptly?
8. Name three complaints that salespeople have about credit
managers and three complaints that credit managers have
about salespeople.
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Chapter 9 | Slide 54
Topics for Thought and
Class Discussion
1. What is your personal definition of customer service and
what do you consider the most important dimensions of
customer service?
2. How do you think customer service expectations are
changing?
3. Why do you think that only a low percentage of dissatisfied
customers ever complain?
4. Have you ever made a formal complaint about a product?
Why? Was your complaint answered? How?
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Chapter 9 | Slide 55
Topics for Thought and
Class Discussion cont’d
5.
As a new salesperson, how would you go about gaining the
cooperation of your company’s customer service team in solving your
customers’ problems?
6.
Explain this statement: “Everyone serves a customer, either an internal
one or an external one.”
7.
How does forming a buyer-seller partnership affect customer service?
8.
How do you account for the differences in level of customer service
among retail store chains?
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Chapter 9 | Slide 56
Internet Exercises
1. Using an Internet search engine, find three firms that
provide training to salespeople for improving their
customer service skills. Is the focus on improving
customer service in B2B selling, in B2C selling, or in both?
What are the length and cost of each program? Where is
each held? Who does the training? What does the
training cover?
2. Use Google or any other search engine to locate two
examples of customer service strategies being
demonstrated using Flash or streaming video.
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Chapter 9 | Slide 57
Internet Exercises cont’d
3. Use an Internet search engine to find additional rules or
techniques for handling customer complaints other than
those identified in Table 9.4.
4. Use the Internet to find articles on customer satisfaction
and approaches for accurately measuring it.
5. Research the Internet to find articles that describe how
strategic partnerships and alliances are being used by
different companies. What characteristics shown in Tables
9.1–9.3 are exemplified by the buyer-seller relationships
described in these articles?
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Chapter 9 | Slide 58
Projects for Personal Growth
1. (a) Ask four of your classmates to brainstorm with you
about which commercial and nonprofit organizations
consistently provide the best customer service. Come up
with three examples of each category, and then take turns
explaining the reasons for each selection. (b) Ask each of
your four classmates to select two organizations that
usually provide the worst customer service. Take turns
explaining why. As each of your classmates gives his or
her explanations, write down the key points. After everyone
has finished, identify the key criteria your classmates
mentioned that cause them to perceive organizations as
providing the best and the worst customer service.
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Chapter 9 | Slide 59
Projects for Personal Growth cont’d
2. In your college library or online resources, find two articles
about how companies measure business customer
satisfaction and two articles about how they handle
customer complaints. From the perspective of the
customer, critique the methods described for handling
customer complaints. As part of your critique, consider the
channels of communication that both kinds of customers
have for providing feedback to sellers. How effective and
efficient are these channels? Finally, outline an ideal
system for obtaining regular feedback on customer
satisfaction and for resolving customer complaints
promptly.
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Chapter 9 | Slide 60
Projects for Personal Growth cont’d
3. Select two area companies, and contact the customer
service manager for each by telephone, e-mail, or letter.
Be sure to tell the manager that you’re doing a school
project, because that should help you obtain responses.
Ask the following questions: (a) How does your company
define customer service? (b) Who is responsible for
customer service? (c) How do you measure your
customers’ level of satisfaction with your products and
services? (d) What is your general process for handling
customer complaints? After obtaining this information, write
your own critique of the way the two companies are
dealing with these critical concerns for retention of
customers.
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Chapter 9 | Slide 61
Case 9.1: Addressing Customer
Problems: Service Or Disservice?
1. Do you believe that Rob is an effective salesperson? Is he
customer-service-oriented? Why or why not?
2. What customer service mistakes did Rob make in handling
the Union Hospital account? What should he have done
differently?
3. What should Rob have done after making his initial sale to
Union Hospital?
4. What advice would you give Rob now in his efforts to win a
higher share of business from Union Hospital?
Copyright © Houghton Mifflin Company. All rights reserved.
Chapter 9 | Slide 62
Case 9.2:
A Slam-Dunk That Really Hurts
1. When faulty equipment is sold to customers, is it the
salesperson’s problem or that of the company’s
manufacturing and quality control departments?
2. What do you think of Darren’s response to his CEO’s
memo? How would you have responded? Do you think the
memo was adequate? Did Darren have any evidence that
the faulty bolts could be any more than a “small problem”?
Should service problems cause a salesperson to disrupt
his daily sales calls? How might a salesperson plan for
service problems?
Case 9.2 is found online at http://college.hmco.com/pic/andersonps2e.
Copyright © Houghton Mifflin Company. All rights reserved.
Chapter 9 | Slide 63
Case 9.2:
A Slam-Dunk That Really Hurts cont’d
3. What can Darren and his district and regional sales
managers do at this point? What would you do if you were
Darren? Do you believe that notification of the problem
should absolve Olympia and Darren from blame? Why or
why not?
4. From the information provided in this case about Darren’s
sales presentation and customer service methods and his
relationships with his competitors and with personnel in his
own company, what do you infer about Darren’s overall
attitude toward his selling activities? Outline a plan for him
to improve himself in these areas.
Copyright © Houghton Mifflin Company. All rights reserved.
Chapter 9 | Slide 64