At your service:
Profitable Services
Marketing
Nadine Robinson
Pre-doctoral candidate, International MBA,
B.Comm.
2009
Evolution of thinking…what is Marketing?
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AIDA
4Ps… 7Ps
4 Rs
A box on the org chart
Where organizations and people meet
Copyright © 2007 McGraw-Hill Ryerson Limited
Service
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Performance, deed, or process
Intangible
Heterogeneous
Simultaneous production and consumption
Perishable
71% of Canada’s Economy, 79% of US
Expanded Mix
Traditional:
• Product, price, place, promotion
Relationship:
• Retention, referral, relationship, recovery
Services
• People, physical evidence, process
Customer Focus
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Integrated marketing communications
Move away from transactional
Customers become more profitable
Build long term relationships
Link between good service and profits
• But the customer is NOT
always right!!
Close the
• Close the customer gap between expected
and perceived service
• Get in the zone (of tolerance)
• Why IKEA and Disney are important to
you (desired service vs adequate service)
• What’s technology got to do with it?
• What can you do?
As easy as 1…2…3…4
Four provider gaps:
1) Not knowing what customers expect
2) Not selecting the right service design and
standards
3) Not delivering to service standards
4) Not matching performance to promises
Focus on:
• Reliability, Assurance, Tangibles,
Empathy, Responsiveness
• The experience is the marketing p. 56
• The service encounter is the “moment of
truth”
• Bad apple or momentous +ve encounter
• Pretty woman & Salvation Army
Platinum
Gold
• Get better business, not just moreIron
Lead
business
Not knowing what customers expect
• Ask them, watch them, market research!
• Talk to front line staff
• Retention over attraction
• 80/20: 5% to 35 – 95%
• Bring back the love. You’re
saying you love me…but
• Solicit complaints, respond quickly,
empower employees
Not selecting the right service design
and standards to meet customer
expectations
• Vague or undefined service blueprint
• Map to customer’s point of view
• Standards not driven by customers
• Fewest dropped calls: hard
• Professional looking staff: soft
Pizza
in 2
hours
or it’s
FREE!
• Inappropriate physical evidence and
servicescape
• Packaging, facilitator, differentiator, socializer
PHYSICAL
EVIDENCE
CONTACT PERSON CUSTOMER
(On Stage)
(Back Stage)
SUPPORT PROCESS
Blueprint for Express Mail Delivery Service
Truck
Packaging
Forms
Hand-held Computer
Uniform
Customer
Calls
Truck
Packaging
Forms
Hand-held Computer
Uniform
Customer
Gives
Package
Receive
Package
Line of interaction
Driver
Picks Up
Package
Deliver
Package
Line of visibility
Customer
Service
Order
Line of internal interaction
Dispatch
Driver
Airport
Receives
& Loads
Fly to
Sort
Center
Fly to
Destination
Load on
Airplane
Sort
Packages
Unload
&
Sort
Load
On
Truck
Not delivering to service standards
Wrong People
• Deficiencies in HR (hiring, training,
compensating, retaining)
• Customers who don’t fulfill roles & detract
• Franchises, agents, e-channels let you down
Service culture
• Appreciation for good service
• Employees are the service, the brand, the
marketing
• Boundary spanners
• Person/role, organization/client, interclient conflict
• Emotional labour
• Lowest paid or highest paid
…Not delivering to service standards
Not matching supply & demand
• Time, labour, equipment & facilities constraints
• Shift it
• Yield mgmt
• Waiting customers
• Differentiate: Importance, urgency, duration, pay premium
• Multiple queue, single queue, take a number
• Make waiting fun or at least tolerable
Not matching performance to
promises
• Lack of integrated services marketing
communications
• Ineffective management of customer
expectations
• Inadequate horizontal communications
• Overpromising
The experience is the marketing
• Manage service promises
– Realistic promises, effective ads, coordinated external
comms, offer service guarantees
• Manage internal marketing
– Vertical, horizontal, cross-functional
• Improve customer education
– Info on service, role, how to evaluate it (credence)
• Manage customer expectations
– Tiered offerings, effectiveness criteria
Service Guarantees
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Unconditional: no strings attached
Meaningful to customers
Easy to understand & communicate
Easy to invoke and collect
It’s the icing… not the cake
Pricing
• Competition-based
• Price signalling, going rate
• Small firms can’t always match pricing
• Limited comparability with heterogeneity
• Cost-based
• Labour difficult to price and trace
• Demand-based
• Set on customer perception of value
• Odd pricing, Prestige pricing
Figure 16.1Communications
and the Services
Marketing Triangle
Company
Internal Marketing
External Marketing
Communication
Vertical communications
Horizontal communications
Employees
Advertising
Sales promotion
Public relations
Direct marketing
Interactive Marketing
Personal selling
Service encounters
Customers
Customer service
Servicescapes
Source: Kotler, Philip, Marketing Management: Analysis, Planning, Implementation, and
Control, 9th Edition, © 1997.
Get ready for a relationship
• Right People
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Get to know your customers & like them
Understand what they expect
Hire right people to deliver their expections
Fire bad customers
• Right Process
– Deliver on your promises
– Integrated Marketing Communications
• Right Physical evidence
Relationships…no more one
night stands
• Commitment
• Long-term focus…it’s not only about “the sale”
• Requires work to create and maintain an emotional
connection (positive and reduce negative emotions)
• Objectives of the both parties
• Honesty & trust
• Conversation
• Satisfaction
• Consistent/ Coordinated
Four wheels on a car
If it is important:
• Measure it.
• Manage it.
• Compensate on it.
The time is always right to do what is right.
~Martin Luther King, Jr.
Next to doing the right thing, the most
important thing is to let people know you are
doing the right thing. ~John D. Rockefeller