Service Marketing Final on DECEMBER 8TH
Review POST midterm
Chapter 12 Managing Relationships and Customer Loyalty
How is customer loyalty profitable to the firm? (4p)
- Increase purchases
- Reducing operating costs
- Referrals to other customers
- Price premiums
What is Service Dominant Logic (S-D logic)
Regarding value as something co- created between organization and the
customer. (a value in-use perspective)
FP6: The customer is always a co-creator of value
FP7: The enterprise cannot deliver value, but ONLY offer a value proposition
FP10: Value is always uniquely and phenomenological determined by the
beneficiary.
What are Strategies for Building Relationships (3p)
-Core Service Provision
- build on delivery of excellent service
- Switching Barriers
- ie. Switching costs
- Relationship Bonds
-Financial, social, customization, structural
Strategies to Develop Loyalty(3p)
- Deepening the Relationship (done by cross-selling or Bundling)
- Creating Loyalty
- Building Higher-Level Bonds
Customer Deflection/ Customer Churn/ Why do customers switch?
-
-
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Service Failure/ Recovery
o Core service Failure
o Service encounter Failure
o Response to service failures
Value Proposition
o Pricing
o Inconvenience
o Competition
“Other”
o Involuntary Switching
o Ethical problem
How to keep customers from switching ? (3p)
- Address Key churn drivers
o Deliver quality service
o Fair and transparent pricing
o Reduce Inconveniences
- Compliant to handling and service recovery
- Increase Switching Costs
CRM: Customer Relationship Management
(Information is captured, deliver touchpoints, giving a better understanding of the
segments) (Allowing for customer information to be captured and delivered)
CRM Strategy
1. Strategy Development
a. Business Strategy (Business Vision, industry and analysis)
b. Customer Strategy (Target segments, loyalty bonds, churn
management)
2. Value Creation Process
(Value customers receives, value organization receives)
3. Multi- Channel Integration
(Sales force, outlets, telephony, direct marketing, electronic marketing)
4. Information Management
5. Performance Assessment
a. Stakeholder results
b. Marketing and service delivery
c. CRM process monitoring
CRM Implementation Failures
- View CRM as a technology initiative
- Lack customer focus
- Insufficient appreciation of customer life time value
- Inadequate support for top management
- Failing to reengineer business processes
- Underestimating data integration
Implementation of CRM
 Creating two way communication channels
 Change value proposition to increase customer loyalty
 Customization/ is one to one marketing needed?
Chapter 13 Handling Service Recovery
Actions a customer takes in response to a service failure (3p)
- Take public action
- Take private action
- Take no action
Why do customers complain (4p)
- obtain restitution or compensation
- release anger
- help improve the service
- out of concern for others
“Justice Dimensions of the Service Rovery Process”
- Procedural Justice
- Interactional Justice
- Outcome Justice
What is a Service Recovery Paradox?
- A customer that experiences a higher service recovery feels more satisfied
than before.
What are the principles of effective service recovery? (3p)
- More it easier for customers to give feedback
- Enable effective service recovery
- Establish appropriate compensation levels
How to Reduce customer complaint barriers?
What are the complaint barriers?
- Inconveniences
- Doubtful payoff
- Unpleasantness
Inconvenience
- Make it easy and convent: customer hotline, email the website, provide
postal addresses
Doubtful Payoff
- Reassurance, format service procedure, feature service improvements
Unpleasantness
- Make providing experience a pleasant thing thank customers.
How to enable effective service recovery?
- proactive
- procedures need to be planned
- recovery skills must be taught
- recovery requires/ empowered employee
How to determine Generous Compensation?
- What is positioning of your firm
- How serve was the service failures
- Who is the affected customer
What is the importance of service guarantee?
- Powerful tools for both promotion and achieving service quality.
- guarantees build market muscle (reducing risk of the purchase decision)
- help organization understand failures
- set clear standards
- focus on what consumers expect
What are the factors you need in a Service Guarantee outline?
- Unconditional
- Easy to understand and communicate
- Meaningful to the customers
- Easy to invoke
- Easy to collect on
- Credible
What are the different types of service guarantees?
-
Single attribute- specific guarantee
(one key attribute of the service is covered by the guarantee)
Multi-attribute specific guarantee
(a few important attributes of the service)
Full satisfaction guarantee
(all aspects of the service are covered)
Combined Guarantee
(explicit mini performance standard)
Seven Types of Jaycustomers?
- The cheat
- The Thief
- The rule breaker
- The belligerent
- The family feuders
- The vandal
- The dead beat
Chapter 14 Improving Service Quality+ Productivity
What is Service Quality?
( A high standard of performance that consistently meets or exceeds customer
expectations)
Aspects of service quality?
- Tangibles (appearance of physical elements)
- Reliability (dependable and accurate performance)
- Responsiveness (promptness and helpfulness)
- Assurance (credibility, security, competence, courtesy)
- Empathy (easy access, good communication, customer understanding)
The GAP Model
A conceptual tool to identify and correct service quality problems, it demonstrates
the most critical service quality gap to close the customer gap. The customer gap is
the difference between expectations and perception.
*** Probably most going to test on Gaps 1-4
Gap 1: The Knowledge Gap
Problem: What Sr. Management believes customers expect and what customers
actually need and expect.
Solution: Educate management on what customers expect.
Why problem occurred:
-Inadequate marketing research
- lack of upward communication
- insufficient relationship focus
-inadequate service recovery
Gap 2: The Policy Gap
Problem: Managements understanding of customers expectations and the service
standards they set for delivery.
Solution: Establish appropriate service processes and specify standards.
Why problem occurred:
- poor service design
- absence of customer-driven standards
- inappropriate physical evidence and servicescape
Gap 3: The Delivery Gap
Problem: Difference in service standards and the service delivery teams actual
performance.
Solution: Ensure that performance meets standards that are based upon customer
needs and expectations.
Why problem occurred:
-Deficiencies in human resource policies
- Customers who do not fulfill roles
- problems with service intermediaries
-failure to match supply and demand
Gap 4: The Communications Gap (both internal and external)
Problem: Companies communications and the customer understands and
subsequently experience.
Solution: Close internal and external gaps by ensuring communication promises are
realistic and correctly understood by customers.
Why problem occurred:
- Lack of integrated service marketing communications
- Over promising
- Ineffective management of customer experience
- Inadequent horizontal communications
Gap 5: Perception Gap
Problem: What is actually delivered and what the customer feels they actually
received.
Solution: Tangibilize the service quality delivered.
Gap 6 Service Gap:
Problem: Difference between what customers expect to receive and the service that
is actually delivered.
Solution: Correct service gaps 1-5
*** Gaps 1, 5, 6 external gap between the customer and the organization.
*** Gaps 2, 3, 4 Internal gaps
Measuring and Improving Service Standards
What is the difference between hard and soft standards?
Soft standards cannot easily be observed and must be collected by talking to
customers etc.
Hard standards are characteristics and activities that can be counted.
What are the key objectives of effective customer feedback systems? (3p)
- assessment and benchmarking of service quality and performance
- customer driven learning and improvements
- creating a customer oriented service
What are some examples of Feedback collection tools?
- Total market, annual, transaction surveys
- Service feedback cards
- Mystery shoppers
- Unsolicited customers
- Focus group discussions and service reviews
Tool to Analyze Service and Quality Problems:
*** Root Cause Analysis: Fishbone Diagram
Showing a cause and effect chart
Draw Diagram:
A Pareto Analysis: Identifies the main cause of observed outcomes.
Chapter 7: Promoting Services and Educating Customers
Marketing Communications
- position/ differentiate the service
- promote the contribution of service personnel and backstage operations
- add value via communication content
- facilitate customer value
Problems of service communications?
*** problem of Intangibility
( abstractness, generality, non-serachability, mental impalpability)
Aspects of defining the Target Market?
- Prospects
- Users
- Employees
Aspects of the Marketing Communications Mix
- Personal communications
- Advertising Sales Promotion
- Publicity and public relations
- Instructional material
- Corporate design
How to get messages through service delivery points:
- Service outlets
- Frontline employees
- Self- serve delivery points
Chapter 11: The Employees Role in Service Delivery
What is a boundary spanner?
Front-stage employees who link an organization with its customers.
Why are service employees (frontline) important?
-Are the service
- Are the organization in the customers eyes
- Are the Brand
- Are the marketers
Important for frontstage to be:
- Hire intelligently
- Train Intensively
- Monitor Incessantly
- Reward Inspirationally
Role Conflict within an organization (3p):
- Organization/ Client
- Person/ Role
- Inter- client conflicts
What is the Cycle of Failure?
When companies have narrow designed jobs with low skill levels, creates high
turnover for companies. (High Turnover= Losing Money)
A “Guide” for achieving Service Excellence
Describe the “Service Talent Cycle”
1. Hire the Right People
- Be the preferred employer
- Use multiple structured interviews
- Observe candidate behavior
2. Enable Your People
- Build high performance service delivery teams
- Empower the frontline
- Extensive training
3. Motivate and energize frontline staff
Management should doing the following
- Support frontline
- Create service culture
- Drive corporate values
Levels of Employee Involvement:
- Suggestion Involvement: Empowers employees to make recommendations
via a formalized structure.
- Job Involvement: Opening up of job content
- High Involvement: Gives frontline staff a sense of involvement through the
overall organization.