MKT 410 Exam #2 (Dr. Clark, MSU)

1. Customer Actions 2. Employee Actions (onstage) 3. Employee Actions (backstage) 4. Support Processes

4 Key Blueprint Components:

Service Recovery

A company's resolution of a problem from a dissatisfied customer, converting them into a loyal customer. It is the action a service provider takes in response to service failure.

Relationship Marketing

A philosophy of doing business, a strategic orientation, that focuses on keeping & improving relationships with current customers rather than on acquiring new customers.

Service Blueprint

A picture or map that portrays the customer experience & the service system, so that the different people involved in providing the service can understand it objectively, regardless of their role or their individual points of view.

Service Guarantee

A pledge or assurance that a product offered by a firm will perform as promised, and if not then some form of reparation will be undertaken by the firm.

Service Encounter

Anytime a vertical line crosses the horizontal line of interaction, a _________ ___________ has occurred.

1. *Confidence Benefits* (trust, confidence in provider, reduced anxiety) 2. *Social Benefits* (familiarity, social support, personal relationships) 3. *Special Treatment Benefits* (special deals, price breaks)

Benefits of Relationship Marketing for CUSTOMERS: (3)

1. *Economic Benefits* [(+)revenues, (-)marketing & administrative costs, regular revenue stream] 2. *Customer Behavior Benefits* (strong WOM endorsements, customer voluntary performance, social benefits to other customers, mentors to other customers) 3. *Human Resource Management Benefits*

Benefits of Relationship Marketing for FIRMS: (3)

1. Provides a platform for innovation. 2. Recognizes roles & inter-dependencies among functions, people, & organizations 3. Facilitates both strategic & tactical innovations 4. Transfers & stores innovation & service knowledge 5. Designs moments of truth from the customer's point of view 6. Suggests critical points for measurement & feedback in the service process 7. Clarifies competitive positioning 8. Provides understanding of the ideal customer experience

Benefits of service Blueprinting: (8)

Customer Actions

Blueprint Components: Area encompasses the steps, choices, activities, & interactions that the customer performs in the process of purchasing, experiencing, & evaluating the service.

Employee Actions (onstage)

Blueprint Components: The activities that the contact employee performs that are visible to the customer are the ______________.

Employee Actions (backstage)

Blueprint Components: Those contact employee actions that occur behind the scenes to support the onstage activities are the _________________.

Customization bonds

Bonds: An approach that suggests customer loyalty can be encouraged through intimate knowledge of individual customers-often referred to as *customer intimacy*- & through the development of one-to-one solutions that fit the individual customer's needs. (Pandora's expert system that predicts music based on 450 musical characteristics.

Structural bonds

Bonds: Created by providing services to the client that are designed right into the service delivery system. Often, ______________ bonds are created by providing customized services to the client that are technology based & make the customer more productive. -When done well, very difficult to imitate. -More frequently seen in B2B relationships [EX. Walmart's electronic data interchange (EDI) system manages the relationship with suppliers.]

financial bonds (level 1)

Bonds: Customer is tied to the firm primarily through financial incentives: -Lower prices for more purchases (punch cards, rewards points) -Lower prices for length of being a customer (long-time customer discounts) -LIMITATIONS: Only can use the ____________ bond when supplementing another bond b/c competitors will imitate incentive programs in the long-run to better compete.

Social bonds

Bonds: Firm seeks to build long-term relationship through interpersonal bonds. -Customers viewed as "clients," not nameless faces -Customers are individuals whose needs the firm seeks to understand. -Common among: (Lawyers, accountants, teachers, hairdressers, counselors, health care providers)

1. Limited restrictions & exclusions 2. Meaningful 3. Easy to Understand 4. Easy to Invoke

Characteristics of Effective Guarantees: (4)

Service recovery paradox

Customers who experience a service failure that is satisfactorily resolved, may be more likely to make future purchases than customers without problems.

Respond Quickly

Fixing the Customer- 1st level: Present customers with intentionally knowing the faster the service recovery is initiated, the higher rate of satisfaction.

Provide Appropriate Communication

Fixing the Customer- 2nd level: Present customers with understanding & accountability are provided along with adequate explanation.

Treat Customers Fairly

Fixing the Customer- 3rd level: Present customers with justice & fairness.

Cultivate Relationships with Customers

Fixing the Customer- 4th level: Present customers with intention of building trust to ensure long-term mutual benefit.

Encourage & Track Complaints

Fixing the Problem- 1st level: The only way to fix problems is to know you have a problem.

Learn from Recovery Experiences

Fixing the Problem- 2nd level: Gain and record knowledge from the problem.

Learn from Lost Customers

Fixing the Problem- 3rd level: If customers where lost due to the result of a service failure. WHY?

Make the Service Fail-Safe

Fixing the Problem- 4th level: Take what was learned from the service failure & create a system to fast-track the resolution process.

After identifying the service process & customer segment (steps 1 & 2) START @ the customer & work down. -Customers POV (step 3) -Contact Employees &/or technology actions (step 4) -Link contact activities to needed support functions (step 5) END: Go back & add evidence of service at each step (step 6) *READ pg's (238-240)*

Key Method for designing a Service Blueprint

Lifetime Value

Lifetime revenue stream of a customer

Lifetime Profitability

Lifetime revenue stream of a customer, minus costs

1. Customer Inertia 2. Switching Costs

List 2 types of switching barriers:

1. Financial bonds 2. Social bonds 3. Customization bonds 4. Structural bonds

List 4 relationship bonds:

1. Identify the process to be blueprinted 2. Identify customer segment 3. Map the process from the customer's POV 4. Map contact employee actions &/or technology actions 5. Link contact activities to needed support functions 6. Add evidence of service @ each customer action step

List 6 steps of Building A Service Blueprint:

1. Encourage & track complaints 2. Learn form recovery experiences 3. Learn from lost customers 4. Make the service *Fail-Safe*

List the 4 service recovery strategies for fixing the problem.

1. Respond Quickly 2. Provide Appropriate Communication (Understanding with accountability, supply adequate explanations) 3. Treat Customers Fairly 4. Cultivate Relationships with Customers

List the service recovery strategies for fixing the customer (4)

1. Passives 2. Voicers 3. Irates 4. Activists

List the types of complainers: (4)

Service Failure

Occurs when service performance that falls below a customer's expectations in such a way that leads to customer dissatisfaction.

Support Processes

Section of the blueprint covers the internal services, steps, & interactions that take place to support the contact employees in delivering the service.

Empirical Evidence of responding quickly

The faster the service recovery is initiated, the higher rate of satisfaction.

Interactional Fairness

The interpersonal treatment received during the complaint process

Line of Interaction

The line representing interactions between the customer & the organization.

Line of Visibility

The line that separates all service activities visible to the customer from those not visible.

Line of Internal Interaction

The line that separates customer-contact employee activities from those of other service support activities & people.

Procedural Fairness

The policies, rules, & timeliness of the complaint process

Outcome Fairness

The results that customers receive from complaints

Primary Goal of Relationship Marketing

To build & maintain a base of committed customers who are profitable for the organization.

Voicers

Type of Complainers: -Actively complain to the provider, but not likely to spread negative WOM; believe in the positive consequences of complaining - *the service provider's best friends!*

Passives

Type of Complainers: -Least likely to take any action, say anything to the provider, spread negative WOM, or complain to a third party -doubtful of the effectiveness of complaining.

Irates

Type of Complainers: -More likely to engage in negative WOM to friends & relatives & to switch providers; average in complaints to provider; unlikely to complain to third parties -More angry, less likely to give provider a second chance.

Switching Costs

Type of switching barrier: Costs, both real & perceived, monetary & nonmonetary. -Include: investments of time, money or effort; such as setup costs, learning costs & contractual costs.

Customer Intertia

Type of switching barrier: May explain why some dissatisfied customers stay with a provider "it's just not worth it" to switch providers.

Activists

Types of Complainers: -Above average propensity to complain on all levels; more likely to complain to a third party -Complaining fits with their personal norms

Physical Evidence

Typically above each point of contact the actual ______________________ of the service is listed.

Internal Service Encounters

Vertical lines cutting across the line of internal interaction represent ___________ ___________ ____________.

1. Interactional fairness 2. Procedural fairness 3. Outcome fairness (*I.P.O.*)

What are the 3 types of justice that customers look for following their complaints?

1. Pricing -High, unfair, or deceptive price 2. Inconvenience -Location/hrs, wait-time 3. Core Service Failure -Service/billing mistake 4. Service Encounter Failures -Impolite, un-knowledgeable, uncaring 5. Response to Service Failure -Negative/no response 6. Competition -Better service 7. Ethical Problems -Cheat,unsafe 8. Involuntary switching -Customer/Provider moved

What are the causes of service switching behaviors:

1. Acquiring 2. Satisfying 3. Retaining 4. Enhancing

What are the goals in the ladder of service marketing? (4)

There is a consistent gap between their desired & received treatment during the service recovery.

What happens to customer expectations when they take the time to complain?

Respond quickly

What is the most desirable action that a customer can take following a service failure?

Flexibility

When compared with other process mapping approaches one of service blueprinting's major strengths is it's ________________.

1. Wrong segment 2. Not profitable in the long-run 3. Difficult customers

When is it appropriate reason to "fire" a customer?

1. Existing service quality is poor. 2. Doesn't fit the image due to current reputation being high quality 3. Service quality if truly uncontrollable 4. Potential customer abuse of the guarantee 5. Costs > benefits 6. Customers perceive little risk

When to not use a Guarantee: (6)