Services Marketing Midterm
Ladder of relationship marketing
Acquiring -> Satisfying -> Retaining -> Enhancing
Benefits of Relationship Marketing
Benefits for Customers: oReceipt of greater value oConfidence benefits: •trust •confidence in provider •reduced anxiety oSocial benefits: •familiarity •social support •personal relationships oSpecial treatment benefits: •special deals •price breaks Benefits for Firms: oEconomic benefits: •increased revenues •reduced marketing and administrative costs •regular revenue stream oCustomer behavior benefits: •strong word-of-mouth endorsements •customer voluntary performance •social benefits to other customers •mentors to other customers oHuman resource management benefits: •easier jobs for employees •social benefits for employees •employee retention
critical theme
Customer Focus ○All strategies should be developed with an eye on the customer ○All implementations should be carried out with an understanding of their impact on the customer. ○All decisions regarding new services, communications, operations, and human resources should integrate the customer
The Provider Gaps:
Gap 1 - The Listening Gap not knowing what customers expect Gap 2 - The Service Design and Standards Gap not having the right service designs and standards Gap 3 - The Service Performance Gap not delivering to service standards Gap 4 - The Communication Gap not matching performance to promises
bucket theory of relationship marketing
New customers and increased purchases by some customers go in lost customers, lost customers, decreased purchases by some customers go out
Building Service Blueprint
Step 1: Identify the process to be blueprinted Step 2: Identify the customer or customer segment Step 3: Map the process form the customer's POV Step 4: Map contact employee actions and/or technology actions Step 5: Link contact activities to needed support functions Step 6: Add evidence of service at each customer action step
Technology-mediated encounters
Types of Service Encounters, communication with a real person in real time via talk, text, live chats; the bases for quality evaluations are tone of voice, employee knowledge, and effectiveness/efficiency.
Face-to-face encounters
Types of Service Encounters, direct personal contact between an employee and a customer; bases for quality are verbal and non-verbal cues, symbols.
Gap 2 Service design and standards gap
between custoemr driven service designs and standards and management perceptions of customer expectations poor service design -unsystematic new service development process -vague, undefined service designs -failure to connect service design to service positioning absence of customer driven standards -lack of customer driven standards -absence of process managmenet to focus on customer requirements -absence of formal process for setting service quality goals inapprorpiate physical evidence and servicescape -failure to develop tangibles in line with customer expectations -servicescape design that does not meet customer and employee needs -inadequate maintenance and updating of servicescape
Gap 3 Service Performance Gap
between customer driven service designs and standards and service delivery Deficiencies in human resource policies -ineffective recruitment -role ambiguity and role conflict -poor employee technology job fit -inappropriate evaluation and compensation systems -lack of empowerment, perceived control, and teamwork Failure to match supply and demand -failure to smooth peaks and valleys of demand -inappropriate customer mix -overreliance on price to smooth demand Customers not fulfilling roles -custoemrs lack knowledge of their roles and responsibilities -customers negatively impact each other Problems with service intermediaires -channel conflict over objectives and performance -channel conclifct over costs and rewards -difficulty controlling quality and consistency -tension b/t empowerment and control
Service failure
occurs when service performance that falls below a customer's expectations in such a way that leads to customer dissatisfaction.
Service recovery
refers to the actions taken by a firm in response to service failure to improve the situation for the customer.
service research program
the portfolio of research studies and types needed to address research objectives and execute an overall measurement strategy. ○Includes qualitative and quantitative research ○Includes both perceptions and expectations of customers ○Balances the cost of the research and the value of the information ○Includes statistical validity when necessary ○Measures priorities or importance of attributes ○Occurs with appropriate frequency ○Includes measures of loyalty, behavioral intentions, or actual behavior ○
Services vs. Goods a
they are... -intangible **most important -heterogeneous -simultaneous production and consumption -perishable (cannot be returned, resold, supply and demand hard
factors that (influence customer satisfaction)
•Product and service features •Perceptions of product and service quality •Price •Customer emotions •Attributions for service success or failure •Perceptions of equity or fairness •Other customers, family members, and coworkers
Service Blueprinting
○A tool for simultaneously depicting the service process, the points of customer contact, and the evidence of service from the customer's point of view.
Characteristics of an EffectiveService Guarantee
○Limited Restrictions and Exclusions ▸The guarantee should make its promise free of "if, and or but" conditions or exclusions associated with many legal documents. ○Meaningful ▸The firm should guarantee elements of the service that are important to the customer ▸The payout should cover fully the customer's dissatisfaction ○Easy to Understand ▸Customers need to understand what to expect ▸Employees need to understand what to do ○Easy to Invoke ▸The firm should eliminate hoops or red tape in the way of accessing or collecting on the guarantee
RATER (5 Dimensions of Service Quality)
○Reliability: ability to perform the promised service dependably and accurately. ○Assurance: knowledge and courtesy of employees and their ability to inspire trust and confidence. ○Tangibles: physical facilities, equipment, and appearance of personnel. ○Empathy: caring, individualized attention the firm provides its customers. ○Responsiveness: willingness to help customers and provide prompt service.
Complaining Customers Iceberg
1-5% complain to management or company HQ 45% complain to frontline employee 50% encounter a problem but do not complain
Answering Questions Tips
Ask customers directly ▸mail, phone, face-to-face, online ▸one-on-one, in groups, formal/informal ▸ Observing customers ▸anthropological tools, qualitative depth Get information from employees and front-line service providers Database marketing research ▸use customer information files ▸"capture" behavior through data analysis ○
customer gap
Expected versus perceived service ○The most critical service quality gap to close is the customer gap, the difference between customer expectations and perceptions. ○ ○Four gaps that occur in companies, which we call provider gaps, are responsible for the customer gap. ○ ○Identify the factors responsible for each of the four provider gaps.
Service Recovery Paradox
Is a customer who has experienced a service failure and exemplary service recovery more likely to be more satisfied - impressed even - with the service provider? Should a firm "screw up" just a little so that it can "fix the problem" superbly? What are the problems with such an approach?
Fairness
Outcome fairness ▸Outcome (compensation) should match the customer's level of dissatisfaction; equality with what other customers receive; choices Procedural fairness ▸Fairness in terms of policies, rules, timeliness of the complaint process; clarity, speed, no hassles; also choices: "What can we do to compensate you...?" Interactional fairness ▸Politeness, care, and honesty on the part of the company and its employees; rude behavior on the part of employees may be due to lack of training and empowerment
customer satisfaction
The customer's fulfillment response. It is a judgment that a product or service feature, or the product or service itself, provides a pleasurable level of consumption-related fulfillment
zone of tolerance
The range of expectations between desired and adequate... can be wide or narrow can change over time can vary among individuals may vary with the type of product/service desired service -> delights zone of tolerance -> desirables adequate service -> musts
Services mktg mix
Traditional -Product -Price -Place -Promotion Added People All human actors who play a part in service delivery and thus influence the buyer's perceptions: namely, the firm's personnel, the customer, and other customers in the service environment. Physical Evidence The environment in which the service is delivered and where the firm and customer interact, and any tangible components that facilitate performance or communication of the service. Process The actual procedures, mechanisms, and flow of activities by which the service is delivered—the service delivery and operating systems.
Remote encounters
Types of Service Encounters, no direct human contact; automated; the bases for quality evaluations are tangibles and technical processes.
Gap 1 listening gap
between customer expectations and company perceptions of customer expectations Inadequate customer research orientation -insufficient customer research -research not focused on service quality -inadequate use of market research Lack of upward communication -lack of interaction b/t management and customers -insufficient communication b/t contact employees and managers -too many layers b/t contact personnel and top mangement Insufficient relationship focus -lack of market segmentation -focus on transactions rather than relationships -focus on new customers rather than relationship customeres Inadequate service recovery -lack of encouragement to listen to customer complaints -failure to make amends when things go wrong -no appropriate recovery mechanisms in place for service failure
Gap 4 communication gap
between service delivery and external communications to customers lack of integrated services marketing communications -tendency to view each external communication as independent -not including interactive marketing in communications -absence of strong internal marketing program ineffective managmenet of customer expectations -not managing customer expectation through all forms of communication -not adquately educating customers overpromising -in advertising, personal selling, physical evidence cues inadequate horizontal communications -between sales and operations and advertising and operations -differences in policies and procedures inappropriate pricing -high prices that raise customerm expectations -prices that not tied to customer perceptions of value
relationship value of a customer
considers customers from the point of view of their lifetime revenue and/or profitability contributions to a company. It is influenced by: ▸Length of average customer "lifetime" ▸Additional sales over time ▸Referrals by the customer over time ▸Costs associated with serving the customer
Services
deeds, processes, and performances provided, coproduced, or cocreated by one entity or person for and/or with another entity or person. All economic activities whose output is not a physical product or construction
Service quality
the customer's judgment of overall excellence of the service provided in relation to the quality that was expected.
Customer Research Programs
•Complaint solicitation •Critical incident studies •Relationship surveys •Posttransaction surveys •Social media •Market-oriented ethnography •Mystery shopping •Customer panels •Lost customer research •Future expectations research
Challenges
•Defining and improving quality •Designing and testing new services •Communicating and maintaining a consistent image •Accommodating fluctuating demand •Motivating and sustaining employee commitment •Setting prices •Organizing to facilitate strategic and tactical decision-making •Finding a balance between standardization and personalization •Protecting new service concepts from competitors •Communicating quality and value to customers •Ensuring the delivery of consistent quality service
Strategy complaint insight
•Develop the mindset that complaints are good •Make complaining easy •Encourage customers to be partners •Say thank you •Be an active listener •Ask customers about specific service issues (vs yes/no Qs) •Conduct short, trailer surveys
Service Encounters
•The most vivid impression of service occurs in the service encounter when the customer interacts with the service firm. •It is the "moment of truth" •Any service encounter can potentially be critical in determining customer satisfaction and loyalty. •However, depending on the context and situation, early, late, and intense encounters are likely to be more important in customer evaluations of the overall service experience. •
Common Research Objectives
•To discover customer requirements or expectations for service. •To monitor and track service performance. •To assess overall company performance compared with that of competition. •To assess gaps between customer expectations and perceptions. •To identify dissatisfied customers, so that service recovery can be attempted. •To gauge effectiveness of changes in service delivery. •To appraise the service performance of individuals and teams for evaluation, recognition, and rewards. •To determine customer expectations for a new service. •To monitor changing customer expectations in an industry. •To forecast future expectations of customers. •
Writing Questions
•Write questions that are simple and to the point •Use words with clear meanings •Avoid loaded and leading questions •In a multiple-choice question, cover all options without overlapping •Avoid double-barreled questions •Offer an "out" for questions that don't apply •Avoid offering too few or too many options •Don't make the survey too long (time yourself taking it) •Don't ever start with the demographic questions
Why not guarantee
▸Existing service quality is poor ▸A guarantee does not fit the company's image ▸Service quality is truly uncontrollable ▸Potential exists for customer abuse of the guarantee ▸Costs of the guarantee outweigh the benefits ▸Customers perceive little risk in the service
CUSTOMER PERCEPTIONS
▸Perceptions are always considered relative to expectations ▸Expectations and perceptions are both dynamic; they each may shift over time. ▸Service quality and satisfaction are based on customers' perceptions of the service
Benefits of Service Guarantees
○A good guarantee forces the company to focus on its customers. ○An effective guarantee sets clear standards for the organization. ○A good guarantee generates immediate and relevant feedback from customers. ○When the guarantee is invoked there is an instant opportunity to recover. ○Information generated through the guarantee can be tracked and integrated into continuous improvement efforts. A service guarantee reduces customers' sense of risk and builds confidence in the organization
Fixing the Problem
○After "fixing the customer" the company should address the actual problem that created the poor service delivery in the first place. ○If the problem is likely to recur for other customers, then the service delivery process may need to be fixed, too. ○Strategies for fixing the problem include: ▸ encouraging and tracking complaints ▸learning from recovery experiences and from lost customers ▸making the service fail-safe
Satisfaction vs service quality
○Both based on customers' perceptions ○Satisfaction: broader concept that includes perceptions of situational factors and personal factors, product quality, service quality, price, etc. ○Service quality is a component of satisfaction; focuses on dimensions of service ○Customers have transaction-specific perceptions as well as overall perceptions of a company, a service, an industry
Portfolio of Services Research (not just surveys)
○Customer Complaint Solicitation ○Critical Incident Studies ○Relationship and SERVQUAL Surveys ○Post-transaction Surveys ○Service Expectations Meetings and Reviews ○Process Checkpoint Evaluations (service interactions workflow review) ○Mystery Shopping ○Customer Panels ○Lost Customer Research ○Future Expectations Research ○
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 ○ ○For tangible products, a guarantee is often done in the form of a warranty ○ ○Services are often not guaranteed ▸Cannot return the service ▸Service experience is intangible (so what do you guarantee?)