5questions about Strategic Services Marketing

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Two types of complainers: reparation versus vigilant

• Less interest in getting revenge
• Write more formally, using “I” and a greater focus on the past and facts.
• Desire for reparation is their strongest motivations.

Reparation-oriented complainers:

Vigilant-oriented complainers:

• More interest in getting revenge
• Write les formally, with a greater use of “you” and “they”, and at the present tense
• Their desire for reparation remains high.

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Textbook: show and tell US view but will complement with examples international and australian.

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Profit from reference: only input lower acquisition cost as opposed to lower acquisition cost + new revenue stream

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Lego CFO John Goodwin reckons that more than 85 million kids (and, let’s be honest, a fair few adults) “had a Lego play experience” over the course of last year. Euromonitor estimates that Lego controls around 7% of the world toy market, up from below 4% five years ago. It is closing the gap fast: Hasbro (around 8%) and market leader Mattel (12%) have both been struggling to boost sales of late.

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–Lead Users; Children and adults who is heavily engaged in LEGO (top of pyramid) ADUlt fans of lego

–One-to-One layer; Group which LEGO keeps an ongoing dialog

–The Community Layer; Users of online games, communities, etc.

–Active household layer; Have bought LEGO sometime in the past. (bottom of pyramid)

Lead User
- people who LEGO actively engages with

1:1 Community
- people whose names and addresses LEGO knows
Connected Community
- people who have bought LEGO and have been either to a LEGO shop or park 
Active Household
- people who have bought LEGO in the last 12 months
Covered Households
- people who have bought LEGO once
All Households
- those who have never bought LEGO
LEGO's Rules for Social Media
LEGO Ideas
LEGO's very own Social Media Platform (Lead Users)
Allows users to submit ideas
Receive feedback
Get votes 
Their idea may be turned into a real LEGO set

Show Pine and Gilmore article figurel expllain that Lego alkready had the product and the experience but not the service which they imprved with relationship marketing.  LLesson: cannot move to experiences if you have not transited to services Ex: Michlein from tire manfacturer to fleet management: manufacturing to service; tomorrow experience? how? could be a final exam question!

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Confidence Benefits

Confidence in correct performance

Ability to trust the provider

Lower anxiety when purchasing

Knowing what to expect and receive

Social Benefits

Mutual recognition and friendship between service provider and customer

Familiarity

Special Treatment Benefits

Better price

Discounts not available to most customer

Extra services

Higher priority when there is a wait

Economic Benefits

Increased revenues

Reduced marketing and administrative costs

Regular revenue stream

Customer Behaviour Benefits

Strong word-of-mouth endorsements

Customer voluntary performance

Social benefits to other customers

Mentors to other customers

Human Resource Management Benefits

Easier jobs for employees

Social benefits for employees

Employee retention

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e.g., mobile phone industry: handset replacement a common reason for subscribers discontinuing services – offer handset replacement programs

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Target the right customer and match them to what firm can deliver

How do customer needs relate to operations elements?

How well can service personnel meet expectations of different types of customers?

Can company match or exceed competing services that are directed at same types of customers?

Focus on number of customers served as well as value of each customer

Some customers more profitable than others in the short term

Others may have room for long-term growth

“Right customers” are not always high spenders

Can come from a large group of people that no other supplier is serving well

The Platinum Tier

Most profitable customers

Typically heavy users

Not particularly price sensitive

Willing to invest in and try new offerings

Committed customers

The Gold Tier

Profitable (but less than Platinums)

Customer want price discounts that limit profit margins

Not as loyal

Heavy users, but may use multiple vendors rather than one focal company

The Iron Tier

Not essential to firm

Provide volume needed to use firm’s capacity

Spending levels, loyalty, and profit levels do not warrant special treatment

The Lead Tier

Cost the company money

Demand attention despite low levels of spending and profitability

Can be problem customers

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https://www.youtube.com/watch?v=LOjSEW09NxE

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Failure definition is very wide; everything below expectations is a failure. Different degrees of failures.

other findings indicating that most

customers have more negative feelings about an

organization after they go througli tlie senicereco\"

en' process.'

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Failure definition is very wide; everything below expectations is a failure. Different degrees of failures.

other findings indicating that most

customers have more negative feelings about an

organization after they go througli tlie senicereco\"

en' process.'

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Ted Levitt: "You don't know what yoit aren't going to get

until you don't get it."^ His cotntiient t"enects citstotnet"

s' unclear expectatiotis Ltliout tiiany sen'ices

and lielps explaiti why they do not cotnplain when

they ate dissatisfied. Otie way to ovetcome the

problem of imdear expectations is to impletnent

ser\'ice standards, which ate often fomtiiitnicated

through sen-ice guarantees.

Between stages 1 and 2: develop recovery standard where failure is fixed even if customers unaware of before they can report problem or complain: proactive approach to failure.

Stage 2: resolving customer problem even if no complain yet: ex resurant with 15 minutes warrantee will offer appetizier without asking if lunch served late.

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BTW: 100-21 = 80% different dat source; same results should feel pretty confident the phenomneon of non complainant not intending to repurchase is that high.

Factors incluencing complaining behaviors:

Level of dissatisfaction
i.e., does it seem worth it?

Personal importance of the service

Cost of complaining
e.g., time and effort

Benefits of complaining
i.e., value of the outcome

Likelihood of resolution
i.e., belief that the problem will/can be solved satisfactorily

Available resources for making a complaint

Access to a means of registering a complaint

Knowing who is to blame for the problem

Demographics
e.g., younger and better educated people are more likely to complain

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Barriers to cmplaining:

Inconvenience
(hard to find out the right complaint procedure; effort required)

Doubtful payoff
(uncertain if action will be taken by the firm to fix the problem)

Unpleasantness
(fear of being treated rudely; hassle and/or embarrassment)

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Should a firm ‘screw up’ just a little so that it can ‘fix the problem’ superbly?

BUT

• Only a small percent of customers complain
• Service recovery must be of a very high standard

• Service recovery is expensive

Even though service recovery can improve satisfaction, it has not been found to increase purchase intentions or perceptions of the brand

Is a recovery attempt a double edged sword.

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255 banking customers who went through 2 failures anbd 2 reciovery attemps; core and facilitating service failaures were experienced.

Failure similarity: ‘do not make the same mistake twice’

‘no good deed goes unpunished’

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Recovery should be attempted even if nit complain has been received it is about fixing identified failires/

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• Managers see the recovery process as a cost center rather than a profit center
• We forget the effects on the long term relationship.
• They stop investing in the recovery process
• Complex telephonic system
• Online complaint
• Difficulties to voice one’s concerns
• Call centers in India, Morocco, etc.
• Use inflexible scripts

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Confidence Benefits

• Confidence in correct performance
• Ability to trust the provider
• Lower anxiety when purchasing
• Knowing what to expect and receive

Social Benefits

• Mutual recognition and friendship between service provider and customer
• Familiarity

Special Treatment Benefits

• Better price
• Discounts not available to most customer
• Extra services
• Higher priority when there is a wait

Economic Benefits

• Increased revenues
• Reduced marketing and administrative costs
• Regular revenue stream

Customer Behaviour Benefits

• Strong word-of-mouth endorsements
• Customer voluntary performance
• Social benefits to other customers
• Mentors to other customers

Human Resource Management Benefits

• Easier jobs for employees
• Social benefits for employees
• Employee retention

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Confidence Benefits

• Confidence in correct performance
• Ability to trust the provider
• Lower anxiety when purchasing
• Knowing what to expect and receive

Social Benefits

• Mutual recognition and friendship between service provider and customer
• Familiarity

Special Treatment Benefits

• Better price
• Discounts not available to most customer
• Extra services
• Higher priority when there is a wait

Economic Benefits

• Increased revenues
• Reduced marketing and administrative costs
• Regular revenue stream

Customer Behaviour Benefits

• Strong word-of-mouth endorsements
• Customer voluntary performance
• Social benefits to other customers
• Mentors to other customers

Human Resource Management Benefits

• Easier jobs for employees
• Social benefits for employees
• Employee retention

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172 respondenst over 4 waves of qustionnaires;’ respondets posted complainst on consumer affair.com or rippoff .com

Desire for revange decreases signifcaintly slower fo rhigh qulaity relationship than for low quality relationship; avoidance increases fatse for high quality relationship.

Relationship quality was measured via the 3 dimensions of trst, commitment, and social benefits.

4 waves with 2 weeks between waves; on-line complaint took place at least 6 weeks prior to first wave.

Do not disappoint your best customers.

This beg the question of what vengeance does to the relationship bond?

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Record faliures in databse – Learn from mistakes

Do not treat failures as isolated incidents but as part of the service production process that failed. For instance Marriott report and collect systemtaic complains and decided not to have TV in bathrooms but additional ironing baorads as housekeeper reported it was a very frequent complaint.,

Forward failure information to individuals who made mistake or error; employee recovering the mistake is often not the same who made the actual mistake (billing error, restaurant meal not well cooked, etc.). Disneland: person who received the most complaintis the garbage collector.

Categorize customers; some companies automatically put a cusatomer who recently complain on a VIP list. Also, helps pointing out which customer is a demon – always complaining and never being satisfied with recovery.

From their data base of eventg (failures and recovery) Hampton Inn flag customers who have abused their guarrantee and when they wnat to book a room next time they recommend another hotel.

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See chapter 5 on research methods; add qualitative and quantitative flavor to service encounter study or gap analysis. Expectyed range can be low and narrow but gap analysis does not revelas how many times performance was outside of the acceptable range

Even if performance below the acceptable range does not mean that failure was all the time; hence frequency and seveirity can only be known thourhgh an integration of service failure and recovery attempts data,

Important that falire and recovery data be disseminated to personnel who works at the sensitive touchpoints where recurrent failures occur.

United Airlines: road warriors business traveles, 37% of revenue but only 6% of travelers most

A year after the infamous United dragging incident, has anything changed for airline travelers?

This ad will end in 13 seconds

United Airlines settled with its passenger who was yanked from his seat to make room for airline crew members. (Reuters)

By Lori Aratani

April 9, 2018

In the year since a Kentucky doctor was violently dragged off a United Airlines flight after refusing to give up his seat, the number of passengers bumped from their flights has dropped significantly and airlines have reduced overbooking. Even so, consumer advocates and the lawyer who represented David Dao said they are disappointed by how little has changed in the wake of the incident that drew worldwide condemnation and calls to boycott the airline.

“We have seen much less improvement than we had hoped for,” said Thomas Demetrio, the Chicago-based lawyer who represented Dao in his case against United. “The airline industry is not closely regulated, and I thought this would change things.”

[A man wouldn’t give up his seat on a United flight, so he was dragged off screaming]

Added William J. McGee, aviation adviser for Consumers Union: “Any changes that airlines made are, frankly, not very impressive.”

Dao was a passenger aboard a flight from Chicago’s O’Hare International Airport to Louisville on April 9, 2017. Passengers had already boarded the flight when a United representative asked for volunteers to give up their seats. The airline said it needed the seats to make room for crew members who needed to be in Louisville so they could staff another flight the next morning. Two other passengers gave up their seats, but when United officials approached Dao, he declined.

Airline police were summoned and Dao was dragged off the plane. Video taken by other passengers and shared widely on social media showed Dao screaming as he was removed from the aircraft and then again when he suddenly returned to the plane, looking confused, his faced bloodied.

The video fueled outrage in the United States and around the world and there were calls for a boycott. United’s stock price tumbled and chief executive Oscar Munoz’s attempts to tamp down the furor only made the situation worse.

Less than a month after the incident, the airline reached a confidential settlement with Dao.

United officials say they have learned lessons from the incident.

“Flight 3411 was a defining moment for United Airlines and it is our responsibility — our mission — to make sure we as a company and all of our 90,000 employees learn from that experience,” United spokesman Charles Hobart said. “The changes we have implemented better serve our customers while empowering our employees.”

The airline outlined a 10-point plan they say puts customers first. Among the changes: Travelers who voluntarily give up their seats are eligible to receive up to $10,000 in travel certificates. The airline — as well as other carriers — also promised to reexamine its policy of overbooking — selling more seats than are available on a flight. And officials said airline personnel would no longer call outside law enforcement officials to remove passengers from flights unless it was a safety or security matter.

[Embattled United chief said he felt “shame” when he watched video of man being dragged from plane]

After the United incident, other major airlines made similar pledges. In hearings on Capitol Hill, airline executives said they would stop overbooking flights, and major carriers including American and Delta increased the compensation for passengers who are bumped from their flights.

Lawmakers introduced a flurry of legislation, but in the end, airlines were largely left to police themselves. The Transportation Department, which also investigated Dao’s removal, declined to fine United, saying that although the airline violated some rules regarding the overbooking of flights, investigators found no evidence of race or nationality-based discrimination in the incident. United, they concluded, had not engaged in a pattern of rule-breaking that would warrant a fine.

[Lawyer for United passenger: Dragging was more horrifying than when he fled Vietnam]

Still, industry executives say progress has been made. They point to figures from the Bureau of Transportation Statistics that show that the number of passengers bumped from flights in 2017 was the lowest in decades. According to BTS, carriers posted a bumping rate of 0.34 per 10,000 passengers. It was also a decline from 2016 of 0.62 per 10,000 passengers.

The number of passenger complaints however, increased 1.3 percent in 2017, to 18,148, from the previous year’s total of 17,908.

McGee, of Consumers Union, noted that statistics collected by the federal government don’t always provide a complete picture of traveler sentiment. For example, he said the federal statistics don’t include complaints made directly to airlines.

“The good news is that DOT has a database where they will accept complaints,” he said. “The bad news is that very few people realize that.”

Airlines, including United, have continued to come under fire for their treatment of travelers.

In October, the NAACP issued a “travel advisory” urging travelers, particularly African Americans, to rethink whether they should use American Airlines. NAACP officials cited a “troubling pattern of disturbing incidents” in issuing the advisory. American Airlines officials, who met with NAACP representatives, emphasized that they were committed to providing “a positive, safe travel experience for everyone who flies with us.”

Earlier this year, United again found itself back on the defensive after a 1o-month-old puppy suffocated aboard one of its flights. A flight attendant for the flight from Houston to New York allegedly told the pet’s owner, who was traveling with the dog and her two children, that the animal had to be placed in its carrier and placed in an overhead bin. Witnesses said the flight attendant told the woman that if she didn’t comply, the family would not be allowed to travel.  The woman placed the puppy in its carrier in the overhead bin, and when the flight arrived in New York the puppy was no longer breathing. The airline took responsibility and pledged to reexamine its policies regarding animals.

Even so, at a time when record numbers of people are flying, industry executives say they are sensitive to the criticism.

“U.S. airlines remain steadfast in our commitment to improving the customer service experience for travelers and ensuring that they receive the respect and dignity that they deserve,” said Alison McAfee, spokeswoman for Airlines for America, a trade group that represents some of the nation’s largest carriers. “The industry continues to work and invest in our ultimate goal of providing a safe, efficient and enjoyable travel experience each and every day.”

This post has been updated to clarify that the NAACP issued a travel advisory for American Airlines.

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See chapter 5 on research methods; add qualitative and quantitative flavor to service encounter study or gap analysis. Expectyed range can be low and narrow but gap analysis does not revelas how many times performance was outside of the acceptable range

Even if performance below the acceptable range does not mean that failure was all the time; hence frequency and seveirity can only be known thourhgh an integration of service failure and recovery attempts data,

Important that falire and recovery data be disseminated to personnel who works at the sensitive touchpoints where recurrent failures occur.

United Airlines: road warriors business traveles, 37% of revenue but only 6% of travelers most

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Still today 65% of complaints initiated witjh front line workers.

Study: 350 complainers who purchased on oine electronic equipment from a US store.

Companies tend to attract, hire and retain people whose values are consistent with the company,s goal.

Customer extra role: the extent to which the service agent exeeced their expecations in resolving their complaint.

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American Express pays careful

attention to the job satisfaction of its in\"estment

advisers, since it estimates that more than 30 percent

of an adviser'.s client.s would defect if the advi.ser left

the company.

Every employee has up to $2000 discretionary amount to be spent on solving guest problems or make their experience unforgettable. Ex: building a woowen path for a husband and wife who is in a wheelchair so they can have dinner on the beach. The physicla symbol of the card embodies the vaklues of the organization and make them more vidi and more memorable.

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What is guarranteed is the outocme more than a specific service: 100% satisfaction.

A good guarantee forces the company to focus on its customers.

An effective guarantee sets clear standards for the organisation

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
organisation

Hampton Inn hotels, for example,

realized $11 million in additional revenue

from the implementation of it.s .ser-

\ ice guarantee and .scored the highest

customer retention rate in the industry.-

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Unconditional

The guarantee should make its promise unconditionally

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

For customers and employees

Easy to Invoke

The firm should eliminate hoops or red tape in the way of accessing or collecting on the guarantee

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(realign expectation with performance)

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