Information for Exam 2 - MKT 442
Major concepts that have been discussed
1. What is relationship marketing? What are the benefits for the customer and the firm?
How do you calculate the lifetime value of a customer? What are the different levels of
(strategies for) retention?
2. What factors impact customer complaining? How do customers judge service recovery
efforts? What are the critical aspects of a firm's service recovery strategy? What are
the different types of complainers?
3. What are the benefits of offering a service guarantee for the organization? What makes
for an effective guarantee? What are the key questions firms should consider when
deciding whether or not to offer a guarantee that were highlighted in the guarantee
implementation framework discussed in class?
4. What is a service blueprint? What are its key components? Why is it a useful tool for
service marketers?
5. What is the service recovery paradox? When does it work? When does it not work?
What are the implications for marketing managers?
6. What are the key components for managing your employees? (I.e. Hire the right
people, train them, give them the tools/support needed, and retain top performers.)
7. Boundary spanning and emotional labor
8. Developing service standards (hard vs. soft)
9. Customer Lifetime Value (with calculation)
Service recovery effects:
Resolving customer problem effectively has a strong impact on customer’s satisfaction,
loyalty, word of mouth communication and bottom line performance. If you fix the
problems customers tend to be more loyal than the problems who have not been sold.
Loyalty transfers into profitability.
-After the recovery and adjust of service companies start “doing it right the first
time” this reduce costs of failure and increase of customer satisfaction.
-Poor recovery in effect created two poor experiences and this lead to Very
dissatisfied customer that can talk very negatively about your company. So when
there is a failure customers talk for sure to other people.
The service recovery paradox.
Recovery paradox: Some businesses have customers who are initially dissatisfied
with a service experience and then experience a high level of excellent service
recovery, seemingly leading them to be even more satisfied and more likely to
repurchase than If no problem has occurred at all.
Problems with disappointing our customers so they can be satisfied with the
recovery?
- majority of customers don’t complain. If customers do not make the firm aware of
the failure and most don’t, dissatisfaction is most likely to be the result.
- it is expensive to fix mistakes
- reliability (doing it right the first time) is the most critical determinant of service
quality.
- repurchase intentions and image perceptions of the firm do not increase. Customers
don’t think highly of the firm in the long run.
- although this paradox suggests that a customer may end up more satisfied after
recovery, this is not guarantee.
The recovery paradox depends on the situation. Some customers are more forgiven than
other depending the situation ( ex lost a reservation vs lost a reservation and you were
going to propose)
-unless the recovery effort Is amazing, it cannot overcome the negative impression
of the initial experience enough to build repurchase intention beyond the point at
which they would be if the service had been provided correctly in the first place.
How customers respond to service failures
-anger, discontent, disappointment, self-pity, anxiety, regret. These initial responses
will affect how customers evaluate the service recovery effort and presumably their
ultimate decision to return to the provider or not.
-Some customers are not very affected with the problem and they will decide later
to come back or not.
-Customers that don’t complain are most likely to never return.
Why people do or do not complain
-waste of time and effort
-they don’t believe anything positive will occur for them or others based on their
actions
-not knowing how to complain
-they feel the problem was their fault
why complain:
-There are social benefits for complaining and their personal norms support their
complaining behavior
-There should be compensation for failure
-Fair treatment and good service are their due
-Social obligation to complain, to avoid other to be in the same situation
-Some of the people just have complaining personalities
-If the situation is very important for customers they’re more likely to complain
-Customers are more likely to complaint about expensive high risk like vacation
packages, airline travel, medical services.
Type of customer complaint actions:
-a dissatisfied customer can complain on the spot giving the company the
opportunity to respond immediately. (best case scenario) to avoid negative wom
and negative feelings
-complain later by phone or email – voice response or seeking redress
-not complain to the company sino spread negative wom, this Is very harmful (using
social media, internet etc)
-complain to third parties such as the better business Bureau, licensing authority,
private attorney etc.
types of complainers
1) Passive: least likely to take any action. Less likely to spread negative wom or to
complain to third parties. They feel they are not going to gain anything and their
persona values are a big factor too
2) Voicers: actively complain to company. But they are less likely to spread negative
wom, switch provider or talk to third parties. These customer should be viewed as
the companie’s best friend. They give a company a second chance and they can fix
things. They believe they are going to get something positive if they complain.
3) Irates: more like than other to do negative wom and switch providers. They are
more angry with the provider and are less likely to give a second chance to the
company and go with the competitors. They create social media internet websites
to show their frustrations
4) Activists: above average propensity to complain on all dimensions, they will
complain to the provider, they will tell others, and they are more likely to complain
to third party than others. Complaining fits their personal norms.
Service recovery strategies: fixing the customer
Service recovery strategies fall into 2 general types.
1) action taken by the firm to restore the relationship with the customer – fix the
customer
2) action taken to correct the problem and to prevent que pase again. – fix the
problem
fixing customer needs goes before fixing the problem.
Figure 7.4 pg 189
Respond quickly:
-The ability to provide immediate responses requires not only systems and
procedures that allow quick action but also empowered employees. They should be
trained and empowered to solve problems.
-Another approach to solve problems is to use technology so custoemrs can solve
their owm problems.
Provide appropriate communication:
Display understanding accountability:
-eight most common remedies:
-three of these remedies are to have the product repaired or service fixed, to be
reimbursed for the hassle of having experienced a problem, and to receive a free
product or service in the future. The other five include an explanation by the firm
as to what happenend, assurance that the problem will not be repeated, a thank
you for the customer’s business, an apology from the firm, and an opportunity for
the customer to vent his or her frustration to the firm , cost the firm very little to
provide.
Supply adequate explanation:
-explanations to customers can help to diffuse negative reactions and convey
respect for the customers.
-First the content of the explanation must be appropriate, relevant facts and
pertinent information are important. Second the style of the delivery (includes
persona characteristics of the explanation givers, credibility and sincerity) of the
explanation or how the explanation is delivered, can also reduce customers
dissatisfaction.
Treat customers fairly
-customers want justice and fairness in hadling their complaints.
3 types of justice that customer are looking for following their complaints:
1) outcome fairness: concerns the results that customers receive from their
complaints. The compensantion needs to meet the level of dissatisfaction like
actual money, an apology, future free service, reduced charges, repairs,
replacements. They want to feel that the company has paid for their mistakes.
PUNISHMENT SHOULD FIT THE CRIME
2) procedural fairness: refers to the policies, rules, and timeliness of the complaint
process. In addition to fairness, firms should treat customers fairly in terms of
policies, rules, and timeliness of the complain process. Customers want easy access
to the complain process and the want things to be handle fast preferable by the first
person they contacted.
- fair procedures are characterized by clarity, speed, absence of hassles. Unfair
procedures are slow, prolonged, illogical and inconvenient .
3) interactional fairness : focuses on the interpersonal treatment received during the
complaint process. Beyond all of the above, this form is fairness can dominate the
others if customers feel the company have uncaring attitudes and have done little
to try to resolve the problem. When employees are rude in this circumbstances are
because lack of training and empowerment.
Service recovery strategies: fixing the problem
-the most pressing and immediate need in service recovery is to “fix the customer”,
but the actual problem created by the poor service also needs to be fixed.
Encourage and track complaints
-Firms can utilize a number of ways to encourage and track complaints. Like
surveys, critical incident stuies and lost customer research
-Free call centers, social media, email are now used to faclitiates, encourage and
track complaints.
-In some cases technology can anticipate problems and complaints before they
happen, allowing service employees to diagnose problems before the customer
recognizes they exist.
Learn from lost customers
-learn from the customers who left. Why did they leave and fixing this so people
don’t leave in the future and same mistakes are avoided.
-We need to find out true reasons of leaving obtained by depth interviews,
administered by skilled interviewers. (seniors that know the business, use why
questions or tell me more about that questions)
-Focused on profitable or important customers lost not the useless ones
Service guarantees
-a guarantee is a particular type of recovery tool that can be used to both “fix the
customer and “fix the problem”
-a guarantee is a pledge or assurance that a product offered by a firm will
performed as promised and if not reparantions takes place.
Characteristics of effective guarantees:
-unconditional:
-meaningful: one that is expected and obvious is not a good one. Customers expect
to be reimbursed in a manner that fully compensates them for their dissatisfaction.
-Easy to understand: easy for customers and employees to understand
-Easy to invoke: not time cpnsuming and easy for the customers to use
Types of service guarantees:
Can be unconditional satisfaction guarantees: any aspect of the service should be to the
customer’s liking there are no limits or conditions.
or service attribute guaranttes: other attributes that are important to customers
benefits of service gurantees:
-a good guarantee forces the company to focus on its customers: they must know if
it is important to their customers and for the guarantee to work firms need to
understand what satisfaction means for its customers. What they value and expect
-an effective guarantee sets clear standard for the organization. What its expected
from employees and communicate expecations to them.
-A good guarantee generated immediate and relevant feedback from customers.
Guarantee tells the customers they have the right to complain
-When the guarantee is invoked there is an instant opportunity to recover.
Dissatisfaction can be controlled with a guarantee and we can have a fast recovery
-Information generated through the guarantee can be tracked and integrated into
continuous improvement efforts: listen to customers so the listening gap closes
-For customer, the guarantee reduces their sense of risk and build confidence in the
organization: por que service is so personal customers look for info that reduces
their uncertainty.
Guarantees help with loyalty build customer awareness and creates posttive wom.
Cuando hay guarantee cutomers complain so we can fix the companies errors so costs
of errors sre reduced and also employees become happier and create a positive service
culture.
When to use and not use guarantee:
-existing service quality in the company is poor: it could be so expensive for the
company
- a guarantee does not fit the company’s imamge: if the company has a reputation of
very high quality then a formal guarantee is unncesesary.
-Service quality is truly uncontrollable: ex mba school can promise all the students
are going to get a job after graduation. Or airplanes with uncontrollable weather.
-Potential exists for customer abuse of the guarantee:
-Costs of the guarantee outweight the benefits: costs agains consumer loyalty,
attraction of new custoemrs positive wom.
-Customers perceive little risk in the service: not expensive products etc
Chapter 8:
To be sucesssful a key component relates to product/service characteristics (meeting
customers’ needs, service advantages over other products , techonological advantages),
strategy characteristics (dedicated human resources, good research), process
characteristics ( marketing, technological and launch proficiencies) and marketplace
characteristics ( market potential)
Things that causes failure:
-no unique benefits offered, insufficient demands, unrealistic goals for the new
product service, poor fit between the new service and others within the
organizations’s portfolio, poor location, insufficient financial backing or failure to
take the time to develop and introduce the products.
Challenges of service innovation and design
-service are intangible and process oriented so it is hard to describe and
communicate.
-Because service are delivered by employees to customers, the service is variable.
No service is alike
-Risks of describing using words a service: oversimplication, incompleteness (omit
important details), subjectivity ( a person will describe the service based on a
personal experience, biased interpretation ( no people will describe “responsive”
quick” the same way)
Important considerations for service innovation:
Involve customers and employees: innovation needs to involve both employees and
customers. Employees deliver the service so their insight for innovation is very useful por
que dicen que falta y que seria beneficial para the company. Involving employees is very
useful because they know organizational issues that need to be addressed to support the
delivery of the service to customers. Customers are also very usefull to do innovations.
Employ service design thinking and techniques
-one of the challenges of service innovation and design is that services are processes
and they are experiential. Service takes time (university)
-service requires steps, combinations of employees customers etc so there has to be
a good coordination and collaboration
-service design is focused on bringing service strategy and innovative service idea
to life by aligning various external and internal stakeholders
Types of service innovation:
-the innvoantion can be with something external like change a menu or something
internal that makes the practices more efficient and productive
-techonological innvoations for frontline employees to make it more efficient
-inoovation in the customer’s role example self service
-also changes in the whole market like education etc
service offering innovation
not all service innovations are “new” to the same degree
-major or radical innovations: are new services for marketers as yet undefined.
Creating brand new markets.
-Start up businesses: consists of new services for a market already served by
existing products that meet the same generic needs. Ex door to door airport shuttle
related with taxi or cars that go to airports
-New services for the currently served market: represent attempts to offer existing
customers of the organization a service not previously available from the company.
( although t may be available from other companies). Companies adding coffe bar
or a play ground for children. But it can be a big change like pet smarts’s perhotels
innovations
-Service line extensions: represent augmnetations of the existing service line. Such
as restaurants adding new menu items and airliens offering new routes.
-Service improvements: represent perhaps the most common type of service
innovation. Changes in feature of services already offered might involve faster
execution of an existing service process. Ex addition of wireless internet
-Style changes: represent the most modest service innovation. Although they are
often visible and have a effect on customers perception. Ex changing the color of
the restaurant, chaning logo for the company, redesigning website etc. these
iinovations often don’t change the service only its appearance.
Innovating around customer roles:
Redefining customers role ex Netflix redefined the customer’s tole for movie rentals.
The entire process of customers have changed
Innovation through service solutions
-customers are looking for innovstive solutions for their problems. These rational
processes comprise
-1) customer requirements definition
-2) customization and integration of services
-3) deployment of these integrated solutions
-4) postdeployment customer support
stages in services innovation and development:
-the service cant just be dropped at any step and the steps are not already in a linear
process (2 steps can be worked on at the same time)
-the skip of steps and the steps worked on at the same time is flexible product
development.
The service innovation and development process:
-it is divided in two sections: the front end planning and the implementation.
-The front end: determines what service concepts will be developed
-The back end implements the service concepts
-The fuzzy front end: where the greatest product weaknesses in service innovation,
it is fuzzy because it is relative abstractness, which is even more apparent with
intangible complex services
Front ends planning
1) Business strategy development or review
- step 1) review the organizations missions and vision, these need to match with the
new innovations
2) new services strategy development
generating specific ideas that match the vision and the companies goals. We need to
identify our growth ooportunities to identify our direction of growth.
3)Idea generation
-formal brainstorming, solicitiations of iseas from employees and customers.
-Observing customers and how they use the service can also generate creative ideas
for the new innovations. – empathic design
-Talking to other employees can actually generate new ideas.
-Using surveys and focus groups
4) Service concept development and evaluation:
-once a good idea is established and fits the business and new service strategies, it is
ready for initial development. We need to analyse this idea well ,what customers;s
need is it meeting.
-We need to explain the description of the service the best way possible so we can
see employees and customer initial reaction.
Explain the process, why a new process, its benefits
5) Business analysis
- in this step we need to estimate its economic feasibility and potential profit implications.
Ex demand analysis, revenue projection cost, etc operational feasibility
- this step will have the cost of hiring and training, facility changes
- the firm will analyze this business analysis to determine whetear the new service idea
meets the minimum requirements
second part of the process
6 Implementation- service prototype development and testing:
-once the new service concept has passed all the front end planning hurdles, it is
ready for the implementation stages of the process.
-Because services are intangible and we cant test like we test a product this step
had challenges
-In this step in order to explain the process to the stakeholders, a bluideprint can be
implemented. .
-All stakeholders needs to be involve and they need to know exactly what is
happening in the bludeprint for the new service to work.
7 Market testing
-the new service mihjt be offered to employees and their families to assess their
responses to variations in the marketing mix.
-It is super important that we conduct a pilot run of the service to be sute that the
operational details are functioning smoothly.
-By this point mistakes are harder to correct.
8 Commercialization
-im this stage the service goes live and is introduced to the marketplace. This stage
has 2 primary objectives
-1) build and maintain acceptance of the service and the personel
-2) monitor all aspects of the service during introduction and through the complete
cycle. Everthing should be tracked, phone calls, emails costs etc
9 Postintroduction evaluation
-in this stage, the info gathered in commercialization of the service can be viewed
and changed.
-No service will ever stay the same, therefore formalizing the review process to
make those changes that enhance service quality from the customer’s point if view
is critical.
Service blueprinting: technique ofr service innovation and design:
What is a service blueprint: is a picture or map that portrays the customer experience
and the service system so that people involve with the service can understand it objectively
-used in the desing stage,
-it displays the service and the process of service delivery, the points of customer
contact, the roles of custoemrs and employees and the visible elements of the
service.
-Provides the excct steps and when the customer does it.
Blueprint components:
-customer actions, onstage/visible contact employee action. Backstage/ invisible
contact employee actions and support processes.
-Customer actions: area encompasses the steps, choices, activities. The total
customer experience is in this area.
-Paralleling the customer actions are 2 areas of contact employee actions. The
onstage/visible contact employee action (visible to consumer) and the
backstage/invisible contact employee action (invisible to consumers).
-The support processes: covers the internal services, steps and interactions that take
place to support the contact employees in delivering the service.
-At the very top you see physical evidence of the service and contact with customer
-Line of interaction: direct interaction between the customer and firm, anytime a
vertical line crosses the horizontal line of interaction a direct contact is happening
-Line of visibility: separates all service activities visible to the customer from those
not visible. Also seprates de lo que hacen employees backstage from onstage.
-Line of interaction: separates customer contact employee activities from those of
other service support activites and people. Vertical lines cutting across the line of
internal interaction represents internal service encounters.
-Physical evidence- customer actions- line of interaction, employee actions
(onstage/visible)- line of visibility- employee actions (backstage) line of internal
interaction and support process.
Chapter 9
Customers-defined service standards
standardization of service behaviors and actions
-standardization: means a nonvarying sequential process similar to the mass
production of goods. The goal is to create a constant process. Some managers feel
standardization is inconsistent with employees empowerment. Techonology helps
to achieve standrduzation goals.
-customization: refers to some level of adaptation or tailoring of the processto the
individual customer. Goal is to meet each of the customers needs
- standardization of service can take 3 forms. 1) substitution of technology por
personal contact and human effort 2) improvement in work methods 3)
combinations of these 2 methods.
-Standardization whether accomplished by technology or by improvements in
work processes reduces gap 2.
-Customer defined standardization ensures that the most critical elements of a
service are performed as expected by customers, not just that every action in a
service is executed In a uniform manner.
-Using customer defined standardization allows employee empowerment
customer, not company defined standards
-in order to close gap 2, standards set by companies must be based on customer
requirements and expectations rather than just on internal company goals.
-A company must set customer defined standards: operational standards based on
pivotal customer requirements identified by customers. These standards match
customers expectations.
Types of customer defined service standards:
-the types of standards that close provider gap 2 are customer defined standards:
operational goals and measures based on pivotal customer requirements identified
by customers rather than on companies concerns such as productivity or efficiency.
Hard customer-defined standards
-things that can be counted, timed or observed through audits.
-Hard service standards for responsiveness are set to ensure the speed or
promptness with which companies deliver products, handle complaints, answer
questions, answer telephone and repair calls.
-Resposnivivness perceptions diminish when customers wait to get through to the
company by phone and its put on hold.
Soft customer defined standards:
Soft measures must be documented using perceptual data.
-second category of customer defined standards are soft standards and measures
because thete are opinion based measures and canot be directly observed.
-They must be collected by talking to customers, employees etc.
-They provide direction, guidance and feedback to employees in ways to achieve
customer satisfaction and can be examinrd by measuring customer perceptions and
beliefs.
-Person to person interactions
-existing They are not easily quantifiable, but surveys can be used to interpret
customers perceptions of how the firm is doing on the standards.
Development of customer-defined service standards
Process for setting customer defined standards
1) identify existing or deseired service encounter sequence: can be done by listing
the sequential steps and activities that the customer experiences In receiving the
service. Blueprints can be used to identify the seuences by noting customer
activities across the top of the blueprint. Vertical lines from customer activities into
the lower levels of the blueprint signal the points st which service encounters takes
place.
-the company would be open to discovering customer’s desired service encounter
sequences, exploring the ways customers want do to business with the firm. Ex
marriot study said the 10 minutes in a hotel are the most critical so they put a lot of
focus en frotnt desk
2) translate customer expectations into specific behaviors and actions: setting to
broad standards is innecficient because it is hard to measure and see if it is being
achieved or should be taken off.
Chapter 11
Employees roles in service delivery
service culture:
-culure: the way we do things around here
-a service culture exists if the is an appreciation for a good service and also good
service is given to internal and external customers ( all people involved) also a
good service is a way of life, a norm to the company
- service culture gives a compettve advantage over companies
exhibiting service leadership
-a strong servie culture starts with good leaders in the company, they sll have
similar core values like joy respect etc and infuse them in the company.
-Espoused value – what managers say the values are, tend to have less impact on
employees
-Enacted values- what employees believe the values to be because of what they
observe management actually doing.
-Culture is driven by what employees perceive that management really believes and
employees understand what is important for the company
The critical role of service employees
-the key focus on customer contact service employees because: they are the service,
the organization in cutomers eyes, brand, marketers
-when employees are on stage they need to maintain the perfect attitude
-employees make up the brand and the image of a company, not only the service
-power of employees to create the brand have been called branded customer
service.
The service triangle
-visually reinforces the importance of people in the ability of firms to keep their
promises and succeed in building customer relationships
-company (management) – external marketing (making promises, anyone that
communicates to the customer before service delivery can be viewed as part of
this) – customers – interactive marketing (delivering the promise, were promises
are kept or broken by the company) – pfoviders ( employees, subcontractors) –
internal marketing (enabliling promises, to helpo the providers deliver on the
service promises ex training motivating rewarding)
diibujae el triangulo
service profit chain:
internal service quality – employee satisfaction- (employee retention and employee
productivity)- employee service value- customer satisfaction- customer loyalty –
(revenue frowth and profitability)
the effect of employee behavior on service quality dimensions
-delivering the service as promised, reliability, is totally within the control of
fronline employees. They also influence customer perceptions of responsiveness by
willingness to help
-assurance: to inspire trust and credibility
-empathy implies that employees pay attention listen and flevible in delivering what
customers need.
-Tangibles related with quality
Boundary spanning roles:
-the frontline employees are referred as boundary spanners because they operate at
the onrganization’s boundary.
-Boundary spanners provide a link between the external customers and environment
and the internal operations of the firm.
-they are important fro understanding, filtering and interpreting ingo from the firm
and itrs external constituencies.
-No matter what level of skill ot pay, boundary spanning position are stressful jobs
Emotional labor.
-labor that goes beyond the physical or mental skills needed to deliver quality
service.
-Smiles, eye contanct, howing interest, and building a relationship.
-Even if you are having a bad day you still need to do all these tthings, so we need
to train and select people that can hundle emotional labor
Sources of conflict
-frontline employees deal with interpersonal and interorganizational conflicts
-they have to deal with conflicts
types of conflicts:
person/role conflict : conflict between they are asked to do and their personalities and
values. Sometimes there is a conflict between role requirements and the self image or self
esteem of the employee. Change their appearance or wear specific clothers etc
organization/client conflict: conflict between their 2 bosses, the organization and the
individual customer. Employee needs to decide if he wants to follow the organizations’s
rules or satify the customer specific demands. These conflicts are severe when the
employees depend on cucstomers to gain income ex commissions etc
interclient conflict:
-when incompatible expectations and requirements arise from two or more
customers. When serving many customers at the same time, employees find It
difficult to serve the full range of needs of a grpoup do different customers.
Quality/productivity trade offs
- technology if being used to balance quality and quantity trade offs to increase the
productivity of a service
strategies for delivering service quality through people and slosing gap 3
-to build a customer oriented, service minded workforce, and organization must,
- 1) hire the right people: technical training, experise and certification. Compete for
the best people attract long termn qualified employees, hire for service
competencies (skills and knowledge to do the job, degrees and skills) and service
inclinations (interest in doing service related work attitudes toward service, service
quality characteristics like helpfulness sociability etc) besides interviews,
companies use creative processes to assess both service competencies and serve
inclination. Another way to attract people is to be the best employer in a industry.
Ex google benefits
-2) develop people to deliver service quality: once the right employee is highered
the firm needs to train them and teach them about the job requirements. Teach
them skills, employees need to be tought interactive skills like to be caring
responsive empathetic etc. they can be tought how to listen better and how to be a
better communicator. We also need to empower employees by training them and
letting them make decisions by their owm. You cant tell them to do whatever it
takes to make the customer happy because they don’t know what this means
exactly. Empowerment reduce jon relates stress, increase jon satisfaction and
adaptability. We also need to promote teamwork. Customer satisfaction will
increase if employees work as a team. It will reduce stress for employees and they
will be more motivated and happy.
-3) provide the needed support system: we need to measure internal service quality
by doing this we need to have a reward internal service by first acknowledging that
everyone in the firm has a customer and them measuring customer perceptions of
internal service quality. A problem with this is that sometimes they n get so focus
on satisfying internal customer that theyforget the overall goal to serve the esternal
customers so it is important to link the internal goals with the external goals by
developing a blueprint. We also need a supportive techonology and equipment.
Employees get frustrated if they don’t have the require tools and techonology to
give a high quality service. We also need internal procedures that support a quality
service performances.
-
-4) retain the best people: if you loose good employees you can also loose good
customers. We cant take employees for granted. We need to include employees in
the company’s vision so they get motivated and know whats going on. They need
to know why they are important for the company. Visions need to be well
communicated by ceos. We also need to treat employees as customers they
employees need to feel valued and they are most likely to stay in the company. We
need to measure employee satisfaction and needs too in order for them to be
motivated. We also need to measure and reward strong service performers we need
to reward and promote them. we need to keep the employee motivated because if
they leave we can loose customer and they can follow the ex salon.
Customer oriented service delivery:
-inverted service marketing triangle?
types of innovation:
1) service change: adjustment to the service tangibles
2) service improvement: faster service, extended hours, added amenities
3) service line extension: augment existing services with new options
4) new services for the currently served market: existing company increasing
market offerings
5) start up business: new alternatives for needs being met already
6) major innovations: new services for yet undefined markets ofen created by
technologt innovations
service redesign approaches: self service, direct service, preservice, bundled service,
physical service
service blueprint: took that helps address the chanllegnes of deliverying intangible
processes. Provides a focal point that can facilitate common understanding of what we
offer to the marketplace. A tool of simulataneosly depicting the service process, the point
of customer contact, and the evidence of service from the customer point of view.
Service blueprinting: process point of contact evidence.
Service blueprint components:
physical evidence: all tangibles that customers come in contact with that impact customer
quality perceptions
Customer actions: all steps that customers take or experience as part of the service
process being examined.
Line of interaction:
Onstage contact employee actions: the contact employee actions that involve face to face
interactions with customer or techonology ex websites atm etc
Line of visibility
Backstage: other contact employee actions including pjone contact wih customer,
preparation eotk and any activity that facilitates the process.
Line of internal interaction
Support processes: activities that facilitate the service process and are done by individuals
who are not contact employees.
Mot epr mot epp ipp oti
Benefits of service blueprinting:
Customer focused
-illuminates the customer’s tole and demonstrates where the customer experiences
quality
-promotes a conscious decision on what customers see and which employees should
be in contact
-constitutes a rationl basis for external marketing
-assits in identifying fail point and opportunities for service improvememt
organizational focus:
-provides common point of discussion for new service development
-stimulates strategic discussion by illumincating the elemtns and connections that
constitutes the service
-provides a basis for identigyinh and assessing cost, revenues and capital
requiremnts
-clarifies competitive positioning by comparing company and competitor processes
when both are mapped
provides a customer focused basis for developing metrics to track service success.
Employee focus
-they can relate ‘what I do” to the service viewed as an integrated whole
-constitutes a rational basis for internal marketing
-provides a basis for strandasdizing processes across units
-helps gain employee buy in for new service offerings or improvments
implementing a blueprinting initiative:
1) define key objectives: what do you want to accomplish
2) clerly define the service and service component to be blueprinted:
3) all relevant parties should contribute
4) decide the oricess by which blueprinting will tale place
5) decide how each blueprint session will be conducted
6) based on input, create comprehensive blueprints
7) decide how the bluepritns that are developed will be used
8) and when will be updated
Chapter 6
Relationship marketing:
Preferimos relationship and retention than just only one transaction y
acquisitions. Queremos build better relationship with the customers we have
instead of getting new ones. Mas barato
The evolution of customer relationships
1) customer as a stranger: customers that have not entered the market yet
(0 transactions) we want to attract them, queremos venderle nuestra idea.
2) Customer as acquaintances: customer awareness and trial are achieved.
This face we want to satisfy the customer an create value for them
3) Customer as friends: continues to make purchases and receive value for
exchange of relationship. Sabian mas cosas del customer y su situation.
Trust comes in place in here, a primary goal of this stage is RETENTION
and to develop competitive advantage
4) Customer as partners: levels of trust are higher, they receive more
customized products. The trust is important pero no sufficient to create a
firm partnership. The idea of trust lead to commitment. Customers don’t
want to find better alternatives. Relationship always needs to improve and
the company needs to understands que los changes del customer
cambian cada vez. This customers dan growth.
The goal of relationship marketing:
- primary goal of relationship marketing is to buils and maintain a base of
committed customers who are profitable for the firm.
- Acquiring, satisfying, retaining, enhancing.
Benefits for customer and firms:
1) benefits for customers: customer will remain loyal when they receive
greater value relative to what they expect form competitors. Consumers
want to get benefits quality satisfaction
relationship benefits
1) confidence benefit: feelings of trust or confidence in the provider along
with a sense of reduced anxiety and comfort. Most importsnt to consumer
is confidence. Cusomers no quieren cambiar de emoresa si hay una
relacion.
2) Social benefits: familiarity and social relatinshio with their service
providers. Aunque el competitor tenga major prices igual no cambian.
3) Special treatment benefits: being given a special deal or price and getting
preferential treatment. Less important de todos
Benefits for firms:
1) economic benefits: increase purchases over time. Satisfied customers a
willing to pay more. Another economic benefit for the firm is lower cost,
using same customers, many starup cost are related with new customers.
2) Customer behavior benefits: word of mouth behavior. The best way to
advertise. Another factor is social support provided to other customer in
the form of friendship and encouragement. Also mentors. Old customers
help the new ones and explain how it works.
3) Human resource management benefits: customer may assit in service
delivery. The more experienced the customer can make the employees
job way easier. Also they are more likely to have more realistic
expectations of what the firm can achieve for them. Another one is
employee retention. People like to work in palce were customers are
happy.
Relationship value of customers:
- concept that looks at customers from the poit of view of their lifetime
revenue and profitability contributions to a company.
Relationship developemt strategies:
How to keep customer
- core service provision:
-
fix individual customer complains
fix customer – respond quickly – provide ample communication – treat customer
fairly – cultivate relationship wiyh custoers
fix problems with the service
fix the problem – encourage track and complaint – learn from recovery
expereicnes – learn from lost customers and mle the service fail safe.
Ch 6
Customer retention
Benefits for customer: confidence benefits, social benefits and special treatmet
benefits
Is it alawyas good to retain customers? Wrong customer segment, difficult
customers and not profitable I nthe logn run
Customer life time value: the LTV of a customer is the net profit that oyu will
receive from transaction with a given customer during the time that this customer
continues to buy from you
Would you rather have a one time large purchase or a repeated purchase.
LTV: (cash inflows – cash outflows) * time
(rev-cost)*volume) – acquisition costs+development osts + ret costs) *
time
retention strategies: financial social customization (customer intimacy one to one
solutions) and structural bonds (sahred processes and equipment integrated
info systems)
Process for setting customer defined standards
1) Identify existing desired service encounter sequence: through
market research – find out what the customer’s desired service
encounter sequence is and how does the customer want to do
business with you? Ex ss ivas a un restaurant are you going yo
seat yourself? Split checks? Que hacer… then start with fidning
out what I important, then find out what it means to them –
reliability: done right the first time and assurance: creadble and
trusthworthy
2) Translate customer expectations into behavior/actions: must be
for each encounter, info and behaviors must be gathered and
interpreted by an independent source, qualitative research may
be helpful like interviews focus groups panels etc
3) Determine appropriate standards: behaviors and action must be
important to customers, focus on standards that cover things
that need to be improved or maintained, the standards cover
behavrios that employees can be realistically improve upon, the
standards are predictive and challenging but realistic
4) Develop measurements for standards eithe4r soft (measured by
transaction based survey) or hard (measured by audits or
operating data. Hard standards: things that can be times
measured counted ex numner of missed pickups or soft
standards: opinion based measures that cant be observed and
must be collected by talking to customers employees etc. ex
give adequate instructions trreatmnent
5) Establish target levels for standards
6) Track measures against standards
7) Provide feedback about performance to employees
8) Update target levels and measures
