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Services Marketing

- Rakesh. N

Assistant Professor,

Dept.Of Management Studies,

Don Bosco nstitute Of !echno"og#,

Banga"ore

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Modu"e-

$nderstanding customer e%pectation

through market research &usingmarketing research to understandcustomer e%pectation, t#pes of serviceresearch, Bui"ding customer

re"ationship through retentionstrategies, market segmentation-Process ' targeting in services,

retention strategies-Monitoringre"ationship, ( "eve"s of retentionstrategies, Market segmentation- )asisand targeting in services.

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UNDERSTANDING

CUSTOMER

EXPECTATIONS AND

PERCEPTIONS THROUGH

MARKETING RESEARCH

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Common Research Objectives

for Services

To identify dissatisfied customers To discover customer requirements or expectations To monitor and track service performance To assess overall company performance compared to

competition To assess gaps beteen customer expectations and

perceptions To gauge effectiveness of changes in service To appraise service performance of individuals and teams

for reards To determine expectations for a ne service To monitor changing expectations in an industry To forecast future expectations

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Criteria for !n "ffective Services

Research #rogram

Research

Objectives

Inclu

des

Qualitat

ive

Resea

rch

IncludesQuantitativeResearch Includes

Perceptions

and Expectations

of Customers

Includes

Measures

of

Loyalty or

Behavioral

Intentions

Balan

cesCo

st

andValue

of

Inform

ationIncludes

StatisticalValidity

hen !ecessary

"easuresPriorities

orImportance

Occurs

#ith

$ppropriate

%re&uency

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#ortfolio of Services Research

Customer ComplaintSolicitation

Relationship Surveys

Post-Transaction Surveys

Customer Focus Groups

Mystery Shopping of

Service Providers

mployee Surveys

!ost Customer Research

"dentify dissatisfied customers to attempt recovery#identify most common categories of service failurefor remedial action

$%tain customer feed%ac& 'hile service e(perience is stillfresh# act on feed%ac& )uic&ly if negative patterns develop

*se as input for )uantitative surveys# provide aforum for customers to suggest service-improvementideas

+ssess company,s service performance compared tocompetitors# identify service-improvement priorities# trac&service improvement over time

Measure individual employee service %ehaviors for use incoaching training performance evaluation recognition andre'ards# identify systemic strengths and 'ea&nesses inservice

Measure internal service )uality# identify employee-perceived o%stacles to improve service# trac&employee morale and attitudes

.etermine the reasons 'hy customers defect

Research $%/ective Type of Research

Future (pectations ResearchTo forecast future e(pectations of customersTo develop and test ne' service ideas

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Stages in the Research #rocess

Stage $% &efine #roblem

Stage '% &evelop (easurement Strategy

Stage )% *mplement Research #rogram

Stage +% Collect and Tabulate &ata

Stage ,% *nterpret and !naly-e .indings

Stage /% Report .indings

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*mportance0#erformance (atrix

0"G0

0"G0

!$1

Performance

"mportance

Attributes to Improve Attributes to Maintain

Hi!

"everae

Attributes to De#emp!asi$eAttributes to Maintain

"o%

"everae

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&UI"DING

CUSTOMER RE"ATIONSHIPS

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Customer 1oals of Relationship (arketing

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Relationship (arketing

is a philosophy of doing business that focuses on

keeping and improving current customers

does not necessarily emphasi-e acquiring necustomers

is usually cheaper 2for the firm344to keep a current

customer costs less than to attract a ne one

goal 5 to build and maintain a base of committedcustomers ho are profitable for the organi-ation

thus6 the focus is on the attraction6 retention6 and

enhancement of customer relationships

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7enefits of Relationship (arketing

7enefits for Customers% Receipt of greater value

Confidence benefits%

trust

confidence in provider

reduced anxiety

Social benefits%

familiarity

social support

personal relationships

Special treatment

benefits%

special deals

price breaks

7enefits for Firms% "conomic benefits%

increased revenues

reduced marketing and administrativecosts

regular revenue stream

Customer behavior benefits%strong ord4of4mouth endorsements

customer voluntary performance

social benefits to other customers

mentors to other customers 8uman resource management

benefits%easier jobs for employees

social benefits for employees

employee retention

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9ifetime :alue of a Customer

!ssumptions

*ncome

"xpected Customer 9ifetime

!verage Revenue 2month0year3

Other Customers convinced via ;O(

"mployee 9oyalty

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! 9oyal Customer is One ;ho===

Sho's 2ehavioral Commitmentbuys from only one supplier6 even though other options

exist

increasingly buys more and more from a particular supplierprovides constructive feedback0suggestions

(hi%its Psychological Commitmentouldn>t consider terminating the relationship44

psychological commitment

has a positive attitude about the supplier

says good things about the supplier

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7enefits to the Organi-ation of Customer

9oyalty

loyal customers tend to spend more ith the

organi-ation over time

on average costs of relationship maintenanceare loer than ne customer costs

employee retention is more likely ith a

stable customer base

lifetime value of a customer can be very high

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7enefits to the Customer

inherent benefits in getting good value

economic6 social6 and continuity benefits

contribution to sense of ell4being and qualityof life and other psychological benefits

avoidance of change

simplified decision makingsocial support and friendships

special deals

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?The Customer *sn>t !lays Right@

Aot all customers are good relationship

customers%

rong segment

not profitable in the long term

difficult customers

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Strategies for 7uilding Relationships

.oundations%

"xcellent Buality0:alue

Careful Segmentation

7onding Strategies%

.inancial 7onds

Social #sychological 7onds

Structural 7ondsCustomi-ation 7onds

Relationship Strategies ;heel

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*etting

Satisf#ing

Retaining

+nhancing

Customer 1oals of

Relationship (arketing

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Dnderlying 9ogic of Customer Retention

7enefits to the Organi-ation

Customer Retention 3"ncreased Profits

mployee !oyalty

4ualityService

Customer Satisfaction

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Steps in (arket Segmentation and

Targeting for Services

dentif#Bases forSegmentingthe Market

S!+P &

Deve"opPro"es ofResu"tingSegments

S!+P &Deve"opMeasuresof SegmentAttractive-

ness

S!+P(&

Se"ect the!argetSegments

S!+P/&

+nsure thatSegmentsAre0ompati)"e

S!+P1&

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"xcellent

Buality

and

:alue

!evels of Retention Strategies!evels of Retention Strategies

"5 Financial2onds

""5Social2onds

"65Structural

2onds

"""5 Customi7ation2onds

:olume and.requency

Reards

7undling and

Cross Selling

Stable

#ricing

Social 7onds

!mongCustomers

#ersonal

Relationships

Continuous

Relationships

Customer

*ntimacy(ass

Customi-ation

!nticipation

0 *nnovation

Shared

#rocessesand

"quipment

Eoint

*nvestments

*ntegrated

*nformation

Systems

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SER'ICE RECO'ER(

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Dnhappy Customers>

Repurchase *ntentions

89:

;:

?;:

@A:

9=:

B8:

8:

Complaints Resolved 4uic&ly

Complaints Resolved

Complaints ot Resolved

Minor complaints DEB-E9 losses Ma/or complaints Dover EB

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Customer Response .olloing

Service .ailure

Service .ailure

&o AothingTake !ction

Stay ith #roviderSitch #roviders

Complain to

#rovider

Complain to .amily

.riends

Complain to Third

#arty

Stay ith #roviderSitch #roviders

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Service Recovery StrategiesService Recovery Strategies

!earnfromRecovery(perie

nces

TreatC

ustom

ersF

airly

!earn fro

m

!ostCustome

rs

1elcomeand

ncourageComplaintsFa

ilSafethe

Service

+ct4

uic&ly

ServiceRecoveryStrategies

Pricing

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.igure F4/

Causes 7ehind Service

Sitching

ServiceS'itching2ehavior

8igh #rice #rice *ncreases Dnfair #ricing &eceptive #ricing

9ocation08ours ;ait for !ppointment

;ait for Service

"nconvenience

Service (istakes 7illing "rrors Service Catastrophe

Core Service Failure

Dncaring

*mpolite Dnresponsive Dnknoledgeable

Service ncounter Failures

Aegative Response Ao Response Reluctant Response

Response to Service Failure

.ound 7etter Service

Competition

Cheat 8ard Sell Dnsafe Conflict of *nterest

thical Pro%lems

Customer (oved #rovider Closed

"nvoluntary S'itching

Source' Sue (eaveney

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Characteristics of an "ffective Service

1uarantee

*nconditional The guarantee should ma&e its promise unconditionally -

no strings attached5

Meaningful

"t should guarantee elements of the service that areimportant to the customer5

The payout should cover fully the customersdissatisfaction5

asy to *nderstand and Communicate For customers - they need to understand 'hat to e(pect5

For employees - they need to understand 'hat to do5asy to "nvo&e and Collect

There should not %e a lot of hoops or red tape in the 'ayof accessing or collecting on the guarantee5

Source% Christopher ;=9= 8art6 ?The #oer of Dnconditional 1uarantees6@ Harvard Business Review6 Euly4!ugust6 $GHH6 pp= ,+4/'=

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;hy a 1ood 1uarantee ;orks

forces company to focus on customers

sets clear standards

generates feedback

forces company to understand hy it failed

builds ?marketing muscle@

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Service 1uarantees

&oes everyone need a guarantees image

too many uncontrollable external variablesfears of cheating by customers

costs of the guarantee are too high

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Service 1uarantees

service guarantees ork for companies ho are

already customer4focused

effective guarantees can be 7*1 deals 4 they putthe company at risk in the eyes of the customer

customers should be involved in the design of

service guarantees

the guarantee should be so stunning that it comes

as a surprise 44 a ;O;IIfactor

?it>s the icing on the cake6 not the cake@

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Thank youJ