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 The Financial &

Economic

Impact Of Service

Services Marketing

Chapter # 18

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What is Service???

Service is the action of helping or doing work forsomeone, act of assistance, favor, kindness or

 helping hand

Service quality is a comparison of expectations withperformance

A bsiness with high service quality will meetcstomer needs whilst remaining economicall!

competitive" Improved service quality ma! increaseeconomic competitiveness

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What is Service Quality ???

An assessment of how well a delivered service conforms to the client#s expectations"

 Service bsiness operators often assess theservice $alit! provided to their cstomers in

order to improve their service, to $ickl!identif! problems, and to better assess client

satisfaction

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Objectives

%" Examine the direct eects of service onprots

'" (onsider eect of service in getting )ew

(stomers*" Evalate role of service in (stomer +etention

" -e! Service .rivers of

%" Service /alit!

'" (stomer +etention*" 0ro1tabilit!

2" 3alanced performance score card

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!"portance

%" 4hat retrn can I expect on S/improvements5

'" 6ow do I know that S/ improvement willbe a good investment5

*" 4here in the compan! do I invest mone!to achieve highest retrns5

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$OSQ %pproach

• S/ is an investment

• S/ eorts mst be 1nanciall!accontable

• It is possible to spend too mch onS/

• )ot all S/ expenditres are e$all!valid

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(onceptal Framework

• Service7 S/ as a cost rather than ascontribtion to pro1t

• Identif! relationship btw service &pro1ts

•  The link btw service & pro1t isneither straight forward nor simple

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Service & 'rotability ( )irect$elationship

• %89: ; .isne! & FedEx

• %88: < =E & I3>

• =AO < '' (ompanies – >arket Share

 – Sales 0er Emplo!ee

 – +etrn on Sales – +etrn on Assets

Service 0ro1ts555

5

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O*ensive Marketing

• S/ can help companies to attractmore & better cstomers

ServiceMarketShare

'rice're"iu

"

$eputati

on

'rots

Sale

s

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.efensive >arketing Eects OfService? (stomer +etention

Custo"er

$etention

+olu"eO,

'urchases

Wor- O,Mouth

'rice're"iu

"

'rots

MarginsServi

ce

.o/erCosts

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.efensive >arketing

• (stomer +etention –  The longer a cstomer remains with the compan! the more

pro1table the relationship is for organi@ation

• ower (osts ; Attracting a new cstomer is 1ve times

as costl! as retaining an existing one

• Bolme of prchase

•

0rice 0remim

• 4ord;of;>oth (ommnication

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Eects of Service on behavioralIntentions & 3ehavior

Custo"er

$etention

+olu"eO,

'urchas

es

Wor- O,Mouth

'rice're"iu

"

'rots

Margins

Service

.o/erCosts

0ehavioral

!ntentions

Sales

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3alanced 0erformance Scorecard

A set of measres that gives top managers afast bt comprehensive view of the bsinessC" that complements the 1nancial measres

with operational measres of cstomersatisfaction, internal processes, and the

organi@ationDs innovation and improvementactivities < operational measres that are

the drivers of ftre 1nancial performance

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Sample Scorecard

• Financial >easrement

• 0erceptal >easres

•

Operational >easres• Innovation & earning

•  The 3alanced Scorecard

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