services marketing session 4 th dated: -28-03-2010 by: -neeraj gupta
TRANSCRIPT
Services Marketing Session 4th
Dated: -28-03-2010BY: -Neeraj Gupta
Service provider needs to change according to the change of customer’s needs and preferences.
Service provider needs to perceive the view of the customer about the services.
Customer wants the fulfillment of words which were
told by the service provider.
Customers do not expect that all their needs will be
fulfilled but at least those promised by the company.
Affected by: - Assurance
Reliability
Empathy
Responsiveness
Tangibiltiy
Model of Consumer Expectations
Ideal Service
Desired Service
Adequate Service
PredictedService
Zoneof
Tolerance
Source: Adapted from Valarie A. Zeithaml, Leonard L. Berry, and A. Parasuraman, “The Nature and Determinants of Customer Expectations of Services” Journal of Academy of Marketing Science,Vol. 21 (Winter 1993), pp. 1-12
Factors that influence Customer Service Expectations Customer Needs
Enduring Service Intensifiers Derived Service Expectations Customer Philosophy
Transitory Service Intensifier: - Personal emergencies & failure of a service provider to offer quality service the first time & push factors
Perceived Service Alternative Situational Factors Predicated Service Expectations due to factors that are out of control
of everybody Explicit Service Promises Implicit Service Promises Word of mouth publicity Past Experience Speed of delivery Certainty of delivery Ease Personal Reognition
Managing Customer Expectations Managing promises Reliability “Getting it right for the first time” Effective Communication
To exceed customer expectations, companies
need to know the customer expectations.
The Process dimension of service gives
service providers an opportunity to exceed
their customer’s expectations and surprise
them with their competence, courtesy, and
commitment.
7
Exceeding Customer Expectations
Service Encounter
Remote encounter Phone encounter Face-to-face
encounter
Factors leading to satisfaction or dissatisfaction in service encounters
Recovery Adaptability Spontaneity Coping
Types of Service encounter
Remote encounters Phone encounters Face-to-face encounters
Remote encounters Phone encounters Face-to-face encounters
Types of Service encounter A. Remote encounters No direct human contactExample: ATM machines
Tangible clues of the serviceAir-conditioning Piped music Quality of technical processes & systems
Types of Service encounter B. Phone encounters Use of telecommunicationsEg: Utilities, Insurance, Telecommunication & Banking
Telephone services Customer inquiry Registration of complaints Taking orders Reserving tickets
Types of Service encounter C. Face-to-face encounters Direct contact b/w service provider & a customerEg: Restaurants, banks & Grocery stores
Assessment of both verbal & non-verbal behaviourAssessment of both verbal & non-verbal behaviour
Service Evidence Service personnel Physical environment Shaping the first impression of the customer Managing the trust of the customer Facilitating quality service Providing a sensory stimulation to customers Changing the image of service organizations
Management of Hotel services to its customers
Image: The Image of service provider definitely gives a clue of service quality to the customers.
Price: Price also give the picture of quality of service provided by service provider
14Chapter - 04
Marketing Research in Services
Marketing research is a necessary and useful analytical tool for service firms for the following reasons: Keeps in Touch Perceptual Veil: Success might breed arrogance in a
service firm and they might suffer from marketing myopia. They then may not perceive the real needs of the customers. This blindness also comes when a successful service firm has many layers and tiers of management and the market information has to go through all of them, leading to a distortion of the message.
Minimizing Risks Growing customer expectations resulting in expanded
markets
Scope of Marketing Research In Services Research of services environment like the political and socio-
economic factors Research into customer needs Research into customer expectations Customer perception studies Benchmarking Studies Service Distribution Studies Pricing Research Promotion Research Communications Research Key Client Analysis Panel studies for customer satisfaction indices and brand
tracking
Using Marketing Research in ServicesUsing Marketing Research in Services
ExamplesFedEx entered into partnership with the Post office - synergize their strengths -better serviceFedEx allows the Post office to use its planes to deliver letters - in urgent category
Using Marketing Research in ServicesUsing Marketing Research in Services
ExamplesCitibank partnered with American airlines – enhanced customer benefits
Influencing Customer Perceptions Service encounters Reflect evidence of service Communicate and create a realistic Image Quality and value through Pricing
CRM in pricing services
For a service firm, its marketing philosophy should be: To acquire customers To retain customers To do business with only profitable customers.
Service Profit Chain Model The 'service-profit chain' model is based on the following seven
theorems: Profit and growth are linked to customer loyalty. Customer loyalty is linked to customer satisfaction. Customer satisfaction is linked to service value. Service value is linked to employee productivity. Employee productivity is linked to employee loyalty. Employee loyalty is linked to employee satisfaction. Employee satisfaction is linked to internal quality of work life
(internalizing the firm's brand).
The limitations of this model are: Relationship between satisfaction and loyalty is not always linear. The relationship depends on the type of industry. Where the choices
for the customer are very high, the relationship is very strong and customer migration is possible; in monopolistic competition (utilities, public transportation, government/ public service, etc.), the relationship is weak.
Benefits of Customer Retention programme Customer retention is cheaper than customer acquisition
Reduces communication costs for customer acquisitions like advertising and other promotions.
Loyal customers tend to do repeat purchase, reducing marketing costs but increasing revenues.
Loyal customers tend to avoid substitutes and other competition and perform repeat purchases even if the price of the service is more - increasing revenue and profit.
Satisfied customers who metamorphose into 'advocates' or 'apostles' perform the role of unpaid salesmen, promoting the service of their own free will.
Repeat customers are less expensive to serve than first time customers, as they are well aware of the offer and do not require customer support, education, guidance and training.
Components of CRM
Customers Relationship Management
CRM extends itself from customer acquisition to customer retention to customer delight. The important steps are: Identifying the right customer Retaining the right customer Delighting the customer
CRM Business Cycle
Acquisition and Retaining Understand and Differentiate
Several activities are important: Profiling to understand demographics, purchase patterns and
channel preference. Segmentation to identify logical unique groups of customers that tend
to look alike and behave in a similar fashion. While the promise of one-one marketing sounds good, not many organizations have mastered the art of treating each customer uniquely. Identification of actionable segments is a practical place to start.
Primary research to capture needs and attitudes. Customer valuation to understand profitability, as well as lifetime
value or long-term potential. Value may also be based on the customer's ability or inclination to refer other profitable customers.
Develop and Customize Interact and deliver
Customer Relationship Analysis
The Bottom Line of CRM: Know Your Customer
Returns Bringing Knowledge into the equation Business drivers Customer analysis solutions Technology Drivers Importance of Customer-relationship
Analytics
Customer Relationship Analytics
Customer value assessment, for examining customer – and channel-value from multiple perspectives, such as lifetime sales, gross margin contribution, and by factors that affect profitability such as discounts, freight and handling, and average selling price.
Customer acquisition and targeted selling, for additional profiling, segmentation and ranking of customers based on the propensity to buy, order frequency, and overall purchasing behaviour.
Customer management, for understanding the impact of order fulfillment, returns and call-centre activity on actual sales performance. This will allow companies to review year-to-date sales and revenue and problems reported by customers to identify correlations and better understand how customer service issues are impacting profits.
Lifetime Value of a Customers
The basic idea is that customers should be judged on their profitability to the firm over the total time they make purchases. Profitability is usually based on net value, that is, the mark-ups over cost less the cost of acquiring and keeping the customer. Fixed costs are not considered because it is assumed that these costs will be incurred with or without the particular customer.
Approach The simplest approach to lifetime value is to compute the
average net revenue by multiplying four quantities together: Avg. sale * No. of purchases/year * Stay of customer * Average
Profit % Having the net revenue, the lifetime value can be determined by
subtracting acquisition and retention costs: Lifetime value = Lifetime revenue – Cost to acquire – (Cost to
retain × no. of purchases)
Lifetime Value of a Customers
Three strategies can be followed to increase the value of the customer: Increase size of average sales (tie-ins, package
multiple items). Increase the number of sales (find other
customer-needs you can provide and satisfy them with).
Increase profit margin (reduce overhead costs, reduce cost of goods and raise price if market will stand it).
Any questio
ns