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18 Cards in this Set
- Front
- Back
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Key Distinguishing Features of Service
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A. Intangibility: performance rather than objects
1. Cannot be seen, tasted, felt or touched; makes services difficult to display and price & hard for consumers to evaluate; marketers should use tangible cues; personal sources of info are important; strong organizational image can help 2. Degrees of Intangibility: there are no pure goods/services; mostly tangible>>>mostly intangible salt>soft drinks>new car> fastfood> edu>fina mgmt> counseling B. Credence Attributes: things that cannot be reasonably evaluated even after purchase and use at least in the short term; most services are high in credence; there are 2 main types 1. Experience Attributes: things that cannot reasonably be evaluated prior to purchase but can be evaluated after purchase 2. Search Attributes: things that can be reasonably evaluated prior to purchase; most physical goods are high in search attributes C. Simultaneous Production and Consumption 1. Services are consumes as they are produces: you cannot inspect out defects ahead of time; |
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Expanded Marketing Mix for Services
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Due to the unique nature of service, the marketing mix is expanded to add people, process and physical evidence
A. People- employees, customers, other customers 1. There is interaction among all 3 and that means we must manage the customers; ex. Family Friendly Area in Stadium in Jacksonville B. Processes of Service Production: activities that lead up to the development and delivery of the service. These are usually more visible than those for goods and the customer is usually involved C. Physical Evidence: any tangible aspect of the service. this is usually the physical surrounding and other visible cues; AKA Servicescape |
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Five Dimensions of Service Quality
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1. Reliability: the ability to perform the promised service dependably and accurately; the ability to get it right
2. Responsiveness: the ability to provide service in a timely manner; the ability to do it on time 3. Assurance: the ability to convey trust, confidence, and knowledge; do you sound/look like you know what you're doing? 4. Empathy: the providing of caring, individualized attention to customers; does it seem like you care? 5. Tangibles: the appearance of physical facilities, equipment, personnel, and communications materials |
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Types of Repeat Customers
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1. Prisoners: these customers are loyal because they have no choice; they may be dissatisfied, but they are trapped. If a choice were to open up, these customers would leave; ex. utility and airline
2. Detached Loyalists: these are the repeat customers who see switching costs as too high; the bond is very week and they would leave if the switching costs were lower; ex. switching colleges or cell phone providers 3. Purchased Loyalists: these customers stay loyal because of low pricing and frequent sales promotions; they can be bought by other other providers;ex. punch card 4. Satisfied Loyalists: their needs are being fully met and they are generally loyal because of service; they are somewhat price-sensitive; they are likely to defect, but they are not truly loyal 5.Apostles/True Friends: they have strong emotional ties to service provider; they have long history with company; they convince others to use the service; will stay even if things go wrong; they exhibit purchase depth> they look for ways of i |
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Benefits of Loyalty (to firm & to customer)
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A. Benefits to the firm from loyal customers; Companies profit from:
1. Increased purchase 2. Reduce costs to service 3. Referrals to other customers 4. Price Premiums 5. It is easier to retain employees with stable customers 6. A small increase in retention can equal a large increase in revenues 7. 5 x rule : costs 5x as much to get a new customer as it is to keep an old one B. Benefits to Customers 1. Customer has higher level of trust and less anxiety. There are confidence benefits 2. Customers gain a sense of familiarity and develops ties to service provider; there are social benefits 3. Long term customers perceive that they get better treatment and the benefit of the doubt; they perceive special treatment benefits |
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Four Types of Relationship Bonds
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A. Financial Bonds: level 1; the company uses price to keep customers
1. they use volume discounts, frequent purchase programs and bundling and cross selling; ex. if you buy home insurance and life insurance from same company, you will receive a discount 2. These bonds are easy to copy and have a limited long term advantage: ex. frequent buyer cards do not automatically mean long term relationship with a customer 3. This type of bond leads to detatched/purchased loyalists B. Social Bond: level 2; the company uses interpersonal skills and frequent customer contact; the provider gets to now the customer; ex state farm hires people from within the community 1. This type of bond is necessary to get to Satisfied Loyalists or Apostles C. Customization Bonds: level3; the company uses individual treatment to keep customers; this bond is tailored to meet the customers needs; ex cc companies will let you choose the design on card 1. The customer usually feels he will not get as good of service from someone else; th |
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Service Quality Gap Model
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Gap 1: Customer expectations vs mgmt knowledge of expectations
Gap 2: mgmt knowledge of expectation vs system design Gap 3: System design vs actual service Gap 4: design/execution vs communication vs. customer interpretation Gap 5: actual service vs customer perceptions of service Gap 6: Customer perceptions vs customer expectations |
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Levels of Satisfaction, Zone of Tolerance, and Requirements
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A. Service Expectation Diagram
1. Desired Level: this is what the customer hopes to obtain; this is ideal service level; the thought pattern of the customer is the service "can be/should be" 2. Satisfactory/Adequate Level:This is what the customer feels is acceptable; the thought pattern of the customer is what the service "will probably be" 3. Unsatisfactory Level: the service does not meet expectation; this is the level where the customer leaves or thinks about leaving B. Zone of Tolerance: desired level of quality & satisfactory/adequate level of quality C. Requirements 1.Must be Requirements: if not present, will be dissatisfied; often assumed to exist/taken for granted 2. Satisfiers: factors that influence level of satisfaction; higher on these, the more satisfied the customer; firms must be competitive with these; if excel on these, then can reach customer desired level; rational/logical 3. Attractive Requirements: not required/expected; if present, does not create dissatisfaction; if present creat |
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Factors That Influence Expectations
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A. Past Experience: with service provider, with competitors
B. Personal Service Philosophy: personal needs; customer's underlying generic attitude about service quality C. Transitory Service Needs: this is a situation with specific customer needs or "special circumstance"; ex. grass cutting D. Enduring Service Intensifiers: these are general business/industry factors and practices that increase a customer;s sensitivity to how a service should be performed: ex. expect certain things from professors E. Perceived Service Alternative: if other options are not available, our expectations are generally lower F. Explicit/Implicit Service Promises 1.Company Statements/Guarantees 2. Advertising 3. Word of Mouth |
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Service is Everybody's Business
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A. Economy is Service Based: competitive advantage, differentiates, service; product quality is standardized; good product quality is ante (necessary, but no enough); economic statistics
B. Link between employee loyalty and customer loyalty and profitability: cant have loyal customers without loyal employees to get loyal employees: 1. right mgmt attitude about employees 2. employees are not expendable/interchangeable 3. must recruit the right people 4. must train correctly 5. paying well 6. good processes |
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4 Things Service Businesses Must Get Right
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1. The offering: implies trade offs; what do you have to be really good at; best service, price, etc...can't have it all; target markets, segmentation; focus on experience (process), not just product
2. Funding Mechanisms: innovations; cost reducers; improved service and reduced costs; spend now, save later; do it right the first time; have the customer do the work (air port check in) in smart ways; charge customer in a palatable way; in a way consumers finds more reasonable DIRST:using feedback, complaints to improve which means there must be a systematic way of retrieving info 3.Employee Management System: employees must be able and motivated; attitude vs aptitude or attitude vs technical skill; can change knowledge; process> conditions should allow typical employees to excel 4. Customer Management System: customers are a part of the process; managing feedback; make it simple; provide incentives/ punishments |
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Loyalty Based Management
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1. The Right Customers: these customers tend to be more loyal
a. demographic: homeowners, rural, middle aged, homogeneous; homeowners are more stable b. these customers buy on referral. they have asked around, put thought into their purchase and this have more credibility. they have a positive market spin c. they are not very price sensitive; the price incentives are usually only to attract new customers 2. The Right Products: companies must change products to fit existing customers; you want an evolving product line that changes with customers needs; ex. state farm with insurance 3. The Right Employees: loyal employees are more knowledgeable about the product and the customer; there are 3 keys to getting loyal employees: a. recruitment: must take time to recruit right people> state farm employs actual 'neighbors' b. good work conditions: some type of growth c. compensation method: if an employee can focus on the service of existing customers by being offered an incentive to receive a commission based on t |
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The Right Customers
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customer equity: what the customer is worth; higher for long term/loyal customers
ARD: cost to Acquire, Retain, Develop ARD-revenue stream=customer equity |
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Why Service Stinks
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A. Coding: customers are graded based upon how profitable they are to the company; ex. platinum, gold, silver; grade is linked with each account or person is company data bases
B. Routing: the customer's code determines treatment; which call queue; which line the person gets in; what level of contact person handles the issue C. Targeting: highly coded customers get special opportunities; ex. starwood hotels customer can propose at taj mahal; they are targeted for special promotions/treatment D. Sharing: One company sells its coded lists to another company; this is generally for complementary products; ex. cc companies will share info as to who will default |
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Your Loyalty Program is Betraying You
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A. Goals
1. should discourage defections 2. should increase share of wallet 3. should encourage purchases of related services 4. program should provide customer insight 5. turn a profit B. Levers (how to structure) 1. divisibility of rewards: rewards for everyone 2. sense of momentum: start up bonus 3. nature of rewards: know what they want 4. expansion of relationship: buy related items 5. combined currency flexibility: allowing points and cash to work together towards a reward C. Mistakes 1. creating a new commodity 2. rewarding the disloyal 3. rewarding volume over profit 4. giving away the store 5. promising what you can't deliver |
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Diamonds in the Data Mine
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Harrah's Article
what they did well: found out people just wanted more chips as rewards; slot players were most profitable; depending on level/tier with high divisibility of rewards (make them visible); wanted to win bigger share of wallet; could gamble with same rewards at all locations why it didnt do well: commodity; each property had a diff program, there was no loyalty to harrahs |
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Attitudes to Service Quality
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k
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How to Delight Customers
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delight: unexpected, valuable
outrage: not dissatisfaction; an extremely poor and totally unexpected experience managerial pitfalls |
