Download Marketing Services

Marketing Services
Winning with Quality
By Arun Kottolli
Service Industry
• A guest at Holiday Inn Hotel
• You traveling on a plane
• A credit card customer calling to enquire
his balance
• A fortune 10 company building a new IT
system
• All these are the examples of various types
of services and repeat business depends on
the customer satisfaction
Traditional Marketing
• Traditional Marketing emphasized on:
– Product, Price, Place & Promotion – 4P’s
– A product based marketing strategy
• Marketing of Services emphasize in:
– Segmentation, Targeting, Positioning and
Quality – STPQ
– Effective services marketing is a strong
service concept delivered well, a desired
service performed excellently.
Services Marketing
• Synergy of Strategy and Execution
– CNN, FedEx, Domino’s Pizza, EDS, Infosys
• The big idea alone or strategy alone offers
only a temporary advantage
– Pioneers often see competitors imitate their
strategy
– Superior execution is vital to sustaining
success
– Quality of service is not easy to copy, unlike
the idea
Quality - A differentiator
• When the end service or products are
similar, performance becomes the core
product
– Customers pay for performance
– Quality earns customer’s confidence
– Reinforces branding, advertising, selling and
pricing
– Quality of service determines brand value
• Quality is the foundation for services
marketing
Nature & Roles of
Services Marketing
Create Awareness
Pre-Sale
Marketing
Induce Trail
Word of Mouth
Communication
Post-Sale Marketing
Production
Consumption
Demonstrate Benefits
Build Brand Preference
Nature of Services Marketing
• Services are consumed as it is produced
• Services marketing has limited influence on
customers prior to purchase than goods
– Need to experience intangible service to know it
– Experience influences Post-Sale marketing
– Experience influences word-of-mouth communication
• Services marketers can create brand awareness &
induce trial
• Experience of benefits builds brand preference
and brand value
Nature of Services Marketing
• Services marketing is also done by service
providing personnel
–
–
–
–
How they conduct themselves with customers
What they say, What they don’t say
How they behave, How they act
Overall appearance
• All these influences customer satisfaction
and customer retention
• Delivering excellent quality service is the
key!!
An Integrative Framework
Maximize
market
Potential
Marketing to
New customers
Managing Experience
Branding the firm
Building a
Marketing
Organization
Marketing to
Existing Customers
Marketing to
Employees
Turning Marketing into
A Line Function
Doing the service
Right the first time
Doing the service
Right every time
Delivering
Quality Service
Identifying the right services
Managing &
Exceeding Customer
Expectations
Doing it Right
• Service reliability – performing the service
dependably and accurately – is the heart of
services marketing excellence
– We want pilots to be dependable
– Surgeon to know their stuff
• Reliability is of paramount importance to
service customers
• Doing it right the First Time sets off
customer relations on good footing
Dimensions of Customer
Satisfaction
• Reliability: Ability to perform as promised
• Tangibles: Appearance of physical facilities,
equipment, personnel, & communications
material
• Responsiveness: Willingness to help customers
and provide prompt service
• Assurance: Ability to convey trust and
confidence
• Empathy: Caring, individualized attention to
customers
Foundation for Services
Marketing Excellence
Service
Marketing Excellence
Quality
Service
Service
Reliability
Benefits of Service Reliability
Improved Service Reliability
Higher
Retention of
current
Customers
Positive
word of
mouth
marketing
Opportunity
for charging
Premium
Prices
Reduced
cost of
redoing
service
Improved Marketing
Effectiveness & higher
Sales Revenue
Higher
Employee
Morale &
Enthusiasm
Increased
Productivity and
Lower Costs
HIGHER PROFITS
Lower
Employee
Turnover
Delivering Reliable Service
• Building a “Zero Defects” culture is
critical in services
• Performing service right the first time
requires a greater immediacy & discipline
than manufacturing
• Services are less concrete and more
subjective – making real time delivery of
defect less service difficult
• Leadership will be tested and needed
Service Leadership
• Believe that 100% reliability is feasible
and worthwhile goal
• Frequently and effectively communicate
their belief company wide
• Reward error-free service
• Empower frontline employees
• Never content with status quo and strive
for continuous improvement
Three Pillars of service
Reliability
Service
Leadership
Service
Reliability
Through Service
Testing
Infrastructure for
Error-free
Service
Action Checklist for Mangers
• Do we believe in 100% reliability is a worthwhile goal?
• Do we understand the challenges of delivering 100%
reliability?
• Do we demonstrate our commitment to service reliability
to all our employees?
• Do we rigorously test new services prior to introduction?
• Do we continuously reevaluate our service after
introduction?
• Are we doing enough to keep employees motivated for
100% reliability
• Do we encourage, facilities & require teamwork and
communication across all units
Service Recovery
• Even the best service company can’t avoid
snafus
• Mistakes are a critical part of every service
especially when services are performed in
customer’s presence
• Inevitability of service errors motivates
firm to improve service reliability
• Service recovery is critical for a quality
based services firm
Resolve Problems Effectively
• Prepare employees for Recovery
–
–
–
–
Communication skills
Creativity
Competence
Understanding Customer’s Expectations
• Empower Employees
• Facilitate Employees
• Reward Employees for service recovery
Make Amends for Hassle Factor
• Service problem is at best an
inconvenience to customer, at worst it can
be a major problem
• Customer incurs some cost even when the
problem is resolved
• Make amends for customer’s hassle
– A suggestion box
– On-the-spot mitigations ( a reward or gift)
– Try to exceed customer’s expectations
Learn from Service Recovery
• Conduct Root-Cause Analysis
– To prevent recurrent problems or defects from
reaching the customer
– Blame systems & not people
• Modify Service-Process Monitoring
– Monitoring service process is a strategy for proactive
identification of service problems
• Set up problem Tracking System
– Nature of customer problem
– An ongoing system to capture information pertaining
to service recovery
– Nature of problem, Actions taken in response
Service Recovery & Customer
• Even companies with excellent reputation will
experience service failures
• A strong recovery effort can restore customer
confidence & gain customer loyalty
• Yet, Many firms respond reluctantly which often
reinforces customers’ negative feelings
• Customers are more emotionally involved &
more attentive observers of recovery service than
routine service
• Service recovery excellence with a reputation for
service reliability is a powerful, profitable
strategy for gaining & retaining customers
Managing and Exceeding
Customers’ Expectations
• Customers’ expectations play a pivotal role
in judging a company’s service
• Firms earn reputation for quality service by
surpassing customer expectations
• Customers are the sole judges of service
quality
• Customer expectations has two parts:
– What customers want to occur?
– What customers believe will occur?
Structure of Customers
Expectations
• Two Levels of Expectations
– A Desired Level: What a customer hopes to
receive.
– An Adequate Level: What the customer
believes “can be” or “should be”
• A zone of tolerance separates the desired
level and what is deemed adequate
• Performance level above the tolerance
zone will surprise customers & increase
loyalty
Two Levels of Expectations
Desired Level of Service
Zone
of
Tolerance
Adequate Service
Zone of Tolerance
• Consider a bank customer who wishes to
cash a check in 3 minutes ( desired level)
• In the past, customers have waited for up
to 10 minutes ( adequate level)
• The range between 3 minutes to 10
minutes is Range of Tolerance
• Service time below3 minutes will thrill
customers
• Service time above 10 minutes will annoy
customers
Changes in Expectation Levels
• Customers’ expectation levels are dynamic
& fluctuate in response to a variety of
factors
• Desired level of service tends to change
more slowly and in smaller amounts
• Adequate service level appears to move
readily up and down – into zone to
tolerance
Changing Expectation Levels
Expectation Levels
Desired Service
Desired Service
Tolerance Zone
Adequate Service
Tolerance Zone
Adequate Service
Outcome
Dimension
Process
Dimension
Influencing Expectation Levels
• Factors that influence customers’ expectation
levels:
–
–
–
–
–
–
–
–
–
Enduring Service Intensifiers
Personal Needs
Transitory Service Intensifiers
Perceived Service Alternatives
Self-perceived Service Role
Explicit Service Promises
Implicit Service Promises
Past Experiences
Word of Mouth Communications
Establishing Customer Franchise
Ensure Promises
Reflect Reality
Place a premium
On Reliability
Manage
Expectations
Communicate
With Customers
Excel in
Service Delivery
Exceed
Expectations
Capitalize on
Service Recovery
Establish
Customer Franchise
Expectation levels &
Service Recovery
First Time Service
Desired
Service
Desired
Service
Expectation Levels
Recovery Service
Desired
Service
Desired
Service
Adequate
Service
Adequate
Service
Adequate
Service
Adequate
Service
Outcome
Dimension
Process
Dimension
= Zone of Tolerance
Outcome
Dimension
Process
Dimension
Establish Customer Franchise
• There is a gap between customer
perceptions and customer expectations
• Two potential service gaps must be
assessed:
– Gap between perceived & adequate service called Measure of Service Adequacy(MSA)
– Gap between perceived & desired service –
called Measure of Service superiority (MSS)
• MSA & MSS score will determine a firm’s
competitive position from a service
standpoint
MSS, MSA &
Competitive Status
Customer
Perceptions/Expectation
levels
MSS
MSA
Competitive Status
MSA = Positive
Perceived Service
MSS = Positive
Customer
Franchise
Desired Service
MSA = Positive
Perceived Service
MSS = Negative
Competitive
Advantage
Adequate Service
MSA = Negative
Perceived Service
MSS = Negative
Competitive
Disadvantage
Competitive Advantage
• Companies must perform above the
adequate service level to gain competitive
advantage
• This however is a temporary advantage
• Customers’ adequate service levels will
raise rapidly when competitors deliver
higher level of service
• Companies performing in the region of
competitive advantage can ill-afford
complacency
Customer Franchise
• Develop true customer franchise i.e,.
Unwavering customer loyalty by:
• Exceeding the desired service level
• Exceptional service will build strong
customer loyalty
• Constantly monitor customer expectations
• Understand factors driving customer
expectations
• Continuously strive for service superiority
Manager’s Action Checklist
• Do we strive to present a realistic picture of our
service to customers?
• Is performing the service right the first time a top
priority in our company?
• Do we communicate effectively with customers?
• Do we surprise customers during the service
process?
• Do our employees regard service problems as
opportunities to impress customers?
• Do we continuously evaluate & improve our
performance against customers’ expectations?
Thank You!!
Email comments or suggestions to:
[email protected]