CRM and Services Mktg

7/31/2019 CRM and Services Mktg

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CRM Concepts from services

Mktg


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Characteristics of Services

Intangibility - A service cannot be seen, touched,

held, or put on a shelf.

Simultaneity - The production and consumptionof the service performance occur simultaneously.

Heterogeneity - Service offerings are variable.Services vary across customers and providers, and

over time. Perishability - Services cannot be held in

inventory.


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FUNDAMENTAL DIFFERENCES

BETWEEN GOODS AND SERVICES

Lack the ability to be stored

Not protected by patents

Not easily displayed or communicated

Pricing is difficult

INTANGIBILITY

ASSOCIATED PROBLEMS:


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Use tangible clues/physical evidence

Utilize personal sources of information

Create a strong organizational image

INTANGIBILITY

SUGGESTED SOLUTIONS:


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Service provider is involved in the production

process

Other customers are involved in the production

process (shared experience)

The mass production of services presentsspecial challenges

INSEPARABILITYASSOCIATED PROBLEMS:


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Customer is involved in the production process:impact on the type of service desired

length of the delivery process

cycle of service demand

service factory must be built with the customerspresence in mind

INSEPARABILITY



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Focus on the training and selection of public

contact personnel

Develop strategies to manage consumers

Develop multi-site locations

INSEPARABILITY



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Standardization and quality control are difficult

to achieve

HETEROGENEITY



Customization

Standardization


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Classification Based onServices Fields

1. Health Care Services

2. Hospitality, Travel, and Tourism Services

3. Financial Services

4. Professional Services5. Sports, Arts, and Entertainment Services

6. Channel, Physical Distribution, Rental and Leasing Services

7. Educational and Research Services

8. Telecommunication Services9. Personal and Repair and Maintenance Services

10. Governmental, Quasi-Governmental, and Non-Profit Services

Source: Fisk & Tansuhaj (1985)


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Lovelock's Classification

Tangible acts on a person - Services such ashealth care, personal care, vacations, hotels, andairlines.

Intangible acts on a person - Services such aseducation, entertainment shows, and legalservices.

Tangible acts on a thing - Services such as housecleaning, appliance repair, landscaping services,etc.

Intangible acts on a thing - Services such as

financial services, insurance, and tax preparation.


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TangibleDominant

IntangibleDominant

saltsoft drinks

detergents

automobiles

cosmetics

fast food

fast food

advertisingagencies

airlines

investmentmanagement

consulting

teaching

Degree of Tangibility

Source: From Breaking Free from Product

Marketing by Lynn G. Shostack, From Journal ofMarketing, 41, April 1977, pp. 73-80. Reprinted bypermission from the American MarketingAssociation.


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DEMAND AND SUPPLY SCENARIOS

Demand exceeds maximum available supply

Demand exceeds optimum supply level

Demand is below optimal levels of supply

Demand and supply are at optimal levels


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STRATEGIES FOR ALTERING

DEMAND AND SUPPLY

Creative pricing strategies

Reservation systems

Complementary services

Developing nonpeak demand

utilizing nonpeak periods to prepare for peak

periodsappeal to different market segments with

different demand patterns

DEMAND STRATEGIES:


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DEMAND AND SUPPLY

Utilize part-time employees Share capacity

Prepare in advance for expansion

Utilize third-parties

SUPPLY STRATEGIES:


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DEMAND AND SUPPLY

Increase customer participation

Advantages:convenience

price

customization

Disadvantages:loss of control over service quality

may be perceived as an attempt to distance formfrom customer

SUPPLY STRATEGIES:


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THE MARKET-FOCUSED

MANAGEMENT MODEL

Purpose of the firm is to serve the customer

Service delivery is the focus of the system

and the overall differential advantage interms of competitive advantage

The services triangle provides a framework

for the services model


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THE SERVICES TRIANGLE

Theservice

strategy

The

customer

The

systemsThe

people

The organization

exists to serve the

needs of the people

who serve thecustomer

The company

exists to serve

the customer


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1. Communicate the service strategy to the

customer

2. Customer/employee interaction:

greatest opportunity for gains and losses

moments-of-truth

critical incidents

3. Customer/procedures & physical hardware

A.T.M. machines

cramped airline seats


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4. Organizational systems may preventemployees from giving good service

5. Physical and administrative systems

should flow logically from the servicestrategy

6. Good service starts at the top

*MGT. should Walk What They Talk and provide:

-sense of focus

-clarity

-priorities



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Discretionary Effort

MaximumEffort

MinimumEffort

Difference Between Maximum EffortOne Can Bring to a Job and

Minimum Effort to Avoid Being Fired

Discretionary Effort

Source: Based on Berry, Leonard (1988), How to Improve the Quality of Service

(audiotape presentation), Chicago: Tech Em, Inc.


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Source: Based on Berry, Leonard (1988), How to Improve the Quality of Service

(audiotape presentation), Chicago: Tech Em, Inc.

WillingnessHigh Low

Ideal Worker

Needs Training

Needs Motivation

Major Problem

Ability

Service Worker Profile


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Services Marketing Concept

PositioningTarget Market

Services Operations Concept(All Productive Factors)

Staff

Equipment

Facility

Time

Service Delivery Process

Blueprint the Process

Service Product Strategy


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CHARACTERISTICS OF THE

MARKET-FOCUSED MODEL

Believes employees want to do good workinvests in people as much as machines

technology is used to assist people (not to

monitor there every activity)

data is made available to the front-line


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(continued)

Recognizes that employee turnover and

customer satisfaction are closely related

tie pay to performance

focus on selection and training of personnel

Ryder Truck

no training (41% turnover)

received training (19% turnover)

better trained, provide better service, require

less supervision


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(continued)

Employ more full-time employees

better for customers and employees

companies that pay more are finding that as apercentage of sales, labor costs are actually

lower than industry averages


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SERVICE-PROFIT CHAIN

Internal Service Quality =>

workplace design

job design

employee selection and development

employee rewards and recognition

tools for serving the customer


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SERVICE-PROFIT CHAIN

Employee satisfaction =>

Employee retention & productivity =>

External service value=>

results for customers

Customer satisfaction=>

Customer loyalty=>

retention, repeat business, referrals

Revenue growth & productivity


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Services Theater

Actors (service workers) are those whowork together to produce the service for an

audience (customers). Setting (service environment) is where the

action or service performance unfolds.

Performance is the dynamic result of theinteraction of the actors, audience, andsetting.


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Performance

Setting

Actors Audience

The Services Theater Model

Source: Adapted from Grove, Stephen J., Raymond P. Fisk, and Mary Jo Bitner (1992), Dramatizing the Service

Experience: A Managerial Approach, in Advances in Services Marketing and Management: Research and Practice, Vol.1, Teresa A. Swartz, David E. Bowen, and Stephen W. Brown, eds., Greenwich, CT: JAI Press Inc., 91-121.


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Servuction

Invisible organization and system - Aspects contributing to theservice production beyond the customers view.

The visible elements include

The inanimate environment(the physical setting in which

the service is performed) The contact personnel(the employees who directly interact

with the customer to provide the service)

Customer A (the customer receiving the service) and

customer B (others who may be present in the visible area) The bundle of service benefitsa customer receives grows out

of the interaction with the contact personnel (e.g., their courtesyand competence) and the inanimate service environment (e.g., itscomfort and decor).


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Bundle of ServiceBenefits Received

by Customer A

Customer A

Customer B

InanimateEnvironment

Contact Personnelor Service Provider

VisibleInvisible

InvisibleOrganizationand System

The Servuction Framework

Source: From Services Marketing: New Insights fromConsumers and Managersby E. Langeard, et. al.Copyright 1981 by Marketing Science Institute,Cambridge, Mass. Reprinted by permission.


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Production

Has at its core a line of visibility that separates theinteractive partof the experience (visible) from the support

part(totally invisible).

The interactive part consists ofcontact persons, physicalresources and equipment, and systemsand operationalresources (e.g., the routines that the customer must gothrough to participate in the service production, such asfilling out order forms or waiting in a queue).

The support part includes the behind-the-scenes technology,management or supervision, and supportfunctions/personsthat help create the service interaction.


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CORPORATE CULTURE

Support Part

Technology andSystems Know-How

Systems Support

Managers andSupervisors

Management Support

Support Functionsand Support Persons

Physical Support

PreviousExperiences

Corporate/LocalImage

MarketCommunications

Word of Mouth

Absence ofCommunications

Personal NeedsInteractive Part

Systems andOperationalResources

Contact Persons

Physical Resourcesand Equipment

The Service Production System Framework

Source: From Service Management and Marketing: Managing the Moments of Truth in Service Competitionby ChristianGrnroos, p. 208. Copyright 1990 by Lexington Books. Reprinted by permission from Christian Grnroos.


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General

Framework

Additional 3Ps

Framework

Theatrical

Framework

Servuction

Framework

Service Production

System Framework

Setting Physical evidence Setting:

Backstage

Frontstage

Invisible area

Visible area

Support part

(invisible)

Interactive part

(visible)

Workers Actors Contact personnel Contact persons

Customers Audience Customer A

(focal customers)

Customer B

other customers

Customers

Process Performance Bundle of benefits (An implicit function

of the components)

Booms and Bitner (1981) Grove and Fisk (1983) Langeard et al. (1981) Grnroos (1990)

Comparison of Different Frameworks of

the Service Encounter


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The Three-Tiered Services Model


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The Three Tiered Services Model

Cross-functional, service logic

Management espouses service values

Service-focused routines and behaviors

Service coordination team

Employee involvement

Coordination Tier

Boundary Tier

Recruitment / selection

Training / socializationReward systems

Servicescapes

Operations management

Marketing

Human resources management

Customer Tier

Customer expectations

Customer needsCustomer talents

Market segment focus

Measurement systems with feedback

Service Quality Culture

A passion for service

Source: Benjamin Schneider and David E. Bowen, Winning the Service Game (Boston: Harvard Business School Press, 1995), p. 244.


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THE THREE-CORNERED FIGHT

FOR CONTROL

Internal logics

implicit and explicit principles of individual

departments that drive organizationalperformance

Operations logic

stresses cost containment and reduction throughmass production.


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THE THREE-CORNERED FIGHT

FOR CONTROL

Marketing logic

stresses providing customers with options that

better enable the service offering to meetindividual needs

Human resources logic

stresses recruiting personnel and developingtraining to enhance the performance of existing

personnel


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BUILDING THE SERVICE LOGIC

THROUGH CULTURAL CHANGE

Changing Culture through Structure

utilizing the marketing department as change agents

Real danger associated with this approachChanging Culture through Systems

Reward structures

Marketing planning

Certainly useful to start with

Can become a mind-numbing bureaucratic exercise


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Changing Culture through People

Bringing in a Champion

Cross-functional transfers

Changing Culture Directly

Programs ranging from broad-scale educationalexercises to process reengineering


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Categorizing Culture Change Initiatives

Group

Empowerment

Source: John E. G. Bateson,Managing Services Marketing: Text and Readings, 3rd ed. (Fort Worth, TX: The Dryden Press.

Low

High

Putting the Customer First Orientation Change

Change the Way You Work Change the Way We Work

Mixed Family


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Mixed groups

Cross-sectional

Family groups

Departmental

Low empowerment

Ability to change individual behavior

High empowerment

Ability to change the organization


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Changing Culture Directly (via Programs)

Putting the Customer First

Mixed/LowPossible problems associated with the return to

work syndrome

Orientation Change

Family/LowProcesses individuals as families

Still stuck within the organization


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Change the Way You Work

Mixed/HighImplies active empowerment of persons attending

the session

Change the Way We Work

Family/High

Total processes are reengineered to better serve the

customer


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The Service Audit:

The Profit and Growth Component

1. How does the firm define customer loyalty?

2. Does the firm measure profits from

referrals?

3. What proportion of the firms developmentfunds are spent on retaining customers as

opposed to attracting new ones?

4. When customers do not return, do we knowwhy?


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The Service Audit:

The Customer Satisfaction Component

5. Is customer satisfaction data collected in a

systematic manner?

6. What methods are utilized to obtain

customer feedback?

7. How is customer satisfaction data used?


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The Service Audit:

The External Service Value Component

8. How does the firm measure value?

9. How is information on customer perceptions

of the firms value shared within the company?

10. Does the firm actively measure the gapbetween customer expectations and perceptions

of services delivered?

11. Is service recovery an active strategydiscussed among management and employees?


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The Service Audit:

The Employee Productivity Component

12. How does the firm measure employee

productivity?

13. Does the firm actively pursue strategies to

promote employee loyalty?

14. Does the firm set employee retention

goals?

THE EMPLOYEE LOYALTY COMPONENT


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The Service Audit:

The Employee Satisfaction Component15. Are employee satisfaction measures linked

to customer satisfaction measures?

16. Are customer and organizational needs

considered when hiring?

17. Are employee reward programs tied tocustomer satisfaction, customer loyalty, and

quality of employee performance?


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The Service Audit:

The Employee Satisfaction Component

18. Are employees aware of internal andexternal customers?

19. Do employees have the support necessary

to do their jobs?

THE INTERNAL SERVICE QUALITY COMPONENT


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The Service Audit:

The Firms Leadership Component

20. Does the firms leadership help or hinder

the service delivery process?

21. Is the firms leadership creating a

corporate culture that helps employees as

they interact with customers?


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The Service Audit:

The Firms Leadership Component

THE MEASUREMENT RELATIONSHIP COMPONENT

22. How do the preceding measures ofservice performance in the service audit

relate to the firms overall profitability?

CRM and Services Mktg

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