SERVICES MARKETING

CHAPTER 4

Service Recovery is very imperative for the companies in the perspective of

customer loyalty. It refers to the actions companies take when they have failed to
provide the service customers expected. It is something in a service delivery goes
wide of the mark. It takes action to ensure that their customer gets their desired
outcome.

3 main recovery approaches.

1. Marketing perspective ; customer recovery
2. Management perspective; employee recovery
3. Operations perceptions; process recovery

Overhaul
-act or performance that one party can offer to another.
-may or may not tie to physical item for consumption.

3 apparatus constitutes of service recovery

1. Collect
2. Distribute
3. Possibilities

3 dimensions of justice
1. The result. Judged from earlier experiences.
2. The process. Judged from accessibility, control, flexibility and how rapid they
settle the complaint.e
3. Personnel’s attitude. Judged from politeness.

3 types of recovery.
1. Customer recovery. Reestablish customer satisfaction.
2. Process recovery. Learn from failures to avoid them in the future.
3. Employee recovery. Prepare employees to deal with failures.

Customer recovery. Recent assistance show that perceived justice is a

significant factors in service recovery evaluations. Service failure implies to some
extent unfair treatment of the customer.

Justice consists of 3 dimensions

1. Distributive. Allowance of renumeration and costs.
2. Procedural. Evaluation of procedures.
3. Interactional. Information communicated about the recovery.

Process recovery. Learning from failures may be more important than simply
recovering individual customers, because process improvements that influence
customer satisfaction represent the most significant means of creating bottom-
line impacts through recovery.

Employee recovery. Although most organizations are aware of external service

recovery, they are poor at their internal service recovery namely, supporting their
employees in their difficult task of dealing with the complaining customers.

INTERVENTIONS NECESSARY FOR SERVICE RECOVERY

The word ‘addict’ is used to describe anyone struggling with chemical
dependency, alcoholism or other compulsive behavior. Most of the time we will
hear people say that addicts cannot get help until they have the ‘hit bottom’.

The purpose of intervention process is to allow the addict to see the bottom
before getting there.
Recovery and intervention services
 Day support mental health programs
 Community support
 Emergency assistance

GOAL OF SERVICE RECOVERY, is to identify customers with issues and then to

address those issues to the customers’ satisfaction to promote customer
retention.

Service recovery is a systematic business process that must be designed

properly and implemented in an organization. A positive approach to complaint
handling. Complaint has serious negative connotations while service recovery has
positive connotations.

Maturity or maturity date. The final payout date of a loan or other financial
apparatus at which point the principal.
Fixed maturity. The loan is due to be repaid on a fixed date. Similar meaning
with ‘redemption date’.

Stages of service recovery maturity.

Stage 1. Moribund. There is no complaint handling angry customers are ignored.
Stage 2. Reactive. Customers complaints are heard, and a response is made. But
it is a haphazard process with no defined goals for the response and no one
owning this business process.
Stage 3. active listening. At this stage, the response to issues voiced by
customers is structured. Specific people have the responsibility to respond to
complaints and guidelines are in place for the response. However, it is still
reactive.
Stage 4. Solicitous. The critical change from stage 3 to 4 is the move from
reactive to proactive solicitation of customers with issues. It is accomplished by
encouraging customer to voice their complaints.
Stage 5. Infused. The pinnacle of service recovery practices is achieved when the
complaint identification merges with business process.

The pyramid of service recovery progression.

Infused
Feedback
to internal
process
owners

Solicitous
Proactive complaint

Active listening
Systematic but reactive response

Reactive
Reactive response to complaints

Moribund
No response to complaints
One of the most significant factors that affect a customer’s perception of quality is
the number and problems they encounter.

2 aspects of universal values

1. Face consciousness
2. Fate submissiveness

2 types of service failure

- process and outcome

CONSUMER VALUE ORIENTATION

Values are crucial variables that explain consumer behaviors. It is an enduring
belief that certain behaviors or outcomes are preferable, thereby driving various
consumer behaviors.

Disgruntled customers are of 4 types and they act towards a service

failure in 4 different ways.
1. Passive. Type of customers never complain for any mistake encountered by
them from a company’s side. They may or may not switch towards a new brand
for that particular service or product.
2. Voicers. Type of customers who raise their voice against the company’s
service/product if they encounter mistake.
3. Irates. Types of customers are mainly engaged in a negative word of mouth.
4. Activist. Type of customers who would actively complain to a third party.
 CHAPTER 5
CUSTOMER RELATIONSHIP MANAGEMENT

CRM
- business philosophy, a business strategy, business process, technological tool.
- a relationship orientation, customer retention and superior customer value
created through process management.
- customer focused business strategy that aims to increase customer satisfaction
and customer loyalty.
- different academic backgrounds of the researchers and scholars
- an emergent perspective and needs more time and studies to reach the
consensus
- combination of management, marketing, and IS discipline.
- balanced perspective
- the philosophy, policy and coordinating strategy mediated by a set of
information technologies.
- building customer oriented culture

3 levels of CRM
1. Strategic. Deals with the creation of customer-centric business culture
2. Operational. Deals with customer’ processes automation
3. Analytical. Deals with increasing customer and organization value.

3 levels of CRM processes

1.Customer-facing level. Systematic process to manage customer relationship
initiation.
2.Functional-level.
3.Company wide level

Customer-oriented CRM processes. Encompasses the customer activities

performed to satisfy a need or to solve a problem.

3 kinds of customer-oriented processes.

1. CRM delivery process. Are the processes of direct contact with customer and
are considered as part of the customer process including campaign management
process, sales management process, service management process and complaint
management process.
2. CRM support processes. Deal with accomplishing supporting purposes
through the market research process and loyalty management process.
3. CRM analysis processes. Concentrate on combining and analyzing the
collected customer knowledge in other CRM process, including the processes of
customer scoring and lead management, customer profiling and segmentation,
and, feedback and knowledge management.

Strategy development process. Encompasses and interactive of set strategic

processes that inaugurate with a detailed review of an organization’s strategy
where, the focus within this process is on the organization’s business strategy and
customer strategy.

CRM STRATEGY MATRIX

Completeness of customer information

Customer-
high Individualized
based CRM
marketing

low Managed
Product -
service and
based selling
support

low high
Product based selling. Where there is a little collection and use of customer
information and low level of customization to the specific requirements of an
individual customer, then marketing efforts tend to focus on products.
Managed service and support. On the lower right-hand position of the CRM
strategy matrix is managed service and support. This quadrant represents
business situations where there is limited amount of customer data but relatively
high levels of customer individualization.
Customer-based selling. In the top left-hand quadrant of the framework is
customer based marketing. Organizations adopting this form of CRM focus more
on the customer and move away from just tracking individual product sales. In
this form of CRM, the customers become the number one focus of a CRM strategy.
Organization seeks to gain a detailed understanding of customers and uses this
knowledge to tailor relationships with them.

Individualized CRM. It is characterized by full customer data with technology

used to provide high degree of customization. Particularly relevant to companies
using multiple channels. Here, integrating customer data across channels is
especially important when delivering a consistent customer experience. It
operates through any channel and does not necessarily involve face-to-face
contact.

FAILURE OF CRM
Darrel K. Rigby and his co-workers at Bain & Company have cited Four Perils of
CRM.

Peril 1. Implementing CRM before creating a customer strategy.

Peril 2. Rolling out CRM before changing the organization to match.
Peril 3. Assuming that more CRM technology is better.
Peril 4. Stalking, not wooing, customers.

USE OF TECHNOLOGY IN CRM

The mostly used tools are;

 Sales force automation

 Call centers
 Data warehousing
 Data mining and OLAP
 Decision support and reporting tools
 Electronic point of sale or EPOS
 CHAPTER 6
CUSTOMER SATISFACTION AND SERVICE QUALITY

DEFINITION OF CUSTOMER SATISFACTION

-it is a variety of situations and connected to both goods and services. It is a
highly personal assessment that is greatly affected b customer expectations.
Satisfaction is based on the customer’s experience both contacts with the
organization and personal outcomes.
- could not only be defined only standard or quality of product. It is about
relationships between the customer and product or service and the provider of a
product or service.
- is the degree to which a customer perceives that an individual, firm or
organization has effectively provided a product or service that meets the
customer’s needs in the context in which the customer is aware of and/or using
the product or service.
- set of complex feelings evoked by discrepancy between customer requirements
and perceived reality in market.

Sources of information on customer satisfaction include;

 Customer complaints
 Communicating directly with customers
 Questionnaires and surveys
 Subcontracted collection and analysis of data
 Focus groups
 Reports from customer organizations
 Reports in various media
 Sector and industry studies

Examples of customer related information;

 Customer and user surveys
 Feedback on aspects of product
 Customer requirements and contract information
 Market needs
 Service delivery data
 Information relating to competition
 Information relating to satisfaction with prices
 Information relating to satisfaction with delivery
 Information relating to satisfaction with sale support

CHECKLIST FOR EVALUATING CUSTOMER SERVICE SKILLS

Exceptional customer service is the cornerstone of a successful business.

When customers are satisfied and happy, they give repeat business and tell their
friends and family about the company.

 Customer communication. Examine one of the most important aspects of

customer service communication. Ensure that employees are effectively
communicating our brand and service expectations by evaluating how well
they interact with customers and demonstrate skill.
 Product knowledge. Good customer service is rooted in how well our
employees can confidently explain the company’s products and service.
 Confronting conflict. Nearly every employees faces the wrath of an unhappy
customer. How our employee deals with the customer in that situation can
mean the difference between repeat business, future referrals or a bad
business reputation.

Quality. Refers to the products or services made as per the customers’

requirements to establish customer satisfaction
Quality assurance. Refers to planned and systematic production processes that
provide confidence in a product’s suitability for its intended purpose.

TWO THEORIES BASIC TO COGNITIVE APPROACH

1. Perception theory
2. Identity theory
Both are grounded in phenomenology.
Phenomenology is the first-person experience. It is the basis for focus groups,
consumer journals whether in written, digital, or video formats and interviews.

DIFFERENCE BETWEEN CUSTOMER PERCEPTION AND EXPECTATION

Customer expectation. It is what customer expect according o available
resources and is influenced by cultural background, family lifestyle, personality,
demographics, advertising, experience with similar products and information
available online.
Customer perception. Totally subjective and is based on the customer’s
interaction with the product or service. It is derived from the customer’s
satisfaction of the specific product or service and the quality of service delivery.

POSSIBLE LEVELS OF CUSTOMER EXPECTATIONS from high to low.

1. Ideal expectation or desires
2. Normative ‘should’ expectations
3. Experience based norms
4. Acceptable expectations
5. Minimum tolerable expectations

Factors that influence desired service

1. Lasting service intensifiers
2. Personal need
Albrecht and Zemke. Have made known determinants of service quality in airline industry.
Tax and Brown. Assumes that only 5-10 percent of the dissatisfied customers in point of fact make a
complaint.
Andreesen. He uses theories about consumers satisfaction where the result of the service recovery is
dependent on expectations, experience and disconfirmation.
Hart. Argues that the front office personnel are the best staff to find the solution to the customer’s
complaints.

Customer loyalty. Is a company’s ability to retain satisfied customers. Maintaining customer loyalty is
one of the toughest challenges for any marketing department in a business enterprise.

Loyalty intentions. An approach to marketing, based on strategic management, in which a company

focuses on growing and retaining existing customers through incentives.

Customer retention. The activity that a selling organization undertakes in order to reduce customer
defections.

Human resource planning. Process that identifies current and future human resources needs for
organization to achieve its goals.

CRM. Refers to practices, strategies and technologies that companies use to manage and analyze
customer interactions and data throughout the customer life cycle, with the goal of improving
business relationships with customers, assisting in customer retention and driving sales growth.

Couriers. Distinguished from ordinary mail services by features such as speed security, tracking,
signature, specialization and individualization of express services, and swift delivery times, which are
optional for most everyday mail services.

Strategy. A high level plan to achieve one or more goals under conditions of uncertainty.

Industrial market. Consists of business to business sales.

Customer satisfaction. Used in marketing, a measure of how products and services supplied by a
company meet or surpass customer expectation.

Intellectual capital. An intangible value of a business, covering its people, the value inherent in its
relationships, and everything that is left when the employees go home of which intellectual property
is but one component.

Customer service. The provision of service to customers before, during and after purchase.

Quality assurance. The systematic activities implemented in a quality system so that quality
requirements for a product or service will be fulfilled.

The gaps model was proposed by A Parasuraman, Valerie Zeitham and LL Berry in 1985 in the
journal of Marketing.s

Quality assurance. is the biggest pillar of any business. It is the main aspect of any business that
should not be ignored or compromised on as it defines the level of success of our business.

Exceptional customer service. Exceeding customer expectations and level of service received exceed
what the customer could reasonable define as normal or expected.

Automation of sales process is an important requirement for business-to-business products. It should

effectively manage the deal and progress it through all the phases towards signing.