4th Session Ppt

WHAT IS CRM in General (services marketing)

Building Customer Relationship

Relationship building as a Process • Cumulative learning's from multiple interactions - match offerings to customers needs better. • Greater perceived value for the customer -switching barrier • Iterative learning process helps to build a relationship

RELATIONSHIP BUILDING AS A PROCESS •Peppers and Rogers (1993)- IDIC Framework to explain the process of converting existing customers into loyal customers. Identify: locate and contact customers directly and know as much detail. Every interaction an opportunity to learn -serve them better.

RELATIONSHIP BUILDING AS A PROCESS • Differentiate: Customers can be differentiated on the basis of the value they represent and also on their needs. • Profit contribution but difficult to isolate due to sharing of overheads and lots of common services. • Customers with specialized needs create opportunities for customization. • Customization helps meet these needs and tie a customer with mutual benefit. • Differentiation should help the company tailor its offerings to each customer to reflect their value's and needs.

RELATIONSHIP BUILDING AS A PROCESS • Interact: The purpose of interaction is to learn more about the customers starting with the more valuable customers. • Purchase, using a service or making a complaint. • Formal surveys, telephone interactions or selfservice channels i.e., web, call centers, or ATMs in banking services. • cost-effective manner

RELATIONSHIP BUILDING AS A PROCESS • Customize: Mass customizing the product. • Ability to fit the product and service to this customer's exact needs. • High level of convenience- cannot be easily duplicated by a competitor (time and effort of consumer to teach)

First two Steps- Customer attraction Rest of Steps- Developing and Enhancing Relationship

THE LADDER OF LOYALTY • PROSPECT: fulfills the requirement of the marketers definition of target • CUSTOMER: Gets attracted by the offering and buys the product /service • CLIENT: Purchases more than once-repeat purchase. Need to differentiate cases of sheer inertia • SUPPORTER: Satisfied and recommends it to his friends and relatives, positive word of mouth

THE LADDER OF LOYALTY • ADVOCATE: in addition to referrals works with the company to improve its products and services. Sharing of vital information and the comfort level and confidence between the parties is high. • PARTNER: An advocate becomes a partner when they become actively involved in the decisions of a company. Proctor and Gamble and Wal-Mart- genuine partnership. P&G- Plan production, better management of its production runs, low inventories as actual sales and not forecasts is the base. Wal-Mart- Faster replenishments, incurs low cost and able to pass savings to customers, reinforcing its image of Everyday low Prices

BONDING FOR CUSTOMER RELATIONSHIP • Berry and Parasuraman (1991) have identified four levels of bonds. – Financial Bonds - Volume and Frequency rewards, Bundle and Cross-selling, and Stable pricing, – Social Bonds - Personal relationships, continuous relationships and Social Bonds among customers, – Customization Bonds - Customer intimacy, Mass Customization and Anticipation/Innovation, – Structural Bonds - Integrated, information systems, Joint Investments, and Shared Processes and Equipment.

Drivers of Service Switching Service ServiceFailure Failure/ /Recovery Recovery

Value ValueProposition Proposition

Core Service Failure

Pricing

• Service Mistakes • Billing Errors • Service Catastrophe

• High Price • Price Increases • Unfair Pricing • Deceptive Pricing

Service Encounter Failures • Uncaring • Impolite • Unresponsive • Unknowledgeable

Service Switching

Response to Service Failure • Negative Response • No Response • Reluctant Response

Inconvenience • Location/Hours • Wait for Appointment • Wait for Service

Competition • Found Better Service

Others Others Involuntary Switching • Customer Moved • Provider Closed

Ethical Problems • Unsafe • Cheat • Hard Sell • Conflict of Interest

Courses of Action Open to a Dissatisfied Customer Complain Complainto tothe the service firm service firm Take Takesome someform form of public action of public action Service ServiceEncounter Encounter isisDissatisfactory Dissatisfactory

Take Takesome someform form of private action of private action Take Takeno noaction action

Complain Complainto toaa third thirdparty party Take Takelegal legalaction action to seek redress to seek redress Defect Defect(switch (switch provider) provider) Negative Negativeword-ofword-ofmouth mouth

Any Anyone oneor oraacombination combinationof of these responses is possible these responses is possible

Dimensions of Perceived Fairness in Service Recovery Process Complaint Handling & Service Recovery Process Justice Dimensions of the Service Recovery Process Procedural Justice

Interactive Justice

Outcome Justice

Customer Satisfaction with the Service Recovery Source: Tax and Brown

Proportion of Unhappy Customers Who Buy Again Depending on the Complaint Process 100 90 80 70 60 50 40 30 20 10 0

95% 82% 70% 46%

54%

37% 19% 9% Customer did not complain

Complaint was not resolved

Problem cost > $100

Complaint was resolved

Complaint was resolved quickly

Problem cost $1 - 5 Source: TARP study

Components of an Effective Service Recovery System

Do the Job Right the Do the Job Right the First Time First Time

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Service Quality

Objectives • Understanding service quality dimensions • Managing customer perceptions of service quality through five dimensions • Understanding the quality gaps

Five Dimensions of Service Quality • • • • •

Tangibles Reliability Responsiveness Assurance Empathy

RELATIVE IMPORTANCE OF SERVICE ATTRIBUTES Reliability Responsiveness 22% Assurance 19% Empathy Tangibles

32%

16% 11%

Reliability

The Five Dimensions of Service Quality Ability to perform the promised

Responsiveness Assurance Empathy Tangibles

service dependably and accurately. Willingness to help customers and provide prompt service. Knowledge and courtesy of employees and their ability to convey trust and confidence Caring, individualized attention the firm provides its customers. Physical facilities, equipment, and appearance of personnel.

RELIABILITY Ability to perform the promised service dependably and accurately. ■ ■ ■ ■ ■

Providing service as promised Dependability in handling customers’ service problems Performing services right the first time Providing services at the promised time Maintaining error-free records

RESPONSIVENESS Willingness to help customers and provide prompt service. ■ ■ ■ ■

Keeping customers informed as to when services will be performed Prompt service to customers Willingness to help customers Readiness to respond to customers’ requests

ASSURANCE Knowledge and courtesy of employees and their ability to convey trust and confidence ■ ■ ■ ■

Employees who instill confidence in customers Making customers feel safe in their transactions Employees who are consistently courteous Employees who have the knowledge to answer customer questions

EMPATHY Caring, individualized attention the firm provides its customers. ■ ■ ■ ■ ■

Giving customers individual attention Employees who deal with customers in a caring fashion Having the customer’s best interest at heart Employees who understand the needs of their customers Convenient business hours

TANGIBLES Physical facilities, equipment, and appearance of personnel. ■ ■ ■ ■

Modern equipment Visually appealing facilities Employees who have a neat, professional appearance Visually appealing materials associated with the service

Manage the Dimensions of Quality at the Encounter Level

SERVQUAL • A test instrument to measure service quality • Based on the premise that service quality is the difference between customers’ expectations and their evaluation of the service they received. • It uses 22 questions to measure the five dimensions of service quality.

A Model of Service Quality

Expected Service GAP5

Perceived Service CONSUMER -----------------------------------------------------------------------------------------------------------MARKETER

GAP1

Service Delivery (including pre and postcontacts) GAP3

Translation of Perceptions into Service Quality Specifications GAP2

Management Perceptions of Consumer Expectations

GAP4

External Communications to Consumers