Chapter 10 - An Introduction To Internal Marketing

Chapter 10 An Introduction to Internal Marketing “In a service organization if you are not serving the customer, you had better be serving someone who is.” – Jan Carlzon Outline: I. II.

III.

Internal Marketing a. Employee Satisfaction and Customer Satisfaction Are Linked The Internal Marketing Process a. Establishment of a Service Culture b. Development of a Marketing Approach to Human Resources Management - The Importance of Initial Training - Managing Emotional Labor c. Dissemination of Marketing Information to Employees d. Implementation of a Reward and Recognition System Nonroutine Transactions

The words internal marketing is not new to you…we have discussed this during the first few weeks of classes...remember the triangle?...I hope you do. Internal marketing is critically important in a service industry. The unique characteristics of service, specifically the characteristic of INSEPARABILITY emphasizes that employees are part of the product. Problems arise when both employers and employees are not aware of this fact, focusing only with what is tangible, like how food products should look and taste like, or how linens should be properly folded, etcetera…etcetera.  Although I’m not saying these aren’t important…but these are things that would NOT generally translate into SATISFIERS…these are things that would just remove dissatisfiers. Remember herzberg’s two factor theory, stating that the absence of dissatisfiers is not enough, satisfiers must be actively present to motivate purchase. Yes, theories are applicable in real life…if you decide to choose and make the topics discussed in class interesting…look for ways on how you can apply it to you personally…it will help you remember and appreciate theories, that can sometimes be a tad boring. Hmmm…anyhow… I think by now, you’re already familiar with the company Southwest Airlines… having a competitive advantage, focus and low cost, are just two of the reasons that made Southwest Airlines the ‘hottest thing in the sky’. The officers and CEOs of the company stated that processes can be imitated but what make their competitive advantage SUSTAINABLE are its people. Go back to the illustration we had on the dynamic relationships among stakeholder groups in a high-performance business. Stakeholders’ satisfaction basically

stems from EMPLOYEE SATISFACTION, remember the arrows…and I remember you all agreed with this argument, no doubt that it’s agreeable…right? Internal marketing has two benefits: customer satisfaction and employee satisfaction. One is more dependent from the other…which is it? Employee satisfaction and customer satisfaction are linked. Studies have shown that a direct relationship exists between employee satisfaction and customer satisfaction…it’s a never ending cycle (as if there is such a thing as an ending cycle??)…and if you’re company is breeding dissatisfied employeesdissatisfied customersincrease in employee dissatisfaction  increase in customer dissatisfaction…the cycle goes on and on and on…until you, as a manager intervene and stop the decaying cycle that will probably lead to your company’s demise. A study was also conducted as to the relationship between employee turnover and customer satisfaction…also a direct relationship exists…increased turnover is a warning that the company is not customer focused. I don’t need a study to tell me this…because I’ve experienced it firsthand … although a study such as what was conducted would heighten the fact that company’s must indeed look at an increase in employee turnover as a warning sign of an increase in customer dissatisfaction. An increase in employee turnover is a very critical and reliable indicator of employee dissatisfaction…businesses not belonging to the service industry may survive this ‘feat’…but I think a service industry where employees are part of the product would not last long if an increase in employee turnover will not be looked into as something that would drastically affect business’ performance. …to make ‘internal marketing’ more precise and systematic (and more bearable  )…Kotler (author of various management books) came up with an internal marketing process that involves the following steps: 1. Establishment of a service culture 2. Development of a marketing approach to human resource management 3. Dissemination of marketing information to employees 4. Implementation of a reward and recognition system ESTABLISHMENT OF A SERVICE CULTURE, ‘easier said than done’…culture is not something you can change overnight…you need a miracle for that.  It is a process that must be continuously monitored and continuously strengthened…I think you can never have enough of a ‘service culture’…(TQM105) Establishing a service culture should not be limited only to ‘servers’…line employees. Support from management is important; the irony is that…managers are usually given incentives based on quantitative achievements, such as increases in profits and decreases in costs…the belief that service quality is dependent only on

short-term quantitative terms can most probably result to short-term operations…and this should not be the case. A strong culture helps organizations in two ways: 1. it directs behavior; 2. gives employees a sense of purpose and makes them feel good about their company Initiative from employees is important…a strong sense of commitment is needed to provide customers/clients the best service that they need. Policies should not limit employees to act according to what they think is best for the company, procedures should not be prohibitive, that employee initiatives are curtailed, and reward systems should hinge NOT ONLY on increases in profits or decreases in costs but on factors that encourages a service culture. A strong service culture empowers employees to make decisions, thus, setting up common values and norms is more critical and more important (therefore…harder) than setting rigid procedures, policies, rules and guidelines. Although rules, procedures, etcetera are important for a firm to be organized…managers should focus not just merely on controlling people/employees but motivating and encouraging them to think beyond these rules, et. al. and improve them as needed. A conventional organizational structure emphasizes on a top-down approach… employees exists in a hierarchy, where employees are used to ‘just doing the job’ just to please those ‘above’ them or their immediate supervisors. Do you think an organization with this perspective has a strong service culture? Therefore, the word marketing is not just about advertising…promotions…or the typical definition one would link ‘marketing’ to. Marketing goes beyond external marketing…and this would entail implementing different marketing strategies to a firm’s employees. DEVELOPMENT OF A MARKETING APPROACH TO HUMAN RESOURCES MGT. How would a firm do that? Creating jobs that attract good people – the same concepts apply on knowing one’s customers, knowing what their needs and wants are and providing them with those needs and wants. Thus, it is important to know who your ‘target’ employees are… knowing what factors would want them to work for you. Wouldn’t it be nice to work for an organization you know only hires the best in the industry. Service organizations need to hire for attitude and train for skills. (no need to expound on this…otherwise I can get emotional again…jk)

Teamwork is important to enhance a firm’s strong service culture. Employees should be committed and motivated enough to strive in achieving a single goal…a single focus…customer oriented, customer driven. Ownership of the problem should be encouraged…loafers should be discouraged. Employees should be team players in the truest sense of the word.  THE IMPORTANCE OF TRAINING AND MANAGING EMOTIONAL LABOR Initial and continuous training are both important (for my class in 105…our discussion of Deming’s TQM clearly differentiated the two among the 14 points of TQM…for those who are not in my 105 class…ask your classmates taking HTM 105… they’re an expert on Deming’s TQM ) Managing emotional labor…you’ve experienced this…most people had/have. But managing emotional labor at work specially in a service industry is of utmost importance because of (again) the inseparability of the service provider to the end product (service). Emotions play a crucial role as to how service is provided. Your professors are part of the service industry…and you might have observed that emotions do affect…sometimes (or most of the time?? ) how professors teach. (I don’t have to elaborate on this…you get the point…) There are a lot of ways on how a firm can manage emotional labor…although, it isn’t possible to control emotional labor 100%...firm’s can manage parts of it…like…. To be continued…………………………………………needed somewhere……….