At your service: Profitable Services

Marketing

Nadine RobinsonPre-doctoral candidate, International MBA, B.Comm. 2009

Evolution of thinking…what is Marketing?

Copyright © 2007 McGraw-Hill Ryerson Limited

• AIDA

• 4Ps… 7Ps

• 4 Rs

• A box on the org chart

• Where organizations and people meet

Service

• Performance, deed, or process

• Intangible

• Heterogeneous

• Simultaneous production and consumption

• Perishable

• 71% of Canada’s Economy, 79% of US

Expanded Mix

Traditional:

• Product, price, place, promotion

Relationship:

• Retention, referral, relationship, recovery

Services

• People, physical evidence, process

Customer Focus

• Integrated marketing communications

• Move away from transactional

• Customers become more profitable

• Build long term relationships

• Link between good service and profits

• But the customer is NOT always

right!!

Close the

• Close the customer gap between expected and perceived service

• Get in the zone (of tolerance)

• Why IKEA and Disney are important to you (desired service vs adequate service)

• What’s technology got to do with it?

• What can you do?

As easy as 1…2…3…4

Four provider gaps:

1)Not knowing what customers expect

2)Not selecting the right service design and standards

3)Not delivering to service standards

4)Not matching performance to promises

Focus on:

• Reliability, Assurance, Tangibles, Empathy, Responsiveness

• The experience is the marketing p. 56• The service encounter is the “moment of

truth”• Bad apple or momentous +ve encounter

• Pretty woman & Salvation Army

• Get better business, not just more businessGold

Iron

Lead

Platinum

Not knowing what customers expect

• Ask them, watch them, market research!

• Talk to front line staff

• Retention over attraction • 80/20: 5% to 35 – 95%

• Bring back the love. You’re

saying you love me…but

• Solicit complaints, respond quickly, empower employees

Not selecting the right service design and standards to meet customer

expectations

• Vague or undefined service blueprint• Map to customer’s point of view

• Standards not driven by customers• Fewest dropped calls: hard• Professional looking staff: soft

• Inappropriate physical evidence and servicescape

• Packaging, facilitator, differentiator, socializer

Pizza in 2

hours or it’s

FREE!

Blueprint for Express Mail Delivery Service

DriverPicks Up Package

DispatchDriver

AirportReceives& Loads

SortPackages

Load onAirplane

Fly toDestination

Unload&

Sort

LoadOn

Truck

SU

PP

OR

T P

RO

CE

SS

CO

NT

AC

T P

ER

SO

N(B

ack

Sta

ge)

(On

Sta

ge)CU

ST

OM

ER

PH

YS

ICA

LE

VID

EN

CE

CustomerCalls

CustomerGives

Package

TruckPackaging

FormsHand-held Computer

Uniform

ReceivePackage

TruckPackaging

FormsHand-held Computer

Uniform

DeliverPackage

CustomerServiceOrder

Fly toSort

Center

Line of interaction

Line of visibility

Line of internal interaction

Not delivering to service standards

Wrong People• Deficiencies in HR (hiring, training,

compensating, retaining)• Customers who don’t fulfill roles & detract• Franchises, agents, e-channels let you down

Service culture

• Appreciation for good service

• Employees are the service, the brand, the marketing

• Boundary spanners• Person/role, organization/client, interclient conflict• Emotional labour• Lowest paid or highest paid

…Not delivering to service standards

Not matching supply & demand• Time, labour, equipment & facilities constraints • Shift it• Yield mgmt• Waiting customers

• Differentiate: Importance, urgency, duration, pay premium• Multiple queue, single queue, take a number• Make waiting fun or at least tolerable

Not matching performance to promises

• Lack of integrated services marketing communications

• Ineffective management of customer expectations

• Inadequate horizontal communications

• Overpromising

The experience is the marketing

• Manage service promises– Realistic promises, effective ads, coordinated external

comms, offer service guarantees

• Manage internal marketing– Vertical, horizontal, cross-functional

• Improve customer education – Info on service, role, how to evaluate it (credence)

• Manage customer expectations – Tiered offerings, effectiveness criteria

Service Guarantees

• Unconditional: no strings attached

• Meaningful to customers

• Easy to understand & communicate

• Easy to invoke and collect

• It’s the icing… not the cake

Pricing

• Competition-based• Price signalling, going rate• Small firms can’t always match pricing• Limited comparability with heterogeneity

• Cost-based• Labour difficult to price and trace

• Demand-based• Set on customer perception of value• Odd pricing, Prestige pricing

Communications and the Services Marketing Triangle

Internal Marketing Vertical communications

Horizontal communications

Interactive Marketing

Personal selling Customer service Service encounters Servicescapes

External Marketing Communication

Advertising Sales promotion

Public relations Direct marketing

Company

CustomersEmployees

Source: Kotler, Philip, Marketing Management: Analysis, Planning, Implementation, and Control, 9th Edition, © 1997.

Figure 16.1

Get ready for a relationship

• Right People– Get to know your customers & like them– Understand what they expect– Hire right people to deliver their expections– Fire bad customers

• Right Process– Deliver on your promises– Integrated Marketing Communications

• Right Physical evidence

• Commitment• Long-term focus…it’s not only about “the sale”• Requires work to create and maintain an emotional

connection (positive and reduce negative emotions)• Objectives of the both parties• Honesty & trust• Conversation• Satisfaction• Consistent/ Coordinated

Relationships…no more one night stands

Four wheels on a car

If it is important:

• Measure it.

• Manage it.

• Compensate on it.

Next to doing the right thing, the most important thing is to let people know you are doing the right thing. ~John D. Rockefeller

The time is always right to do what is right.  ~Martin Luther King, Jr.