Agency Management Client Servicing

3. CLIENT SERVICING
WHAT IS SERVICE?
According to Phillip Kotler, “Services are intangible, inseparable, variable and perishable
product. Hence, they require more quality control, supplier credibility and adaptability.
The service industries journal defines services as "Any primary or complimentary activity that
does not directly produce a physical product. i.e. the non goods part of transaction between buyer
(customer) and seller (provider).”
Thus, services provide benefits to customer, similarly, as the products do. But services are in
intangible and invisible form. It is an act or performance offered by one party to another. An
economic activity that does not result in ownership.
A process that creates benefits by facilitating a desired change in:
 customers themselves
 physical possessions
 intangible assets
The examples of services are hotels, banks, educational institutions, insurance companies,
advertising agencies and so on.
CHARACTERISTICS OF SERVICES:
1. Intangibility: Unlike of products. services cannot be touched, tasted, heard or seen.
Therefore, consumers do not have scope to evaluate the services on the basis of its features.
Hence. it becomes difficult for the advertiser to promote the service. They have to undertake
certain things to create confidence in the mind of customers.
2. Perishability: Service cannot be stored. Consumption takes place simultaneously. It may be
wasted even if it is not consumed i.e. the value of service exists.' at the point when it is required.
3. Lack of ownership: The ownership of the services get transferred to the person, who is
consuming it.
4. Variability: There is a problem of standardization in. service industry. It is highly variable as
they depend upon the service provider and where & when" they .are provided.
5. Inseparability: Services are produced and consumed simultaneously. As far as products are
concerned, they are first produced, distributed and then consumed later. But, services cannot be
separated from the service provider. Thus, the service provider would become a part of a service.
7P'S OF SERVICE MARKETING:
Since Services are radically different from products and need to be marketed differently, the
classical structure of 4P’s need to be modified and extended,
1. Product:
The product in service marketing mix is intangible in nature. Like physical products such as soap
or detergent, service products cannot be measured. Financial institution or the education industry
can be the examples. Services have to be designed with due care as they are perishable and
variable. A proper planning in the form of blue print needs to be done before launching the
service For example - a restaurant blue print will be prepared before establishing a restaurant
business
2. Pricing:
Pricing in case of services is rather more difficult than in case of products. If you were a
restaurant owner, you can price people only for the food you are serving. But then who will pay
for the nice ambience you have built up for your customers? Who will pay for the band you have

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for music? Thus these elements have to be taken into consideration while costing. Generally
service pricing involves taking into consideration labour, material cost and overhead costs. By
adding a profit mark up you get your final service pricing
3. Place: Place in case of services determine where the service product is going to be located.
The restaurants should be located mostly in the residential areas and near offices. Similarly a
software company will be better placed in a business hub with a lot of companies nearby rather
than being placed in a town or rural area. Also the firms have to set up the service centres to
provide better assistance to the customers regarding the utility of services and to salve their
queries. E.g. Customer care centres in case of Telecom industries.
4. Promotion: Promotions have become a critical factor in the service marketing mix. Services
are easy to be duplicated and hence it is generally the brand which sets a service apart from its
counterpart. The major limitation for promoting services is that the advertisements can not be
promoted on the basis of its features and looks as in case of product. Therefore planning for its
advertising is relatively rigorous task. Most of the service providers consider internet as the
better vehicle to promote services .
The additional 3 P's are:
5. People: People are one of the elements of service marketing mix. People define a service.
People strongly influence the customer’s perception of the quality of the service. Significant
effort are given to recruiting, training and motivating employees. If you have an IT company,
your software engineers define you. If you have a restaurant, your chef and service staff defines
you. If you are into banking, employees in your branch and their behaviour towards customers
define you. In case of service marketing, people can make or break organization. Thus many
companies nowadays are involved into getting their staff trained in interpersonal skills and
customer service with a focus towards customer satisfaction. Thus in cases of service marketing,
people contribute more to enhance the brand image.
6. Process: A process is the method and sequence of actions in the service performance. Service
process is the way in which a service is delivered to the end customer. Example: Mcdonalds and
Fedex. Both the companies thrive on their quick service and the reason they can do that is their
confidence on their processes. On top of it, the demand of these services is such that they have to
be delivered optimally without a loss in quality. Thus the process of a service company in
delivering its product is of utmost importance. It is also a critical component in the service
blueprint, wherein before establishing the service, the company defines exactly what should bet
he process of the service product reaching the end customer.
7. Physical Evidence: Service firms need to manage physical evidence carefully as it can have a
profound impact on customers’ impressions. Physical evidence is in the form of buildings,
landscaping, vehicles, interior furnishing, equipment, staff members, signs, printed materials &
other visible cues which provide tangible evidence of a firm’s service quality. The services are
intangible in nature. However, to create a better customer experience. tangible elements are also
delivered with the service. E.g. restaurants not just concern with the quality food but also
maintain its ambience in the form of superior furniture, lighting system and high-class looks.
This ambience is the physical evidence. Several times, physical evidence is used as a
differentiator in service marketing.

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THE GAPS MODEL OF SERVICE QUALITY

The gaps model positions the key concepts, strategies, and decisions in services, marketing in a
manner that begins with the customer and builds" the organization’s tasks around what are
needed to close the gap between customer expectations and perceptions.
The central focus of the gaps model is 'the customer gap, the difference between customer
expectations and perceptions. Firms need to close this gap--between what customers expect and
receive in order to satisfy their customers and build long-term. Relationships with them. To close
this all-important customer gap, the model suggests that four other gaps-the provider gaps-need
to be closed.
The following are the five gaps:
GAP 1: Not knowing what customers expect
GAP 2: The wrong service quality standards
GAP 3: The Service Performance Gap
GAP 4: When promises do not match delivery
GAP 5: Expected Service-perceived Service Gap

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GAP 1: Not knowing what customers expect

According to the model, the first GAP occurs because of the difference between what customers
expect and what managers perceive they expect. It indicates the difference between what the
customer expects from the service offered & the management’s perception of consumer’s
expectations
Many reasons exist for managers not being aware-of what customers expect:
a. They may not interact directly with customers
b. Be unwilling to ask about expectations, or be unprepared to address- them.
c. When people with the authority and responsibility for setting priorities do not fully understand
customers' service expectations, they may trigger a chain of bad decisions and sub optimal
resource allocations that result in perceptions of-poor service quality.
d. Inadequate upward communication from contact personnel and management and too many
levels of management separating contact personnel from top managers are the other reasons for
this gap.
Another key factor related to provider gap 1 involves the lack of company strategies to retain
customers and strengthen relationships with them, an approach called relationship marketing.
When organizations have strong relationships with existing customers; provider gap 1 is less
likely to occur. Relationship marketing is distinct from transactional marketing, the term used to
describe the more conventional emphasis on acquiring new customers rather than on retaining
them.
When companies focus too much on attracting new customers, they may fail to understand the
changing needs and. expectations of their current customers.
The final key factor associated with provider gap 1 is lack of service recovery.
It is critical for an organization to understand the importance of service recovery-why people
complain, what they expect when they complain, and how to develop effective service recovery
strategies for dealing with inevitable service failures.
This might involve a well-defined complaint-handling procedure and empowering employees to
react on the spot; in real time to fix the failure; other times it involves a-service guarantee or
ways to compensate the customer for the unfulfilled promise.
GAP 2:The wrong service quality standards:
The difference between company's understanding of the service desired by customer and the
service as designed to be delivered by the company, and the performance standards set for the
same. It indicates the gap between service standards & management perceptions of consumer
expectations
This gap too exists in service organizations for a variety of reasons:
a. Those responsible for setting standards, typically management, sometimes believe that
customer expectations are unreasonable or unrealistic.
b. They may also believe that the degree of variability inherent in service defies standardization
and therefore that setting standards will not achieve the desired goal. compensated.
c. When service standards are absent or when the standards in place do not reflect customers'
expectations, quality of service as perceived by customers is likely to suffer.
d. In contrast, when there are standards reflecting what customers expect, the quality of service'
they receive is likely to be enhanced.
Therefore closing provider gap 2 by setting customer defined performance standards has a
powerful positive effect- on closing the customer gap.
One of the most important ways to avoid gap 2:

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a. Is to clearly design services without over simplification, incompleteness, subjectivity, or bias.

b. To do this, tools are needed to ensure that new or an existing services are developed and
improved in as careful a manner as possible.
c. Another factor involved in provider gap 2 is physical evidence the tangibles surrounding the
service. By physical evidence we mean, everything from business cards to reports, signage,
Internet presence, equipment, and facilities used to deliver the service.
d. The services cape, the physical setting where the service is delivered, must be appropriate.
Think of a restaurant, a hotel, a theme park, health club, a hospital, or a school. The services
cape-the physical facility is critical in these industries in terms of communicating about the
service and making the entire experience pleasurable.
GAP 3: The Service Performance Gap or not delivering to service standards
The discrepancy between service specifications and the actual service delivered initiates this gap.
It indicates the difference between service delivery & service standards. In general, this gap
appears when employees are unable and/or unwilling to perform the service at the desired level.
It occurs mainly due to discrepancies in Human Resources policies
Various reasons are:
a. Role ambiguity,
b. Role conflict,
c. Poor employee-job fit,
d. Poor technology-job fit,
e. Inappropriate supervisory control systems leading to inappropriate evaluation/compensation
system,
f. Lack of perceived control on the part of employees, and
g. Lack of teamwork.
When the level of service-delivery performance falls short of the standards, it falls short of what
customers expect as well. all the above reasons result in inadequate supply to the consumers
demand. The crucial way to eliminate is to develop a healthy management employee relationship
& effective personnel policy by considering certain factors such as payment, motivation,
promotion, training & development programmes etc. A satisfies employee is a strong asset for
the company & always serves better to company’s customers. Narrowing gap 3-by ensuring that
all the resources needed to achieve the standards are in place-reduces the customer gap.
To deliver better service performance, these issues must be addressed across functions (e.g., with
both marketing and human resources) if they are to be effective.
GAP 4: When promises do not match delivery
The difference between what a firm promises about a service and what it actually delivers is
described as Gap 4. The difference between service delivery and the service provider's external
communications. Promises made by a service company through its media "advertising” sales
force, and other communications may potentially raise customer expectations that serve as the
standard against which customers access service quality.
The discrepancy between actual and promised service therefore has an adverse effect, on the
customer gap.
Broken promises can occur for many reasons:
a. Over promising in advertising or personal selling
b. Inadequate coordination between operations and marketing, and
c. Differences in policies and procedures across service outlets.

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d. In addition to unduly elevating expectations through exaggerated claims, there are other, less
obvious ways in which external communications influence customers' service quality
assessments. Service companies frequently fail to capitalize on opportunities to educate
customers to use services appropriately.
They also frequently fail to manage customer expectations of what they will receive in service
transactions and relationships.
Two factors contribute to this gap
a. Inadequate communication among operations, marketing, and human resources, as well as
across branches; and
b. Propensity to over-promise in communications
GAP 5: Expected Service-perceived Service Gap
Gaps 1 through 4 contribute to the emergence of Gap 5, which is the difference between what the
customer expected to receive from the service and what he/she believes he/ she actually did
receive. This gap is related to everyone’s perception of service quality. Customers expect certain
things from certain companies. Customers’ perceptions are influenced by many sources, which
include word-of-mouth communications, personal needs, past experiences, and communications
from the service organization. The most important gap, if perceived service falls short of the
customer’s expectations, she will be disappointed and dissatisfied. Conversely, if the perceived
sevice exceeds the customer’s expectations, she will be not only satisfied but delighted.
Putting it all together: Closing the gaps:
The key to closing the customer gap is to close provider gaps 1 through 4 and keep them closed.
To the extent that one or more of provider gaps 1 through 4 exist, customers perceive service
quality shortfalls.
The model, called the gaps model of service quality, serves as a framework for service
organizations attempting to .improve quality service and services marketing.
CLIENT-AGENCY RELATIONSHIP:
When client appoints an agency for specific work the client - agency relationship starts, which
continues as long as the agency provides services to the client. The entire agency - client
relationships are different, often reflecting the culture of companies involved. In many cases,
relationships are sustained for many years. Example: J. W. Thompson has handled Kellogg's
account since 1930.
On the other hand, some companies change their agency very frequently as they perceive that
change will enhance other aspects of their overall advertising programmes. An agency - client
relationship is a dynamic decision making process in which participants identifies, evaluate &
choose appropriate communication strategies and alternatives.
Stages in the client-agency relationship
1. Pre-relationship stage:
The period before the agency has been hired; the first-impression stage when all are on their best
behavior, trying to get the business or get the best agency.
2. Developing stage:
First test of reality of an agency. It is a period immediately after agency has been retained. In this
stage rules are set and relationships are established.
3. Maintenance stage:

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Maintenance stage is based on day-to-day working relationship. Here, agency tries to give its
best to an account. At the same time, client evaluates agency's performance.
4. Termination stage:
It is a period when all problems are tested which may or may not be resolved & Irreconcilable
difference may occur. The way the termination stage is handled is an important factor in
determining whether the two ever get back together. In this if a client or an account leaves an
agency, it will result in client turnover.
PRINCIPLES IN CLIENT-AGENCY RELATIONSHIP:
1. An agency cannot handle account of client's close competitors.
2. An agency ought to take an approval of client at each & every step of advertising activities
such as developing creative plan, media plan etc.
3. The agency is responsible for making payment to media.
4. Agency keeps media commission for itself.
5. A client must avoid too many changes and frequent interruptions in advertisement proposed
by an agency
FACTORS AFFECTING THE CLIENT-AGENCY RELATIONSHIP:
1. Proper Understanding (Chemistry):
If there is proper understanding between them the association will be smooth. If ego clashes
occur the relationship will be stormy.
2. Communication:
Sound communication is must in order to foster a better client-agency relationship. Both the
parties should value each other’s views, opinions & ideas. Constant, open, honest
communication is vital for success.
3. Product Changes:
Many a time unannounced changes in product lead to major shift in the strategy which might
lead to friction.
4. Personnel:
Any change in Personnel on either side can lead to change in the relationship equation. Agency
personnel must have qualities like intelligence, creativeness, etc
5. Knowledge:
Both client & the agency must have knowledge about each others work profile
6. Working Environment:
An agency must have a pleasant working environment with respect to office ambience & unity
amongst the employees.
ISSUES IN THE AGENCY-CLIENT RELATIONSHIPS:
Even in good times, agency-client relationships can be a delicate dance. But with the economy
still stalling, the push-you-pull-me inherent in such relationships can be even more problematic.
1. Sales and corporate objectives: Most of the client want agency to focus on sales and marketing
objectives, instead of only focusing o the creative strategy.
2. Return on investment (ROI): Most clients place, return on investment at the heart of its
account.
3. Innovation and creativity: Is another key toward enhancing the relationship, as companies
increasingly rely on agencies to come up with new and innovative ideas to drive sales.

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4. The team members are too junior

5. Don't understand client business objectives: The biggest hurdle remains an inability among
agencies to understand their clients' business objectives while trust and cost also weigh heavily
on relationships.
6. Not responsive
7. Lack of trust in the relationship
8. Senior staff unavailable
9. Incapable of providing Strategic counsel
10. Overshooting Cost and budget
11. A slowness to respond to changing needs was pinpointed as one of the major criticisms of
agencies by their clients

WHY AGENCIES LOSE CLIENTS

1. Poor performance or service
2. Poor communication
3. Unrealistic demands by client
4. Personality conflicts
5. Personnel changes
6. Changes in size of client or agency
7. Conflicts of interest
Ways to enhance client agency relationship:
What client should do?
 Adequate & true information to be provided to the agency
 Encouraging agency by providing flexibility in developing plan
 Timely payment of agency fees
 Avoiding too much of negotiation with an agency
 Avoiding frequent interruptions in agency’s creative plan
What agency should do?
 Hiring skilled personnel
 Maintaining deadlines
 Preparing most cost effective plan for client
 Full knowledge of clients business
 More innovative ideas for clients campaign
Above all, there has to be a perfect blend of good communication, co-operation & respect for
each other in other to achieve the best client-agency relationship
UNDERSTANDING CLIENT'S BUSINESS:
Understanding client's business is crucial and critical job of the agency. The advertising plan
cannot be developed without undertaking the detailed analysis of client's business objectives,
financial strength, competitor's strategy etc. The agency can undertake research activities to
secure the complete information. This data proves to be helpful to the agency for setting
advertising objectives and developing plan to achieve these objectives.
The agency can enhance its understanding of client's business through:
 Knowing the overall objectives of client's business.
 Knowing the products or services, the client deals with.

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 Analysis of the growth rate of client's business in order to identify the current position of his
business.
 Analysis of close competitors.
 Market audit to understand marketing activities of client and consumer demand for client's
products
BUILDING A CLIENT PROFILE
When you engage a new client, create a folder (real or virtual) and begin a client profile. A client
profile is a biography of sorts, giving attention to history, the present, and the future. In it you
can record your observations as your relationship with the client grows, noting what works -- and
what doesn't.
Your client profile should contain:
A brief statement of what the client's business is. What is the client's product or service? What
makes that product or service unique? In the case of a client who works in the communications
or publications department of a larger company, you'll want to know both what the company’s
products and services are, AND how your client serves the company.
1. A list of key client contacts and information about each one. You'll expand the list over time.
Building good relationships means knowing the people you work with and understanding what
motivates them. It also makes business far more pleasant when you are on friendly terms with
your contacts. It's not a matter of feigning interest. It's a matter of knowing people well enough
to create partnerships that work for both of you.
2. A brief history of the client's business. How long has the client been in business? What's the
story behind the product or service?
3. A simple profile of your client's customers or clients. Who does your client serve? How does
your client reach his or her clients, and how does he or she address the business problems of
those customers?
4. A statement of the client's overall business goals. That's something more than "make money."
Does your client want to be the number one purveyor of widgets in the world? The number one
provider of janitorial services in the region? Be specific.
5. A list of the client's main competitors. Knowing who your client competes with helps you see
why the client's product or service is positioned the way it is -- and what could be wrong with
that positioning. Researching the competition also helps you find better angles for your
marketing copy or product documentation. You'll see what the competition is doing and show
your client how to do it better.
NEGOTIATION PROCESS:
In negotiation process, two or more parties are involved, who gets into the discussion, where one
party tries to persuade the other party to accept its terms. The result of negotiation may be
positive when both parties moves ahead on agreed terms. But, when both parties are not ready to
sacrifice on the items, it leads to conflict or the breakage of association.
The eight-stage negotiation process:
1. Prepare: it focuses on knowing & understanding what you want. Its basic premise is to get a
clear idea about the objective of negotiation, which needs to be achieved.
2. Open: It focuses on present you case strongly & in most effective manner.
3. Argue: it emphasis on supporting your case with necessary arguments (view points)
4. Explore: it attempts to seek understanding and evaluates possibility leading to win win
situation.

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5. Signal: It indicates your readiness to work together.

6. Package: it assembles potential trades.
7. Close: Reach final agreement.
8. Sustain: It focuses on proper implementation. Make sure what is agreed happens.
There are deliberately a larger number of stages in this process as it is designed to break down
important activities during negotiation, particularly towards the end. It is an easy trap to try to
jump to the end with a solution that is inadequate and unacceptable.
CONFLICT RESOLUTION:
Conflicts may take place between people in all kinds of human relationships and in all social and
organisational settings. It results due to the wide range of potential differences among people.
Conflict is defined as an incompatibility of goals or values between two or more parties in a
Relationship. Some of the simpler ways to overcome conflict:
1. "Know yourself' and take care of self in terms of explosion of emotions & aggressiveness.
2. Clarify personal needs threatened by dispute
3. Look for a safe place for negotiation i.e. appropriate space for discussion.
4. If required, take the aid of support people (Facilitators, Mediators, and Advocates).
5. Take a listening stance into interaction
6. Assert your needs clearly and specifically
7. Have a Problem-Solving approach with flexibility by identifying the issues clearly and
concisely, clarify the criteria for Decision-Making
8. Build consensus that works; it has to be implemented effectively and evaluated timely.

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