UNIT-I (Introduction)

Defination of Services :-
"excellent customer service (is) the ability of an organization to constantly and consistently
exceed the customer's expectations."

Accepting this definition means expanding our thinking about customer service; if we're going to
consistently exceed customers' expectations, we have to recognize that every aspect of our business has
an impact on customer service, not just those aspects of our business that involve face-to-face customer
contact.

Improving customer service involves making a commitment to learning what our customers'
needs and wants are, and developing action plans that implement customer friendly processes.

Services Marketing :-
A service is the action of doing something for someone or something. It is largely
intangible (i.e. not material). A product is tangible (i.e. material) since you can touch it and own
it. A service tends to be an experience that is consumed at the point where it is purchased, and
cannot be owned since is quickly perishes. A person could go to a café one day and have
excellent service, and then return the next day and have a poor experience. So often marketers
talk about the nature of a service as:

Inseparable - from the point where it is consumed, and from the provider of the service. For
example, you cannot take a live theatre performance home to consume it (a DVD of the same
performance would be a product, not a service).

Intangible - and cannot have a real, physical presence as does a product. For example, motor
insurance may have a certificate, but the financial service itself cannot be touched i.e. it is
intangible.

Perishable - in that once it has occurred it cannot be repeated in exactly the same way. For
example, once a 100 metres Olympic final has been run, there will be not other for 4 more
years, and even then it will be staged in a different place with many different finalists

Variability- since the human involvement of service provision means that no two services will
be completely identical. For example, returning to the same garage time and time again for a
service on your car might see different levels of customer satisfaction, or speediness of work.

Right of ownership - is not taken to the service, since you merely experience it. For example,
an engineer may service your air-conditioning, but you do not own the service, the engineer or
his equipment. You cannot sell it on once it has been consumed, and do not take ownership of it

Difference in Goods vs Services Marketing :-

 Economics is concerned with the production and distribution of goods and services.
Goods would be defined as anything that anyone wants or needs. Services would be the
performance of any duties or work for another; helpful or professional activity. The distribution of
goods and services is referred to as marketing. The marketing of goods and services can add
almost as much to the cost as the actual manufacturing of the goods. Marketing a product refers
to the advertising, and other efforts to promote a products sale

There are many different kinds of goods. Consumer goods are those such as food and
clothing, that satisfy human wants or needs. Producer goods are those such as raw materials
and tools, used to make consumer goods. Capital goods are those such machinery, used in the
production of commodities or producer goods.

There are untold numbers of services. A short list would include educational, health,
communication, transportation, social services.

Services Marketing Triangle :-

Service marketing involves 3 types of marketing:
1. EXTERNAL MARKETING
2. INTERNAL MARKETING
3. INTERACTIVE MARKETING

1. External Marketing : "Setting the Promise"

· Marketing to END-USERS.
· Involves pricing strategy, promotional activities, and all communication with
customers.
· Performed to capture the attention of the market, and arouse interest in the service.
2. Internal Marketing : "Enabling the Promise"
· Marketing to EMPLOYEES.
· Involves training, motivational, and teamwork programs, and all communication with
employees.
· Performed to enable employees to perform the service effectively, and keep up the
promise made to the customer.
3. Interactive Marketing : (Moment of Truth, Service Encounter)
· This refers to the decisive moment of interaction between the front-office employees
and customers, i.e. delivery of service.
· This step is of utmost importance, because if the employee falters at this level, all prior
efforts made towards establishing a relationship with the customer, would be wasted.

The increasing role of services in economy :-

Services Marketing Mix (general introduction) :-

 The services marketing mix is an extension of the 4-Ps framework. The
essential elements of product, promotion, price and place remain but three
additional variables – people, physical evidence and process – are included to 7–
Ps mix. The need for the extension is due to the high degree of direct contact
between the CE providers and the customers, the highly visible nature of the
service process, and the simultaneity of the production and consumption. While it
is possible to discuss people, physical evidence and process within the original-Ps
framework (for example people can be considered part of the product offering) the
extension allows a more thorough analysis of the marketing ingredients necessary
for successful services marketing.

People – because of the simultaneity of production and consumption in services the

CE staff occupy the key position in influencing customer’s perceptions of product
quality. In fact the service quality is inseparable from the quality of service provider.
An important marketing task is to set standards to improve quality of services
provided by employees and monitor their performance. Without training and control
employees tend to be variable in their performance leading to variable service quality.
Training is crucial so that employees understand the appropriate forms of behaviour
and trainees adopt the best practises of the andragogy.

Physical evidence – this is the environment in which the service is delivered and any
tangible goods that facilitate the performance and communication of the service.
Customers look for clues to the likely quality of a service also by inspecting the
tangible evidence. For example, prospective customers may look to the design of
learning materials, the appearance of facilities, staff, etc.

Process – this means procedures, mechanism and flow of activities by which a

service is acquired. Process decisions radically affect how a service is delivered
to customers. The service in CE includes several processes e.g. first contact
with customers, administrative procedure regarding course delivery,
preparation, delivery and evaluation of the courses. The following guideline can
be useful for successful CE management:
 ensure that marketing happens at all levels from the marketing department to
where the service is provided
 consider introducing flexibility in providing the service; when feasible customize
the service to the needs of customers
 recruit high quality staff treat them well and communicate clearly to them: their
attitudes and behavior are the key to service quality and differentiations
 attempt to market to existing customers to increase their use of the service, or
to take up new service products
 sep up a quick response facility to customer problems and complaints
 employ new technology to provide better services at lower costs

 use branding to clearly differentiate service offering from the competition in the
minds of target customers.

UNIT-II (FOCUS ON CUSTOMER)

The Customer Experience :-

Customer experience is the sum of all experiences a customer has with a supplier of goods or
services, over the duration of their relationship with that supplier. It can also be used to mean an
individual experience over one transaction; the distinction is usually clear in context.

" says Richard Owen, 34, vice president of Dell online worldwide. "It goes from the moment
when customers see an ad to the moment when they accept delivery of a product -- and beyond.
Sure, we want people to think that our computers are great. But what matters is the totality of
customers' experiences with us: talking with our call-center representatives, visiting our Web site,
buying a PC, owning a PC. The customer experience reflects all of those interactions."

Consumer behavior in services :-

1. Need Recognition: Maslow's Hierarchy of Needs
A. Physiological
B. Safety and Security
C. Social
D. Ego (Self Esteem)
E. Self-actualization

2. Collect Information and Evaluate Alternatives

A. Product attributes

1. Search Attributes:

2. Experience Attributes:

3. Credence Attributes

B. Strategic Responses to difficulties in evaluating services.

3. Service Experience

A. Cast Member:
 B. Onstage

C. The Show

4. Post Purchase.

Customer expectation & perception of service :-

Understanding Customer Requirements
Customer Expectations
Types of Service Expectations

Factors that Influence Customer Expectations of Service

Factors that influence customer expectations of desired services.

Factors that influence customer expectations of adequate services.

Factors that influence both desired & predicted services expectations.

Criteria to evaluate a service based on customers services expectations.

Managing Customer Service Expectations

Managing Promises; Reliability

Getting it Right the First Time
Effective Communication

Exceeding Customer Service Expectations

Customer Perceptions

Factors That Influence Customer Perceptions

Service Encounter
Service Evidence
Image
Price

Strategies For Influencing Customer Perceptions

Enhance Customer Satisfaction through Service Encounters

Reflect Evidence of Service
Communicate and Create a Realistic Image
Enhance Customer Perception of Quality and Value through Pricing
In Summary:-
Delivering quality service consistently gives a competitive edge to service
organizations. It requires an understanding of customer expectations and the types
of expectations. Further, knowledge of factors influencing the desired service level,
adequate service level, and zone of tolerance will help service organizations
consistently meet and exceed service expectations of customers

While evaluating service offered by an organization, customers compare

perceived quality of service with the expected quality of service. Therefore, service
organizations should have knowledge about customer perceptions and the influence
of factors such as service encounter, service evidence, image of the service
organization, and price of the service on customer perceptions.

Service organizations should also attempt to understand the various types of

service encounters like remote, face-to-face, and phone encounters to be able to
understand customer perceptions. They should examine the factors that influence
customer satisfaction/dissatisfaction, like recovery, adaptability, spontaneity, and
coping and innovate strategies to influence customer perceptions.

Relationship marketing :-
Relationship marketing is not about having a "buddy-buddy" relationship
with your customers. Customers do not want that. Relationship Marketing uses
the event-driven tactics of customer retention marketing, but treats marketing as a
process over time rather than single unconnected events. By molding the
marketing message and tactics to the LifeCycle of the customer, the Relationship
Marketing approach achieves very high customer satisfaction and is highly
profitable.

The relationship marketing process is usually defined as a series of stages,

and there are many different names given to these stages, depending on the
marketing perspective and the type of business. For example, working from the
relationship beginning to the end:

Interaction > Communication > Valuation > Termination

Awareness > Comparison > Transaction > Reinforcement > Advocacy

Suspect > Prospect > Customer > Partner > Advocate > Former Customer

Using the relationship marketing approach, you customize programs for

individual consumer groups and the stage of the process they are going through as
opposed to some forms of database marketing where everybody would get virtually
the same promotions, with perhaps a change in offer. The stage in the customer
LifeCycle determines the marketing approach used with the customer.

Building lasting relationship :-

We can define it with the help of following points.

Develop a clear communication process:-

As is often the case when a business is highly focused on administrative streamlining it

forgets to communicate the changes to customers effectively. So what happens is that the
administrative imperatives are implemented and the customer becomes confused and the
business begins to be at odds with customer expectations.

The business must have bring into play a series of communication tools that allow the
customer to familiarise themselves with the changes as they occur, this gives a gradual change
effect to the relationship and allows the customer what is happening and more importantly
why. Sometimes a simple “newsletter” or “customer bulletin” issued on a more frequent basis
may be sufficient. The important aspect of this driver is that a process be identified as suitable
to your customer base and then implemented without fail. Obviously the quality of the
information is of absolute importance, critical versus trivial is always a good analysis to
conduct.

Creating a communications champion within the organization is also most effective, these
people are usually only found in large organizations, but a part time champion in a smaller
organization is better than ad-hoc approaches.

Demystify the regulatory imperatives for the customer:-

Once we have a communication process that we believe to be effective and suited to our
organization we need to use it in a manner that is easy to understand. Most communication
gurus will tell you that assuming an average age of 12 years amongst your audience will help
keep your concepts and explanations simple. In this case study of the financial services
industry we know full well that communicating administrative changes can be most confusing
at the best of times.

Explaining why certain rules apply in doing business can be a negative experience in the
context or relationship building, it can often lead to questions that remain unanswered
(mysteries) and this leads to uncertainty in the relationship.

We often have organisations present their communications via a third party who has little or
no technical jargon in their vocabulary. The regulatory imperatives are there to improve the
quality of the service not to confuse the customer.

Process the imperatives not the customer:-

Often it can be said that in working to meet the expectations of industry regulations
organizations become process mad and this overshadows their customer focus. The danger is
that the customer becomes part of the process and used merely as a commodity in that
process.
 Following the compliance route does sometimes over focus the organization into treating the
“compliance” as the primary objective which can lead to creating process that alienate the
customer relationship. Once again communication and dialogue are critical.

Following the compliance route does sometimes over focus the organization into treating the
“compliance” as the primary objective which can lead to creating process that alienate the
customer relationship. Once again communication and dialogue are critical.
Under the financial services model the correlation between compliance processes and
“relationship management excellence” is in the ability of the organization to manage the
flexibility that is required to meet all expectations.

The tip here is to devise the processes for meeting compliance but then test them by matching
their deliverables against the service expectations of the customer base.

Reduce the service timeline with efficiencies:-

Service quality and technical quality (competence) are not mutually exclusive, in many
organizations this is sometimes not true. The delivery of quality service to customers needs to
be linked to competence and capability, as research shows that only when this is the case does
customer satisfaction and loyalty increase. A business out of focus in any of the three will
always struggle to meet service expectations of its customer base.

Once again building efficiencies within the parameters of compliance allows the organization
to deliver service within the timeframes expected. This then deletes the possibility of blame
having to be apportioned to compliance for poor service performance.

The tip here is to look at response methodologies and customer service processes within the
organization. Simplifying, coordinating and collaborating become key ingredients in
promoting efficiencies.

Training of staff in customer satisfaction initiatives and policies is important. Horizontal

communication within the organization is as important as external communication. Promoting latitude of
decision making amongst staff interacting with customers. Efficient use of
technology to empower staff and customers into anticipate and resolve service problems.

The challenges that regulations and compliance bring to organizations in meeting customer
relationship management expectations are not always industry unique. However in the
services industries (particularly financial services) they have the potential to destroy
“relationship intimacy” and negatively impact satisfaction and therefore loyalty. Blaming
compliance and regulatory regimes for this breakdown will never justify the end result,
unhappy customers with high disloyalty. Organisations need to work hard at creating Loyal
customers regardless of the environment in which they operate. The environmental forces and
the organizations management of the customer relationship will determine whether you have
hostages, defectors, mercenaries or loyalists as the majority of your customer base.

The nature of relationship :-

CRM (customer relationship management) is an information industry term for methodologies,
software, and usually Internet capabilities that help an enterprise manage customer relationships in an
organized way. For example, an enterprise might build a database about its customers that described
relationships in sufficient detail so that management, salespeople, people providing service, and
perhaps the customer directly could access information, match customer needs with product plans and
offerings, remind customers of service requirements, know what other products a customer had
purchased, and so forth.

How to mannage relationship :-

Various levels of management play a role in managing the customer relationship (e.g., sales
management is responsible for the overall customer account). However, the Deliverer is responsible
for maintaining a good working relationship with the customer Acceptor, which is essential to the
project’s overall success. Key items to consider are identified in the Checklist for Managing the
Customer Relationship. The subprocesses are:

Review Progress Maintain frequent formal and informal contact with the customer to review progress
and maintain open communication. Communicate accomplishments on a regular basis, typically
weekly, so that issues that arise are seen as exceptions to a pattern of regular progress. The
mechanisms for formal contact are defined in the Project Management Plan. Typically formal contact
involves meeting with the Acceptor to walk through the Project Weekly Status Report, and meeting
monthly with the Steering Committee to walk-through the Steering Committee Status Report.

Resolve Issues Identify and manage to completion any issues affecting the customer relationship. The
process involves logging, assigning, investigating, and reviewing issues with appropriate persons, and
formally tracking them through to resolution.

Monitor Customer Satisfaction On a small project, regular day-to-day contact may be sufficient to
monitor whether or not a customer's expectations for quality service delivery are being met. On a
large project with many stakeholders, more formal methods may be required (such as periodic
customer surveys).