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The New Services Realities

Although service firms once lagged behind manufacturers in their use of marketing, service firms are now some of the most skilled marketers. However, because U.S. consumers generally have high expectations about service delivery, they often feel their needs are not being adequately met. A 2013 Forrester study asked consumers to rate 154 companies on how well they met their needs and how easy and enjoyable they were to do business with. Almost two-thirds of the companies were rated only “OK,” “poor,” or “very poor.” Retail and hotel companies were rated the highest on average, and Internet, health service, and television service providers were rated the worst.8 This is just one indicator of the shifting relationship between customers and service providers.

A Shifting Customer Relationship

Savvy services marketers are recognizing the new services realities, such as the importance of the newly empowered customer, customer coproduction, and the need to engage employees as well as customers.

Customer Empowerment Customers are becoming more sophisticated about buying product-support services and are pressing for “unbundled services” so they can select the elements they want. They increasingly dislike having to deal with a multitude of service providers handling different types of products or equipment. Most importantly, the Internet has empowered customers by letting them send their comments around the world with a mouse click. A person who has a good customer experience is more likely to talk about it, but someone who has a bad experience will talk to more people.9 When a customer complains, most companies are responsive because solving a customer’s problem quickly and easily goes a long way toward winning long-term loyal customers.10

Customer Coproduction The reality is that customers do not merely purchase and use a service; they play an active role in its delivery. Their words and actions affect the quality of their service experiences and those of others as well as the productivity of frontline employees.11 This coproduction can put stress on employees, however, and reduce their satisfaction, especially if they differ from customers culturally or in other ways.12 Moreover, one study estimated that one- third of all service problems are caused by the customer.13

Preventing service failures is crucial because recovery is always challenging. One of the biggest problems is attribution—customers often feel the firm is at fault or, even if not, that it is still responsible for righting any wrongs. Unfortunately, although many firms have well-designed and executed procedures to deal with their own failures, they find managing customer failures—when a service problem arises from a customer’s mistake or lack of understanding—much more difficult. Solutions include: redesigning processes and customer roles to simplify service encounters; using technology to aid customers and employees; enhancing customer role clarity, motivation, and ability; and encouraging customers to help each other.14

Satisfying Employees as Well as Customers Excellent service companies know that positive employee attitudes will strengthen customer loyalty.15 Instilling a strong customer orientation in employees can also increase their job satisfaction and commitment, especially if they have high customer contact. Employees thrive in customer-contact positions when they have an internal drive to (1) pamper customers, (2) accurately read their needs, (3) develop a personal relationship with them, and (4) deliver high-quality service to solve customers’ problems.16 Given the importance of positive employee attitudes to customer satisfaction, service companies must attract the best employees they can find, marketing a career rather than just a job. They must design a sound training program, provide support and rewards for good performance, and reinforce customer-centered attitudes. Finally, they must audit employee job satisfaction regularly.

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