Achieving Excellence in Services Marketing

The increased importance of the service industry and the new realities have sharpened the focus on what it takes to excel in the marketing of services.17 In the service sector, excellence

FiGURE 10.2 Three Types of Marketing in Service Industries

must cover broad areas of marketing: external, internal, and interactive (see Figure 10.2).18 External marketing describes the normal work of preparing, pricing, distributing, and promoting the service to customers. Internal marketing describes training and motivating employees to serve customers well. The most important contribution the marketing department can make is to be “exceptionally clever in getting everyone else in the organization to practice marketing."19

Interactive marketing describes the employees’ skill in serving the client. Clients judge service not only by its technical quality (Was the surgery successful?), but also by its functional quality (Did the surgeon show concern and inspire confidence?).20 In interactive marketing, teamwork is often key. Delegating authority to frontline employees can allow for greater service flexibility and adaptability because it promotes better problem solving, closer employee cooperation, and more efficient knowledge transfer.21

Companies must avoid pushing technological efficiency so hard, however, that they reduce perceived quality.22 Some methods lead to too much standardization, but service providers must deliver “high touch” as well as “high tech"23 Amazon has some of the most innovative technology in online retailing, but it also keeps customers extremely satisfied when a problem arises even if they don’t actually talk to an Amazon employee.24

Well-managed service companies that achieve marketing excellence have in common a strategic concept, a history of top-management commitment to quality, high standards, profit tiers, and systems for monitoring service performance and resolving customer complaints.

Strategic Concept Top service companies are “customer obsessed” They have a clear sense of their target customers and their needs and have developed a distinctive strategy for satisfying them.

Top-Management Commitment Companies such as USAA and Marriott have a thorough commitment to service quality. Their managers look monthly not only at financial performance but also at service performance. USAA, Allstate, Dunkin’ Brands, and Oracle have high-level senior executives with titles such as Chief Customer Officer, Chief Client Officer, or Chief Experience Officer, giving these executives the power to improve customer service across every customer interaction.25

High Standards The best service providers set high quality standards. Standards must be set appropriately high. A 98 percent accuracy standard may sound good, but it would result in 400,000 incorrectly filled prescriptions daily, 3 million lost pieces of mail each day, and no phone, Internet, or electricity for eight days per year.

Profit Tiers Firms have decided to coddle big spenders to retain their patronage as long as possible. Customers in high-profit tiers get special discounts, promotional offers, and lots of special service; those in lower-profit tiers who barely pay their way may get more fees, stripped-down service, and voice messages to process their inquiries. Companies that provide differentiated levels of service must be careful about claiming superior service, however— customers who receive lesser treatment will bad-mouth the company and injure its reputation. Delivering services that maximize both customer satisfaction and company profitability can be challenging.

Monitoring Systems Top firms audit service performance, both their own and competitors’, on a regular basis. They collect voice of the customer (VOC) measurements to probe customer satisfiers and dissatisfiers and use comparison shopping, mystery or ghost shopping, customer surveys, suggestion and complaint forms, service-audit teams, and customers’ letters.

Satisfying Customer Complaints On average, 40 percent of customers who suffer through a bad service experience stop doing business with the company.26 Companies that encourage disappointed customers to complain—and also empower employees to remedy the situation on the spot—have been shown to achieve higher revenues and greater profits than companies without a systematic approach for addressing service failures.27 Customers evaluate complaint incidents in terms of the outcomes they receive, the procedures used to arrive at those outcomes, and the nature of interpersonal treatment during the process.28 Companies also are increasing the quality of their call centers and their customer service representatives (see “Marketing Insight: Improving Company Call Centers”).

 
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