1

2

Marketing, financial,

operations and HRM

Common research objectives for services that help us listen to the

customer• To identify dissatisfied customers• To discover customer requirements or expectations• To monitor and track service performance• To assess overall company performance compared to competition• To assess gaps between customer expectations and perceptions• To gauge effectiveness of changes in service• To appraise service performance of individuals and teams for rewards• To determine expectations for a new service• To monitor changing expectations in an industry• To forecast future expectations 3

Criteria for an effectiveservice research program

5

6

7

• Executive visits to customers• Management listing to customers• Research on intermediate

customers• Research on internal customers

Relationship marketing• is a philosophy of doing business that focuses on

keeping current customers and improving relationships with them

• does not necessarily emphasize acquiring new customers

• is usually cheaper (for the firm)– keeping a current customer costs less than attracting a new

one

• thus, the focus is less on attraction, and more on retention and enhancement of customer relationships

8

7-9

“Bucket theory of marketing”

Most ProfitableCustomers

Least ProfitableCustomers

What segment spends more withus over time, costs less to maintain,spreads positive word of mouth?

What segment costs us intime, effort and money yetdoes not provide the returnwe want? What segment isdifficult to do business with?

OtherCustomers

BestCustomers

The “80/20” Customer pyramid

10

7-11

Profit generated by a customer over time

7-12

Relationship development model

ExcellentQuality

andValue

I. Financial Bonds

II. Social Bonds

IV. Structural

Bonds

III. CustomizationBonds

Volume and Frequency Rewards

Bundling and Cross Selling

Stable Pricing

Social Bonds Among Customers

Personal Relationships

Continuous Relationships

Customer Intimacy

Mass Customization

Anticipation/ Innovation

SharedProcesses and Equipment

Joint Investments

Integrated Information Systems

Levels of retention strategies

13

Customer satisfaction

14

8-15

Service Recovery Paradox

“A good recovery can turn angry, frustrated customers into loyal ones. ..can, in fact, create more goodwill than if things had gone smoothly in the first place.” (Hart et al.)

HOWEVER: only a small percent of customers complain service recovery must be SUPERLATIVE

only with responsiveness, redress, and empathy/courtesy only with tangible rewards

even though service recovery can improve satisfaction, it has not been found to increase purchase intentions or perceptions of the brand

service recovery is expensive