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Services Marketing

Wayne AndermanAdam Berk

Vince RubieraSteve Sherwood

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Presentation Structure

• Core Strategy• Integrative Framework• Recommendations• Summary

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Core Strategy: Defined

• Unchangeable Needs vs. Products:– Mission: Genuine care and comfort to guests

• Focus on underserved market:– Luxury stays providing WOW factor– Emotional intensity

• Going beyond tangibles (commoditized within segment) • Personal attention/caring

– Active listening systems to uncover needs• Bi-weekly WOW stories• Heavy investments made for systematic listening of front-line

staff and guests

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Core Strategy: Execution

• First rule of execution: competing for the right talent– Behavior interviews:

• Talent and value matching• People who care and respect others• What do they enjoy?• What motivates them?• What is their purpose in life?• Do they enjoy contact with others?• Do they smile naturally?• Do they fit culture and philosophy?

– Strong Beginnings– Continuous Learning– Ownership Attitudes

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Core Strategy: Execution

• Execute using Gold Standards– Service values– Credo– Motto– Three steps of service

• 6P’s Model– Problem or need of customer– Product– Promises– Personal Advantage– Positioning– Price/Value

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Core strategy: Analysis

• Focus on core strategy is so singular that it facilitates presentation excellence to the customer

• Strategic boundaries established – Highly segmented for maximum effectiveness

• Affluent guests

• Clear priorities in sub strategy design– Employees who execute and understand the strategy,

deliver constant image• WOW meetings• Line-up• The Gold Standard

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Gold Standards – 7 Values

Joy

Teamwork

SOCIAL PROFIT

Respect

Integrity

Excellence

INNOVATION

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Doing the Service Right the First Time

Doing the ServiceRight the First Time

Doing the ServiceVery Right theSecond Time

Managing andExceeding Customers’

Expectations

DeliveringQualityService

Turning Marketing into a Line FunctionBuilding aMarketing

Organization

Marketing toNew Customers

Marketing toExisting

Customers

Marketingto

Employees

MaximizingMarketingPotential

S

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Quality of Service

• Execution vs. Growth “Product quality is a result of service quality”– Clearly defining core components of company values, quality

standards and service tradition daily called “the line up”• Line-up is a world-wide process where leadership engages staff in discussion

of the overall mission (motivational & guiding huddle)• Constantly redefining brand to remain relevant in the face of changing

economics, evolving customer segments, domestic/international growth• President and COO attend all new hotel openings and conduct mandatory

group sessions– New employee orientation– Developmental training– Daily line-ups– Positive and negative reinforcement– Mission statements discussed– Distribution of credo cards– Employee ownership assessment

– “Its not about you” principleS

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Quality of Service

• Execution vs. Price– Price insensitive customers– Focus on value

• Customers expect to pay more for “Ritz-Carlton service”

– “Never cut back on any service that touches a guest”• Entrepreneurship vs. Maturity

– Confederation of entrepreneurs • Teamwork • Seamless handoffs

– Employee empowerment– Active listening systems

• Class Database (Gap 3 reduction) – Technology• Communication between employees to pass on names etc..

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Awards

• AAA Five Diamond Award 2008 19 PropertiesMobil Five-Star Award 20065 PropertiesMobil Four-Star Award 200623 Properties

Condé Nast Traveler: 2006 Top 100 Best in the WorldThe Ritz-Carlton, Istanbul The Ritz-Carlton, Osaka The Ritz-Carlton, Millennia Singapore

Travel and Leisure: 2006 Worlds Best Business Hotels12 Properties

Travel and Leisure: 2008 Best by DesignNo. 1: The Ritz-Carlton, Beijing Financial Street

Travel and Leisure: 2007 Best Family ResortsThe Ritz-Carlton, Bachelor Gulch The Ritz-Carlton, Reynolds PlantationThe Ritz-Carlton, NaplesThe Ritz-Carlton, Grand CaymanThe Ritz-Carlton, Cancun

•Condé Nast Traveler: The Best by DesignNo. 1 in the Americas: The Ritz-Carlton, Santiago

Condé Nast Traveler: The Best by ActivitiesNo. 1 in Asia, Australia and Pacific Nations: The Ritz-Carlton, Bali Resort & Spa

Travel + Leisure: 500 Greatest Hotels in the World 2006

32 PropertiesConsumer ReportsConsumer Reports’ hotel issue ranked The Ritz Carlton Hotel Company the No. 1 luxury hotel company in all areas including value, service, upkeep and problem resolution.

Luxury InstituteAwarded The Ritz-Carlton Hotel Company with the “Most Prestigious Luxury Brand” award

Travel Weekly2006 Readers Choice Awards, Best Luxury Hotel Company2006 Readers Choice Awards, Best Upscale Hotel Company

Forbes: Sure to Impress Travel DestinationsNames The Ritz-Carlton Hotel Company the best Business Hotel Chain

Weekly DiamondThe Ritz-Carlton, Osaka ranked No. 1 for Japan’s Best Hotels

DEPA Middle East Hotel AwardsThe Ritz-Carlton, Doha won Middle East Hotel of the Year, Best Conference, Catering and Banquet facilities and Young Hotelier of the Year.

2006 Market Metrix Hospitality Index (MMHI)The Ritz-Carlton Hotel Company ranked highest in customer satisfaction among luxury hotels.

Dubai Quality Gold Award 2005The Ritz-Carlton Dubai was awarded the Dubai Quality Gold Award

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Service Very Right the Second Time

Doing the ServiceRight the First Time

Doing the ServiceVery Right theSecond Time

Managing andExceeding Customers’

Expectations

DeliveringQualityService

Turning Marketing into a Line FunctionBuilding aMarketing

Organization

Marketing toNew Customers

Marketing toExisting

Customers

Marketingto

Employees

MaximizingMarketingPotential

A

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Ritz Service Transactions

Ritz Carlton Service Type1: Bellman greets arrival, pulls luggage, ID guest name tag2: Uses Customer Interface Technology to alert Front desk for check-in3: Use of Customer profiles prior to check in to customize room and other requirements.

Ritz Carlton Service Type

Ritz Carlton Service Type

Process

ServiceDelivery

Outcome

Routine Nonroutine

Ritz Carlton Service Type1: . Guest greeted by name and already checked in when arrive at desk2: Guests are pre-checked out on date of departure. No physical action needed. Bill emailed to address on file.

1: Reservation errors2: Hotel Oversold 3: Delays in check-in process4: Unappealing tangibles (old/dirty rooms, smells, etc..)

1: Guests booked into “set aside” rooms 2: If oversold Ritz retains reciprocal agreements with other 5 stars. St. Regis, Mandarin oriental, in their markets.3: Guest, served amenities while wait drinks, dinner, other employee or mgt discretion. Chauffeured by limo to hotel

* All issues documented in guest’s folio, and made aware to management on daily in-house customer service report.A

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Ritz Empowerment Process

Warm Welcome

Anticipation And Compliance With

Guest Needs

Fond Farewell

Employee Senses Guest Wish or

Need

Employee Breaks Away from

Routine Duties

Employee Applies

Immediate Positive Action

Determine Guest Reaction

Document the Incident

Employee Returns to

Routine Duties

Guest Memory System

Escalate the Complaint

Satisfied

DissatisfiedTh

ree

Type

s of

Ser

vice

1.

2.

3.

A

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Service Recovery

• Front-line empowerment– $2000/$5000 to enhance or recover service– Stop what they are doing to address customer issues– Investigate and document into database– 1/10/100 rule

• $1 to fix today - $10 to fix tomorrow - $100 to fix downstream

– Listening to identify issues– Spare rooms reserved for problems– Agreements with other 5 star hotels in case of overbooking– Quality improvement and problem solving procedures

• Systematic recovery standards/procedures

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Managing and Exceeding Expectations

Doing the ServiceRight the First Time

Doing the ServiceVery Right theSecond Time

Managing andExceeding Customers’

Expectations

DeliveringQualityService

Turning Marketing into a Line FunctionBuilding aMarketing

Organization

Marketing toNew Customers

Marketing toExisting

Customers

Marketingto

Employees

MaximizingMarketingPotential

S

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Managing and Exceeding Expectations

• The evidence– JD Power and Associates

• Always exceeding the expectations of customers

– Top U.S. Hotel Chain Survey: 1st place, 5 consecutive years• Relationship of price to value

– Recent third party survey• 99% Satisfied• 80% Extremely satisfied

– Business week 2008 survey• Ranked top of customer service champs• Increased employee satisfaction & improved customer service

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Marketing Into a Line Function

Doing the ServiceRight the First Time

Doing the ServiceVery Right theSecond Time

Managing andExceeding Customers’

Expectations

DeliveringQualityService

Turning Marketing into a Line FunctionBuilding aMarketing

Organization

Marketing toNew Customers

Marketing toExisting

Customers

Marketingto

Employees

MaximizingMarketingPotential

W

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Marketing Service Grid

Med

iocr

eS

up

erio

r

Moderate AggressiveOptimumStrategy

Possible“Overkill”

Need to MoveUp Instead ofto The Right

Counter-ProductiveStrategy

Technology

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Marketing Into a Line Function

• Ritz-Carlton ensures all customer-employee contact (regardless of that employee’s function) is handled in superior fashion so that each interface involves marketing the company.

• Investment in Employee success

• HR focus is tied into developing the marketing line function– Recruitment and managing with a focus on marketing– Employees know what their supposed to do (No role ambiguity)

• Communicated: all employees touch customers directly or indirectly– Authority to make changes (No lack of perceived control)

• WOW stories: Huddles with real stories-Employee Heroics– Chef in Bali flies in eggs and milk for customer special diet– Hotel Laundry: fails to remove stain; Hotel Manager flew to deliver reimburse check– Does two things: 1-Reinforces Customer Service skills (2) gives employees local fame (recognition)

• “Class” database– Client Book: Past folio’s and tracking-to customize service consistently across all properties

• Gold Standard and 7 core values addressed previously

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Employee Engagement

Doing the ServiceRight the First Time

Doing the ServiceVery Right theSecond Time

Managing andExceeding Customers’

Expectations

DeliveringQualityService

Turning Marketing into a Line FunctionBuilding aMarketing

Organization

Marketing toNew Customers

Marketing toExisting

Customers

Marketingto

Employees

MaximizingMarketingPotential

W

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Employee Engagement

• Success rules: Listen first—this is the “It’s Not about You” approach.– They use Malcolm Bridge National Quality Award evaluation process. – Benchmark other businesses outside hospitality and invest heavily in

listening to staff, customers and investors• Management listens to the needs of the employees Ritz

employees enabled to listen and deliver to the needs of their guests.

• 250-300 hours of training:– Operational aspects – Desired outcomes employees need to produce for their customer.

• Understanding these outcomes, the frontline is empowered to create the Ritz experience. – $2000.00 per day per guest authority and $5000 management to do

whatever is necessary to enhance as well as recover stay. W

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Requirements for Employees

• Providing the “finest personal service and facilities to our guests who will always enjoy a warm, relaxed yet refined ambience”

• To cultivate the type of employee that delivers such high service standards, and as we saw in slide 4, are a fit to the existing culture

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Feelings about working at the Ritz

• The sign at employee entrances states “We Are Ladies And Gentlemen Serving Ladies And Gentlemen”

• Leaders with determination: way management is viewed

• Supportive line managers: work closely with employees in promotional plans and career request considerations

• Management emphasizes their leadership consistency in taking care of employees– Executive team works with employees when issues arise no

matter how small they may be– When it comes to big things they point to the SARS crisis in

2003 (35% occupancy vs. 85%)W

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Ritz Empowerment Process

Warm Welcome

Anticipation And Compliance With

Guest Needs

Fond Farewell

Employee Senses Guest Wish or

Need

Employee Breaks Away from

Routine Duties

Employee Applies

Immediate Positive Action

Determine Guest Reaction

Document the Incident

Employee Returns to

Routine Duties

Guest Memory System

Escalate the Complaint

Satisfied

DissatisfiedTh

ree

Type

s of

Ser

vice

1.

2.

3.

W

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Marketing to New Customers

Doing the ServiceRight the First Time

Doing the ServiceVery Right theSecond Time

Managing andExceeding Customers’

Expectations

DeliveringQualityService

Turning Marketing into a Line FunctionBuilding aMarketing

Organization

Marketing toNew Customers

Marketing toExisting

Customers

Marketingto

Employees

MaximizingMarketingPotential

A

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Marketing to New Customers

• Physical environment– Design: Indulgent, Unified, and “refined design”

sensibility– Furniture, carpet, rugs, marble etc..

– Ambient: • regulated HVAC & lighting • lit make-up mirrors• Extras: tissues holders, towel racks, phones• allergy sensitive rooms and extra towel racks

– Social factors• White glove greeting – fond farewell• “Class” database

Types of Evidence

PhysicalEnvironment

PriceCommunications

A

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Marketing to New Customers

• Communications– Tangibilize the message

• Implicit Guarantee• Credo• Messages point to awards received (evidence)

– Tangibilize the service• Lion logo (regal)• Silver platter service

Types of Evidence

PhysicalEnvironment

PriceCommunications

A

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Marketing to New Customers

• Price– Matches perceived value– In-line with physical environment and communications– Higher price for affluent customers expecting more

Types of Evidence

PhysicalEnvironment

PriceCommunications

A

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Marketing to Existing Customers

Doing the ServiceRight the First Time

Doing the ServiceVery Right theSecond Time

Managing andExceeding Customers’

Expectations

DeliveringQualityService

Turning Marketing into a Line FunctionBuilding aMarketing

Organization

Marketing toNew Customers

Marketing toExisting

Customers

Marketingto

Employees

MaximizingMarketingPotential

A

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Marketing to Existing Customers

• Level three relationship– Financial

• Expectations = service = value• Price point acts as barrier to reassure affluent guests• Exclusivity level

– Social• 1:1 / Gold Standards

– Structure• Class database – customizing/tracking each stay

Relationship Level

Type of Bond(s)

Degree of Service Customization

Primary Marketing Emphasis

Sustainable Competitive Differentiation

ThreeFinancial, Social

and StructureHigh Service Delivery High

A

Service Quality to Customer Loyalty

Service Quality (White glove attentive “Par Excellence”)

+ Product Quality ( Silver Platter Tanglibles)

+ Price (Not big determinant of Value BUT admission ticket)

=Perceived Value (Awards and Guests Satisfaction)

Customer Loyalty (Recurring Business-Franchise)

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Recommendations

In over 1800 Google items, Business Source Premier , & ABI Inform searches the only issues concerning Ritz Carlton to be found by this group were those which other service providers took lessons from the Ritz Carlton.

The Ritz Carlton Leadership Group is a B2B unit which emphasizes and imparts TQM to other Business Industries!

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Challenges/Recommendations

Challenges: Employees not reporting problem resolutions on smaller scales?Hotel failures – management not following Gold Standards*Privacy Issues with CLASS system: Who is really seeing it.**

Recommendations:Recovery resource usage should be tied to incident reporting, systematicallyOn-site quality managers reporting directly to corporateCreate a user profile that customers can log in and view info kept on their stays; $ spent to preferences noted.

*Columbia B-School Case Study 1998 **University of Texas at Austin, Syllabus questions

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Ritz Carlton Summary:

• The ZOT is extremely high and narrow• They are under the microscope and must

ensure there is no deviation from those things which have earned them their rank

• There is no room for error in their station, as the epitome of service quality

• Continue framing TQM as a journey, not a destination.

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Resources

• The Portman Ritz-Carlton. (1998, January). Institutional Investor, 32(1), W6.• DeCocinis, The Portman Ritz-Carlton: Setting up our Ladies and Gentlemen for Success, Primary Source Info• Ritz-Carlton’s Application for The Malcom Baldridge Award, Primary Source Info• Bruce Serlen (2004, February). Ritz Receives Highest Mark In Every Deluxe Criterion. Business Travel

News, 21(2), 16. • Karen Robinson-Jacobs (20 November). Dallas' Ritz-Carlton ranked No. 1 large hotel in Zagat

guide. McClatchy - Tribune Business News• Ritz-Carlton 10-K’s, Hoovers.com• The Ritz Carlton Philosophy; Cutomerexpectations.com, 08122008• Learning-from-The-Ritz-Carlton-Customer-Serivce-Philosophy, ezinearticles.com• Kanes, www.island.lk/2001/11/04/busine08.html Asia's Best Employers Treat their Workers Well, Far

Eastern Economic Review 2001• The Ritz-Carlton Individual Incentive Awards Program. (2008, November). Incentive, 182(11), 49.• Gallo, C, Employee Motivation the Ritz-Carlton Way Business Week, Feb, 2008• www.ritzcarlton.com• The New Gold Standard: 5 Leadership Principles for Creating a Legendary Customer Experience Courtesy of

the Ritz-Carlton Hotel Company ,• Joseph Michelli, McGraw-Hill Professional 2008• Berry, Discovering the Soul of Service: The Nine Drivers of Business Success, Free Press 1999• Parasuraman, A. Course Pack Service Marketing MKT 672 Section 62 Fall 2008