SERVICE QUALITY THROUGH INTERNAL MARKETING 11 SERVICE QUALITY THROUGH INTERNAL MARKETING Prepared by Simon Hudson, Haskayne School of Business University of Calgary and Marion Joppe, University of Guelph 11-1 Copyright © 2009 by Nelson Education Limited.

11 Topics Internal marketing process Service Quality Through Internal Marketing Topics Internal marketing process Link between service quality and customer satisfaction Measurement tools and the behavioural consequences of service quality Link between customer satisfaction and loyalty Relationship marketing strategies Importance of service recovery 11-2 Copyright © 2009 by Nelson Education Limited.

The Internal Marketing Process 11 Service Quality Through Internal Marketing The Internal Marketing Process Internal marketing integral part of the services marketing triangle (see Figure 1.5) marketing aimed internally, at a company’s own employees internal marketing takes place through the fulfilling of promises 11-3 Copyright © 2009 by Nelson Education Limited.

11 Internal Marketing Four-step process Service Quality Through Internal Marketing Internal Marketing Four-step process 1. Establishment of a Service Culture 2. Development of a Marketing Approach to Human Resource Management 3. Dissemination of Marketing Information to Employees 4. Implementation of a Reward and Recognition System 11-4 Copyright © 2009 by Nelson Education Limited.

Link between Internal Marketing and Profits 11 Service Quality Through Internal Marketing Link between Internal Marketing and Profits 11-5 Copyright © 2009 by Nelson Education Limited.

Establishment of Service Culture 11 Service Quality Through Internal Marketing Establishment of Service Culture Service Culture a culture that supports customer service through policies, procedures, reward systems, and actions Empowerment the act of giving employees the authority to identify and solve guest problems or complaints on the spot, and to make improvements in the work processes when necessary 11-6 Copyright © 2009 by Nelson Education Limited.

For Internal Marketing... 11 Service Quality Through Internal Marketing For Internal Marketing... Employees must have a customer service attitude Employees must understand your product Employees must be enthused about your product and your company There must be good communication between employees and management Employees must be able to identify and solve customer problems 11-7 Copyright © 2009 by Nelson Education Limited.

Development of a Marketing Approach to Human Resource Management 11 Service Quality Through Internal Marketing Development of a Marketing Approach to Human Resource Management Create jobs that attract good people Employee turnover in tourism & hospitality is often 10 times what it is in other industries How do you reduce the problem? Selection: hire for attitude and train for skills Orientation Inspire institution-building pride Training Increase responsibility Keep job interesting 11-8 Copyright © 2009 by Nelson Education Limited.

Dissemination of Information 11 Service Quality Through Internal Marketing Dissemination of Information Involve customer; contact employees Tell employees when introducing new products or starting promotional campaigns Employees watch management for cues on expected behaviour Use printed publications as part of internal communication Find out how service delivery system can be improved–how can managers make it easier for employees to serve the customer 11-9 Copyright © 2009 by Nelson Education Limited.

Reward and Recognition System 11 Service Quality Through Internal Marketing Reward and Recognition System communication must be designed to give employees feedback on performance being made to feel like a valued employee is important in motivating employees to achieve company goals rewards should be tailored to the interests of the employees they are designed to motivate what would motivate you provide service excellence? 11-10 Copyright © 2009 by Nelson Education Limited.

Delivering Service Quality 11 Service Quality Through Internal Marketing Delivering Service Quality Service quality the customer’s perception of the service component of a product, or the customer’s judgment of overall excellence of the service provided in relation to the quality that was expected key factor in differentiating service products and building a competitive advantage in tourism many researchers believe that the outgrowth of service quality is customer satisfaction 11-11 Copyright © 2009 by Nelson Education Limited.

Outcomes of Customer Satisfaction 11 Service Quality Through Internal Marketing Outcomes of Customer Satisfaction Increased customer retention Positive word-of-mouth communications Increased revenues 11-12 Copyright © 2009 by Nelson Education Limited.

Gaps Model of Service Quality 11 Service Quality Through Internal Marketing Gaps Model of Service Quality 11-13 Copyright © 2009 by Nelson Education Limited.

Measuring Service Quality 11 Service Quality Through Internal Marketing Measuring Service Quality Importance-Performance Analysis (IPA) a procedure that shows both the relative importance of various attributes and the performance of the company, product, or destination under study in providing these attributes 11-14 Copyright © 2009 by Nelson Education Limited.

Measuring Service Quality 11 Service Quality Through Internal Marketing Measuring Service Quality SERVQUAL an instrument used to measure the difference between consumers’ expectations and perceptions of service quality 11-15 Copyright © 2009 by Nelson Education Limited.

Performance of Attributes Service Quality Through Internal Marketing Performance of Attributes Copyright © 2009 by Nelson Education Limited.

Service Quality Ratings 11 Service Quality Through Internal Marketing Service Quality Ratings Table 11.1 11-17 Copyright © 2009 by Nelson Education Limited.

Behavioural and Financial Consequences of Service Quality 11 Service Quality Through Internal Marketing Behavioural and Financial Consequences of Service Quality 11-18 Copyright © 2009 by Nelson Education Limited.

Loyalty and Relationship Marketing 11 Service Quality Through Internal Marketing Loyalty and Relationship Marketing Customer loyalty a measure of how likely customers are to return to an organization, and of their willingness to build relationships with the organization 11-19 Copyright © 2009 by Nelson Education Limited.

Loyalty and Relationship Marketing 11 Service Quality Through Internal Marketing Loyalty and Relationship Marketing Relationship marketing marketing that attracts customers, retains them, and enhances their satisfaction a philosophy of doing business that focuses on keeping and improving current customers does not necessarily emphasize acquiring new customers 11-20 Copyright © 2009 by Nelson Education Limited.

Levels of Retention Strategies 11 Service Quality Through Internal Marketing Levels of Retention Strategies 11-21 Copyright © 2009 by Nelson Education Limited.

Benefits of Relationship Marketing 11 Service Quality Through Internal Marketing Benefits of Relationship Marketing Table 11.2 11-22 Copyright © 2009 by Nelson Education Limited.

Benefits of Relationship Marketing 11 Service Quality Through Internal Marketing Benefits of Relationship Marketing Lifetime value of a customer a calculation that considers customers from the point of view of their potential lifetime revenue and profitability contributions to a company 11-23 Copyright © 2009 by Nelson Education Limited.

11 Service Quality Through Internal Marketing The 80/20 Customer Pyramid 11-24 Copyright © 2009 by Nelson Education Limited.

11 Service Recovery Service Recovery Service Quality Through Internal Marketing Service Recovery Service Recovery the process by which a company attempts to rectify a service delivery failure 11-25 Copyright © 2009 by Nelson Education Limited.

Customer Response Following Service Failure 11 Service Quality Through Internal Marketing Customer Response Following Service Failure 11-26 Copyright © 2009 by Nelson Education Limited.

Harari’s Guidelines for Tracking and Handling Customer Complaints 11 Service Quality Through Internal Marketing Harari’s Guidelines for Tracking and Handling Customer Complaints Make it Easy for Customers to Complain Respond Quickly to Each and Every Complaint Educate Employees Approach Complaints as Operational Problems and Strategic Opportunities continued... 11-27 Copyright © 2009 by Nelson Education Limited.

Harari’s Guidelines for Tracking and Handling Customer Complaints 11 Service Quality Through Internal Marketing Harari’s Guidelines for Tracking and Handling Customer Complaints Make Complaints and Complainers Visible Adjust Quality Measures, Performance Reviews, and Compensation Accordingly Reward Complainers Stop Calling them “Complainers”! 11-28 Copyright © 2009 by Nelson Education Limited.