At your service: Profitable Services Marketing Nadine Robinson Pre-doctoral candidate, International MBA, B.Comm.2009

Evolution of thinking…what is Marketing? Copyright © 2007 McGraw-Hill Ryerson Limited AIDA 4Ps… 7Ps 4 Rs A box on the org chart Where organizations and people meet

Service Performance, deed, or process Intangible Heterogeneous Simultaneous production and consumption Perishable 71% of Canada’s Economy, 79% of US

Expanded Mix Traditional: Product, price, place, promotion Relationship: Retention, referral, relationship, recovery Services People, physical evidence, process

Customer Focus Integrated marketing communications Move away from transactional Customers become more profitable Build long term relationships Link between good service and profits But the customer is NOT always right!!

Close the Close the customer gap between expected and perceived service Get in the zone (of tolerance) Why IKEA and Disney are important to you (desired service vs adequate service) What’s technology got to do with it? What can you do?

As easy as 1…2…3…4 Four provider gaps: 1)Not knowing what customers expect 2)Not selecting the right service design and standards 3)Not delivering to service standards 4)Not matching performance to promises

Focus on: Reliability, Assurance, Tangibles, Empathy, Responsiveness The experience is the marketing p. 56 The service encounter is the “moment of truth” Bad apple or momentous +ve encounter Pretty woman & Salvation Army Get better business, not just more business Gold Iron Lead Platinum

Not knowing what customers expect Ask them, watch them, market research! Talk to front line staff Retention over attraction 80/20: 5% to 35 – 95% Bring back the love. You’re saying you love me…but Solicit complaints, respond quickly, empower employees

Not selecting the right service design and standards to meet customer expectations Vague or undefined service blueprint Map to customer’s point of view Standards not driven by customers Fewest dropped calls: hard Professional looking staff: soft Inappropriate physical evidence and servicescape Packaging, facilitator, differentiator, socializer Pizza in 2 hours or it’s FREE!

Blueprint for Express Mail Delivery Service Driver Picks Up Package Dispatch Driver Airport Receives & Loads Sort Packages Load on Airplane Fly to Destination Unload & Sort Load On Truck SUPPORT PROCESS CONTACT PERSON (Back Stage) (On Stage) CUSTOMER PHYSICAL EVIDENCE Customer Calls Customer Gives Package Truck Packaging Forms Hand-held Computer Uniform Receive Package Truck Packaging Forms Hand-held Computer Uniform Deliver Package Customer Service Order Fly to Sort Center Line of interaction Line of visibility Line of internal interaction

Not delivering to service standards Wrong People Deficiencies in HR (hiring, training, compensating, retaining) Customers who don’t fulfill roles & detract Franchises, agents, e-channels let you down

Service culture Appreciation for good service Employees are the service, the brand, the marketing Boundary spanners Person/role, organization/client, interclient conflict Emotional labour Lowest paid or highest paid

…Not delivering to service standards Not matching supply & demand Time, labour, equipment & facilities constraints Shift it Yield mgmt Waiting customers Differentiate: Importance, urgency, duration, pay premium Multiple queue, single queue, take a number Make waiting fun or at least tolerable

Not matching performance to promises Lack of integrated services marketing communications Ineffective management of customer expectations Inadequate horizontal communications Overpromising

The experience is the marketing Manage service promises –Realistic promises, effective ads, coordinated external comms, offer service guarantees Manage internal marketing –Vertical, horizontal, cross-functional Improve customer education –Info on service, role, how to evaluate it (credence) Manage customer expectations –Tiered offerings, effectiveness criteria

Service Guarantees Unconditional: no strings attached Meaningful to customers Easy to understand & communicate Easy to invoke and collect It’s the icing… not the cake

Pricing Competition-based Price signalling, going rate Small firms can’t always match pricing Limited comparability with heterogeneity Cost-based Labour difficult to price and trace Demand-based Set on customer perception of value Odd pricing, Prestige pricing

Communications and the Services Marketing Triangle Internal Marketing Vertical communications Horizontal communications Interactive Marketing Personal selling Customer service Service encounters Servicescapes External Marketing Communication Advertising Sales promotion Public relations Direct marketing Company Customers Employees Source: Kotler, Philip, Marketing Management: Analysis, Planning, Implementation, and Control, 9th Edition, © Figure 16.1

Get ready for a relationship Right People –Get to know your customers & like them –Understand what they expect –Hire right people to deliver their expections –Fire bad customers Right Process –Deliver on your promises –Integrated Marketing Communications Right Physical evidence

Commitment Long-term focus…it’s not only about “the sale” Requires work to create and maintain an emotional connection (positive and reduce negative emotions) Objectives of the both parties Honesty & trust Conversation Satisfaction Consistent/ Coordinated Relationships…no more one night stands

Four wheels on a car If it is important: Measure it. Manage it. Compensate on it.

Next to doing the right thing, the most important thing is to let people know you are doing the right thing. ~John D. Rockefeller The time is always right to do what is right. ~Martin Luther King, Jr.