Customer Service Excellence - Lecture 8

• 1. B2B/B2C The context of customer service excellence Customer Service Excellence week 9

2. THE LADDER OF LOYALTY Advocate Supporter Client Customer Prospect Suspect PROSPECT - Someone whom you you believe may be persuaded to do business with you CUSTOMER - Someone who has done business just once with your organisation CLIENT - Someone who has done business with you on a repeat basis but may be negative, or at best neutral, toward your organisation SUPPORTER - Someone who likes your organisation, but only supports you passively ADVOCATE Someone who actively recommends you to others, who does your marketing for youSUSPECT - A suspect is someone who comes across your companies promotion. They are a potential prospect for your company . 3. 4. 5. Guru Insight

• The number one mistake that most companies make at the beginning of the (CRM) process is to ask the wrong question : How can we use this technology to sell our customersmore stuff?.

• The question they should be asking is : How can we use this new technology to make our customers lives better; how can we make our product or service more convenient, faster, cheaper, more tailored or more appropriate?.

• Don Peppers, 2003 .

• • Quoted in Customer Relationship Management

• • Perspectives from the Marketplace

• • Knox, Maklan, Payne, Peppard & Ryals

• • Butterworth-Heinemann, 2003.

6. CRM Some Definitions

• A strategic approach to improving shareholder value through the development of appropriate relationships with key customers andcustomer segments.

• CRM unites the potential of IT and relationship marketing strategies to deliver profitable, long-term relationships.

• Importantly, CRM provides enhanced opportunities to use data and information both to understand customers and implement relationship marketing strategies better.

• This requires cross-functional integration of people, operations and marketing capabilities enabled through information technology and applications.

• Relationship Marketing Creating Stakeholder Value

• Christopher, Payne & Ballantyne, Butterworth-Heinemann, 2002.

• CRM is a business strategy focused on maximising shareholder value through winning, growing and keeping the right customers.

• Hewson Consulting ( www.hewson.co.uk/crmdefn.htm )

7. Why the Interest in (C)RM ?

• The challenges of the new marketing environment

• Proper RM encourages loyalty & promotes retention

• It costs 6 times more to acquire new customers than look after your existing customers

• Loyalty / retention pays real dividends, as customers :

• • Spend more (increased share of wallet)

• • Get comfortable dealing with us & are more receptive to new Ps &Ss

• • Spread positive word of mouth

• • Have greater profit potential

• • Cost less to serve

• • Are are less price sensitive

• • Are more forgiving when something goes wrong

• • Make our marketing program more efficient (& effective)

8. Customer Retention Strategies Internal marketing Bonding Targeting customers for retention Customer Retention Building trust Promise fulfillment Service recovery 9. RM A Premature Death !

• Even with the potential benefits of technology :

• • Customer satisfaction is falling

• • Complaints, boycotts and other discontent is rising

• • Consumers simply cant accommodate to many 1:1s

• • Giving and getting are out of balance

• • Loyals can lose out in focus on new customers

• • Medium and small customers can be ignored

• • Many companies are creating problems not solutions

Preventing the Premature Death of Relationship Marketing Susan Fournier, Susan Dobscha, and David Glen Mick, HBR Jan/Feb 1998. 10. Sources of Differential Advantage n.b.Convert DAs into Value to Customer Product / Service Promotion Place Price People Process Physical evidence Form / design Salesforce Availability High - Quality Competence Ordering Appearance Features Creativity Coverage Lower - Value Courtesy Delivery Premises Performance Co-operative promotions Expertise Range Credibility Support Technology Conformance Branding Performance Credit facilities Reliability Handling complaints Awards Durability Packaging Delivery Trade-in Responsiveness Computerisation Indep. reviews Reliability Effectiveness Guarantees Trade-up Communications Communications Clippings Upgradability Image / Style Support Promotions Commitment Services Fact file Service Events Quality of Intermediaries Consistency Extra mile Guarantees Documentation Training Communications Support 11. Case Insight: National Trust

• The National Trust exists to look after special places, for ever, for everyone and is organised around 11 geographic regions/ countries. In 2006/2007 one of the major income streams for the national Trust was through membership levies, this equated to 100 million.

• Marketing objectives for the National Trust include new member acquisition and existing member retention.

• How could the National Trust use electronic technologies to increase their understanding of new and existing members and build member loyalty and retention?

12. How do you manage in the different contexts? 13. Characteristics of Services

• Intangibility - services cannot be touched, seen, tasted, heard or smelled before purchase

• Inseparability - services cannot be stored and sold later, they cannot be separated from the provider

• Perishability - services cannot be stored, so a better management of demand is necessary

• Heterogeneity (or variability) - the quality of the service is dependant on the person providing it (therefore it will vary)

14. The extended marketing mix

• The additional elements deal with the characteristics of services

• People -good training for service staff, appearance of staff, staff carefully selected, and held more accountable

• Process -fast service tills, part time staff to cover highest periods of demand, easy booking systems for appointments

• Physical evidence - internal and external appearance of premises, short queues, modern equipment, pleasant waiting areas

ProductPrice PromotionPlace 15. Characteristics - FMCG

• Fast moving consumer goods e.g. confectionery, wash powder

• Manufacturers of products that are purchased often and rapidly consumed

• Logistics and supply chain important

• Margin can be low

16. FMCG mix

• Key differences

• • Products purchased often, rapidly consumed, packaging important

• • Price - relatively inexpensive

• • Place manufacturer to distributor/wholesaler to retailer, internet

• • Promotion branding important, heavy advertising pull and push promotion

17. What implications do these operational issues have on your customer service? 18.

• Seth Godin- good marketing

• Seth Godin talking at Google - All marketers are liars

19. Characteristics of Business Markets

• Fewer but larger buyers

• Demand often derived from consumer demand - e.g. car industry buys steel because consumers buy cars

• Buying unit differs - more rational approach, more people involved

• Buying process usually more formalised

20. Decision Making Unit (DMU)

• User - end user, may initiate request and help specify

• Influencer - technical personnel or specialists, help specify, provide information

• Buyer - formal authority holders, help specify, select vendors, negotiate

• Decider - final approver (often also buyer)

• Gatekeeper - control information flow to others, can prevent sales people gaining access

21. Types of buying decision

• Straight re-buy - goods re-ordered without modification

• Modified re-buy - opportunity for competitors to enter discussions, essential service quality is good

• New buy - greater risk or cost, the fuller decision making unit involved

22. Factors influencing industrial buying behaviour ENVIRONMENTAL Levels of demand Economic prospects Interest rates The pace of technological change Political and legal structures Competitive structures ORGANISATIONAL Objectives Policies Structures Systems & degree of centralisation Processes and procedures Managerial attitudes to risk Financial l resource Previous experiences BUYING CENTRE Roles in DMU Group processes Interpersonal interactions INDIVIDUAL Personal objectives Job position Attitude to risk Previous experiences Technical knowledge Motivation BUYING DECISION SOURCE: Adapted from Webster and Wind, 1972 23. Organisational segmentation

• Macro-segmentation

• size of organisation

• location

• industry sector

• end use

• Micro-segmentation

• DMU structure

• decision process

• buy class

• type of purchasing organisation

• innovation level

• purchasing strategy

24. Marketing Mix - key differences

• Greater degree of negotiation

• Bid pricing may be involved

• Greater emphasis on personal selling

• Increasing use of e-commerce, extranets, etc

• Distributors and agents may be involved

25. Business to Business Price-setting

• Geographical pricing

• Negotiated pricing

• Discount pricing

• Value-in-use pricing

• Relationship pricing

• Transfer pricing

• Economic value to the customer pricing.

26. Large capital projects

• Product complex, major investments

• Price high level, infrequent decision

• Place direct sales or through value-added resellers (VAR)

• Promotion specialist trade advertising, technical sales people

• Value added by training post-installation, extranet support, etc

27. What implications do these operational issues have on your customer service? 28.

• 6th annual B2B debate - digital media

• the future of b2b???

29. Not for Profit Sector SchoolsCollegesHealth Sector Leisure ServicesPublic-sector Social servicesCharitiesChurches Voluntary organisationsThe Arts 30. Objectives

• Objectives not profit based

• Performance to objectives more difficult to measure

• May be to improve quality of life

• Or to involve local people in decisions that affect them

• Or to tackle inequality, discrimination and disadvantage

• Or to raise $xxx funds to restore the building or to conduct further research into cancer treatments

31. Target Markets

• Will differ according to aims

• Examples -

• Charity - donors, volunteers, governments

• Education - prospective students, parents, feeder schools or colleges, governments

• Public sector - residents, national government, new business from outside the area

32. Key marketing mix differences

• Product - usually ideas, and services

• Price - value for money approach

• Place - short distribution channels

• Promotion - emphasis on PR, face to face fund raising, retail outlets, service personnel, lobbying of government departments

33.

• Give and Tell

34. As a charity

• 1. How would you organise and develop your customer service strategy?

• B2B?

• B2C?

• (Position?Who?How?Marketing Mix to support position? Strategic collaboration with suitable partner?)

35. Common issues

• Market research and management information important

• Marketing planning still as relevant

• Target markets can be segmented

• Relationship marketing is important in this sector - particularly charities

36. Characteristics of SME

• Small to medium sized enterprises

• Independent

• Managed by owner/part owner

• Small market share

• Small varies sector to sector

• In some, measured by number of employees, and others by turnover

37. SME Mix key differences

• Place many small retailers, small office/home office(soho), direct marketing/internet

• Price responsive.

• Promotion personal selling (by owner), website, limited by size of budget available