CHAPTER 12 MANAGING SERVICES I LEVELS OF SERVICE a CORE PRIMARY SERVICES i The major activity of a business or nonprofit ii Investment services provide the usage of a brokerage account to buy sell stock 1 Ex Charles Schwab eTrade b Ancillary Services i Expected or optional supplements to the primary purchase 1 Ex Supermarket carryout Valet Parking Free Parking ii Expected in B2B Marketing 1 Prompt delivery 2 Favorable credit terms 3 Responsive 24 7 Customer Service II SERVICES AS VALUE a Consumers and Organizational Buyers Want i Quality products ii Right price iii Qualified sales personnel iv Maximum benefits v Minimum effort vi Low wait times vii VALUE b Casual Dining Industry stopped providing value i Competition from fast casual chains are stealing customers ii Checks average from 10 23 iii Ex Panera Chipotle Panda Express Zaxby s Five Guys III VALUE a An intangible concept often defined in terms of i Exceptional customer service ii Exceptional product quality iii Value based prices IV COMPETITIVE POSITIONING a Service Image is conveyed by the firm s service products i Dimensions used should be those valued by the customers i b What DO consumers want in casual dining Stand for something unique 1 Cheesecake Factory Large Portions 2 Outback High quality grilled Steak 3 Olive Garden Tuscan like ambience ii Lower Prices iii Better Food ex Ruby Tuesday s iv Improved Service ex Chili s 1 Slow service discourteous staff professional uniforms v Better Looking Stores ex Ruby Tuesday s vi Get Kid Friendly V VI SERVICE LEADERSHIP OR FOLLOW THE LEADER a Will you set the service standard or wait for competitors to set the standard and then follow their lead BENEFITS OF EXCEPTIONAL CUSTOMER SERVICE a Exceptional customer service can differentiate you from competitors Services and recover lost sales Services attract and keep customers i ii iii iv Customer service usually leads to a profitable Return on Investment in the long run Service quality is related to customer satisfaction VII How consumers purchase evaluate services a The Purchase Process i Search Properties What consumers can judge prior to purchase a b Easiest to Evaluate Price Location Appearance of Physical Facility Paperwork Interactions with Staff c HIGH clothing jewelry furniture houses Automobiles ii Experience Properties Attributes discernable only after the service experience a Hardest to evaluate b c HIGH restaurant meals vacations haircuts childcare Physical comfort staff concern wait time iii Credence Properties Attributes inferred from a subjective evaluation of the entire process a HIGH TV repair legal services root canal auto repair medical diagnosis VIII THE SERVICE DESIGN PROCESS a Customer Targets What do they want b Nature of the Service i Complex substantial support services and highly qualified customer contact people medicine investments ii Less Complex Substantial up front design effort automated services ex ATM Pricing Who is the Target c i How much and how often do you buy ii Ex T G I Friday s Loyalty Program iii What is this type of service iv Can a fee be justified d Costs i Wages ii Physical facilities iii Technology and equipment iv Honoring warranties and guarantees e Degree of Complexity Uncertainty i When the service product is complex or customers are uncertain about the purchase They may need 1 Extensive sales assistance 2 Demonstrations 3 Service guarantees 4 After sale assistance 5 Pre purchase information f Marketer s Resources Significant Growth 1 2 Save money 3 Testing Learning 4 Variable Volume 5 Business Model Shifts g Number of Services h Level of Service i Full service to self serve Smaller marketers may need to outsource some customer services to save costs i ii When to use customer service outsourcing i Focus on services which make a difference in consumers purchase decisions ii Remember customers may be willing to pay some or all of the cost of desired services 1 What does your market target customer call for 2 What can you support IX SERVICE DELIVERY a Top Management Commitment b Treat customers as internal customers ex Disney c View service as a performance d Ensure service recovery X SUCCESSFUL SERVICE RECOVERY a Know the costs of losing a customer i For every customer that bothers to complain there are 26 others that stay silent ii The average wronged customer will tell 8 16 people iii 91 of happy customers will never purchase your services again iv It costs about 5X as much to attract a new customer than to keep an old one b Listen to the customer get them to talk c Anticipate potential failures d Act fast e Train Employees f g Close the Loop get back to the customer Empower the front line XI CHEF RAMSEY S CARDINAL RULE a Put customers first make them feel really special and build a sense of loyalty b Unhappy customers destroy reputations XII THE EVOLVING WORLD OF PRODUCT a Before 1940s A world of Commodity b 1940s 1980s A World of Product Branding 1980s 1990s A World of Services c d 1990s 2010s A World of Experiences Charismatic Experiences
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