Chapter 15 Flashcards
what is the long term impact of customer-centricity on profitability and shareholder value.
-financial success
-high customer satisfaction
-creates value for customers and create values for its owners
what determines a customer’s share of wallet?
–the relative satisfaction rank of a brand used by a customer
–the number of brands used by that customer
*Increasing a firm’s satisfaction score does not increase its share-of-wallet if it does not also achieve a change in ranking vis-à-vis competitors
SOW + how its calculated
-is a marketing metric that measures the percentage of a customer’s spending within a specific product category that goes to a particular company or brand, indicating how well a brand is performing against its competitors
-calculated by dividing the total amount a customer spends with a particular company or brand by the total amount the customer spends in the relevant product category or market.
why is SOW important (5)
*Customer Loyalty: It’s an indicator of brand loyalty and the depth of a client relationship.
*Market Performance: It shows how well a brand is performing against its competitors in the marketplace.
*Revenue Growth: Increasing a customer’s share of wallet can lead to increased revenue.
*Customer Retention: Focusing on existing customers and maximizing their spending can improve customer retention.
*Brand Loyalty: A higher share of wallet can indicate stronger brand loyalty
what are the four levels of service performance?
- service losers
- service nonentities
3.service professionals
4.service leaders
service losers
-Bottom of the barrel from both customer and managerial perspectives
–Customers only use them because they have no other choice
-management is resistant to change, employees are uninterested and provide poor service
–New technology introduced only under duress; uncaring workforce
Service Nonentities
–Dominated by a traditional operations mindset
–Unsophisticated marketing strategies
–Consumers neither seek out nor avoid them
Service Professionals
–Clear market positioning strategy
–Customers within target segment(s) seek them out
–Research used to measure customer satisfaction
–Operations and marketing work together
–Proactive, investment-oriented approach to HRM
Service Leaders
–The crème da la crème of their respective industries
–Names synonymous with outstanding service, customer delight
–Service delivery is seamless process organized around customers
–Employees empowered and committed to firm’s values and goals
how to transform a loser to a leader?
-follow the trends
-be dynamic
-dont stick to your own segment
-encourage innovation
-upgrade technology
3 strategic pathways to achieve cost effective service excellence (CESE)
1.the dual-culture strategy
2.the operations management approach
3.the focused service factory strategy
The dual-culture strategy
*In the dual-culture strategy, the organization pursues service excellence and productivity simultaneously
*Leadership ambidexterity: Leaders direct organizations to pursue and integrate conflicting demands
*Contextual ambidexterity: Guides employee thinking and decision-making about
–when to focus on service excellence
–when to emphasize cost-effectiveness
–how to integrate both objectives synergistically
*Employee buy-in: Employees need a strong rationale.
Operations Management Approach
*The operations management approach relies on three tools to reduce process variability:
- isolate technical core & shift activities to the
–buffering and industrializing the back office, and shifting activities from the expensive front office to an industrialized back office - Reduce Customer Choice
–modularizing service, allowing increased deployment of systems and technologies in the front office
3.Reduce Customer Contact
–the deployment of self-service technologies (SSTs), robotics, and AIEnabled after processes and products
have been modularized and have low complexity
Focused service factory strategy
*Tailors a single solution to meet the exact needs of a specific customer segment combined with a culture for service excellence
*Customers can receive a single, highly standardized, but excellent service offering.
*This approach benefits from
–simplicity
–repetition
–homogeneity
–experience
Dual culture vs Operations Management Approach & Focused service factory strategy
Dual-culture strategy
–harder to implement
–driven by intensifying competition and cost pressures pushing organizations to seek new ways to increase efficiencies while maintaining high levels of quality
The other two:
–easier to implement
–productivity and cost-effectiveness are hardwired into the business model by systems and technologies
–likely to gain mass market for many services with increasing usage of service robots and AI
