lecture 11 Flashcards
Service profit chain
Integrative framework for understanding how a firms operational investments into service operations are related to customer perceptions and behaviors, and how these translate into profits
Return on quality framework
Revenues vs profitability
Strategic vs operational focus
Service profit chain e.g.
Internal service quality –>
employee satisfaction –>
Employee retention & employee productivity –>
External service value –>
Customer satisfaction –>
Customer loyalty –>
Revenue growth & profitability
strategic model (2)
Operational efforts (PEREF personal effort)
(EQUEFF equipment effort)
Consumer perceptions
(PERPRC personnel perceptions)
(EQUPRC (equipment perceptions)
(INTENT intentions to recommend)
Business outcomes
(CUSTBEH customer behavior)
(Profit)
Evaluation of service business performance (old situation)
Mainly financed performance indicators
Misleading signals for improvement/innovation
Switch to mainly process indicators
Evaluationg of servie business performance
Balanced scorecard
Weighted hard and soft indicators :
Financial
Customer
Internal processes
Learning and growth
Use of balanced scorecards requirements
Collect and integrate information across the firm
Establish cause and effect linkages between performance indicators
Determine objectives, measures and targets
Determine acceptable tolerances
Determine weights of performance indicators
Plans, Implementation, monitoring and incentives for improvement
Dynamic multi-dimensional performance framework (DMP)
Extension of BSC
More on contributions employees and suppliers
Role of community (environment) in which the company works
Role of motivated personnel
Indicators of customer performance
Service customer:
1) orientation
2) choice
3) consumptions (specification, operation and completion)
4) post-consumption evaluation
INdicators of customer performance
Service provider
1) attraction
2) conversion
3) fullfillment
4) retention
effectiveness indicators
Click through rate and conversion rate
Click through rate
User initiated action of clickin on an ad element, when being exposed to it, causing a redirect to another website
Conversion rate
Percentage of people who engaged in a particular kind of action after clicking on an ad (sale, information request)
How to increase CTR and conversion ratio
Argument quality in advertisements
Type of evidence (expert evidence, statistical evidence, causal evidence or anecdotal evidence)
Evidence types
Making use of opinions of an expert
Numerical summary of certain incidences
Consist of an explanation of cause and result relation
involvement drivers persuasion
Involvement is one of the most important factors affecting persuasion
Browsing internet or conducting an initial search is a low involvement process, making customers less motivated to process the content of the message
Rather, they base their judgements on simple acceptance and rejection cues, such as source credibility and are less likely affected by argument quality and strength
The largest group of internet users are low-involved searchers (expert evidence, statistical evidence and causal evidence)
The central route is taken when consumers use the internet for a purchase driven search. This involved group of users forms the minority of internet users
As a consequence they are motivated to process the content of the message more actively
Consequently, the causal ad, which is regarded as a strong quality argument, will be regarded as a valuable source of information. Once these motivated searchers click on the causal ad, the chance that they will actually convert is larger
Two types of studies (ig)
Experiment
Product (tech supplies) and service (travel insurance)
Self-selection of respondents, participate when searching for sepcific keyword
Procedure
Circulation of advertisements
Position of text (first page)
1 month experiment + 1 month for conversion
does evidence type have a significant impact on CTR and conversion
YES
– Is traffic key then use expertise or statistical evidence
Is conversion key then use causal evidence
The cost and profitability challence of services
Cost: Fixed/variable services > fixed/variable goods
Profit contribution
Price - Average variable cost = high
1) capacity has large(st) cost share
2) Profit increases rapidly with additional customers
What is value
Value = lowest price (monetary give)
Value = highest quality (get)
Value = quality for money (get - mon. give)
Value = quality for sacrifice (get - total give)
Multi service strategy
objectives: market share (in f) increase by share of wallet
Challenge: service development, cross-selling and maintaining focus
Multi segment strategy
objectives: yield management and market share increase
Challenges: customer attraction, conflict minimization and maintaining focus
Multi site strategy
Objectives: sales increase by geographic area
Challenges: service standardization
Quality control
Finance growth - e.g. franchising
Mixed strategies:
Multi site - multi service
(operations + marketing)
Multi site - multi segment
(split + pricing + control)
Multi service - multi segment
(multi site - multi service - multi segment)
localization, specialization and fragmentation
Localization = single site but
Specialization = single service but
Fragmentation = single segment but
Experience economy Advantages/disadvantages
Extension services marketing
Advantage: higher price, WOM
Disadvantages: temporary effect, competition and expensive
