test 2 Flashcards
Relationship Marketing
is a philosophy of doing business, a strategic orientation, that focuses on keeping current customers and improving relationships with them
Service ladder of marketing
Acquiring, Satisfying, retaining, Enhancing
What are the four levels of relationship stratagies
Financial bonds, social bonds, customization bonds, structural bonds
Financial bonds (level 1)
Customers are loyal to firm through financial incentives (Lower price for greater volume) ex. frequent flyer miles.
Limitations: Do not usually result in long term advantage since it is easy to replicate by competitors
Social bonds (level 2)
Customer is tied to the firm by social and interpersonal bonds..seeks to build long term relationships (Example of the professor being loyal to his dentist because he talks personably with him)
Customization bonds (level 3)
Loyalty is created through customer intimacy (Pandora takes the songs you listen to and find similar songs)
Structural bonds (level 4)
Providing services to the client that are designed right into the service delivery system. Usually B2B
(ex. Walmart’s Electronic Data Interchange (EDI) system manages the relationships with suppliers.)
Service failure
occurs when service performance that falls below a customer’s expectations in such a way that leads to customer dissatisfaction.
Service recovery
The actions taken by a firm in an effort to recover from the failure
Passives vs Voicers
Passives: least likely to say anything to employees if something has gone wrong. Spread bad WOM
Voicers: actively complain to the provider, but not likely to spread negative WOM; believe in the positive consequences of complaining - the service provider’s best friends!
Irates vs Activists
Irates: More angry, less likely to give the provider a second chance. More likely to spread negative WOM to friends and family and then switch providers
Activists: above average propensity to complain on all levels; more likely to complain to a third party; feel most alienated from the marketplace compared to other groups; in extreme cases can become “terrorists”
Characteristics of a successful service guarantee?
Limited Restrictions and exclusions, Meaningful, Easy to understand, Easy to Invoke
Fixing the customer: Respond quickly
Research conducted shows that 1/3 of customers who have problems resolved within 24 hours are “completely satisfied” by the action taken by the provider
Fixing the customer: Provide Appropriate communication
It is important to be understanding and accountability.
Fixing the customer: Supply adequate explanations
Customers want to know why a failure occurred. The content of the explanation must be appropriate as well as the style as to which it is delivered
3 specific types of justice that customers are looking for following their complaints?
Outcome fairness, procedural fairness, and interactional fairness
Outcome fairness
The result that the customer gets after they complain (The food comes out cold they should at least get another meal or free drink)
Procedural fairness
The timeliness, rules and policies of the complaint process. (not being able to reach a customer service phone line would be bad procedural fairness)
Interactional fairness
The interpersonal treatment received during the complaint process (just simply be nice and personable with the customer)
Fixing the problem: Encourage and track complaints
This allows you as a business to know what you did wrong.
Fixing the problem: Learn from Recovery experiences
This allows managers to conduct root-cause analysis and eliminate the need for a recovery in the first place
Fixing the problem: Learn from lost customers
It is hard to conduct research as to why a customer left, but if you can it can be a real help to what can be fixed
Service Guarantee: Limited Restirctions and Exclusions?
Guarantees with a large number of restrictions are generally not effective, and they tend to lose power with the more conditions there are
Service Guarantee: Meaningful
It should be something of high value that the customer is receiving. (Money back on poor service for a 3 credit hour class would be meaningful to students)
Service Guarantee: Easy to Understand
Should be easy to communicate with both customers and employees
Easy to Invoke
Should be easy to get point across that the service guarantee failed. If the customer has to write a letter or documented proof of a failure, it is not easy to invoke
Service blueprinting
A tool for simultaneously depicting the service process, the points of customer contact, and the evidence of service from the customer’s point of view
Service blueprinting components
Physical Evidence, Customer actions, Employee actions,(visible) Employee actions,(invisible) Support processes
Customer actions
This encompasses the steps, choices, activites and interactions that the customer performs in the process of purchasing the service (hotel ex. checking in, going to room, sleeping/showering)
Onstage employee actions
This is what employees do for the customer that is visible in the service. (Hotel ex. Greeting the customers, taking their bags, checking in at registration desk)
backstage Employee actions
Employees completing service for customer that they cant see. (Hotel ex. Making the food in the kitchen, cleaning the hotel room)
Support processes
Covers the internal services, steps and interactions that take place to support the contact employees. (ex. Mail service - Flying to sort center, sorting packages, loading on airplane, flying to destination)
Steps in building a blueprint
- Identify the process to be blueprinted
- identify the customer or customer segment
- Map the process from the customers point of view
- Map contact employee actions or technology actions
- Link contact activities to need support functions
- Add evidence of service at each customer action step
Reasons to fire a customer (3)
The wrong segment, Not profitable in the long term, difficult customers
What are the two types of switching barriers?
Customer Inertia and Switching costs
Customer Inertia
This is the idea that people stay with a company even if they are unhappy because it takes too much effort to switch.
Switching costs
It may cost more money to switch to a different provider. (patient may incur setup costs when changing doctors or new X-rays when switching dentists)
Relationship benefits for customers
Confidence Benefits, Social benefits, and Special Treatment benefits
Confidence beneifts
This comprises feelings of trust and confidence that the service will be done correctly and the customer will be treated right. (most important to customers)
Social Benefits
A benefit for the customer because they create a friendship with these people and want to do business with people they know (hairdressers often provide this)
Special treatment benefits
Giving customers who are important special benefits is something that firms can do.
