copyright 2004 madge m lyman customer service is important : fact or fiction ? presented by dr....
TRANSCRIPT
copyright 2004 Madge M Lyman
CUSTOMER SERVICE IS IMPORTANT :
FACT OR FICTION ?
Presented by Dr. Madge M. LymanAt the SCP Showcase
29 October 2004
copyright 2004 Madge M Lyman
Why have I been asked to talk to you about this topic?
• Responsible for Relationship Marketing, courses and research at Henley Management College in the UK.
• I am a customer, who demands service
• I am an advocate of customer feedback driving company excellence
copyright 2004 Madge M Lyman
What is Customer Service?
Customer service embraces many different activities to provide benefits:– Before the transaction: (providing
information)– During the transaction: (clarifying and
demonstrating)– After the transaction: (supporting the
purchase)From: Capon,N and Hulbert,J (2001), Marketing Management in the 21st century ,Pearson Education,Inc., New Jersey,USA
copyright 2004 Madge M Lyman
Excellent customer service:
• Provides non-users with persuasive information that may lead to purchase
• Provides current users with external validation of their own purchases
• Avoids the negative impact of word of mouth due to poor customer service
copyright 2004 Madge M Lyman
Why worry about Customer Service?
• Acquiring new customers can cost 5 times more than it costs to satisfy and retain current customers.
• It takes a lot of effort to induce satisfied customers to switch away from current suppliers.
• Average customer churn is 10% yearly.• A 5% decrease in defection rate can increase profits
by 25% to 85%, depending on industry• Customer profit rate tends to increase over the life
of the retained customers.Therefore, we need to take Customer Service
seriously!
From:, Frederick F. Reichheld, The Loyalty Effect (Boston: Harvard Business School Press, 1996)
copyright 2004 Madge M Lyman
The Changing Competitive Environment
Forces at Work:
Competitor
Driven
Customer Driven
Consequences
Fragmentation
Sophistication
Concentration
Intensification
Globalization
Alternative Technologies
copyright 2004 Madge M Lyman
The Changing Competitive Environment
• Changing Balance of Power
• Transition from Material to Information Economy
• Rapid Pace of Market and Product Development
Key Issues
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Value Distribution
in the Industrial age
Information (Virtual)
Matter(Physical)
Transition to Information Economy
Value Distribution
in theInformation
Age
copyright 2004 Madge M Lyman
THE EMERGING INFORMATION ECONOMY
0%
20%
40%
60%
80%
100%
120%
1996 1998 2000
CAPITAL INVESTMENT RATIO*
*Ratio of capital spending on computer hardware, software and communications gear to capital spending on machinery and equipment (US data).
74%81%
107%
YEAR
copyright 2004 Madge M Lyman
Customer Service…. Why Now?
• Power of customers will continue to increase, driven by competitive intensity
• Management of information will be central to success
• Faster technological change makes ability to manage information crucial
copyright 2004 Madge M Lyman
The changing view towards services:
• Service is recognized as a key competitive weapon
• Service is seen as crucial to customer retention
• Customer databases are often pivotal in service management
• Loyalty incentives are very common• Customer expectations are seen as
crucial for customer satisfaction
copyright 2004 Madge M Lyman
The times they are a changing…..
Production Customer Service Experience
₌Customer Service CRM(CustomerRelationshipManagement)
≠
copyright 2004 Madge M Lyman
Relationship Marketing
Relationship marketing is to identify and establish, maintain and enhance and where necessary also to terminate relationships with customers and other stakeholders, at a profit, so that the objectives of all parties are met, and that this is done by a mutual exchange and fulfilment of promises.
Gronroos, 1994
copyright 2004 Madge M Lyman
Six Market Domains
InternalMarkets
Supplier &AllianceMarkets
RecruitmentMarkets
Influence Markets
Referral Markets
Customer
Markets
copyright 2004 Madge M Lyman
Services Marketing Mix
Product
Place
Price
Promotion
Service
Marketing Mix
ProcessPhysical Evidence
People
The 7 P’s
(4P’S)
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Physical Evidence (and Presentation)
• Tangible • Physical appearance of facilities• Physical appearance of individuals• Ambiance or Experience of dealing
with this service provider
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Process
• Do your processes help to eliminate heterogeneity between centres, between people and within people
• How do you ensure that customers “experience” the same service over time and situation?
copyright 2004 Madge M Lyman
People
• Selection, training and motivation are key
• Do we have the right people?• Do they understand their roles? • Are their roles in conflict?• Do you check for technology - job
fit?
copyright 2004 Madge M Lyman
So why do we do this?
SatisfiedEmployees
SatisfiedCustomers
GreaterProfits
Loyal Customer
copyright 2004 Madge M Lyman
I hope I’ve convinced you that excellent Customer Service is
essential
Because:• Of the changing competitive
environment we work in• Need to differentiate in a world of
product parity• Quality service creates loyal
customers who provide greater profits
copyright 2004 Madge M Lyman