Chapter+3+ marketing: Building Customer Loyalty Through Quality

Building Customer Loyalty Through Quality Relationship Marketing Compared With Traditional Marketing Complaint resolution Establishing a Relationship Marketing Program Developing a Service Quality Program

Chapter 3

Building Customer Loyalty

Traditional Marketing

Orientation to single sales Discontinuous customer contact Focus on product features

Short time scale Little emphasis on customer service Limited commitment to meeting customer expectations

Quality is the concern of the production staff

Relationship marketing

Orientation to customer retention

Continuous customer contact

Focus on customer value

Long time scale

High customer service emphasis

High commitment to meeting

customer expectations

Quality is concern of all staff

Relationship Marketing Compared With

Traditional Marketing

Customer Delivered Value

Customer Delivered Value Equals

values) (Monetary, time, energy, and psychic costs)

(“Profit” to the consumer)

Customer Satisfaction

Customer Satisfaction with a purchase depends on the product’s performance relative to a buyer’s expectations.

If performance exceeds or meets

expectations the customer is highly

satisfied or delighted.

Customer Satisfaction Versus Customer Loyalty

 Customer satisfaction – How well expectations are met

 Customer Loyalty

 Behavior – Do customers come back or intend to come back

 Emotional Attachment – Do customer spread

positive word of mouth and perform other

partnership activities

Five Levels of Relationships

 The company sells the product but does not follow-up

 The company sells the product and encourages the customer to call when the have problems or questions

 The company’s representative checks on customer after the sales and the event to make sure things were

satisfactory and to get feedback

 The salesperson or others in the company phone customers from time to time to seek suggestions

 The company works continuously with the customer to discover ways to develop better value

Three Customer Binding Approaches

Value-Financial benefits

Social benefits

Social benefits

Structural ties

Establishing a Relationship Marketing Program

 Identify the key customers meriting relationship management

 Assign a skilled relationship manager to each customer

 Develop a clear job description for relationship managers

Establishing a Relationship Marketing Program

 Have each relationship manager develop annual and long-range customer relationship plans

 Appoint an overall manager to supervise the relationship managers

Internal Costs

 Rework (back of the house)

 Facility Downtime

 Loss of Morale

 High employee turnover

 Loss of employee marketing

Managers and employees should

treat complaining customers as the most important customer - and

listen to their complaints

 Complaints and problems create opportunities to develop loyalty

 Knowing customer value gives us an idea of how far we want to got fix the problem

Managing the Perceived

Service Quality

Source: Christian Gronroos

Benefits of Service Quality

 Retaining customers

 Avoidance of price

competition (coz they

got loyalty’s customers)

Developing a Service Quality Program

1. Supply strong leadership

2. Integrate marketing throughout the organization

3. Understand the customer

4. Understand the business

5. Apply operational fundamentals

Developing a Service Quality Program

6 Leverage the freedom factor

7 Use appropriate technology

8 Practice good human resource management

9 Set standards, measure performance, and establish incentives

10 Feed back the results to the employees

Managing Capacity

 Involve customers in the delivery system

 Cross-train employees

 Use part - time employees

 Rent or share facilities and equipment

Managing Capacity

 Schedule downtime during periods of low demand

 Extend service hours

 Use technology

 Use price

 Honor bar - concierge floor

 Macaroni Grill - wine

 Fast food - beverages

 Cook Steak

 Change salesperson’s assignment

 Create promotional events

Waiting Time

 Unoccupied times feels longer than occupied time

 Unfair waits are longer than equitable waits

Chapter 11: Figure 11-3: Conceptual model of service quality - the gap analysis model Source: Leonard l Berry, A

Parasuraman, and Valarie A

Zeithaml

Close Gap 1 by;

1 Talking to customers

2 Talking to customer contact employees

3 Marketing information systems customer surveys analysis by segment focus groups

4 Reducing levels of management

Close Gap 2

1 Management Commitment resources, internal marketing, reward systems

2 Use of hard and soft technology

3 Shift demand

4 Is meeting customer expectations financially feasible?

Close Gap 4

1 Know the capabilities of the firm

2 Good communications within the firm

3 Internal marketing teamwork

 Listen and talk to customer

 Help them to solve the problems