Service marketing part two
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Transcript of Service marketing part two
Services Services Services Services
MarketingMarketingMarketingMarketing
(part two)(part two)(part two)(part two)
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(part two)(part two)(part two)(part two)
TopicsTopicsTopicsTopics
Day 3 :
Brand and communication
The marketing plan
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Customer retention and loyalty
Customer Relationship Management System
How to evaluate marketing investmentsHow to evaluate marketing investmentsHow to evaluate marketing investmentsHow to evaluate marketing investments
Customer base, brand notoriety, sales channels/
local desks represent assets to be valued
when joint ventures, company acquisitions or other
financial operations are in place.
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Therefore, marketing investments are not only
sales costs, but costs needed to create patrimonial
value
Branding the companyBranding the companyBranding the companyBranding the company
� Branding plays a special role in service companies because strongbrands enable customers to better visualize and understand intangible products
� Brand should be used as the foundation for building trust-based relationships with customers
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� Brand should communicate values customers hold dear, creating an emotional connection between the company and the customer
� Brand for local utilities should be based on local traditional values
An example : Centrica Corporate ValuesAn example : Centrica Corporate ValuesAn example : Centrica Corporate ValuesAn example : Centrica Corporate Values
Our valuesOur valuesOur valuesOur valuesOur values are the core of our corporate philosophy.
All our actions are based on these fundamental values and
beliefs, which link our vision to our business principles.
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Source: www.centrica.com
An example : Centrica Corporate ValuesAn example : Centrica Corporate ValuesAn example : Centrica Corporate ValuesAn example : Centrica Corporate Values
Passion for customersPassion for customersPassion for customersPassion for customers
This value is central to the way we work. We have an ethos ethos ethos ethos of delivering
outstanding customer service. We must be able to anticipate our customers' needs
and correct any errorscorrect any errorscorrect any errorscorrect any errors promptly. We must give value for money, and deliver
efficient and effective products and services.
PridePridePridePride
Pride comes from the satisfaction of our customers and from delivering high-quality
products and services. We're proud of our staff and their achievements, and we
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products and services. We're proud of our staff and their achievements, and we
recognise and reward success.
TrustTrustTrustTrust
Trust is at the heart of our relationships with customers. Trust means doing what
we say and acting with integrity. acting with integrity. acting with integrity. acting with integrity. We demonstrate trust by respecting and respecting and respecting and respecting and
empowering our employeesempowering our employeesempowering our employeesempowering our employees. Building trust will help us develop strong future
relationships with our stakeholders.
Source: Centrica Web Sites
An example : Centrica Corporate ValuesAn example : Centrica Corporate ValuesAn example : Centrica Corporate ValuesAn example : Centrica Corporate Values
ChallengeChallengeChallengeChallenge
We are constantly striving for continual improvement; we are neverwe are neverwe are neverwe are never
satisfiedsatisfiedsatisfiedsatisfied. We engage constructively with advocates and critics from within
and outside the company. We do this to maintain our competitive edge
and deliver consistently outstanding shareholder returns
SupportSupportSupportSupport
We support employees seeking to meet and own challenges. We foster
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We support employees seeking to meet and own challenges. We foster
teamworking and knowledge sharing, and give our employees the tools
and training they need to do their job well.
Centrica's vision is to be a leading supplier of essentialservices in our chosen markets.
An example : Centrica Corporate ValuesAn example : Centrica Corporate ValuesAn example : Centrica Corporate ValuesAn example : Centrica Corporate Values
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Our distinctive strategyis to create value for shareholders.
This is at the heart of everything we do.Welcome to Centrica.Welcome to Centrica.Welcome to Centrica.Welcome to Centrica.
Source: Centrica Web Sites
The marketing communication mixThe marketing communication mixThe marketing communication mixThe marketing communication mix
PersonalPersonalPersonalPersonalCommunicationsCommunicationsCommunicationsCommunications AdvertisingAdvertisingAdvertisingAdvertising Sales PromotionSales PromotionSales PromotionSales Promotion Publicity andPublicity andPublicity andPublicity and
Public RelationsPublic RelationsPublic RelationsPublic RelationsInstructionalInstructionalInstructionalInstructionalMaterialsMaterialsMaterialsMaterials
CorporateCorporateCorporateCorporateDesignDesignDesignDesign
SellingSellingSellingSelling
CustomerCustomerCustomerCustomerServiceServiceServiceService
Training
Broadcast
InternetInternetInternetInternet
Coupons
Gifts
Price
PressReleases
PressConferences
Special
Web SitesWeb SitesWeb SitesWeb Sites
ManualsManualsManualsManuals
BrochuresBrochuresBrochuresBrochures
BillsBillsBillsBills
VehiclesVehiclesVehiclesVehicles
EquipmentEquipmentEquipmentEquipment
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Training
TelemarketingTelemarketingTelemarketingTelemarketing
Word of mouthWord of mouthWord of mouthWord of mouth
InternetInternetInternetInternet
Direct Mail
Price Promotions
SpecialEvents
Sponsorship
Trade showsExhibitions
Media-InitiatedCoverage
BrochuresBrochuresBrochuresBrochures
Video/Audiocassettes
Voice MailVoice MailVoice MailVoice Mail
EquipmentEquipmentEquipmentEquipment
Stationary
UniformsUniformsUniformsUniforms
Creating/Planning the Service ProductCreating/Planning the Service ProductCreating/Planning the Service ProductCreating/Planning the Service Product
Starting competition influences operational
procedures to create/plan new services:
� strong customer focus should be maintained at all
times
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times
� product management and operational
management should work in strong cooperation
Creating/Planning the Service ProductCreating/Planning the Service ProductCreating/Planning the Service ProductCreating/Planning the Service Product
� market and competitive analysismarket and competitive analysismarket and competitive analysismarket and competitive analysis : should address each of themarkets in which the firm is involved or thinking of entering
customer portfolio (customer size, profile and value) competitors (product line, brand reputation, marketing strategy and positioning)
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� resource allocation analysisresource allocation analysisresource allocation analysisresource allocation analysis : actual resources and additional resources required to address new functionalities and/or supplementary services – equipment, information technology, human resources
Creating/Planning the Service ProductCreating/Planning the Service ProductCreating/Planning the Service ProductCreating/Planning the Service Product
Corporate objectives and resources
Market and competitive analysis
Resourceallocationanalysis
Marketing Assets Statement:•Customer Portfolio•Market Knowledge•Product Line•Positioning Strategy
Operating Assets Statement•Physical Facilities•Equipment•Information Technology•Human Resources
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Service delivery process
•Positioning Strategy•Reputation of Brand
Service Marketing ConceptBenefits to Customer• Core Product• Supplementary Services• Service Level and Style,…User Costs• Price• Time• Mental Effort• Physical Effort,…
•Human Resources•Alliances and Partnerships•Cost Structure
Service Operations ConceptNature of Processes• People Processing, • Information ProcessingGeographical area/constraints• Area Served• Infrastructure availabilitySchedulingFacilities Design and LayoutHuman Resources
Source: Service Marketing (C.Lovelock, J. Wirtz)
Planning, a management toolPlanning, a management toolPlanning, a management toolPlanning, a management tool
Planning is answering, with details, to some crucial questions:
�Where are we today? (current situation)
�Where want we to go? (objectives)
�How want we to go there? (policies)
�Which resources/tools can we count on?
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�Which resources/tools can we count on? (budgeting)
�When and how will we use those resources? (programming)
�How will we check the way? (controlling)
The Market PlanThe Market PlanThe Market PlanThe Market Plan
The objectives of a Market Plan should be:
The market plan is the document which describes and plans the actions needed to achieve the expected results.
The market plan is the tool to check periodically where you are, where you should be, what to do if you are not in line with expected progress
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�quantifiable,
�specifics,
�scheduled on a timing basis,
�challenging but achievable at the same time
The Market PlanThe Market PlanThe Market PlanThe Market Plan
A Market Plan covers following aspects:
�market :
� target market,
� reference competitors,
� target market share
� finance and economy :
� investments - sales and marketing, infrastructure, …
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� investments - sales and marketing, infrastructure, …
�expected revenues
� technology :
� technical requirements
�sales organisation :
�direct sales vs. indirect sales
�new sales channels (Internet, call center,others,…)
Customer Customer
OrientedOriented
1
Top Management
“committed”
to the customer base
2
Regular customer and
market feedback
analysis
5
Managing human
CustomerCustomerCustomerCustomer orientedorientedorientedoriented companiescompaniescompaniescompanies
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OrientedOriented
CompaniesCompanies
analysisManaging human
resources positive
customer attitude
3
Competitive
Benchmarking4
Organization and
processes customer
oriented
Relational MarketingRelational MarketingRelational MarketingRelational Marketing
� Marketing focus shouldn’t be the product/service, but
the customer, and the relationship the company can
define with the customer base
� The customer base is an important asset, to be
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� The customer base is an important asset, to be
appropriately made valued
� Retaining customers costs much less than acquiring a
new one
The knowledge of the customer as a key competitive factorThe knowledge of the customer as a key competitive factorThe knowledge of the customer as a key competitive factorThe knowledge of the customer as a key competitive factor
PaymentsPaymentsPaymentsPayments ContractsContractsContractsContracts
Requests Requests Requests Requests Customer: Customer: Customer: Customer:
who is? who is? who is? who is?
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BillingBillingBillingBilling
MeteringMeteringMeteringMetering
ExpectationsExpectationsExpectationsExpectations
Requests Requests Requests Requests
for servicesfor servicesfor servicesfor serviceswho is? who is? who is? who is?
How many in the family? How many in the family? How many in the family? How many in the family?
What they do? What they do? What they do? What they do?
What they wishWhat they wishWhat they wishWhat they wish
us to do?us to do?us to do?us to do?
4Customer data collection
and analysisSegmentation
Inte
razi
one
Cu
sto
me
r
rela
ion
sh
ip
Relationship
Marketing
RelationshipRelationshipRelationshipRelationship mmmmarketingarketingarketingarketing
To build a relationship marketing means to define a mutual recognition and knowledge between the parties
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4Segmentation
4Tailored Services
4One-to-one marketing
Mass
Market
Target
Marketing
Info
rmation
Low HighCustomer Focus:
Tailored Services
Cu
sto
me
r
rela
ion
sh
ip
Increased ProfitIncreased ProfitCustomer RetentionCustomer Retention
Longer customer life Longer customer life
Deeper customer Deeper customer
A. Reduce costs (sales and operations)
B. Primium Price
CustomerCustomerCustomerCustomer rrrretentionetentionetentionetention eeeeffectsffectsffectsffects
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Increased ProfitIncreased Profitand Valueand Value
Customer RetentionCustomer Retention Deeper customer Deeper customer presencepresence
References References
C. Increased customer purchases/
transactions
D. Better Company Image
Profit from Price PremiumProfit from References
Profit from Reduced Operating Costs
CustomerCustomerCustomerCustomer loyaltyloyaltyloyaltyloyalty benefitsbenefitsbenefitsbenefits
Loyal customers generates an ongoing stream of profits
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YearYear(Source : Reichheld and Sasser)
0 1 2 3 4 5 6 7
Profit from Increased Usage (*)
Base Pofit
Sales costs
(*) often not applicable to public services
The The The The ccccustomer ustomer ustomer ustomer ssssatisfaction/atisfaction/atisfaction/atisfaction/lllloyalty oyalty oyalty oyalty rrrrelationshipelationshipelationshipelationship
60
80
100
Zone of IndifferenceZone of IndifferenceZone of IndifferenceZone of Indifference :
Zone of affectionZone of affectionZone of affectionZone of affectionCustomers do not
look for servicealternatives:
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20
40
2 3 4 51
VeryDissatisfied
Dissatisfied Neither SatisfiedNor Dissatisfied
Satisfied Very satisfied
Zone of DefectionZone of DefectionZone of DefectionZone of Defection: customers will switch unless switching costs are high or there are no
alternatives
Zone of IndifferenceZone of IndifferenceZone of IndifferenceZone of Indifference :Customers are wiilling to
switch if they find abetter alternative
(Source:Jones and Sasser)
The The The The wwwwheel of heel of heel of heel of lllloyaltyoyaltyoyaltyoyalty
1. 1. 1. 1. Build a Build a Build a Build a FoundationFoundationFoundationFoundationFor LoyaltyFor LoyaltyFor LoyaltyFor Loyalty
-Segment the market to match customer needs and firm capability
-Be selective:focus on customerswho fit the core value proposition
-Manage the customer base via effective tiering of service
3.Reduce3.Reduce3.Reduce3.ReduceChurn DriversChurn DriversChurn DriversChurn Drivers
Monitor churning Monitor churning Monitor churning Monitor churning customerscustomerscustomerscustomers
Address key churn driversAddress key churn driversAddress key churn driversAddress key churn drivers-proactive retention measures-reactive rtention measures
Put effective complaint Put effective complaint Put effective complaint Put effective complaint handling and servicehandling and servicehandling and servicehandling and servicerecoveryrecoveryrecoveryrecovery
EnabledEnabledEnabledEnabled
throughthroughthroughthrough::::
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CustomerCustomerCustomerCustomerLoyaltyLoyaltyLoyaltyLoyalty
tiering of service
-Deliver quality service
2. 2. 2. 2. Create Loyalty BondsCreate Loyalty BondsCreate Loyalty BondsCreate Loyalty BondsBuild higherBuild higherBuild higherBuild higher----level bonds:level bonds:level bonds:level bonds:-Social-Customization-Structural
Give loyalty rewardas:Give loyalty rewardas:Give loyalty rewardas:Give loyalty rewardas:-Financial-Nonfinancial-Higher tier service levels-Recognition andapplication
Deepen theDeepen theDeepen theDeepen therelationshiprelationshiprelationshiprelationship :-Cross.selling- Bundling
recoveryrecoveryrecoveryrecovery
Increase switchingIncrease switchingIncrease switchingIncrease switchingcostscostscostscosts
-Frontline staffaccount -ManagersMembershipprograms-CRMsystems
Source: Services Marketing(C. Lovelock J. Wirtz)
LoyaltyLoyaltyLoyaltyLoyalty----rrrreward eward eward eward pppprogram rogram rogram rogram oooobjectivesbjectivesbjectivesbjectives
�Increase service purchases
�Support cross-selling/up selling programs
�Facilitate retention actions
�Reduce operating costs
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�Reduce operating costs
�Support relational marketing (going deeply into customer knowledge and behaviour)
LoyaltyLoyaltyLoyaltyLoyalty----rrrreward eward eward eward pppprogram rogram rogram rogram oooobjectivesbjectivesbjectivesbjectives
Loyalty reward programs are tools to give consistency to intangibility
Reward benefits should be in line with brand values
Marketers should focus on loyalty programs that directly support the
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Marketers should focus on loyalty programs that directly support the value proposition
To what extent are customers loyal to the core service (or brand) rather than to the loyalty program itself?
How buyers value rewardsHow buyers value rewardsHow buyers value rewardsHow buyers value rewards
The cash value of the redemption reward
The range of choice among rewards
Be sure that the amount of use required to obtain an award is
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Be sure that the amount of use required to obtain an award is coherent with effective usage for any given customer
The psychological benefits of belonging to the program and accumulating points
Initiative and company: Enel Club – Enel Distribuzione
Reserved to :Customers who pay with direct charge on bank
account or with credit card
Subcsription :Through web, call center, mail sending the
wellcome kit at customers’ home
Loyalty Loyalty Loyalty Loyalty ccccards: some examplesards: some examplesards: some examplesards: some examples
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Services included:Everything to include
family life and free time:
house equipments,
concerts, cinema, books,
travels, museums,..
Notes:Requests are based more on services than on
products,mainly related to free time.
Customer identification is through the “Service
Card”, to which are connected services.
(source SINT SpA)
Inititive and company :“AEM Casa + AEM TORINO DISTRIBUZIONE” home
assistance 24h
Time : yearly
Reserved to :
Customers of “AEM TORINO DISTRIBUZIONE”
leaving in Torino (town and district) with a
contract for energy supply.
Loyalty Loyalty Loyalty Loyalty ccccards: some examplesards: some examplesards: some examplesards: some examples
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Subscription:
Filling the subscription form at the
insurance policy sent to all customers of
“AEM TORINO DISTRIBUZIONE”
Annual fee 33 Euros, distributed in the
electricity bill during the year
Contents:• Fast home assistance
• Civil Liability on private life
• Discounts and other facilities in
the shops connected with the
card network
• 3 hours local calls free of charge
(source SINT SpA)
What is “CRM”?What is “CRM”?What is “CRM”?What is “CRM”?
�CustomerCustomerCustomerCustomer - a focus on the individuals and
businesses who buy your services
�Relationship Relationship Relationship Relationship - the nature of how you interact with them
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�Management Management Management Management - an attempt to direct the course of that relation
to your benefit
(source Logica Consulting)
Setting Business Strategy
Value Proposition
BrandingMarket Strategy
Planning the Enterprise
Market Analysis Business CaseVision
Developing Developing Developing Developing ccccustomer ustomer ustomer ustomer rrrrelationship elationship elationship elationship mmmmanagement anagement anagement anagement ssssystemsystemsystemsystems
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Modelling the Approach
CRM StrategyBusiness
Process MapIT Strategy
Planning the Delivery
Organisational Model
Key Performance
IndicatorsIT Architecture
(modified from original Logica Consulting)