Service marketing part two

Services Services Services Services

MarketingMarketingMarketingMarketing

(part two)(part two)(part two)(part two)

Erminia Corsi www.marketenergy.info

(part two)(part two)(part two)(part two)

TopicsTopicsTopicsTopics

Day 3 :

Brand and communication

The marketing plan


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.


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

Erminia Corsi www.marketenergy.infostudio professionale per il business

� 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.


Source: www.centrica.com


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


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


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


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.



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

Print

InternetInternetInternetInternet

Coupons

Gifts

Price

PressReleases

PressConferences

Special

Web SitesWeb SitesWeb SitesWeb Sites

ManualsManualsManualsManuals

BrochuresBrochuresBrochuresBrochures

BillsBillsBillsBills

VehiclesVehiclesVehiclesVehicles

EquipmentEquipmentEquipmentEquipment


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


times

� product management and operational

management should work in strong cooperation


� 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)


� 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


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


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?


�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


�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, …


� 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


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


� 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?


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


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


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


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:


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::::


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


�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


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


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


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


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


�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


Modelling the Approach

CRM StrategyBusiness

Process MapIT Strategy

Planning the Delivery

Organisational Model

Key Performance

IndicatorsIT Architecture

(modified from original Logica Consulting)

Date post:	20-Jun-2015
Category:	Marketing
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