Chapter 6 Overheads

1
Part 3
UNDERSTANDING CUSTOMER REQUIREMENTS
2
Provider Gap 1
CUSTOMER
Expected Service
Listening Gap
COMPANY
Company Perceptions of Consumer Expectations
Part 3 Opener
3
Our RoadmapListening to Customers through
Research

• Present the types of and guidelines for marketing
  research in services.
• Show how marketing research information can and
  should be used for services.
• Describe the strategies by which companies can
  facilitate interaction and communication between
  management and customers.
• Present ways that companies can and do facilitate
  interaction between contact people and management.

4
Listening to Customers through Research
Chapter
6

• Using Marketing Research to Understand Customer
  Expectations

5
Stages in the Research Process

• Stage 1 Define Problem
• Stage 2 Develop Measurement Strategy
• Stage 3 Implement Research Program
• Stage 4 Collect and Tabulate Data
• Stage 5 Interpret and Analyze Findings
• Stage 6 Report Findings

6
Common Research Objectives for Services

• To discover customer requirements or expectations
  for service.
• To monitor and track service performance.
• To assess overall company performance compared
  with that of competition.
• To assess gaps between customer expectations and
  perceptions.
• To identify dissatisfied customers, so that
  service recovery can be attempted.

7
More Common Research Objectives for Services

• To gauge effectiveness of changes in service
  delivery.
• To appraise the service performance of
  individuals and teams for evaluation,
  recognition, and rewards.
• To determine customer expectations for a new
  service.
• To monitor changing customer expectations in an
  industry.
• To forecast future expectations of customers.

8
Criteria for an EffectiveService Research Program

• Includes both qualitative and quantitative
  research
• Includes both expectations and perceptions of
  customers
• Balances the cost of the research and the value
  of the information
• Includes statistical validity when necessary
• Measures priorities or importance of attributes
• Occurs with appropriate frequency
• Includes measures of loyalty, behavioral
  intentions, or actual behavior

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Criteria for an EffectiveService Research Program

• Includes both qualitative and quantitative
  research
• Marketing research not limited to surveys and
  statistics
• Qualitative research
• Exploratory and preliminary
• Conducted to
• clarify problem definition
• prepare for more formal research
• gain insight when formal research is not
  necessary
• Often the first type of research done

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Criteria for an EffectiveService Research Program

• Includes both qualitative and quantitative
  research
• Quantitative research
• Designed to describe the nature, attitudes, or
  behaviors of customers empirically
• Also designed to test hypotheses that a service
  marketer wants to examine
• Can provide results that highlight specific
  service deficiencies

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Criteria for an EffectiveService Research Program

• Includes both expectations and perceptions of
  customers
• Expectations serve as standards or reference
  points for customers
• A measurement program that captures only
  perceptions of services is missing a critical
  part of the service quality equation
• Research content and levels of customer
  expectations.

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Criteria for an EffectiveService Research Program

• Balances the cost of the research and the value
  of the information

13
Criteria for an EffectiveService Research Program

• Includes statistical validity when necessary
• Enterprise Service Quality Index (ESQI)
• statistically valid sample of customers' opinions
  taken monthly, at each branch
• used as a factor in employee recognition awards
  and advancement
• customer gets called seven to ten days following
  the close of the rental
• an outside company collects the data
• two questions
• the first asks about the customer's satisfaction
  level, with five answers ranging from "completely
  satisfied" to "completely dissatisfied,"
• the second asks how likely they would be to
  return to Enterprise.

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Criteria for an EffectiveService Research Program

• Measures priorities or importance of attributes
• Measurement helps managers channel resources
  effectively.
• Research must document the priorities of the
  customer.
• Prioritization
• Direct and Indirect importance measures

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Criteria for an EffectiveService Research Program

• Occurs with appropriate frequency
• Single study of service provides only a
  snapshot view of one moment in time
• Customer expectations and perceptions are dynamic
• Companies need to institute a service quality
  research process, not just do isolated studies.

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Criteria for an EffectiveService Research Program

• Includes measures of loyalty, behavioral
  intentions, or actual behavior
• behavioral intentions can be viewed as positive
  and negative consequences of service quality
• Tracking these areas help
• in estimating relative value of service
  improvements to the company
• in identifying customers who are in danger of
  defecting.

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Listening to Customers through Research
Chapter
6

• Elements in an Effective Services Marketing
  Research Program
• Complaint Solicitation
• Good service organizations take complaints
  seriously
• Complaint channels
• Employees at the front line
• Intermediaries
• Managers
• Consumer advocate groups
• Complaints.com

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Listening to Customers through Research
Chapter
6

• Elements in an Effective Services Marketing
  Research Program
• Critical Incidents Studies
• benefits
• Requirements Research
• involves identifying the benefits and attributes
  that customers expect in a service

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Listening to Customers through Research
Chapter
6

• Elements in an Effective Services Marketing
  Research Program
• Relationship and Servqual Surveys
• SERVQUAL Scale
• Trailer calls or Posttransaction surveys
• BizRate.com
• Service Expectation Meetings and Reviews

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Listening to Customers through Research
Chapter
6

• Elements in an Effective Services Marketing
  Research Program
• Process Checkpoint Evaluations
• Market-Oriented Ethnography
• Mystery Shopping
• Phase 1evaluate existing customer service
• Phase 2evaluations analyzed and training program
  developed.
• Phase 3shoppers return to evaluate the customer
  service post-training

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Listening to Customers through Research
Chapter
6

• Elements in an Effective Services Marketing
  Research Program
• Customer Panels
• Ongoing groups of customers provide
  attitudes/perceptions about a service over time
• Lost Customer Research
• Seek customers who dropped service
• Future Expectations Research

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Portfolio of Services Research
Research Objective
Type of Research
Identify dissatisfied customers to attempt
recovery identify most common categories of
service failure for remedial action
Customer Complaint Solicitation Relationship
Surveys Post-Transaction Surveys Customer Focus
Groups Mystery Shopping of Service
Providers Employee Surveys
Assess companys service performance compared to
competitors identify service-improvement
priorities track service improvement over time
Obtain customer feedback while service experience
is fresh act on feedback quickly if negative
patterns develop
Use as input for quantitative surveys provide a
forum for customers to suggest service-improvement
ideas
Measure individual employee service behaviors for
use in coaching, training, performance
evaluation, recognition and rewards identify
systemic strengths and weaknesses in service
Measure internal service quality identify
employee-perceived obstacles to improve service
track employee morale and attitudes
Lost Customer Research Future Expectations
Research
Determine the reasons why customers defect
Forecast future expectations of customers
develop and test new service ideas
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Listening to Customers through Research
Chapter
6

• Analyzing and Interpreting Marketing Research
  Findings
• Must convert complex set of data to a form that
  can be read and understood quickly by those who
  will make decisions.
• Graphical representations help relay marketing
  research data to those not trained in statistics.

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Tracking of Customer Expectations and Perceptions
of Service Reliability
Source E. Sivadas, Europeans Have a Different
Take on CS Customer Satisfaction Programs,
Marketing News, October 26, 1998, p. 39.
25
Service Quality Perceptions Relative to Zones of
Tolerance
9 8 7 6 5 4 3 2 1 0
O
O
O
O
O
Reliability Responsiveness Assurance
Empathy Tangibles
O
Retail Chain
Zone of Tolerance Service
Quality Perception
26
Service Quality Perceptions Relative to Zones of
Tolerance
10 8 6 4 2 0
O
O
O
O
O
Reliability Responsiveness
Assurance Empathy Tangibles
Computer Manufacturer
O
Zone of Tolerance S.Q. Perception
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Importance/Performance Matrix
HIGH
High Leverage
?
?
Attributes to Improve
Attributes to Maintain
?
?
?
?
?
Importance
Low Leverage
?
Low Leverage
?
?
Attributes to De-emphasize
Attributes to Maintain
Performance
HIGH
LOW
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Listening to Customers through Research
Chapter
6

• Model Services Marketing Research Programs
• Disney
• 200 different external surveys/year
• Price sensitivity analysis
• Guests evaluate attractions
• Monitors letters / comment cards received
• Management by Walking Around

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Listening to Customers through Research
Chapter
6

• Model Services Marketing Research Programs
• Intuit
• Maker of Quicken and Turbo Tax
• Focus groups of potential users
• Annual customer satisfaction surveys
• New product feature testing
• Mystery shopping of dealers
• Intense listening to complaints

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Listening to Customers through Research
Chapter
6

• Model Services Marketing Research Programs
• Federal Express
• First major company to win Malcolm Bridge
  National Quality Award
• Multiple qualitative and quantitative research
  studies
• Toll-free numbers for complaints
• Customer satisfaction studies
• Comment card program

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Listening to Customers through Research
Chapter
6

• Model Services Marketing Research Programs
• Continental Airlines
• Worst to first to favorite.
• Identify and focus on most valuable customers
  (Priority Elite)
• Identified, researched, and improved every
  employee interaction with customers.

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Listening to Customers through Research
Chapter
6

• Using Marketing Research Information
• Dont stop at conducting research.
• Use research findings in a meaningful way
• To drive change or improvement in the way service
  is delivered.
• Misuse/ nonuse can lead to a large gap in
  understanding customer expectations.
• Research plan must specify how the customer data
  will be used.

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Listening to Customers through Research
Chapter
6

• Upward Communication
• Objectives for Upward Communication
• Gain firsthand knowledge about employees
• Improve internal service quality
• Gain firsthand knowledge of employees
• Obtain ideas for service improvements

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Listening to Customers through Research
Chapter
6

• Upward Communication
• Research for Upward Communication
• Executive visits to customers
• Executive or management listening to customers
• Research on intermediated customers
• Research n internal customers
• Executive or management listening approaches to
  employees
• Employee suggestions