The size of the service sector, global competition, rising labor and technology costs and demanding customers all force companies to create excellent customer experiences.
The challenge firms face today is knowing their customer’s definition of service quality and how to deliver that at a reasonable cost to create superior customer value.
Customers use service encounters to assess the quality of a firm’s offering. So, how can we “wow” customers?
It’s all about the service experience
Seventy percent of customer defections are due to service problems. Improving service quality is like taking vitamins, eating healthy and exercising regularly. Although the results may not be immediate, long-term benefits are significant. Service quality is not a “quick fix,” but rather a way of life for companies who are serious about improvement. Here are 10 recommendations that can lead to superior customer value:
1. Co-create services with customers. Learn what customers value by incorporating the “voice-of-the-customer” into the service development process.
2. Focus your improvement programs outward, on market “break-points.” By defining and mapping episodes (service cycle), you can see the service experience as the customer sees it. Realize that customers view service as a totality, not an isolated set of activities.
3. Create a tangible representation of service quality. Hertz Gold Plus Rewards communicates a premium, value-added bundle of services to business travelers seeking a hassle-free car rental experience.
4. Use teamwork to promote service excellence — service workers who support one another and achieve together can avoid service burnout.
5. Create a “service-bias” based on key SQ determinants such as professionalism, attitudes/behaviors, accessibility and flexibility, reliability/trustworthiness and service recovery.
6. Develop metrics that are specific in nature, such as a 95 percent on-time delivery, customer wait time or order processing time.
7. Employee selection, job design and training are crucial to building customer satisfaction and SQ. The ability to respond quickly, competently and pleasantly to customers needs to be a priority.
8. Reward quality efforts in marketing. Seek opportunities to reinforce quality behaviors when they occur. Reward employees on the basis of commitment and effort, not just sales outcomes.
9. Think of service as a process, not a series of functions. Service quality occurs when the entire service experience is managed and the organization is aligned to respond accordingly.
10. Integrate customer information across sales channels. The information made available to online and offline service representatives should be consistent.
Checklist — improving service quality
1. Does your company really listen to its customers? Give a specific example of how good listening improved the service experience.
2. Reliability means performing the promised services dependably and accurately. On a 10-point scale, where 1 is unreliable and 10 is perfectly reliable, rate your company and explain why.
3. How well does your company perform the “service basics?”
4. How effectively does your company manage service design — systems, people and the physical environment? Provide an example of how lack of planning in one of these areas resulted in a “fail point” during a customer encounter.
5. Service recovery refers to how effectively companies respond to service failures. Cite an example when a service failure occurred and how it was handled.
6. Teamwork is an important dynamic in sustaining service workers’ motivation. How can you improve teamwork in your organization?
7. Internal service is crucial to service improvement, as customer satisfaction often mirrors employee satisfaction. To what extent does your company assess internal service quality? ●
Art Weinstein, Ph.D., is chair and professor of marketing at Nova Southeastern University and author of “Superior Customer Value: Strategies for Winning and Retaining Customers.” He may be reached at firstname.lastname@example.org or (954) 262-5097. For more information, visit www.artweinstein.com.
Link with Art Weinstein on LinkedIn http://linkd.in/1hQcrHJ.
A pivotal challenge for companies is to differentiate themselves from competitors. While different isn’t always better, better is always different! A business model describes how an organization designs and delivers value by providing stakeholders a shared understanding of how the business operates. A strong business model offers a competitive advantage by demonstrating that the firm does something different, more innovative and better than its rivals.
Herbert Kelleher and Rollin King sketched out the Southwest Airlines business model on a breakfast napkin in 1967. Recognizing a need for a service-oriented low cost airline, the “Texas triangle” meant that Southwest would fly dozens of daily flights between Dallas, Houston and San Antonio. In 2000, David Neeleman, a former Southwest manager, launched JetBlue Airways by adding quality to the service/value mix.
In steps the digital era
The digital era has driven many recent business model transformations. Apple’s iTunes is a great example of the changing music industry. In the past, record companies, distributors and retailers controlled channels and profits; now the artist and platform (iTunes) has the market power.
Newspapers have struggled to become information providers as their readers aged and defected to other media. The Wall Street Journal, The New York Times, and USA Today have stellar reputations and large/loyal customer bases. They can charge fees for online content. In contrast, most metropolitan newspapers are a less viable option as free alternatives (websites, smart- phones, community magazines and television) abound.
Google, Facebook, Apple, and Salesforce.com are examples of shapers since they open platforms for third-parties and create new market space. Participants embrace and enhance shapers’ platforms and may include applications (apps) developers, service firms or online e-tailers.
Zynga, a Silicon Valley social-gaming company, has generated hundreds of millions of dollars in revenues through Farmville. Millions of users manage virtual plots of land, grow crops, raise animals, and use online tools such as tractors. It has been estimated that there are more than 20 times more people playing Farmville than there are actual farms in the U.S. Other examples of strong business models are listed in the table below.
Take apart your business model
Consider these questions as your management team assesses your business model. Can you clearly explain your business model? What is unique about your strategy? How does it compare with your direct and indirect competitors?
Have you broken any industry rules lately? Can you develop a more innovative and interesting business model? Will your business model win in the market? Does your organization truly deliver superior value for customers?
ArtWeinstein, Ph.D., is professor and chair of marketing at Nova Southeastern University and author of “Superior Customer Value — Strategies for Winning and Retaining Customers.” He may be reached at email@example.com or (954) 262-5097. Visit his website www.artweinstein.com.
American society is intrigued by image. Consider this related word: imagine. Disney is all about the customer experience, emotionally and magically transporting guests to another time or place. Speaking of place — some of the best image marketing campaigns have been tied to geographic areas. Remember “I Love New York,” “What Happens in Vegas Stays in Vegas” and “Virginia is for Lovers”?
Image is often associated with entertainment, fashion and technology markets, but all companies have a singular corporate personality that differentiates them from their rivals. Corporate image is the reputation of an organization viewed by its various stakeholders — investors, employees, customers, business partners, communities and other entities. The communication challenge? To manage and enhance your firm’s identity over time.
Components of an image
A perceived image is based on two components:
1. What the company does and says
2. What the customers/market say about the organization (Hint: This is more important.)
Companies must manage a strong integrated marketing communications program consisting of advertising, selling, sales promotion, online, social media and public relations activities. This includes customer-generated content such as Facebook posts, tweets, blogs and online communities, which can dramatically impact organizational performance.
Case in point: the YouTube viral video “United Breaks Guitars” about airline baggage mishandling has been viewed more than 12 million times to date.
Even if your company is not a global giant, image research still provides a practical guide for promotional strategy.
Let’s assume that you recently opened a trendy sports bar and café. You can assess your corporate image in the local community via a simple two-dimensional plot of customer perception. Examine familiarity and favorability scales for your firm and your direct competitors — other casual dining establishments — within your primary trade area. Next, collect data about indirect competitors such as casinos, clubs, hotels and sports sites.
A competitive edge counts
Differentiation means having a competitive edge. This advantage can be real, as in higher quality product, faster service or best price, or perceived. Take Air Around the Clock, a South Florida air conditioning and appliance service contractor. The company is differentiated based on quality of service that includes night and weekend emergency repairs, a preferred customer program, a fleet of more than 90 trucks and a “fix it right the first time” philosophy.
Then you have Amazon, Apple, Ben & Jerry’s, Best Buy, Google, Harley-Davidson, IKEA, Whole Foods and Zappos, which are often cited as “cool” companies. Many consumers aspire to have the latest and greatest and want to purchase cool products. But brand coolness is a multidimensional construct consisting of uniqueness, excitement, innovation, authenticity and self-concept reinforcement.
Coolness is also impacted by age, group influence, lifestyle, media and technology. So business leaders need to realize that coolness or “being hip” is an elusive attribute that is based around overall image but also requires that the other value proposition ingredients — service, quality and price — are satisfactory to superior.
Questions to ask
Consider these queries as you revisit your 2013 marketing communications strategy.
? How important is image in your value proposition?
? Should it be even more important?
? Does your image clearly resonate with your target market?
? How can you get your customers and the market to share more positive messages about your company?
? What is your main point of differentiation from your competitors?
? Should coolness be a major or minor part of your IMC strategy?
? How can you best tell your business story to communicate value? ?
Art Weinstein, Ph.D., is chair and professor of marketing at Nova Southeastern University and author of “Superior Customer Value — Strategies for Winning and Retaining Customers.” Visit his website at www.artweinstein.com, or reach him at firstname.lastname@example.org or (954) 262-5097.
Customer focus no longer means just researching current and future needs in order to design expected or desired goods and services. Instead, a rising trend in business today is co-creating value with customers.
Value is created when a product and buyer come together within a particular use situation. Some examples include retailers getting the customer involved in the shopping experience to save time (Home Depot’s self-checkout) or costs (IKEA’s assembly and delivery by customers), smartphone personalization through app selection and Dell’s online built-to-order computers are others.
Another is utilizing management consultants who collaborate with clients to add value in research projects.
Co-creation of value can lower costs, increase benefits and improve the overall service experience for both the organization and the user. As the table below explains, co-creation of value has a dual emphasis on the customer and company as value creators and is an applicable business strategy in a wide variety of market contexts. Airlines, supermarkets, supply chains, theaters, theme parks and retailers have all embraced co-creation of service opportunities through self-serve initiatives such as check-in, checkout, price checks, information/purchase kiosks and other technology enhancements.
Value Creation and Marketing Opportunities
|Marketing Strategy||Market Emphasis||Value-Creation Focus||Corporate Examples|
|Market driven||Established market||Customer||Coca-Cola, Procter & Gamble, Toyota|
|Market driving||Emerging or imagined markets||Company||Google, IKEA, Virgin Group|
|Co-creation of value||Established, emerging or imagined markets||Customer and company (simultaneous)||Amazon, Apple, LinkedIn|
A great example of the new co-creation of value model is illustrated in the case of Crushpad, a Sonoma, Calif., winery. Crushpad is a state-of-the-art winery where customers choose their level of involvement for small lot wine-making — typically 25 to 100 cases — based on their interest in the production process.
The company allows customers to develop wine-making plans, engage in hands-on activities, such as sorting, de-stemming, crushing, fermenting, pressing into barrels, labeling and packaging bottles, and even distributing and marketing the products. Wine enthusiasts, restaurants and retailers have co-created value with Crushpad, and as a result, the business has launched more than 150 world-class brands.
The rock music industry has also experimented with co-creation of value. Radiohead’s “In Rainbows” album was sold directly to more than 2 million consumers who paid what they felt the music was worth. The symphonic band Renaissance also raised more than $92,000 from 860 loyal fans to record a new CD called “Grandine il Vento.”
Innovation and creative collaboration allow the smartest — not necessarily the biggest — companies to win in the marketplace.
Here are six questions to think about as your company ponders the idea of co-creation of value.
1. Do you strive to continually exceed customer expectations?
2. Does your view of value creation go beyond the firm (to include the customer)?
3. Do you actively seek to create an extended community of users?
4. Is personalizing the customer experience a major part of your marketing strategy?
5. Is your marketing team truly obsessed with researching and improving customer experiences?
6. Do you nurture and forge enduring business relationships with customers and collaborators?
Art Weinstein, Ph.D., is a professor of marketing at Nova Southeastern University and author of “Superior Customer Value: Strategies for Winning and Retaining Customers.” Visit his website www.artweinstein.com or reach him at email@example.com or (954) 262-5097.
Many companies trace their success to innovation. Whirlpool invested millions of dollars to embed creativity into their business culture and build new offerings. FedEx pioneered computer usage in delivery vehicles, designed sophisticated automation for corporate shipping, and developed package tracking. Southwest Airlines is known for its 25-minute turnaround — developed after benchmarking NASCAR pit crews — and Wal-Mart is renowned for supply chain management practices.
Creativity spawns innovation, creates value, and enhances market performance. When IBM interviewed more than 1,500 global executives in more than 30 industries for its 2010 study, “Capitalizing on Complexity,” they found that creativity is now the most important leadership quality. My recent study of 70 technology firms explored marketing practices. While the companies were successful in innovation — the success rates were 82 percent for product technology, 70 percent for management know-how, 66 percent for innovative culture, and 60 percent for R&D expertise — process technology, ideas embodied in the manufacturing and operations, was the one weak link. It was practiced successfully by only 49 percent of the companies surveyed.
Generally, creativity plummets as people age. We learn what is correct and “accepted” and become obsessed with failure. With groupthink mentality and play-it-safe business cultures dominating, is it really surprising that great ideas are limited? Incredible success stories like Apple, Amazon, and Google are rare exceptions, not the rule.
So, how can companies successfully innovate? A five-step process can be insightful:
Identify the problem or business challenge
For example, ask “How might we improve product X or customer satisfaction?”
Offer many possible ideas or use “what if?” statements as steppingstones to new ideas. Think way outside of the box, but remember that you often have to implement within the box.
Find a tentative solution
Develop decision criteria and select the best option. Consider cost savings or efficiency (doing things right), effectiveness (doing the right thing) and flexibility (how else can we solve customers’ needs?)
Try out the proposed solution on real customers and get feedback for possible improvements.
Go to market and adjust
Roll it out, make necessary changes and profit from it. Creativity is a core business activity within an organization that leads directly to entrepreneurship. One of 3M’s seven pillars of innovation success is to have a broad base of technology. This multidimensional thinking is responsible for the development of many unrelated products, such as durable abrasives, highway signs and golf gloves.
Innovation management can be studied as a process improvement technique across a spectrum of activities, from R&D to design, new product management and cycle time reduction. So if you are unsure of how to make innovation a bigger part of your business, here are four tips to help you:
1. Commit to innovate. Whether your organization is a global giant or a small or medium-sized enterprise, establishing a creative climate is the necessary starting point to generate ideas that become profitable business opportunities. Encourage risk-taking, tolerate failure, reward success, and promote open and collaborative business relationships.
2. Get the customer actively involved in the innovation process through co-creation of value or customer toolkits such as web-based tools.
3. Always be innovating. Service firms are often stretched to capacity servicing existing clients or manufacturers may be pressured, putting out daily fires. Organizations may have little time for innovation. Yet, crises make innovation even more important. For example, the Tylenol poisonings led to the introduction of tamper-proof medicine bottles which resulted in increased customer confidence in Johnson & Johnson.
4. Plan for innovation. Break out of the routine through creativity retreats to re-energize and motivate your people. Consider quarterly brainstorming sessions, occasional dinner meetings or a weekend out-of-the-office experience (get done by noon on Saturday). Also, supplement face-to-face briefings with technology initiatives to stay on track. Be open to change!
Art Weinstein, Ph.D., is a professor of marketing at Nova Southeastern University and author of “Superior Customer Value — Strategies for Winning and Retaining Customers.” Visit his website www.artweinstein.com or reach him at firstname.lastname@example.org or (954) 262-5097.