2018

FINANCIAL SERVICES AND

MARKETING

win 7
01/01/2018
1|Page
 Unit- 1

INTRODUCTION TO SERVICES MARKETING

CONCEPT OF SERVICES MARKETING:

Meaning of Service Marketing:

Service marketing is marketing based on relationship and value. It may be used to market a service or a product.
With the increasing prominence of services in the global economy, service marketing has become a subject that
needs to be studied separately. Marketing services is different from marketing goods because of the unique
characteristics of services namely, intangibility, heterogeneity, perishability and inseparability.

In most countries, services add more economic value than agriculture, raw materials and manufacturing
combined. In developed economies, employment is dominated by service jobs and most new job growth comes
from services.

Features of Services:
1. Intangibility:
A physical product is visible and concrete. Services are intangible. The service cannot be touched or viewed, so
it is difficult for clients to tell in advance what they will be getting. For example, banks promote the sale of
credit cards by emphasizing the conveniences and advantages derived from possessing a credit card.

2. Inseparability:
Personal services cannot be separated from the individual. Services are created and consumed simultaneously.
The service is being produced at the same time that the client is receiving it; for example, during an online
search or a legal consultation. Dentist, musicians, dancers, etc. create and offer services at the same time.

3. Heterogeneity (or variability):

Services involve people, and people are all different. There is a strong possibility that the same enquiry would
be answered slightly differently by different people (or even by the same person at different times). It is
important to minimize the differences in performance (through training, standard setting and quality assurance).
The quality of services offered by firms can never be standardized.

4. Perishability:
Services have a high degree of perishability. Unused capacity cannot be stored for future use. If services are not
used today, it is lost forever. For example, spare seats in an aeroplane cannot be transferred to the next flight.
Similarly, empty rooms in five-star hotels and credits not utilized are examples of services leading to economic
losses. As services are activities performed for simultaneous consumption, they perish unless consumed.

5. Changing demand:
The demand for services has wide fluctuations and may be seasonal. Demand for tourism is seasonal, other
services such as demand for public transport, cricket field and golf courses have fluctuations in demand.

6. Pricing of services:
Quality of services cannot be standardized. The pricing of services are usually determined on the basis of
demand and competition. For example, room rents in tourist spots fluctuate as per demand and season and many
of the service providers give off-season discounts.

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7. Direct channel:
Usually, services are directly provided to the customer. The customer goes directly to the service provider to get
services such as bank, hotel, doctor, and so on. A wider market is reached through franchising such as
McDonald’s and Monginis.

Problems in Marketing Services:

1. A service cannot be demonstrated.

2. Sale, production and consumption of services takes place simultaneously.

3. A service cannot be stored. It cannot be produced in anticipation of demand.

4. Services cannot be protected through patents.

5.Services cannot be separated from the service provider.

6. Services are not standardized and are inconsistent.

7. Service providers appointing franchisees may face problems of quality of services.

8. The customer perception of service quality is more directly linked to the morale, motivation and skill of the
frontline staff of any service organization.

#SERVICES MARKETING MIX:

The service marketing mix is a combination of the different elements of services marketing that companies
use to communicate their organizational and brand message to customers. The mix consists of the seven P’s
i.e. Product, Pricing, Place, Promotion, People, Process and Physical Evidence. The service marketing mix,
also known as the extended marketing mix, treats the service that the business offers just as it would treat a
product. While the first four P’s are involved in product marketing too, the remaining three P’s focus mainly
on service delivery and enhancing customer satisfaction. For an in-depth knowledge on extended
marketing principles, take this course on Service Sector marketing.

#Elements of Service Marketing Mix:

1. Product – Unlike a product, a service is intangible and cannot be measured in terms of look, feel and
other qualities present in a commodity. However, it can be customized to suit the user requirements and
give a personal touch. However, the service product is heterogeneous and perishable in nature just like a
normal product and needs to be designed with the utmost care to increase customer satisfaction. Master
positioning your B2B services with this course.
2. Pricing – The pricing strategy for services is difficult to achieve unlike in products, wherein the final
price depends on the raw materials, cost of production and distribution etc. However, in service pricing,
you cannot measure the cost of the services you offer that easily. For example, in the education industry,
how would you set the price of the quality of education imparted? Or if you are in the food and
hospitality industry, how would you charge the customers for the care shown by the host or hostess, the
ambience in the restaurant or the fine taste of your delicacies? Therefore, pricing plays a crucial role in
the services marketing mix for your business. Learn how to price your service with confidence in this
course.
3. Place – The place where you choose to conduct your service business can make or break your
organizational growth. You need to understand how visible your setup would be to potential customers
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 and how frequently it would be visited by consumers. For example, would you set up a fast -food centre
near a college or office hub, where students and professionals can quickly grab a bite or nex t to a big
restaurant in a classy neighbourhood?
4. Promotion – The service industry usually has stiff competition across different verticals and your
business would need a lot of promotions to pass on the right message to potential customers. While
advertising, online and direct marketing are the best ways to promote your service you need to have a
good mix of communication channels to address a larger audience.
5. People – Your business is not just built on your goals, company vision and principles but also depends
heavily on your employees. It is the people who work for you who are responsible in creating happy and
returning customers. People in your organization are the epicentre of the quality of your services and
need to have the best of talents to gain customer loyalty and trust.
6. Process – How efficiently your services are delivered to the customer is an important aspect of your
service blueprint and you need to emphasize on setting up a process for doing so. You need to ask
yourself “Do I want to have a process in place that is quick, reliable and easy to monitor or one that is
sluggish but necessarily passes through several layers of hierarchy?” In today’s competitive world,
companies are always in the race to deliver services quickly, efficiently and with the highest quality.
7. Physical Evidence – While offering your services, you can either do it without adding a personal touch
or by differentiating your offerings by adding an element of delight to the customer. For example, would
you prefer to visit a bookstore that only has a stack of books with a cashier nearby or one that also has a
place to sit, where you can browse through the book you are interested in and enjoy the light music in the
backdrop while you make a choice? The ambience of a bookstore or restaurant, the music, the friendly
face of your travel host etc. are all part of the physical evidence of a service and they are an important
element of the service marketing mix.

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 UNIT -2
#DESIGNING FINANCIAL SERVICES:

At Designer Fund, we are working to bring design to underserved industries like health care, energy, and
education. These services are essential to our lives and design is what can make them usable and delightful.
Financial services is particularly in need of design, especially as new technologies are reshaping the industry.
And while terms like “compound interest” might not spark a lot of excitement among designers, there are
significant opportunities for creativity, problem solving, and innovation in designing for financial technologies.

Design is crucial for all three companies, but it plays a different role in each. Earnest, a platform for
customized, low-cost lending and loan refinancing, aims to leverage data and design to create a smarter
alternative to traditional financial institutions. “You don’t feel like banks are on your side,” says Earnest’s data
visualization lead Lian Chang, who has a background in architecture design and humanities research. “You feel
like they want you to mess up so they can get the fee. We don’t see it that way.” Chang digs into Earnest’s
unique dataset to find and tell stories about personal finance trends, and makes clients’ data visual to help them

#TYPES OF FINANCIL S ERVICES:

The number of financial products and services in India has increased multifold. It requires a lot of patience and
skill to pick up the best suited option from this huge list of financial products available with us. Here are some
of them:

MUTUAL FUNDS

A mutual fund is a professionally managed type of collective investment scheme that pools money from many
investors and invests it in stocks, bonds, short-term money market instruments, and/or other securities. By
investing in Mutual Funds, one can have benefit of diversification. Since they are managed by professionals,
one need not track the markets regularly. It is regulated by SEBI, so the investor interests are also protected. It
also offers flexibility of choosing the products from various categories like Equity, Gold, Debt and Money
Markets. Most schemes being open ended, they also offer liquidity. One can invest in Mutual Funds either in
Lump-sum (at one go) or through Systematic Manner (SIP).

NPS

National Pension System (NPS) is a voluntary, defined contribution retirement savings scheme designed to
enable the subscribers to make optimum decisions regarding their future through systematic savings during their
working life. NPS seeks to inculcate the habit of saving for retirement amongst the citizens.

CORPORATE FIXED DEPO SITS

There are various companies which offer Fixed Deposits and the rates on offer are generally higher than the
rates offered by Banks. These instruments can be considered based on their rating, interest rates and the cash
flows. The corporate fixed deposits are available for various tenures with Interest being paid Monthly,
Quarterly, Half Yearly, Annually or at Maturity. Investors looking at regular cash flows and interested in fixed
rate of interest can invest in these deposits.

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CAPITAL GAIN BONDS

Capital gain bonds are another type of bonds available, where any person can avail exemption in respect of
long-term capital gains (arising from the sale of long term capital asset other than equity shares and securities) if
the capital gain is invested in Capital Gain bonds u/s 54EC. The exemption will be the amount of capital gain or
the amount of investment made, whichever is less. Interest rate offered on these bonds is around 6% per annum.

understand their options. “We can use data and design for a win-win situation,” Chang says.

Financial Services Branding

Financial services branding—naming, in particular—requires a delicate balance; one that straddles the line
between sounding too commonplace and too creative. After all, your clients are trusting you with their hard
earned money, so while you need to be unique and memorable, you also need to instill a sense of trust and
credibility.
To strike the right tone, we work to create financial brand names that communicate the firm's core strengths and
key attributes. We may also utilize a metaphor to convey the qualities of the company, or a descriptive hybrid
name that is part literal and part evocative.
Here are a few of the financial services companies we have branded, along with a short rationale as to their
name.
FourBridges Capital - A mergers & acquisitions firm based in Chattanooga, TN. The company "spans" the
middle market and provides bridge loans. In addition, the city is at the crossroads of four rivers. The names
captures a sense of the locale, as well as providing a metaphor for connecting clients and capital.
Parkworth Wealth Management - As a fee-for-service wealth management provider, this client needed a
name that exuded a sense of both warmth and trust. In this case we chose a "positive connotation" approach to
naming, choosing words that are perennial favorites, but combined in new and interesting ways. You can see
this naming strategy in brands such as OnStar and BrightHouse. These two-word combo names also open up
two sets of brand lexicon or marketing language to draw upon. The word "park" conjures up pleasant and
welcoming environments. The word "worth" brings up net worth, high worth, worthwhile, etc. Blending these
concepts created a new name that sounded "money-ish" or "financial-ish." In other words, it puts the potential
customer in the right mind set, one that compliments the brand... creating financial environments where
customers thrive.
PrivatePlus Mortgage - When Private Bank out of Buckhead, Georgia approached us for a name for their
mortgage business, they knew it couldn't just be Private Mortgage (it would sound generic as well as
misleading... as a bank, they don't do "private" mortgages.) So the challenge was to create a name that fit with
the parent company, while providing a sense of distinction and memorability. With the name PrivatePlus, they
were able to speak to the "added value" they brought to the mortgage experience. The name also provided the
added appeal of the alliteration of the "P"s (as in PayPal, CocaCola, BestBuy, etc.) As a fit-to-concept,
PrivatePlus added up all the way around.
BrightPath Mortgage - Here is another example of a positive connotation, or perennial, brand name. The word
"bright" communicates a number of messages, including insight, clarity and brilliance. The word "path"
provides a metaphor for leadership, guidance and direction. The two concepts are mutually reinforcing, creating
a unique and compelling brand identity that sounds positive, upbeat and aspirational in nature. The name
positioned the company to speak to unique set of tools and services, using the tag line "Brilliant Mortgage
Solutions."

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Pricing Strategy for Financial Services

Cash Management and Payment Services encompasses a wide range of products, services and markets. It is
quite possibly one of the more complex areas within a financial institution given the breadth of product
offerings and the type of customers served. It is also a fast changing environment, with the introduction of new
products such as electronic payment and deposit products that are making cash management and payments
easier for customers to manage. While that makes it a challenging market from a pricing perspective, it is also
a tremendous opportunity that many banks ignore.

While revenue and profits are key objectives for any pricing strategy, it is important to remember that pricing is
also a fundamental part of the marketing mix and has a role to play beyond just generating more income. In the
Cash Management and Payments world it is a tool that we can use to help us to meet marketing objectives for
new products, cross sell, and market share. That does not and should not mean just lower prices, although that
too often is the pricing strategy that is adopted. It does mean a more sophisticated pricing strategy that is based
on marketing objectives, understanding customer behaviour, and better pricing management.

There are several strategic reasons why we should have an all encompassing pricing strategy. These include:

 Meet cross-sell objectives: create packages and bundles to encourage uptake of multiple products;
 Product migration: encourage customers to adopt more efficient transaction products through pricing
incentives;
 Optimize new product introduction; and
 Implement more effective non-standard pricing: developing more profitable approaches to setting prices
for large commercial and corporate customers.

Pricing plays a role in all of these and strategy is the foundation for building pricing that helps financial service
providers to meet their marketing objectives. Without a strategy, prices can sometimes work against marketing
objectives and result in customer choices that were unintended.

#Competition-Based Pricing:

1. Base price plus surcharges

The cruise ship industry is extremely competitive. A ship earns no money on empty cabins. They must offer
attractive pricing to fill berths. Their costs still increase. When you book a cruise, you might encounter a fuel
surcharge based on the world price of crude oil. If it's trading above a threshold, passengers are charged an
additional amount per day. The base remains stable.

2. Unbundling

Today, airlines must operate in a world dominated by travel search engines. Price is the first thing customers see
and often the dominant decision-making factor. American Airlines and others determined that rather than
providing a meal to everyone, it made more sense to offer upgraded food for purchase instead. Not all
passengers want to check luggage. Others will be agreeable to paying more for a choice of seating. If benefits
carry costs, unbundling is a way to keep prices low.

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3. Removing incentive discounting

Turn on your radio. You will discover that the new car business is extremely competitive. When prices get the
most attention, the lowest cost provider often wins. Dealerships often offer specific incentives for previous
owners, veterans, students, etc. When demand strengthens, yet raising prices is impractical, withdrawing
incentive-buying bonuses can work.

4. New assets = new pricing

In the financial services industry, the investing landscape can change, yet investors often prefer continuity.
When an insurance company finds it must lower an interest rate for new customers on an annuity product, they
often give advance notice to agents and advisors. Policies written before the cutoff date qualify for the old,
higher rate. Those established after the date get the new, lower rate. This can often lead to a jump in business
before the cutoff date.

5. Perpetual sales
Grocery prices have been steadily rising over time. Supermarket flyers focus on discounts. The consumer's
attention is taken away from the rise in the base price, and focused instead on the percentage savings. Although
shoppers see prices increasing, they rationalize they saved money on the sale items.

6. Passing along added costs

Regulated industries like utilities have often been allowed to maintain a specified profit margin in exchange for
providing a service in a market with limited competition. At scheduled intervals they appear before the public
service commission, cite increased costs and make their case for raising prices. The increase is legislated.

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 UNIT- 3

#Swap:
A swap is a derivative contract between two parties that involves the exchange of pre-agreed cash flows of two
financial instruments. The cash flows are usually determined using the notional principal amount (a
predetermined nominal value). Each stream of the cash flows is called “leg.”

Introduced in the late 1980s, swaps are a relatively new type of derivatives. Even though relatively new, their
simplicity coupled with their extensive applications, makes them one of the most frequently traded financial
contracts in the world.

Corporate Finance Professionals may use swap contracts to hedge risk and minimize the uncertainty of certain
operations. For example, sometimes projects can be exposed to exchange rate risk and the Company’s CFO may
use a Currency swap contract as a hedging instrument.

Types of Swaps:

Modern financial markets employ a wide selection of swaps suitable for different purposes. The most popular
types include:

1 Interest rate swap

Counterparties agree to exchange one stream of future interest payments for another based on a predetermined
notional principal amount. Generally, the interest rate swaps involve the exchange of a fixed interest rate for a
floating interest rate.

2 Currency swap
Counterparties exchange the principal amount and interest payments denominated in different currencies.
Currency swaps are often used to hedge a position against currency exchange rates fluctuations.

3 Commodity swap
It is designed to exchange floating cash flows that are based on a commodity’s spot price for fixed cash flows
determined by a pre-agreed fixed price of a commodity. Despite its name, commodity swaps do not involve the
exchange of the actual commodity.

4 Credit default swap

It provides insurance from the default of a debt instrument. The buyer of a swap transfers to the seller the
premium payments. In case of the asset default, the seller will reimburse the buyer the face value of the
defaulted asset, while the asset will be transferred from the buyer to the seller. Credit default swaps are
notorious due to their impact on the 2008 Global Financial Crisis.

Applications of Swaps

Nowadays, swaps are an essential part of modern finance. They can be used in the following ways:

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1 Risks hedging
One of the primary functions of swaps is the hedging of risks. Interest rate swaps can hedge against interest rate
fluctuations, currency swaps are used to hedge against currency exchange rates fluctuations, and commodity
swaps are utilized to lock in the most suitable spot prices of a commodity.

2 Access to new markets

Companies can use swaps as a tool for accessing previously unavailable markets. For example, a US company
can opt to enter into a currency swap with a British company to access the more attractive dollar-to-pound
exchange rate, because the UK-based firm can borrow domestically at a lower rate.

#Credit risk of swaps:

A swap is a financial contract between two parties, where each party pays the other party
periodic payments over the life of the contract according to some pre-specified rules
based on certain underlying index. In most swaps, one party makes the fixed payments
while the other party delivers the floating payments according to the underlying index.
The two most common types are the interest rate swaps and currency swaps, where the
underlying index is the interest rate and exchange rate, respectively. The payments are
calculated based on notional principal, and usually the payments between the parties are
netted. For interest rate swaps, there is no exchange of principals at initiation or maturity.
However, for currency swaps, principals at the respective currencies are exchanged at
both initiation and maturity. At initiation of the swap, the value of the swap is set to be
zero to both parties. The fixed rate of the swap is then calculated such that the present
value of the fixed payments equals that of the floating payments based on the current
information of the underlying index. As time evolves, the underlying index may move
upward or downward so that the value of the floating payments changes. Therefore, the
value of the swap changes in later times, and its value at each time is given by the
difference in the present values of the remaining cash flows from the two parties. For
example, consider an interest rate swap and an upward interest move environment, the
floating rate payer is expected to pay more in future payments so that swap is expected to
be in-the-money to the fixed rate payer.

In swap contracts, there are two most basic forms of risk: price risk and default
risk. The price risk arises due to the movement of the underlying index so that the default
free present value of the future payments changes. The price risk can be hedged by taking
offsetting positions using related derivative instruments, like interest rate futures,
currency futures, etc. The default risk is defined to be the exposure to the risk of failure
of the other counterparty. Unlike forward contracts, swaps are over-the-counter contracts
so they are not backed by the guarantee of a clearing house or an exchange. Swap default
may be due to early termination of the swaps contract, or defaulting on some other
obligation or filing for bankruptcy. Early termination may be due to the non-performance
of obligations under the swap contract, for example, defaulting on a swap payment. The
swap may include clauses that trigger early termination, say, the credit rating of either
party falling below a certain class, or failure to meet margin payment when required on a
marking to market basis.

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 UNIT- 4

Service blueprint is a picture or map that accurately portrays the service system so that different people
involved in providing it can understand and deal with it objectively regardless of their individual point of
view. It is particularly useful at design and redesign stages of service development.

It provides a way to break the service into logical components and to depict the steps or tasks in the
processes, the means by which they are executed and evidence of the service as consumer experiences it.

Service Mapping/Blueprinting

It is a tool for simultaneously depicting the service process, the points of customer contact, and the
evidence of service from the customer's point of view.

Blueprint components

Basic components of Service Blueprint are:

* Customer actions

* "Onstage" contact employee actions

* "Backstage" contact employee actions

* Support processes

Customer Actions

It includes steps, choices, activities and interactions that customer performs in the process of purchasing,
consuming and evaluating the service.

Onstage Employee Actions

The steps and activities that the contact employees performs that are visible to the customer.

Backstage Employee Actions

The steps and activities that occur behind the scene to support onstage activities.

Support Processes

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They include the internal services, steps and interactions that take place to support the contact employees
in delivering the service.

Role of customers in service delivery:

Service delivery for customers can be seen in a factory. The place the service is produced and is consumed
interacting with the employees and other customers. E.g in a classroom or in a training situation, students
(customers) are sitting in the factory interacting with the instructor and other students as they consume the
educational services.

Since these customers are present during the service production, customers can contribute to or detract from the
successful delivery of the service and to their own satisfaction.

Importance of customers in service delivery

Customer participation at some level is inevitable in service delivery. Services are actions or performances,
typically produced and consumed simultaneously. In many situations employees, customers and even others in
the service environment interact to produce the ultimate service outcome. As the customers receiving the
service participates in the service delivery process. He or she can contribute to the gap through appropriate or
inappropriate, effective or ineffective, productive or unproductive behaviors.

Customer’s roles

Customers as a productive process

Service customers are referred to as “partial employees” of the organization. They are human resources who
contribute to the organization’s productive capacity. In other words, if customers contribute effort, time or other
resources to the service production process, they should be considered as part of the organization.

Customers as quality contributors to service delivery and satisfaction

Another role customers play in service delivery is that of the contributor to their own satisfaction and the
ultimate quality of the services they receive. Customers may care little that they have increased the productivity
of the organization through their participation. But they likely care a great deal about whether their needs are
fulfilled. Effective customer participation can increase the likelihood of service delivery that their needs are met
and that benefits the customer seeks are attained. Services such as health care, education, personal fitness, and
weight loss, where the service outcome is highly dependent on the customers participation. In such services
unless the customers perform their roles effectively, the desired service outcomes cannot be achieved.

Research has shown that in education, active participation by students – as opposed to passive listening –
increases learning the desired service output significantly.

Customers as competitors

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A final role played by service customers is that of a potential competitor. If self-service customers can be
viewed as resources of the firm, or as “partial employees,” self-service customers in some cases. They can
partially perform the service or the entire service for themselves and may not need the provider at all.

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 UNIT-5

Building customer loyalty:

Building customer loyalty gives you a high return on the time, effort and money you invest in providing good
customer service. Loyal customers buy more, more regularly, and the cost of selling to them is low. And they
will frequently recommend your business to others.
Understanding your customers, providing good service, handling complaints well and staying in touch all help
improve customer loyalty.

1. Making customer service a priority:

Make customer care a key part of your business strategy

 Effective customer relationship management means organising your business to focus on the needs of
customers.
 Set out the levels of service you plan to offer your different customer types. For example, you might assign
key account managers to your most profitable customers.
 Make sure customer-facing employees have all the information they need to serve customers. Give them
powers to make certain decisions independently.
 Draw up procedures for handling customer contact. For example, standards for speed and courtesy when
answering phone calls.

2. Essentials of customer care

Think of ways to make life easier for customers

 Try to save the customer inconvenience at every stage of the buying experience. For example, provide a
simple procedure for returning unwanted goods.
 Concentrate on providing quality service in key areas. For example, customers often complain that deliveries
fail to arrive on time.

Identify and address weaknesses that could affect customer service

For example:
 Choose reliable suppliers. Build good relationships so they will help you out in a crisis.
 Set up a production process that minimises defects, rather than relying on inspection of the finished product.
 Establish systems and cross-checks to ensure that every order is correctly executed (the right product
delivered to the right address on the right date).
 Make sure you have the capacity to fulfil orders and provide quality service. If necessary, take on extra staff
or equipment - or restrict sales until you can afford improvements.

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 3. Encouraging customer feedback
The more you know about customers, the better you can meet their needs.

Provide opportunities for customers to give feedback

 Ask new customers why they chose you over the competition, and existing customers what you could do
better.
 Set up a customer hotline, and make sure the number is visible on every piece of communication you send
out.
 Get feedback online by encouraging customers to engage on social media.
 Include an email response form on your website.
 Encourage customers with a concern to contact you. You may then have a chance to rectify an issue before it
has escalated to a complaint.
 Thank customers for their feedback and let them know if you make changes as a result.

4. Customer communications

Plan your communications

 Regular interaction helps build trust and loyalty.
 Be clear about your aims. For example, you might want to turn your best customers into advocateswho
recommend you. Your communications might aim to keep them informed, rather than sell.

Focus on customer needs

 Give unbiased advice, even if it means no immediate sale for you. Nothing builds trust more effectively.
 Suggest products which will complement what they have already bought.
 Ideally, you should anticipate when they need to re-order.

5. Customer loyalty schemes

A successful loyalty scheme pays for itself by encouraging more frequent purchases. The most common loyalty
schemes are based on offering rewards to loyal customers.

You can offer cumulative discounts

 A cumulative (or 'retrospective') discount gives customers money back whenever they reach specified
spending targets.
 Retail businesses can offer loyalty cards which work this way.
 You may need to track customers' purchasing activity to flag discounts as they are earned. If customers have
to ask for the discount, the scheme will be less effective.

6. Employees and customer service

Make sure everyone gets customer care training

 Staff who have regular contact with customers should receive training on customer care. They are at the front
line of your business and need to give an efficient, professional image at all times.
 Sales people should be trained to listen to the customer, so they sell intelligently, not aggressively.
 Everyone in the company should be taught how to handle calls and take basic enquiries.

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 Make sure all staff understand how it will affect customers if they do not do their job properly. For example,
production errors could delay the completion of an order.

8. Customer relationship technology:

The tech you use could improve customer relationships

 Consider installing a customer relationship management (CRM) system so that all customer-facing staff can
access customer details and records.
 Network your PCs so that any member of staff can retrieve customer information.

Customer Feedback Analysis and a Service Recovery:

No matter how great a product your company provides and no matter how carefully you safeguard against
faulty products, things go wrong: delivery systems fail, component suppliers ship faulty parts, customers use
products improperly, or sometimes customer expectations are simply wrong. All these are quick opportunities to
lose current and potential customers, including not only the dissatisfied customer or customers but also every
other customer or potential customer they interact with about the problem. To avoid unnecessary customer
defection, companies need to have a process in place for dealing with these types of issues. This process is
typically called a “service recovery program”, and it requires accurate and effective detection systems, a
preemptive action plan, and resources ready to take immediate action.

The service recovery paradox is a popular hypothesis, which states that a customer who has a less than
satisfactory experience with a company’s product, but who receives a high level of attention and compensation
for the problem, can actually end up being a more loyal customer than one who never had any problems with
the product to begin with. This hypothesis is debatable and, of course, in reality not so simple, but experts agree
that a service recovery program is an essential element in a company’s customer experience management
process.

The right customer feedback analysis service will provide a unique opportunity to recognize product, service,
and delivery failures in real-time and to take corrective action quickly, effectively, and to the customer’s
satisfaction. So, what are the characteristics of the right customer feedback analysis service?

1. A real-time customer feedback analysis service enables companies to detect customer dissatisfaction as soon
as it happens and to take action before the customer has been lost and/or starts to interact with others about his
dissatisfaction via, for example, social media.

2. A multi-channel customer feedback analysis service enables companies to react to customer complaints from
social media as well as traditional “complaint channels” like feedback forms, call centers, event-based surveys,
and email.

3. An effective service recovery program–one that results in saving the customer or even improving his level of
loyalty–is well-thought out and extremely reactive. A centralized customer feedback analysis service enables
companies to shift valuable human resources to planning and carrying out recovery efforts.

4. An efficient customer feedback analysis service allows companies to shift financial resources typically spent
on analysing data to recovery program planning and execution and, perhaps most importantly, compensation for
dissatisfied customers.

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 GAP MODEL:
The Gap Model of Service Quality has been developed by Parasuraman and his colleagues which helps to
identify the gaps between the perceived service qualities that customers receive and what they expect.
The Gap Model of Service Quality identifies five gaps:

1. Consumer expectation – management perception gap.

2. Management perception – service quality expectation gap.
3. Service quality specifications – service delivery gap.
4. Service delivery – external communications to consumer’s gap.
5. Expected service – perceived service gap.
6. Gap – 5 is the service quality shortfall as seen by the customers, and gaps 1-4 are shortfalls within the
service organization. Thus gaps 1-4 contribute to gap – 5. These gaps are given in the following figure:

7. The first gap is the difference between consumer expectations and management perceptions of consumer
expectations. Research shows that financial service organizations often treat issues of privacy as relatively
unimportant, whilst consumers consider them very important.
8. The second gap is the difference between the management perceptions of consumer expectations and
service quality specifications. Managers will set specifications for service quality based on what they
believe the consumer requires. However, this is not necessarily accurate. Hence many service companies
have put much emphasis on technical quality, when in fact the quality issues associated with service
delivery are perceived by clients as more important.
9. The third gap is the difference between service quality specification and the service actually delivered. This
is of great importance to service where the delivery system relies heavily on people. It is extremely hard to
ensure that quality specifications are when a service involves immediate performance and delivery in the
presence of the client. This is the case in many service industries: for example, a medical practice is
depending on all the administrative, clerical and medical staff performing their tasks according to certain
standards.
10. The fourth gap is the difference between service delivery intention and what is communicated about the
service to customers. These established expectations within the customer may not be met. Often this is the
result of inadequate communication by the service provider.
11. The fifth gap represents the difference between the actual performance and the customer perception of the
service. Subjective judgement of service quality will be affected by many factors, all of which may change
the perception of the service which has been delivered. Thus a guest in a hotel may receive excellent service
throughout his stay, apart from poor checking out facilities. But this last experience may damage his entire
perception of the service, changing his overall estimation of the quality of the total service provided from
good to poor.

The The Gap Model of Service Quality outlined above provides a framework for developing a deeper
understanding of the causes of service quality problems, identifying shortfalls in service and determining the
appropriate means to close the gaps.

Top 10 Strategies for Maximizing Lease Renewals:

Despite indications that the number of apartment renters electing to move out at the conclusion of their lease is
easing up, multifamily firms are nevertheless working harder than ever to lock in renewals, due in large part to
downward pressure on rents for new leases and weaker occupancies. That doesn’t mean it’s time to throw in the
towel. Instead, seasoned property management vets from progressive multifamily firms say there are still plenty

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of tools left in the strategy box to keep loyal residents happy and coming back for more at the conclusion of
their lease.

Here are the top 10 tactics suggested by a panel of industry experts who are revving up their renewals.

1. Start renewals before lease-up. “We just started a new program to renew our residents two days before they
move in,” says Harlan Krichman, CEO of Philadelphia-based Resource Residential. “In an office of four leasing
people, we have taken one person and turned them into a resident concierge: All they deal with is resident
relations, and they are paid on lease renewals. They call on residents two days before move-in to see if they
need anything. They call on the resident two days after they move in, then two weeks later, then two months
later, and so on to maintain high touch throughout the lease duration.”
2. Keep advertising on the down low. “Today’s renter is savvy and is on the Internet,” says Mark Fogelman,
president of Memphis, Tenn.-based Fogelman Management Group. “There’s not much you can do about pricing
available via the Web, but having a $599 rent advertisement banner on your building when your renewal
residents are paying $799 is just bad business.”
3. Leverage the power of your property. Revenue management programs can offer flexibility in unit pricing
and terms elsewhere in a community, and residents might want to either downsize to save money or upsize to
get a roommate. Likewise, corporate units and common areas can be used as sweeteners to the renewal
discussion. “You could give the renewal customer access to the clubhouse for an event or give the customer a
guest suite for a weekend,” says Julie Smith, president of Greenbelt, Md.-based Bozzuto Management Co.
“There are a host of things you can do with the property itself to reward residents for their loyalty and make
them feel like they are getting additional value.”
4. Over amenitize and get social. Getting people to socially activate in a community increases the sense of
being at home while also offering an entertainment alternative to budget-stressed residents. “One of the things
we did at all of our properties was to purchase outdoor movie theaters for our pools and a couple of times a
month, we will have a drive-in movie night,” Krichman says. “That has been tremendous in getting people
together.”
5. Make capital improvements. Not only do in-unit rehabs provide immediate value to the renewing resident,
they also improve the underlying asset value of your property. From upgraded appliances to lighting fixtures to
kitchen and bath remodeling, “there are plenty of opportunities to make capital improvements to retain the
renters and improve asset value,” Fogelman says. “It’s amazing how happy you can make a resident by putting
a new refrigerator into a unit.”
6. Get a jump on it. Capital improvements don’t have to be bargained for during renewal discussions, and they
need not be large, either. Resource Residential makes seemingly casual visits to residents two weeks before a

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renewal letter even goes out, and uses the occasion to perform unrequested minor upgrades to lighting and
bathroom fixtures to keep positive impressions high.
7. Procrastinate. Why not put off now what you can more effectively accomplish at a later date? Bozzuto has
selectively been working to extend resident leases as they expire, letting recession-wary residents lock in for
another couple of months and make a longer-term renewal decision when they feel better about the economy.
“You want to make sure you simultaneously are managing your expirations,” Smith says. “But if you can keep a
resident three months longer, you are ahead of the game.”
8. Relinquish the security deposit. If you have a longer-term resident who has a great payment track record
and has otherwise been a great resident, there is no reason to keep a security deposit on them. Property
managers agree it’s fine to either give back a deposit after a year or return it in installments. “It’s one of the best
retention strategies I’ve heard in a long time,” Fogelman says.
9. Get handy. Most property management firms have access to maintenance and/or cleaning staff that can be
availed to the renewal resident looking for a little bit more out of their monthly rent check. “There are a lot of
things you can do to add value, including offering a couple of hours of handyman work,” Smith says. “Leverage
the talent and availability of your personnel on-site. A jump start on a cold morning could be all you need to
renew a lease.”
10. Don’t renew leases at all. We’ve made a conscious move to not renew leases,” says Kathy Whitman,
executive vice president of Dallas-based property manager LumaCorp. “Once your initial lease expires, we take
very good care of you and hope that you’ll stay with us for a very long time month to month and appreciate our
customer service and not have any reason to move. Our turnover has decreased since implementing that policy.”

10 Customer Retention Strategies:

Many business owners focus on the acquisition stage of the sales funnel to the exclusion of retention. That’s
because people often think of marketing as synonymous with acquisition - the act of attracting customers to
your business. Keeping customers, or retention, should be equally if not more important than acquisition.

According to Bain & Company, it costs seven times more to attract new customers than it does to keep them.
Additionally, if you retain just 5 percent of your customers annually, you can generate up to 125 percent more
profits. Retention strategies truly pay off in the long run and help you build a sound business over time.

Be smart. Create a successful retention strategy to convert your new customers into long-term customers.
Chances are that you too will spend less and earn more, the formula for a successful business.

In order to build a successful retention marketing program, you must rethink how your company prioritizes its
marketing efforts. To shift the focus from acquisition to retention, consider:

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1. Adding CRM.

A CRM system, or customer relationship management system, allows you to track, monitor and communicate
with customers using an automated platform. You can customize messages to focus on items, issues, products
or information of interest to specific customers, which helps build retention into your communications mix.

2. Prioritize around retention, rather than acquisition, strategies.

Shift the focus from outbound cold-calling, mass advertising, and general ads to communications with existing
customers. Add tactics from the list below to your outbound marketing mix as part of your retention efforts, and
let your team know that they should focus on completing these tasks first.

3. Budget for retention marketing.

Be sure you include enough budget to support retention efforts as much as you have supported acquisition in the
past.

4. Measure customer value.

Track, measure and monitor customer value, especially customer lifetime value. Instead of measuring individual
sales alone, use your database to measure sales by customer. Customer lifetime value assigns a score to
customers based on recency, frequency, and monetary value of their purchases. The higher the lifetime value,
the more you invest in retention efforts with that customer, since they are considered a ‘good’ customer for your
company.

5. Focus on service.

The way to retain customers is through excellent customer service. Make customer service a priority for your
team. Empower individuals to handle problems promptly, and follow up with customers after resolving service
tickets to make sure there are no loose ends remaining. Customers often switch companies based on price, but
stellar service earns your business long-term loyalty.

Now that you understand some of the basic strategies behind retention, let’s take a closer look at some popular
retention tactics. These tactics support the strategies listed above and will help keep customers coming back to
your business for more:

6. Send frequent communications.

Emails and postcards are inexpensive ways to maintain communications with customers. Remind customers of
upcoming sales, or drop them a simple “thank you” note and coupon to encourage repeat business. Remember
to only send emails to customers who have agreed to receive them (opted-in to your email list).

7. Interact on social media.

Social media isn’t about pushing messages out to your fans and followers. It’s about communication and
engagement. Share, comment and thank people when they share your posts. Be a frequent, courteous social
media presence and use a handful of social media platforms really well rather than trying to be everywhere at
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once. It’s better to focus on a few platforms and work them really well then it is to try to be on dozens of them
with limited success.

8. Turn complaints into opportunities.

Remember that in a retention-driven business, service is paramount. Complaints are an opportunity to engage
with your customers, not an annoyance. Use the opportunity to resolve the problem fully and to thank them with
additional services.

9. Start a frequent shopper program.

Frequent shopper programs are familiar to many customers and can be started with simply punch cards or
sticker cards. Make rewards easy to obtain and friendly to redeem.

10. Host an event.

Whether you have an online or an offline business, consider hosting an event. Online businesses can host
podcasts, give-away events, “open office” Q & A hours, or special sales. Bricks and mortar business can have
special parties, open house events, guest lectures, new product unveilings, and other events at their stores. Make
some events exclusive for your current customers only and you’ve turned an event into a retention tactic.

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