_, |BUILDING CUSTOMER = | LOYALTY THROUGH w ; | CUSTOMER SERVICE i) The market today offers a lot of choices to satisfy consumers’ needs and wants. To persuade them to choose only one from a wide array of options, they must have a positive perceived quality and value of the product or service they will avail-of. Of course, this should be consistent to achieve repect purchases and increase customer base. Therefore, the challenge for any organization is to conduct marketing activities that will attract and retain customers because this is essential in the viability of any business. This unit discusses how to build and maintain customer loyalty despite fast-changing markets through relaticnship, marketing and service marketing, which are now commonly used by many companies. This unit also features levels of relationship marketing, customer value, types of customers, relationship development: strategies, characteristics of services, and components of service marketing.‘At the end of this lesson, the’ students will be able to iy aera eee - 5 i Relationship rere ‘explain the value of customers, Marketing Ga ee, ae discuss the different types of ae oof customers, identify and describe relationship development strategies, ond illustrate the successfyl customer service strategy In the Philippine business enterprize, N LET’S DISCOVER Nike + and: the Active Lifestyle In 2010, the global sports brand Nike developed technologies that allow users to live an active lifestyle and.keep track of their performance in their respective sports. Nike organized a Digital Sport division which created applications that help its customers maintain an active life. Nike also launched an online platform, Nike+, where users can sign up to access various applications. Two of the popular applications in the Nike+ platform are Nike+ Training Club and Nike+ Run Club. ‘The Nike+ Training Club serves as an online personal trainer. It features more than 100 workout videos of Nike trainers and athletes. The application can also create a personalized training plan adapted to the user’s lifestyle: ‘The Nike+ Run Club helps users engaged in the running lifestyle prepare for races and track their progress. The application provides accurate details about pace, distance, routes, and personal records. Users also get personalized coaching and are able to share their training journeys with fellow runners. Discussion Questions How do Nike+ applications help customers maintain an active lifestyle? In what way will the fitness applications help Nike's sales performance? What values are being upheld by the company through these applications? Po ghee Do you see these applications reinforcing the relationship between Nike and its customers? Explain.LET’S LEARN One of the ways for companies to remain competitive is to provide superior customer service. This in essence is relationship marketing; a company builds customer loyalty by making customer satisfaction its top priority. Relationship Marketing Defined Relationship marketing is the process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction, thus ensuring‘brand loyalty. When customers are satisfied, it is more likely that they will become loyal customers because they will keep on patronizing the brand. A key factor in relationship marketing is customer loyalty (also known as brand loyalty). This arises when a customer has had several positive experiences with a company’s products and services and thus, is motivated to continue to support the company and patronize its products and services. Customer loyalty tends to persist despite the actions of the company or changes in the business environment. . Levels of Relationship Marketing Customer loyalty is founded on excellent customer services. The five levels of relationship marketing define the levels of interaction between the customer and the company. It is alsoa guide in improving customer satisfaction. 1. Basie marketing. This is also called “direct sales” and is the most basic level of interaction between the company and the customer. In basic marketing, a salesperson takes charge of selling the products or services to consumers. 2. Reactive marketing. The transaction moves to a higher level because the sales person tells the customer that he or she can be contacted to answer any inquiry about the product or service. 3. Accountable marketing. In this level, the salesperson voluntarily contacts the customer to ensure that the product is in perfect condition and asks if it met the latter's expectations. Also, the salesperson encourages the customer to provide suggestions on how to improve the product or service. 4. Proactive marketing. The company works closely with a group of regular customers who provide constructive feedback for the improvement of the product or service. This group also helps in the development of new products or services. 5. Partnership marketing. In the final level, the company has already built a loyal group of customers who can help in improving its performance and offerings. <7)Building Customer Value Customer value is defined as the satisfaction derived from what a customer may experience or expect to experience by choosing a particular action relative to the cost of that action. The action can be a purchase, a visit, an order, ora sign up. The cost refers to anything that can be given up to receive the desired product or service, which can be in the form of money, time, knowledge, data, or others. For example, when a customer buys an iPhone, he or she may immediately feel a sense of satisfaction relative to the price he or she has paid to get it. The creation of customer value does not rely on marketing alone. It encompasses other functions such as sourcing, operations, processing, communication, human resource services, administration, finance, and accounting. These functions directly’ or indirectly affect customer value because a product or service will not reach the end users without any of them. Levels of Customer Value The levels of customer value indicate what the consumers expect and do not expect from their purchase decisions. ‘ Basic and expected levels. These levels include the basic requirements of conducting a business. For instance, restaurants are expected to have a spacious dining area and clean tables and utensils. If these requirements are not met by the business, it cannot provide high-quality customer value. Desired customer value. This involves what the customers want from the purchase or service experience. This is the first opportunity for a business to get ahead of the competition. For example, a retail shop can provide friendly and helpful staff who can assist the customers in making the right purchase. Unanticipated customer valve. It pertains to an unexpected purchase or service experience that may go beyond what the customers desire. For example, in a gasoline station, the gasoline boy cleans the car windows after filling up the customer's gasoline tank without an extra charge. Types of Customers ‘There are four types of customers based on projected customer retention and loyalty to the brand. Strangers are customers whose needs do not fit the company’s offerings. The company does not need to invest and exert effort to win them. Butterflies, as the name implies, are not loyal to a specific brand because they keep on looking for the best deals which may lead to patronizing other brands. The company can enjoy profits from these customers only for a short period.True friends have needs that match the company’s offerings. They make repeat purchases and patronize the brand so long as it satisfies their needs. The company must invest in these customers and strengthen its relationship with them. Freeloaders are loyal but not profitable because of the limited fit between their needs and the company’s offerings. For example, a few customers of a salon patronize its services regularly but do not generate enough profit to sustain the maintenance costs; it can earn only ifit raises the prices of its services. ir Relationship Development Strategies 4 Recent research has shown that loyal customers prove to be more profitable than ordinary customers. This is the reason why companies are challenged to maintain customer loyalty. Companies should practice the following relationship development strategies to retain loyal customers: ‘ 1... Communicate with customers frequently and effectively. [tis important to always get in touch with customers through e-mail and social networking sites to sustain brand recall. Also, they should be provided with various means to give immediate feedback (e.g., online customer surveys) so companies can promptly respond to them. 2. Offer customerrewards, Customerloyalty programs, whichinclude special discounts, perks, and freebies, may work well for various types of products and services. These encourage consumers to remain loyal to the brand because they are rewarded for their patronage. 3... Conduct special events and provide sponsorships. Companies can, hold or sponsor parties, concerts, contests, and the like to boost interaction among loyal customers and company representatives. 4. Enhance customer service. Some companies outsource their customer services to third- party organizations to cater to.complaints and inquiries, promote their latest offerings, and provide technical support, 5. Utilize languages to reach'a wider customer base. Marketers can create promotional materials in different languages to cater to specific regions. Consumers can also now choose the language they would like to use to communicate with customer service representatives. Customer Service in the Philippine Business Enterprise The success of our homegrown companies lies not just on their offerings but also on their customer service. Local businesses now utilize customer service tools that fit our customer- oriented culture and extensive technology usage.Most companies provide a customer hotline that customers can call for inquiries, concerns, and technical support. For example, customers can call PLDT to ask for assistance regarding their faulty Internet connection. The customer service representative (CSR) can either provide a step- by-step guide on how to troubleshoot the problem or schedule a visit from a company technician, depending on the issue at hand. Email and SMS also help businesses communicate with their clientele more easily as most consumers regularly check their inboxes. Online store BeautyMNL sends texts and emails from the moment an order is placed until it is on its way to the customer. This way, the shopper can keep track of his/her purchase and contact the company immediately if it does not arrive on time. Social networking sites, aside from their primary function of connecting people, have become a channel for netizens to ask for customer support. Globe Telecom promptly responds to inquiries and complaints on Facebook and Twitter and redirects the customer to the site's private messaging system for further assistance. live chat support facilitates real-time correspondence between the customer and the company representative . Real estate developer Camella and payment service provider Dragonpay are some of the companies that employ this tool.+ Given the amount of time people spend on using their smartphones, companies know that creating mobile applications increases their visibility and provides value to their customers. The Bank of the Philippine Islands (BP!) created the BPI Mobile app to make banking more accessible for their clients. Using the app, one can check the balances of his/her accounts, transfer funds, pay bills, inquire about foreign exchange rates, locate a BPI branch or ATM, and others. SS TE >> SUMMARY << * Relationship marketing is the process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction, thus ensuring brand loyalty. « Thereare five levels of relationship marketing which helpin customer satisfaction ‘and retention: basic marketing, reactive marketing, accountable marketing, - proactive marketing, and partnership marketing. Customer value is the satisfaction felt by a Customer immediately after making a purchase relative to what has actually been given up to receive them. * The levels of customer value are basic and expected levels, desired customer value, and unanticipated customer value.02. identify the characteristics of | 5 3 ogo ES cael Service Marketing NSP siaob opieisne? LET’S DISCOVER Mobile Technology in the Technical Terms Hospitality Industry : Mobile technology, _ particularly —_ mobile applications, has redefined the meaning of customer service in many industries. It has improved how we avail of transportation services through apps, like Uber and Grab. It has also enabled customers to explore dining options through Zomato and Yelp, as well as organize their travels through Airbnb and TripAdvisor. One industry that can benefit greatly from the use of mobile technology is the hotel and hospitality industry. Technology can complement and improve the ability of hotel staff to serve guests, and provide customers convenient and efficient service. The following are the potential uses of mobile technology in hotels and other providers of accommodation. Currency. Banks can provide mobile. wallets which can allow guests to securely pay for their accommodation using their bank account or credit card.Hotel room access. The guest’s mobile device can be used as a room key, by assigning it a unique encrypted signal. In-room phone. The guest’s cellular phone can bé used to request for various hotel services. In this case, there is no need to install and maintain telephones in hotel rooms. Concierge desk. The device can act as a concierge for the guest by assisting in booking tickets for concerts and tours and making dinner reservations. This eliminates the hassle of going to the reception to arrange one’s itinerary. Front desk. The guest can use his or her mobile device to facilitate the release of room keys as well as the billing for the room and other services. Promotion. Hotels will not need to put up printed ads of their promos and services in the establishment, as guests can just use a quick response (QR) code to browse updates and news about the hotel using their smartphones. Lights and aireonditioner. An app can be installed in the guest's device which can be used to switch on the room lights and adjust the temperature. Discussion Questions 1. What positive effects will result from these potential applications of mobile technology in the hotel industry? 2. What challenges do you think will arise from the use of these applications? 3. _Whatother possible uses of mobile technology in hotels canyou think of? Cite three examples. LET’S LEARN We encounter services on a daily basis: we eat meals in dining places, go to school, use the Internet, call and text family and friends, and many others. Most aspects of our life, if not all, revolve around services. As consumers, we want the services we avail of to satisfy our needs and meet or even exceed our expectations. Also, we make sure that companies receive, respond to, and address our feedback regarding them. Given the wide variety of services nowadays, businesses are challenged not just to offer services but also to make them innovative and a cut above the rest. One of the best ways to achieve this is for companies to train their employees or service personnel to deliver excellent customer service.Service Defined A service is an act that is provided by a party that creates value and provides benefits to the other party. Organizations that offer services include restaurants, hotels, airlines, banks, schools, hospitals, telecom companies, among others. Characteristics of Service 1. 4, Intangible. A service does not have a physical manifestation that can be seen, touched and described quantitatively, For customers to remember and rate the quality of the service, they must experience it. A vacation package in a resort will be remembered and rated by the customer based on the accommodation, food, facilities, and staff. Inseparable. A service involves simultaneous production and consumption, so there is outright feedback. A haircut is done by the hairstylist and at the same time, done to the customer. The latter can provide feedback to the former during and after the service. Perishable. Because they are intangible, rendered services cannot be stored or returned. A poorly done massage, once rendered, can no longer be returned to the service provider for improvement. . Homogeneous. The service in itself is the same but the way it is provided may differ from time to time. A salesperson in a department store may be friendly and accommodating today, but may also be rude and disrespectful the next day due to various reasons. Components of Service Marketing The components of service marketing form part of the integrated service management which is considered as the ultimately satisfying delivery of a service. hs Product and its elements. There are services that only supplement the main product. The goal of the marketer is to create a bundle of supplementary services that increases the value of the main product. For example, a high quality appliance with superior quality has a higher value if it comes with free delivery and extended warranty. Time and place. The channel of distribution is crucial in service delivery. The service should be rendered on time and in.an appropriate venue or location. For example, fast food restaurants do not take long in preparing and serving meals as they are expected to deliver speedy service. Also, these restaurants must be located somewhere accessible and with high foot traffic. Process. Thisis the method of service delivery. Marketers should be able to make the process of availing and receiving the service convenient for the customers. For example, banks are now offering online and mobile banking services for clients who want to avoid the long lines in their branches.Quality service or productivity. The kind and quality of service provided to a'customer cannot be separated from how the service is rendered. The quality ofa service is seen in how aservice satisfies and meets the needs, wants, and expectations of the customer, For example, acouturier designs a wedding gown. The productivity rests on how he or she transforms the raw materials (e-g,, cloth, thread, embellishments) into a gown on schedule. People or service providers. The ultimate proof of service quality manifests in the people who provide the service to the customers. They must be skilled, knowledgeable, friendly, accommodating, and customer-oriented. For example, the quality of a dining establishment does not depend on the food or the place alone; the servers’ skills and attitude towards the diners are also taken into account. . Promotion. Companies must use various means to inform the public about the service and reach a wider customer base. This may be through word-of-mouth and advertisements. For example, a salon can benefit from customers recommending their services to others as well as promo flyers distributed in crowded places. : Physical evidence. While a service is inherently tangible, there should still be visible cues that will indicate its quality. For example, a hotel with elegant furnishings and a beautiful landscape-creates an impression of quality Service. Price. The price of the service depends on its perceived quality. For example, two salons in. the same neighborhood with the same services may have different price points because of many factors. The first salon may have a more sophisticated ambiance and a group of well- known professional hairstylists so they charge more; the other one may be an establishment with simple interiors and self-taught hairdressers so customers pay less for their services, >> SUMMARY<< * A service is an act that is provided by a party that creates value and provides benefits to the other party. « Services in general are characterized as intangible, inseparable, perishable, and homogeneous. «. The components of service marketing are product and its elements, time and place, process, quality service or productivity, people or service providers, promotion, physical evidence, and price.