Knowing & Delighting

Your Customers

Prof Mariz Mandocdoc

MGMT 201: Theory and Practice of Management
UP Diliman Extension Program in Pampanga and Olongapo
 Delighting Your Customers

When was the last time you

were delighted as a customer?

When was the last time you

were disgusted as a customer?

If you delight your customers…

They will take care of your business.
What: Customers
Customers - People and organizations in the environment that acquire goods or services from
the organization (Daft).

Customers - Individuals or groups of people, external to the organisation, who are receiving and
often paying for the service (Johnston/Clark)

Service Encounter. Any episode in which the customer comes into contact with any aspect of
the organization and gets an impression of the quality of its service/ product (Haksever)
Touch Point (Customer Encounter)
(concept from Haksever)

A customer’s encounter with whatever or

whomever he/she is in contact with in the
organization, and the customer perceives it
as THE ORGANIZATION.

Customer’s “Moment of Truth” with the

organization

It may occur at any time and any place.

“One rotten apple
spoils the whole
barrel.”

Image from: https://post.naver.com/viewer/post

Service encounters should be carefully managed.

What: Customers
Managing customer relationships (sometimes referred to as relationship marketing) is
about establishing, maintaining and enhancing relationships with customers for mutual benefit.
The emphasis in relationship marketing is on the requirement to develop relationships with
individual customers

Customer Relationship Management (CRM)

(Johnston/Clark Fig 3.3)

Systems that help companies keep in close touch with

customers, collect and manage customer data, and
collaborate with customers to provide the most valuable
products and services (Daft).
CUSTOMER TYPES (Johnston/Clark)
THE ALLY - Willing to help and give positive
feedback to facilitate the service
THE HOSTAGE - Require service, but may be
‘locked in’ to a particular service provider
contractually
THE ANARCHIST – Dislike rules and systems
THE PATIENT - Very similar to the Hostage in
that they are locked into the service; examples
are hospital patients or students at school or
university
THE TOLERANT - May be passive, always
waiting patiently for service providers to
acknowledge their presence and deliver service.
THE INTOLERANT - Cause stress and problems within the
service for themselves, the service providers and other
customers.
THE VICTIM - When something goes wrong in service
organizations, some customers appear to attract bad luck.
THE TERRORIST - Mounts a damaging attack when you
least expect it.
THE INCOMPETENT - Customers may be confused by
the organization's procedures and, if not ‘trained’ by
staff, may find the experience threatening.
THE CHAMPION – Valued customers who are
supportive of the organization.
CUSTOMER TYPES (Johnston/Clark, Fig 3.1 and 3.2)
Why:
Taking care of customers yields financial success
Why:
The Importance of CUSTOMERS (Haksever)
“A customer is not an interruption of work,
he is the purpose of it.”
“A customer is not dependent on us, we are
dependent on him.”
“We are not doing a favor by serving him,
he is doing us a favor by giving us the
opportunity to do so.”
“A customer is a person who brings us what he
wants. It is our job to handle them profitably to
him and to ourselves.”
“A customer is not someone to argue or match
wits with. Nobody ever won an argument
with a customer.” “A customer is the most important person
ever in this company."
Why:

“There is only one

boss. The
CUSTOMER. And he
can fire everybody in
the company from the
chairman on down,
simply by spending
his money somewhere
else.”

Samuel Moore Walton

(March 29, 1918 – April 5, 1992)
Founder, Wal-Mart Stores
 How do we create a “customer mindset”?
1. Bycreating a customer responsive culture
• Include in your organizational values
• Train employees on customer service
• Make everyone aware Customer service is not a unit but is expected from all employees
• Publish customer praises and complaints, subject to privacy of information
• Use customer service quality as an indicator.
2. By understanding your customers better and getting feedback from them
3. By creating work environment that supports the “service profit chain”.
• Provide necessary tools for employees
• Empower employees
• Automate
4. By ensuring proper communications with customers
5. By benchmarking with your competitors
How:

Porter’s Five Forces (Affecting Competitiveness)

How powerful now

are the customers?
How: 1. By creating a customer responsive culture
Robbins, Exhibit 2.10
Why:
The Importance of CUSTOMERS

“There is only one boss:

The CUSTOMER.
And he can fire everybody in the
company from the chairman on
down, simply by spending his money
somewhere else.” - Samuel Walton
(founder, Wal-Mart Stores)

Customers today have greater power because of the Internet, which presents threats
as well as opportunities for managers. Today’s customers can directly affect the
organization’s reputation and sales. (Daft)
Begins with the first contact a
customer has with a company
and continues throughout the
entire lifetime of the relationship.
”Increasing customer retention by
just 5% can lead to an increase in
profits by 25% to 95%...”

Customer
Retention
Activities and actions
companies and
organizations take to
reduce the number of
customer defections.
” …the likelihood of converting an
existing customer into repeat
customer is 60% to 70%...”
“…while the probability of
converting new lead is 5% to 20%,
at its best.”
Importance of customer retention
 Customer Retention
Keeping customers delighted

refers to a company’s ability to turn customers

into repeat buyers and prevent them
from switching to a competitor.
It indicates whether your product and the quality of
your service please your existing customers.*

*https://www.zendesk.com/blog/customer-retention/
 Manage Complaints: Talkers and Walkers
Talkers Walkers

VS.

Express their dissatisfaction calmly Dissatisfied and don’t tell you

and politely or loudly and angrily. verbally.
Challenge:

Delighting your
customers
 Purchase Outcome
(Haksever)

Neutral Positive Negative

Disconfirmation Disconfirmation
The performance The performance The performance is
confirms the exceeds expectations below the
expectations of the and the customer is expectations, the
consumer, leading to delighted, which is customer is not
a neutral feeling of known as satisfied
satisfaction;
How:
Levels of Customer Satisfaction
Much better than expected
Delighted
Perceived
Level
As expected
Customer
Satisfaction
= - Satisfied

Expected
Level Worse/Below than expected
Walkers
Dissatisfied &
Talkers

Source: https://www.smartkarrot.com/resources/blog/customer-satisfaction-vs-customer-
delight/
 How do we create a “customer mindset”?
1. Bycreating a customer responsive culture
• Include in your organizational values
• Train employees on customer service
• Make everyone aware Customer service is not a unit but is expected from all employees
• Publish customer praises and complaints, subject to privacy of information
• Use customer service quality as an indicator.
2. By understanding your customers better and getting feedback from them
3. By creating work environment that supports the “service profit chain”.
• Provide necessary tools for employees
• Empower employees
• Automate
4. By ensuring proper communications with customers
5. By benchmarking with your competitors
How: 1. By creating a customer responsive culture
Robbins, Exhibit 2.10

Above applies to companies providing products, instead of service

https://www.markumgroup.com/what-is-organizational-culture--why-does-it-matter.html
 2. By understanding Customer Selection Process
How:

Customer Considerations

WHY THEY BUY IT? HOW OFTEN THEY WHEN AND WHERE
BUY IT? THEY BUY IT?
Customer
Considerations
Source: https://blog.cbs.dk/servitization/strategy/
Source: https://safetyculture.com/topics/operations-management/operations-management-system/.
Source: https://blog.cbs.dk/servitization/strategy/
How:
Factors Affecting Customer Selection
Hawkins, Best, and Coney Consumer Behavior Model (Haksever)
 Factors Affecting Customer Selection
Internal Influences: Influences that originate within an individual’s body, or mind. Unique to
the individual; Same events will elicit different responses from different individuals.

1. Emotions - Strong and uncontrollable feelings generally triggered by outside events: Fear, anger, joy,
sadness, acceptance, disgust, expectancy, and surprise
2. Personality - Psychological characteristics that distinguishes an individual.
3. Motive - Inner force, created by a need or desire that stimulates and compels a person to act; usually
emerges as a result of an unsatisfied need;
4. Learning - Process through which humans acquire knowledge, which leads to a change in the long-
term memory. We learn when acquired information becomes part of the long-term memory.
5. Perception - How we see the world around us. Process through which we select, organize, and make
sense of stimuli from our environment.
6. Attitudes - Orientation, favourably or unfavourably, toward an object in our environment; Attitudes
are learned from the environment and formed as a result of the internal and external factors previously
discussed.
How: Factors Affecting Customer Selection
External Influences:

1. Culture - The personality of a society; learned, not static;

• Cultural values are widely held beliefs that identify what is desirable or right.
2. Demographics - Statistical characteristics such as age, sex, education, income, occupation,
distribution, and density of population.
3. Social status - Position of an individual relative to the rest of the population in terms of some
measurable demographic characteristics.
4. Reference Groups - Groups that influence consumers’ purchase decisions ex: Family, friendship
groups, formal social groups, and work groups;
5. Households
6. Marketing Initiatives - Activities focusing on building and maintaining relationships with customers
that will benefit both sides.
 Evaluation Classification (Haksever, Exhibit 3-4)

Attributes that the consumer may

Attributes can be Attributes that can be be unaware of or lack the technical
determined before a judged only during or knowledge to evaluate, even during
purchase decision is made after consumption or after consumption
How: Customer’s Sources of Information
(Haksever)

Memory
(Personal experience)
Marketing sources
(Sales Personnel and Advertising)
Personal sources
(Family & Friends)

Experiential sources
Independent sources (Inspection or Trial Use)
(Consumer Groups)
How: 3. By getting Customer Feedback

EXPECTATION-PERCEPTION APPROACH

Simplified Gap Model by Parasuraman et al. 1985;

Johnston/Clark , pp

2022 37
 LEVELS OF EXPECTATION
Expectations exist somewhere on a range or continuum, between ideal and
intolerable

Ideal Ideal
Feasible
Desirable

Deserved

Intolerable &
Minimum
Tolerable

MM201: Excellent CLIENT SERVICING 2022 38

 INFLUENCING
EXPECTATIONS Price

Confidence Alternatives
Expectations are dynamic. They
are not fixed and will change over
time.
EXPECTATION
Expectations are under continual Customers’
mood and Marketing
review and change. attitude

Word-
Previous
experience of-
mouth

MM201: Excellent CLIENT SERVICING 2022 39

 SERVICE QUALITY FACTORS (Johnston and Clark, Fig 4.)

These factors are

not fixed and may
differ for every
organization of
client.

MM201: Excellent CLIENT SERVICING 2022 40

Delighting and Dissatisfying Factors (Johnston / Clark, Fig 4.8. 4.9)
Delighting and
Dissatisfying
Factors (Johnston /
Clark, Fig 4.10)
How:

WHAT CONSTITUTES EXCELLENT SERVICE:

Delivering Dealing
Providing a the with the Going the
personal touch promise problems “Extra Mile”
and
queries

MM201: Excellent CLIENT SERVICING 2022 43

Source: https://www.oberlo.com/ecommerce-wiki/benchmarking
Sources: https://blog.invgate.com/service-desk-benchmark
https://www.similarweb.com/blog/research/business-benchmarking/benchmarking-types/
How:

METHODS ON COLLECTING
CUSTOMER FEEDBACK

1. Customer feedback surveys

2. Email Questionnaire
3. Usability tests
4. Exploratory customer interviews
5. Social media
6. Analytics
7. Instant feedback from company
website
 COMMON
CHALLENGES
1. Understanding Customer Expectations
2. Reaching Out to Customers
3. Exceeding Customer Expectations
4. Consistency
5. Employing Skilled Customer Service
Professionals
6. Creating a Customer-First Culture
7. Handling social media avenues
 General social media statistics in the Philippines

Source: https://www.meltwater.com/en/blog/social-media-statistics-philippines
Delighting Your Customers

• How do you create

“customer” mindset?

• How do you manage

customer
expectations?
 Agree ? Disagree?

Customer is always right !

Which one is correct?

Customer First !

Employee First !

How does the Balanced Score card help you

answer the questions?
Sharing your Customer • Who among you have direct
Experiences encounters with your customers
(face-to-face, email, telephone)?

• What are unique challenges that

you faced in customer servicing?

• How do you get the accurate

feedback from your customers?
“ Building a good customer experience does not
happen by accident.
It happens by design.”
-Clare Muscutt
 Summary Points
• What: Definitions/Concepts: Customers; Managing Customer Relations
• Why: Importance of Delighting Customers
• How: How to influence customer decision and how to delight them
• How customers process their decisions
• Methods to Get Feedback from Customers
• Challenges to Customer Satisfaction /Delight
• Ways to exceed client expectation
 References

• Customer Satisfaction vs Customer Delight (2020, Jul. 10). Retrieved from

https://www.smartkarrot.com/resources/blog/customer-satisfaction-vs-customer-delight/
• Kenton, Will. Customer: Definition and How to Study Their Behavior for Marketing (2021, Oct. 29).
Retrieved from https://www.investopedia.com/terms/c/customer.asp
• Caldwell, Austin. What Is Customer Retention? Importance, Metrics & Strategies (2021, May 24). Retrieved from
https://www.netsuite.com.au/portal/au/resource/articles/crm/customer-retention.shtml
• Saguer. Service Desk Performance Benchmarks and their ultimate Value (2021, Nov. 19 ) Referred from
https://blog.invgate.com/service-desk-benchmark
• Gap Analysis. Retrieved from https://bbamantra.com/gap-analysis-reasons-5-gaps-service/
• Operations Strategy. Retrieved from https://blog.cbs.dk/servitization/strategy/
• What is Benchmarking?. Retrieved from https://www.oberlo.com/ecommerce-wiki/benchmarking
• Why Culture Matters. Retrieved from https://www.markumgroup.com/what-is-organizational-culture--why-does-it-
matter.html
 References

• 4 Steps for Effective Competitive Benchmarking. Retrieved from https://www.similarweb.com/blog/research/business-

benchmarking/benchmarking-types/
• BBAMantra. Articles Marketing of Services. Referred from https://bbamantra.com/gap-analysis-reasons-5-gaps-
service/
• Haksever, Cengiz and Render, Barry. Service Management. 2013. Pearson Education, Inc. (Chapters 2-3).
• Johnston, Robert and Clark, Graham. Service Operations Management (2nd ed.). 2005. Pearson Education Ltd., England.
(Chapters 3-4).
• Robbins, Stephen P., et al. Management (11ed). Prentice Hall Intl Inc. New Jersey, USA. (Chapter 2).
• Daft, Richard L. Management (9th ed). 2010. South-Western Cengage Learning. (Chapter 3).
First Exam Reminders
• Face-to-face exam, on July 22 2023; venue to be announced
• No going out of room during exam period.
• Closed notes; Exam Type:
Objective/ Essay
• MOM to provide answer sheets;
• Only pen should be on the table;
• Do not indicate your name in the answer sheet. Use 4-number code of
your choice. Start with your course and section. Example: 201_1462
Exam Type: Example of Review of Topics:
Delighting Customers
Objective/ Essay 1. Definitions: Customer; CRM
2. 9 customer types; plot in activity vs attitude
Reference: Books, MOM and student’s
matrix
power point materials 3. 3 Purchase Outcomes and corresponding
level of satisfaction of customers
4. 5 Competitive Business Performance
Tip: Objectives
1. Memorize Topics: 5. Consumer Behaviour Model
Definitions, Lists 6. Sources of customer feedback /complaint
2. Integrate: What Why 7. Costumer satisfaction
How 8. Common challenges to delighting customers
3. Take critical view of
concepts learned