Page 234 - DMGT522_SERVICES MANAGEMENT

Unit 11: Customer Loyalty

view to completely satisfy his need. The service marketer should build long-term relationships Notes
which results in repeat encounters and successful customer retention.

Example: When an insurance agent (or ‘advisor’ as the present nomenclature is) makes
his ‘pitch’, he is intent on selling those products that would earn him more commission. The
advisor is really supposed to do a critical need analysis of the consumer and then offer him
alternatives, which would suit his present and future budgets. The advisor should also keep in
mind that the customer would have growing needs and there will always be opportunity to
offer other products to the customer later. He should therefore shift his focus from a single
transaction sale to long-term relationship building.
Given on the next page is a chart (Table 11.1) on the difference between the two types of marketing
that can be directed at the customer market.

Many service firms, placed under monopoly and control regimes, did not have customer
orientation and instead followed the transactional route, looking for short-term objectives. It
was easier and required less involvement on the part of the service marketer. But many realised
that it was turning out to be expensive to create customers – and then keep creating more. It was
cheaper to have effective customer retention strategies in place.
11.1 Influencing Customer Perceptions and Expectations

A customer’s purchase decision of a particular service largely depends on his perceptions of the
service. Therefore, it is necessary for service organisations to conduct a research to know the
factors that influence customer perceptions. Based on these factors, service organisations should
develop strategies to influence customer perceptions and achieve higher levels of customer
satisfaction. The following strategies will help service organisations influence customer
perceptions:
1. Service encounters: Service organisations should understand that service encounters play
a crucial role in satisfying or dissatisfying customers. To increase the satisfaction level of
customers during service encounters, service organisations should innovate ways of
delivering their service. Further, service organisations should train their employees on
ways – to recover from a service failure, give them flexibility in delivering the services,
offer tips to be spontaneous, and assist them in coping with difficult customers.
2. Reflect evidence of service: Before making a purchase decision, customers often try to
assess the service evidence with the help of tangible clues like the service organisation’s
personnel, processes, and physical evidence. They evaluate the behaviour of the service
organisation’s personnel in terms of friendliness, knowledge of procedures, and their
willingness to help customers. Customers also assess the flexibility involved in the processes
and the physical evidence in terms of ambience and layout. Organizations should
understand the significance of these clues and make efforts to reflect evidence of their
service in terms of their people, processes and services cape.

3. Communicate and create a realistic image: A service organisation should not only
communicate its promises clearly but should also ensure that it keeps its promises. This
will create a positive image of the company in the eyes of its customers. Word-of-mouth
publicity about a company can create a positive or a negative image of it in the minds of
existing or potential customers. While customers who have had positive experiences with
the company will indulge in good word-of-mouth publicity, those who have had
unpleasant experiences will try to tarnish the image of the company by indulging in bad

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