Page 238 - DMGT522_SERVICES MANAGEMENT

Unit 11: Customer Loyalty

It would be very difficult and impracticable for a service firm to be all things to all people; Notes
instead, it should concentrate on those customers who yield maximum profits, by giving them
maximum customer satisfaction. This segmentation will help the service firm optimise its limited
resources and get better Return on Capital Employed (ROCE). To survive and prosper in the
service business, the firm has to map its competencies and capabilities, target profitable customers,
and work hard at retaining them.
Customer retention makes business sense. There are evidences through various researches that
there is a very strong relationship between customer satisfaction and profitability, just as there
is between customer retention (in other words, customer loyalty) and profitability. This is
explained in a model called the service-profit chain.

Caselet Case: Committees at Work
here is palpable excitement at ITM Business School, Navi Mumbai this academic year.
TRanked 25th overall and 5th in the ‘Wannabe’s List’ by Business Today, it is witnessing
frenetic activity amongst the freshmen. The all-India profile students have been divided
into 20 committees under the catchall concept called ‘UTKARSH’ (Unleashing the Knowledge
and Reaching Starry Heights). The B-school is practically run and managed by these 20
committees. Ideated by its Dean and Director Prof. A K Dasbiswas, and brainstormed
amongst his faculty colleagues, some of the scope of UTKARSH includes:
Academic – to check on syllabus and look for continuous up gradation;
Placement – to manage the long drawn out task of interacting with prospecting
employers for successful placements;
Admission – to wholeheartedly participate in the entire process of student acquisition;
Competitions – to effectively manage the total participation of students in all
prestigious inter-B-school competitions. 2004-05 had been an extremely satisfying
year for ITM, having won over ten competitions including the Tata Business Model
Contest, IIM Ahmedabad/National Innovation Foundation Business Model
Competition for grass roots innovation and having come up to the semi-final contest
in the ‘Imagine Cup’ conducted by Microsoft.
Cultural Events – to organize and participate in cultural events;
Code of Conduct – to oversee the corporate governance inside the campus and
amongst the student fraternity;
Social Initiatives – to work and manage social initiative projects like ‘ownership’ of
village uplifting activities;

Publications and Journals – to manage the publications of research and case studies
in the institute.
The Infrastructure Committee’s mandate is to keep the campus in spick-and-span condition
including hostels, classrooms, the quality of drinking water and toilets, etc. The entire
campus, with a quadrangle inside has the looks of a modern-day castle (it is an oft-chosen
location for film-shoots, like Madhoshi). It bristles with features like Wi-Fi connectivity
and India’s first simulation lab for financial market analysis. The IT Committee seeks to
be the support arm in maintaining the entire networks for the campus.
Source: Business Today, June 15, 2005

LOVELY PROFESSIONAL UNIVERSITY 233