Page 243 - DMGT522_SERVICES MANAGEMENT

Services Management

Notes 7. McDonalds failed initially in India because it failed to judge the customer expectations.
8. You judge an AC by the amount of cooling it does. It relates to the conformance factor.

9. PVR cinemas charge only a minimal amount for their morning shows. This is done to
influence customer perceptions through value.
10. Relationship between the employee satisfaction and their loyalty would always be in
consonance of each other.

11.6 Components of CRM

CRM consists of three discrete components:

1. Customer,
2. Relationship, and
3. Management.
CRM tries to achieve a ‘single integrated view of customers’ and a ‘customer-centric approach’
by judiciously blending these three factors.
Customer: The customer is the only source of the company’s present profit and future growth.
However, a good customer, who provides more profit with less resource, is always scarce
because customers are knowledgeable and the competition is fierce. Sometimes it is difficult to
distinguish who is the real customer because the buying decision is frequently a collaborative
activity among participants of the decision-making process. Information technologies can provide
the abilities to distinguish and manage customers. CRM can be thought of as a marketing
approach that is based on customer information.
Relationship: The relationship between a company and its customers involves continuous bi-
directional communication and interaction. The relationship can be short-term or long-term,
continuous or discrete, and repeating or one-time. Relationship can be attitudinal or behavioural.
Even though customers have a positive attitude towards the company and its products, their
buying behaviour is highly situational.

Example: The buying pattern for airline tickets depends on whether a person buys the
ticket for their family vacation or a business trip. CRM involves managing this relationship so
that it is profitable and mutually beneficial. Customer Lifetime Value (CLV) is a tool for measuring
this relationship.
A way in which airlines strengthens relationships with their clients and reward their loyal
clients is the Frequent Flyer Program. The frequent flyer program is an incentive program
operated by an airline to reward customers for their continued loyalty. As a traveller, you earn
free miles for the miles that you fly on a particular airline. The concept behind frequent flyer
programs is that the airlines want their passengers to become lifetime customers. It is much
more costly for the airlines to get new customers than it is to retain the ones they already have.
So how do they reward you? The more frequently you fly with them, the greater your awards.
It all started in 1981, when American Airlines introduced a program called Advantage. Their
purpose was simple: to reward customers for using the airline and promote future customer
loyalty. American started the program by using their customer database. They tracked the
members’ number of flown miles and put together a reward system of “a mile earned for a mile
traveled.” To round out the array of services for the travel customer, American also included
Hertz rental cars and Hyatt hotel stays in the program. It was an instant success. United Airlines
almost immediately debuted their Mileage plus program and upped the ante by offering an

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