Wednesday, June 30, 2010
Saturday, June 26, 2010
Marketing the Intangible
Originally Published in Adclubbombay.com
Services contribute about 5o% of India’s GDP and have become an important growth engine for our economy. The growth in the service sector has opened up immense opportunities for new products and also newer markets. The huge service economy of India has attracted many players into the market. The market is now flooded with new players and new products.
Marketing of services is a challenging task primarily because services are largely intangible in nature. Because of this intangible nature, consumers find it difficult to visualize the service or evaluate the quality of service before purchase. For established services this problem is less because customers already have formed their opinions because of their past interactions. For a new service firm, getting the customers to try out the service is a very difficult task. This calls for a strong branding effort on the part of the service marketer to lure the customers into their offerings.
Creating a service brand is not the task of the marketer alone. The entire organization is responsible for crafting that brand experience. This is because of the fact that service cannot be separated from the service provider. When the brand promises a consumer of a definite experience, the entire organization should be working as a single unit to provide that expected experience. People who are a part of the organization form an important element of the consumer’s perception about the service brand. For example, the behaviour of the cabin crew in an airline service is a critical factor that defines the perception of the consumers regarding that brand. Hence managing a service brand is more of a strategic function rather than a mere functional task.
For a consumer, evaluating a service before purchase is a difficult task. There is a strong element of risk which is perceived by the consumer before availing the service for the first time. Marketers’ task is to reduce the risk perception and encourage trust so that consumers try out the services. Many companies use branding as a tool to build trust and thus create a long lasting relationship with the customers.
Professor Leonard Berry in his article “Cultivating Service Brand Equity “in Journal of the Academy of Marketing Science” talks about four ways to build service brand equity. According to him, the service brand should be (a) Different (b) Determine your own fame (c) Make an emotional connection and (d) Internalize the brand. Strong service brands create powerful differentiators to convince the customers that they are different from the rest of the crowd. Service brands should also be very clear about their core strengths which will inturn makes customers to come back to their service offering. The brand should then build emotional connection with the consumers. Another important requisite is that the employees of the service organization should internalize the brand values and then only they will be able to provide outstanding customer service.
While communicating the service brand’s message, firms should be able to project its credibility, expertise and trustworthiness to the customers. Brands use characters, logo,symbols,colors etc to reinforce its service promise. ICICI Bank successfully used celebrities to build its image as a trustworthy new generation bank. Global consultancy firm Accenture firm uses Tiger Woods to convey its core brand value of “Performance”. These brands have used brand elements like slogans to reinforce the brand promise. Brands like Bajaj Allianz use characters to convey its message. Bajaj Allianz uses the animated “Super Agent “character to convey the message of reliable customer service. These brand elements help the customers to visualize the services even in the pre-purchase stage thus reducing the perceived risk of service failure.
Marketing a service require a holistic approach where the entire organization is focused at fulfilling the brand promise. It becomes the responsibility of every employee in the service organization to take part in creating the experience promised by the brand.
Tuesday, June 22, 2010
Saturday, June 19, 2010
Thursday, June 17, 2010
Zappos.com is an online retailer of fashion accessories predominantly shoes. The retailer is famous for its focus on customers. The key factor behind the stupendous success of Zappos.com is their customer service culture. The company is passionate about their customers and the culture of putting customer first runs through the entire company. The entire business model of this company is centred on customers and the CEO is the driving force behind this customer oriented culture. The company has a warehouse that is open 24X7 so a customer who orders at 11 PM gets a next day delivery. The company also has a 365 day return policy where a customer, if he is not satisfied, can return the product with in 365 days of purchase and get a refund.
Every company understands the need for customer service. But it is interesting to see that the understanding seldom translates into actual practice. One of the primary reasons for the huge disparity between understanding and execution of customer service initiative is the lack of customer service culture.
Top Management Involvement
The quality of customer service is directly proportional to the involvement of senior leaders of the company. Although the actual execution of service is done at the lower levels of management strata, unless the senior leaders are held responsible for customer satisfaction, the process will not excel. But for that, customer service should be given its legitimate position in the management functions. In service firms it is natural that customer service is given its due importance. But in other companies there is no reference to customer service as a function.
When senior managers become involved in managing customer service and satisfaction, the function gets recognized in the organization. Priorities change and service does not become an irritant but a priority. Firms like Zappos.com,Ritz Carlton, Mitchells and Marriott thrive because of the intense involvement of top leadership in monitoring customer service. In firms like Zappos and Marriott, the CEOs take personal interest in customer service initiatives.
Although it may seem very basic to state that employee motivation is critical to any customer service initiative, many firms fail to practice this obvious dictum. Since the frontline employees are the implementers of customer service, it is absolutely essential that they are given the necessary authority and responsibility to handle any request from the customers. This perhaps will the main reason why consumers do not appreciate being serviced by call centre executives. These outsourced firms usually do not have any authority to solve the issues of customers.
Randy and his sister approached the store and was surprised when the store staff replaced the shakers for free and even apologized for not packing it correctly. The author then mentions that his family later went on to give more than $100,000 worth of business to Disney Land. The salt and pepper shaker was not worth more than $10 but the small gesture by the Disney Staff created goodwill that is worth millions.
Such customer service excellence will not happen unless the employees are intrinsically motivated. The motivation comes from the responsibility and the freedom that comes with the job. It is in this context that organisational culture becomes critical. While processes can make customer service error free, spontaneity can come only from individuals. Organizations should strive to bring that spontaneity into the customer service.
Another story about customer service spontaneity -
Bill Marriott , the Chairman and CEO of Marriott International, in his blog once narrated a story about an Associate who gave his pants to one of the guests . The guest who came for a business meeting found that he accidently packed his wife’s slacks instead of his own. He realized this only minutes before the meeting began. The chances of going to a store to buy one and making it to the meeting on time were minimal. One of the Marriott Associates noticed that he happened to be of the same size as the guest and offered him the pair of pants he was wearing. The pants were of perfect fit and the guest went to the meeting on time. The Associate managed with his extra casual pants till the grateful guest returned.
(source : http://www.blogs.marriott.com/search/default.asp?item=2358646).
It is not that companies today are not aware of these basics but the fact is that in pursuit of high growth, often these fundas take the backseat.
Sunday, June 13, 2010
Tuesday, June 08, 2010
Sunday, June 06, 2010
The Four Pillars of Customer Focus
Originally Published Here at Adclubbombay.com
Customer focus is one of the most used jargons in the marketing lexicon. Despite being accepted as an important strategy, many firms have not yet been capable of delivering exceptional customer service and focus in their operations.
Customer focus is a choice and the choice has to be made at the highest management level. Being customer focused is an expensive proposition. It is resource intensive and needs hands-on management from senior leadership of the company. More than money, customer focused strategy depend on human resource. The investment needed for maintaining customer focus is the time and dedication of all management levels towards the goal of service excellence. Most of the firms which aspire to be customer focused fail because of the lack of involvement of top management in customer-related activities.
Most companies invest their resources in creating processes and automating customer touch points. After this investment, the management leaves the customer management to these insensitive machines and algorithms. The entire process will be a waste unless there is a human element in it.
For any organisation who aspire to be customer-centric should start by building a strong foundation .Without a strong foundation, customer centric activities will lack in their effectiveness.
Customer knowledge, Culture, Human Resources and Conflict resolution are the four pillars of a customer focused organisational strategy.
Customer profiling is the first step towards building customer focus. This is one of the most difficult phases in the quest towards customer focus. The depth of customer focus in a company is directly proportional to the depth of the customer information collected. The effectiveness of all customer-related promotions will depend on the extent to which the collected information is being used at the customer touch points.
For example in a business to business environment, firms are sitting on a huge pile of customer information. The information from the past interactions with the customer, the information from the past sales data are all available with the company. How well this information is available to the sales force will determine the effectiveness of any customer related campaign run by the company. While most firms collect customer information, this information are seldom updated or distributed to the concerned personnel.
Another important task for the managers is to identify the customer group that the organisation should focus on. It is near impossible for organisations to satisfy every customer. Some customers may be unprofitable for the company to serve. The management should be able to take informed decision on the customer groups which it will have to focus on. Once these groups are identified, firms must orient its organisation to deliver exceptional service to these customers.
Customer-Centric Organisational Culture
The second most important pillar of customer focused organisational strategy is the culture. Customer-centric organisational culture is where the entire organization is tuned to deliver exceptional service to the customer. Customers become the centre around which the organization is built.
The Chief Executive becomes the Chief Customer Officer. Every process and actions of the firm is prepared with customer in mind. Although this proposition may sound theoretical, companies like Marriott, P&G and FedEx have built their business around a customer focused strategy.
People form the third pillar of a customer focused organisation. The employees are the vital interface between the customer and the company. Customer focused organisations invest huge resources in developing a team of highly trained customer- care executives.
It is critical for organisation to understand the importance of front-line employees who deal directly with the customers. These employees represent the face of the organisation. There has to be clear role clarity for employees who interact with the customers. Customers always prefer a single contact point with the selling organisations. Customer focused organisations thrive because their entire organisation is created to optimize customer touch points. The customer –care executives are given enough authority and responsibilities to deal with customer requirements. Cases which are beyond their authority are escalated to higher levels.
Handling customer conflicts is the litmus test of the effectiveness of any customer-centric organisation. When there are no conflicts or complaints, customer management is not a daunting task.
The real depth of customer focus is revealed when there is a complaint or a conflict. As customers, we all have faced situations where our complaints go unresolved. A recent survey conducted on mobile phone users revealed that unresolved complaint was one of the major reasons for customer churning in Post-paid customer segment.
Customer focused organisations have a robust complaint handling mechanism backed by strong process and also sufficient budgets. These organisations have a system where complaints or conflicts are addressed within a stipulated time frame. The unresolved complaints are escalated to higher levels of management and necessary actions are taken at each levels of management for proper remedial actions.
Thursday, June 03, 2010
In 1998-99, Titan tried to tap the market with a brand Dash. But the brand failed to catch the fancy of the market at that point of time. Analysts says that Dash was too early for the Indian consumers. During that time, parents were not that interested in spending on kid's accessories like Watches.
Watch the ad here : Zoop
Zoop faces competition from the host of unorganized players in the market along with cheap Chinese imports. For Zoop, budget competition will also be something to be concerned about. Budget competition is the competition for the money . Budget competition for Zoop will be those kid's products across various categories that falls in the price band of Rs 350- Rs 1000. That include toys, clothes, video games, etc. If you look at the launch campaign of Zoop , the brand subtly addresses that competition by pointing at the ' need ' for a watch.
Zoop has rightly positioned itself on the style factor and I am sure many young customers will fall for it.