Chapter 9:

Managing Services for

Business Markets

A.

B.

C.

D.

What is the value of systematically monitoring the

customer experience?
What is the central role that business services
assume in customer solutions?
What do the roles of service quality, customer
satisfaction and loyalty assume in service
marketing success?
How offerings that combine products and services
can be created to deliver value to customers

From Products to
Many
companies, especially smaller ones, start
Solutions

by developing a product to replace an existing

product.
This
is
the
building-a-bettermousetrap mentality.
Many companies also think that the best way
to win customers is to develop a superior
product and continually work to make it better.
In other words, they start with the product &
services first and consider customer relations
as an afterthought.
This is an error in thinking!
A better approach is to understand the
customer by mapping out experiences.

Customer Experience Approach

Recent research discovered that only 8% of customers think that

their experience with their vendors were superior, whereas 80%
of vendors think that they delivered a superior one.

This research points out an obvious disconnect.

By focusing on core products instead of understanding the

customers experience, many companies lose their customer
and never know why.

Also, by not understanding the customer, companies lose an

opportunity to create value and cement relationships.

One way to understand the customer better is to

Map out experiences at various touchpoints.

Touchpoints are spots where a seller has direct or

indirect contact with the customer about the
product or service over time.

The map points out what is most important in the

seller/customers experience.

Ultimate Goal of
Experience Map
The ultimate goal of an Experience Map is to identify:
1. The value that customers place on different levels
of performance for each element of the
experience.
2. The customers minimal expectations for each
element.
3. The customers perception of the firms
performance versus that of key competitors.

Once the map is developed, the next step is to

meet with the customer and pare down the list to
the most critical issues.

Customer Experience Life Cycle

Map

Figure 9.1 The First Step in Understanding a Customers Experience is to Develop a Life Cycle Map
A representative set of customer-company interactions
Relationship
initiation

The company
exposes the
customer to
its marketing
message
The customer
seeks relevant
information

Provider
evaluation

Account
setup

The
customer
gets initial
price and
lead-time
quotes

The
customer
obtains
materials for
account
setup

The
customer
puts out an
RFP

The
customer
provides
account
profile
information

The
customer
evaluates
providers
and
negotiates
terms and
pricing

The
company
confirms
setup and
activation

Order
placement

Product
reception
and use

The
customer
selects the
product

The
customer
tracks order
status

The
customer
places the
order (fills
out the order
form

The
company
and the
customer
arrange the
final
delivery
terms

The
customer
prepares
specialty
documents
when
required (for
example, for
rush
delivery)

The
customer
receives
and
inspects the
product

Problem
resolution

The
customer
files a claim
and obtains
resolution
The
customer
notifies the
company of
a problem
and obtains
resolution
The
customer
seeks an
invoice
adjustment
and obtains
resolution

Payment

The
customer
receives
and
validates
the invoice
The
customer
makes the
payment

The
The
The
company
customer
customer
performs
selects the
courtesy
The
refuses or
provider
follow-up
company
accepts the
SOURCE: David Rickard, Winning by Understanding the Full Customer Experience, The Boston Consulting Group,
and the
product
Accessed at http://www.bcg.com
The
customer
customer
arrange
requests
initial

Account
maintenance

The
customer
maintains
profile
information
The
customer
maintains
supplies
The
company
provides
general
support (not
related to
problems)
The
customer
obtains
ongoing
price quotes
Inc., 2007, p. 6.

Product- to a Solution-Centered
Approach
Dont start with product first. Instead, start

with understanding the customers problem

and end with products and services that
solve that problem.
The exchange should not be transaction-

based but rather be an interactive

exchange with the objective of developing a
relationship around c0-creating value with
the customer.

Work with the Customer

Co-creating value means that products and
services are developed in concert
(integrated) with the customer such that its
benefits provides solutions to customer
problems.
Services are a critical feature of the solution:
It provides a valuable basis for competitive
advantage.
Its an important driver of profitability.

From a Product to a Solutions Perspective

Product Perspective

Solutions Perspective

Value
Proposition

Win by creating innovative

products and enriching
features of existing products

Win by creating and delivering

superior customer solutions

Value
Creation

Value is created by the firm

Value is co-created by the customer

and the firm

Designing
Offerings

Start with the product or

service, and then target
customer segments

Start with the customer problem, and

then assemble required products and
services to solve the problem

CompanyCustomer
Relationship

Transaction-based

Interaction-based and centered on

the co-creation of solutions

Focus on
Quality

Quality of internal processes

and company offerings

Quality of customer-firm interactions

DETERMINE UNIQUE
CAPABILITIES

Before developing solutions, B2B firms must:

Define their own capabilities
2. Figure out how to use them to help customers to:
1.

a.
b.
c.
d.

Reduce costs
Increase responsiveness
Improve quality
Maybe even contract to do some of the work

Products provide the platform for the delivery of

services.

The authors suggest that many sellers think that

providing a solution is a customized and
integrated combination of products and services
for meeting customer needs.

However, customers view a solution as a set of

customer-company relational processes that
involve:

1. Defining customer needs

2. Customizing, integrating and deploying
products & services
3. Providing post-deployment customer
support
Aimed at meeting (solving) business customers
needs (problems).

DO SERVICE TRANSITION STRATEGIES PAY

OFF?
To improve competitiveness many firms add
services to their existing product offerings to
make
1. The firms value offering more unique
2. Duplication difficult for rivals
3. Products more valuable to customers
thereby enhancing profitability and firm value.

1.
2.
3.

Does it pay off?

Confirmation comes when firms that add services

see an increase in sales from 20 30%.
Adding services is more effective for firms that
relate the service to their core products.
Adding services is effective in turbulent or slow
growth industries, but counterproductive in
stable or high growth industries.

14

Defining Customer Requirements and

Business Needs
Customizing and Integrating Good
and Services to Fit Customers
Requirements
Deploying and Installing Products in a
Customers Environment
Providing Ongoing Post-deployment
Customer Support

Customer adaptiveness refers to the degree to

which a customer is willing to adjust its routines
and processes to accommodate a suppliers
products.
Solution effectiveness is enhanced if the customer
provides information and guidelines concerning the
priorities and sensitivities of various stakeholders
in the customer firm.
Solution effectiveness can be enhanced if the
customer provides counseling to a supplier
concerning the unique elements of its operations.

It offers:
I.
II.
III.

New avenues of growth

New ways to differentiate
Higher customer loyalty

Growth Opportunities
Services, by their very nature, offer far

more than core products can offer.

However, marketers need to

understand the true need (problem)

that core products presently solve.
Next, when looking at the core need,

ask, Are there other ways to solve

that problem?
Other ways can lead to new products.

Service Solutions Facilitates

Differentiation
Business marketers who emphasize

solutions sustain differentiation because

solutions offer a wider variety of
services that can be customized to meet
customers unique needs.

By co-creating solutions, business

marketers enhance loyalty resulting in

the customer creating barriers for
competition.

All Products Are

Services
Most marketers know that all

products are really just wrapped-up

services.
So how do we distinguish between

services and products?

Generally,
1. Services are intangible.
2. Products are tangible.

They consist of
Deeds,
Processes, and
Performances

that are intangible.

Continuum Tangible to
Intangible
The Continuum suggest that there
are very few pure products or very
few pure services.
Its a useful tool for understanding
the product-service definition issue.
Many services are a combo of
services and products. Example:
hotels offer sleeping service to food
products

BUSINESS PRODUCT-SERVICE CLASSIFICATION

BASED ON TANGIBILITY CONTINUUM

22

How Services Differ from

Goods
Inseparable
Inseparableproduced
produced and
and
consumed
consumedsimultaneously
simultaneously
Non-standardized
Non-standardized
Heterogeneous
Heterogeneous
Perishable
Use it or Lose it
Intangible
Lacks ownership

Business services that are intangible-dominant market offerings.

Few services are totally intangible they often contain
elements with tangible properties.

What is a good service?

A good service is

one that meets or exceeds

the customers expectations.

Therefore, marketers should

position their service a bit
below what they, in fact, can
deliver.

Under-promise and overdeliver!

5 Dimensions for Business

Services
Customers tend to focus on five dimensions in
evaluating business service quality.

1. Reliability
2. Responsiveness
3. Assurance
4. Empathy
5. Tangibles
Among these dimensions, reliability delivery
on promises is most important to customers.

5 Dimensions of Service Quality

Developed by Cool Pictures and MultiMedia Presentations

Copyright 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Customer Satisfaction and

Loyalty
Customer-linking processes that affect satisfaction:
1. Basic elements of the product or service that
customers expect all competitors to provide.
2. Basic support services, such as technical assistance
or training, that makes product more effective.
3. A recovery process for quickly fixing product or
service problems.
4. Extraordinary services that so excel in solving
customers unique problems or in meeting customer
needs that these services make the product or service
seem customized.

Service Recovery
Sometimes

there are problems.

The

firm did not do everything it

promised.

What
The

should they do?

way to address this is to institute

a service recovery strategy.

Service Recovery Strategy

Service recovery strategy encompasses

procedures, policies, and processes that
firms use to resolve customer service
problems promptly and effectively.

One way of resolving a discrepancy is to

negotiate the resolution.

Whats it going to take for you to be very

satisfied with the resolution of this
complaint?

Service providers who satisfactorily

resolve service failures often see their
customers level of perceived service
quality rise.

Also, solving service problems helps

correct shortcomings in the first place,
and

Can lead to the development of a new

feature or even a new product.

Zero Defections
There is no such thing as zero defections, however

providing high quality service has an effect of keeping

customers longer.
It is beneficial in terms of sales and profits because:
1.The firm can charge more.
2.The cost of doing business is reduced.
3.Long-term customers provide word-of-mouth Publicity.
Therefore, the strategy is to:
1.Track defections to find out why.
2.Recognize that continuous improvement is not a cost

but an investment in a customer that generates profits.

3.Measure return on quality.

Marketing Mix for Service

Firms
Meeting the needs for the service market
requires an integrated marketing strategy
that:
1.
2.

3.

4.

Selects a target segment.

Customizes the service marketing mix (4
Ps).
Promotes a relationship vs. a
transactional approach.
Emphasizes the total buyer-seller
interaction process.

Segmenting Services
Segmentation demands that a group must be large and
homogeneous enough to support a marketing effort.
First, service segments are often narrower because
customers expect services to be customized.
Second, service segmentation focuses on what business
buyers expect as opposed to what they need.
Third, segmenting service markets help firms adjust their
service capacity more effectively.
Total demand is made up of many small segments, thus
they are able to control them more easily and predictably.

Developing the Service

Package

The service package can be thought of as

the product dimension of service, to include:
1.Essential concept of the service
2.Range of service provided
3.Quantity, quality and level of service
In addition:
Service package must consider some
factors unique to services personnel,
physical product and a process for providing
the service.

Conceptualizing the Service

Product

36

CustomerBenefit Concept is understanding

those service attributes that are important

to the customer. They include
a.Functional,
b.Effectual, and
c.Psychological components
that result in a successful service
experience.
Consistent quality is the goal so quality-

control is of utmost importance.

Service Concept
The

service concept defines the general

benefits that customers will receive from the
service providers bundle of goods and
services.

Notice

the future tense: will

Service Offer
The

service offer spells out in more detail the

who, what, where, when, and to whom the
service will be provided.

The

service elements make up the total

service package to include both tangible and
intangible components.

Service Delivery System

The

final element addresses: How is the

service going to be provided?

This

includes:
1.Jobs that qualified people are going to do
2.Necessary equipment, facilities and
layout
3.Carefully developed procedures
that insure successful delivery of the
service

Service & Delivery

For tangible products that demand service,

both the service performance and the

delivery system create and deliver product
benefits to the customer.
For example: The tangible product (copy

machine) needs to be cleaned and serviced. If

either the service or delivery system fails, the
product fails. If both are good, then
customers consider the total package good.

Service Personnel
Finally, the importance of employing

good people cannot be emphasized

enough.
In short, personal qualifications, i.e.:
1. Attitude
2. Skill
3. Knowledge
4. Behavior

have a critical effect on customers level

of satisfaction with the rendered service.

Hybrid Offering
Combination

of one or more goods and

one or more services that together offer
more customer benefits than if the good
and service were available separately

Distinctive Capabilities to Launching Hybrid Offerings

Service-related data processing and interpretation
capability
Execution risk assessment and mitigation
capability
Design-to-service capability
Hybrid offering sales capability
Hybrid offering deployment capability

Hybrid Service Offerings Classification

Product life cycle services
Asset Efficiency services
Process support services
Process delegation services

Happy Dusshera