CRM Final

Unified Service Theory

the defining characteristic of all service business is process dependency upon customer resources

service supply chains are…

bidirectional

PCN Analysis

a systematic way of studying and designing effective interactions

service process

one in which the firm’s customers each provide essential input resources to the process

non-service process

a firm can perform before receiving resources from individual customers (usually financial resources)

which firms have service processes and non-service processes

all firms

process

a sequence of steps

PCN stands for

process chain network

process chain

a sequence of process steps with an identifiable purpose

value

improve the well-being of some entities

dashed arrow

loose temporal dependency

process entity

any entity that participates in a process

operant resources

act on other resources (surgeon acts on a patient)

operand resources

they are acted upon (surgery patient)

specific beneficiary

benefit from the specific purpose of the process

generic beneficiary

receive generic resource (money) from process

process domain

the set of process steps that are initiated, led, performed, or to some degree controlled by the process entityc

co-productive

the step involves both entities as operant and/or operand resources

coproduction

producing together

different domains

independent, surrogate, direct

Creating a PCN Diagram

identify process to analyze

identify entities that participate

record the steps that mark the start and end

fill in intermediate steps

value proposition

a formal or implied proposal about why any particular entity should participate in a particular process chain

The common goal

to be happy

happiness is…

a multi-dimensional construct

contextual

exists on a continuous scale

is relative to some baseline

is an emotion

value potential

an ability to satisfy needs in the futureva

value realization

the actual satisfaction of needs in the present

value creation

a realization of value by customers

value co-creation

multiple entities are simultaneously realizing benefits

the key to sustainable process chain relationships is…

trustl

loyalty (textbook)

the propensity for one entity to make decisions that are in alignment with the other entity

what is the most reliable indicator of a sustainable process chain relationship?

loyalty

Net Present Happiness (NPH)

the perceived happiness coming out of an interaction

Assemble sandwich process design options

PI = prepackaged sandwiches in factory

PS = assemble sandwich in restaurant kitchen

DI = assemble sandwich at Subway

CS = assemble sandwich at buffet

CI = assemble sandwich at home

Factors of a process in each domain

PI = economies of scale

CI = customization

DI = process inefficiency

S = surrogate positioning (best balance of efficiency and coproduction

enabling innovation

enable customers to do things previously provided by provider

relieving innovation

firm takes over activities that previously were done by customers

servitization

manufacturing firms make a strategic process shift into related services

SPA steps

1. have them describe process from their perspective
2. have them identify parts of process they think customers would consider valuable
3. have them identify parts of the process that are burdensome or problematic

PI-Region 1: internal operations

characterized by efficiency and accomplishing tasks

PS-Region 2: Back office

characterized by quick and accurate response to customer requirements

DI-Region 3: personal interactions

characterized by empathetic understanding of adaption to customer needs (highest customer density)

CS-Region 4: self-service

characterized by robustness and clear dissemination of customer roles

CI-Region 5: DIY

characterized by an effective match between customer capabilities and resource features

Customer Intensity

the degree to which a provider process varies in response to customer variation

types of variation

arrival

request

capability

effort

subjective preference

learning curve theory

standard, repetitive processes experience a greater learning effect than varying processes

low customer intensity strategy

reducing the impact of customer variation on the firms’ processes

high customer intensity strategy

accommodating customer variation

Psychology of Queing

1. Unoccupied is worse than occupied
2. preprocess is worse than inprocess
3. anxiety is bad
4. uncertain is worse than known duration
5. unexplained is worse than explained
6. unfair is worse than equitable
7. the more valuable the service the more willing to wait


1. waiting alone is worse than together

time-perishable capacity

capacity for service processes cannot be preserved at times of low demand

activity based costing

the resource activity is used to determine the cost

inactivity based costing

how the cost of idle capacity is accounted for in the cost of production

independent process operates at utilization while direct interaction processes operate at _

80-90%, 10-20%

search properties

search information before purchase

experience properties

experience the service to assess quality

credence properties

customers must rely on credible sources of information

Independent processing demand

inventory can be used to match capacity to demand

high resource utilization (80-90%)

activity based costing

Interactive Processing Demand

customer inventory (queues) match demand to capacity

low resource utilization (10-20%)

inactivity based costing

custom offering

provider performs the customization

customizable offering

an offering that can be modified by the customer

value of CRM system

customers receive service that matches their needs without having to re-communicate their preferences at every interaction which increases loyalty

An effective CRM system requires

employee and customer buy in

the provider controls the process by providing…

Standard operating procedures (SOPs)

The employee controls the process by

using their own judgement for how the process should progress

the customer controls the process by

specifying how they think the process should proceed (self-service)

service-encounter triad

company/customer = efficiency vs satisfaction

customer/employee = satisfaction vs autonomy

employee/company = autonomy vs efficiency

complicatedness

number of steps in a process

divergence

uncertainty about and decision ambiguity around the execution of a process or a process step (expert judgement required)

quality

the performance of an offering relative to an expectation

robust

continues to perform as designed even when subject to customer variation

poka yoke

a failure prevention mechanism

service recovery

effort taken to redo the part of the process that failed and to rectify the damage to the customer’s attitude and loyalty

Why is service recovery not enough?

only 4% of dissatisfied customers actually complain. You can’t fix what you don’t know about

Unconditional Service Guarantee

unconditional

easy to understand and communicate

meaningful

easy and painless to invoke

easy and quick to collect on

Benefits of unconditional guarantees

forces provider to focus on customer

sets clear standards for performance

generates more feedback

forces the provider to understand why service fails

marketing benefits

quality only matters when coupled with _

value

Perils of measuring customers

subjective

intrusive

resist being measured

halo-effect

self-selected sampling

scale interpretation

feedback process

how to use (type of analysis)

how to collect (type of solicitation)

when to collect (in process vs ex post)

where it will go (channeling)

where to use feedback (4 categories)

design, marketing, operations, customer support

types of surveys

dichotomous

scale

list

field

open-ended

solicitation types

active or passive

visibility

what % of customers think a solicitation is directed at them

channeling

where the feedback goes in the company and who responds

value constellations

networks of entities configured to interact in a way to provide mutual value

Prime mover

having competencies in integrating the competencies of other firms

what types of factors are included in the lifetime value of customers

base profit

profit from increased purchases and higher balances

profit from reduced operating costs

profit from referrals

profit from price premiums

How does customer retention impact profitability

companies can boost profits by almost 100% by retaining just 5% more of their customers

What are common strategies for retaining customers

watch the door

try to win customers back

improve upon the complaints of defectors

decide which service quality investments are profitable

find your target market

use defections as a primary performance measure for employees

What are ways companies move to servitization

Stage 1: goods or services

Stage 2: goods + services

Stage 3: goods + services + support + knowledge + self service

what drives servitization

customer demand

in what ways is servitization a competitive tool

sets up barriers to competitors, 3rd parties, and customers,

is a differentiator

creates dependencyHo

w does servitization play in strategic positioning

how far into services to go?

what services to choose?

when is services too much?

when is more services too much?

think about your customers and what they want? Would adding this service add value to your offering?

Think about your core competencies. Could you provide this offering at a good quality?

what impact does emotions have on customer behavior and response

emotions influence what we remember, how we score encounters and the decisions we make

what is an emotionprint

service flowcharts that describe how customers feel during the process

where are emotionprints applicable

in processes where the emotional state of customers is directly tied to steps in the service cycle

how to create trust

professional appearance

clear communication

active involvement

smart follow-up

likability

willingness to take the high road

what are the two forms of control

behavioral: customers get to do it themselves

cognitive: can’t influence, but have knowledge of what is going on

what is the ultimate purpose of firms

mobilize customers to create value for themselves

what is the true source of competitive advantage

the ability to conceive the entire value-creating system and make it work