SERVICE MARKETING

CHAPTER- LISTENING TO
CUSTOMER THROUGH RESEARCH

BRIG GEN A K M IQBAL AZIM, ndc, psc, G+, PhD 1

LISTENING TO CUSTOMERS THROUGH RESEARCH

Aim

 Types of and guidelines for customer research in services.

 How customer research information can and should be used for

services.

 Strategies by which companies can facilitate interaction and

communication between management and customers.

 Ways that companies can facilitate interaction between contact

people/employee and management.

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Improving Customer Experiences by Researching Customer
Journeys.

Approaches involve either measuring touchpoints of individual

encounters between the customer and the company or overall
service quality summary assessments.

Each of these two major categories has its benefits but each also
has its limitations.

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 Problem with measuring touchpoints in isolation is that each of
them can be optimized higher, while the customer’s overall
satisfaction can be significantly lower.

A summary score on service at the end may limit the ability of the
company to pinpoint which encounters are the most critical.

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An innovative trend of research is known as “customer journeys,”
which contribute to end-to-end experiences.

Research suggests that only by looking at experiences through

Customers’ own eyes, companies can improve service excellence.

Customer journeys are clusters of integrated touchpoints that

happen before, during, and after the experience of using a service.

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Remodeling Customer Experience Journey. According to
McKinsey Consulting, six actions are critical to managing customer
experience journeys.

The first is to step back and identify the nature of the journeys
customers take.

The second step is to understand how customers navigate across

the touch- points as they move through the journey.

Third, company must anticipate customers’ needs, expectations,

and desires during each part of the journey. Develop research
approach to determine in each cluster with multiple touchpoints.
Must use techniques to deepen empathy for pain points.

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Fourth step, to make/build an understanding of what is working
and what is not.

Fifth, the company must set priorities for the most important gaps
and opportunities to improve the journey.

 Sixth, then must fix root cause issues.

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McKinsey found that improving a customer experience from
merely average, can lead to a 30- to 50-percent increase in
behavioral measures.

 Such as likelihood to renew purchasing a service or buying the

product again.

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Using Customer/Consumer Research to Understand Customer
Expectations. Firm that doesn’t research on customer expectations,
may fail to know what is needed to stay in tune with changing
customer requirements.

Research must focus on what features are most important to

customers, what levels of these features customers expect, and
what customers think company can and should do when problems
occur in service delivery. Example: Study in BUP, AMAZON etc.

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 RESEARCH OBJECTIVES FOR SERVICES
 To discover customer requirements or expectations for service.
 To monitor and track service performance.
 To assess overall company performance compared with that of
competition.
 To assess gaps between customer expectations and perceptions.
 To identify dissatisfied customers, so that service recovery can be
attempted.
 To gauge the effectiveness of changes in service delivery.
 To appraise the service performance of individuals and teams for
evaluation, recognition, and rewards.
 To determine customer expectations for a new service.
 To monitor changing customer expectations in an industry.
 To forecast future expectations of customers.
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 Criteria for Effective Service Research Program

 A service research program can be defined as research studies of

the portfolio and an overall measurement strategy.

 Understanding the criteria for an effective service research

program will help a company evaluate different types of research
and choose the most appropriate for its research objectives.

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 Includes Qualitative and Quantitative Research.

 Qualitative research is exploratory and preliminary. It is

conducted to clarify problem definition, prepare for more formal
research, or gain insight.

 Insights can be gained through customer focus groups discussion

(FGD) and critical incidents analysis. It enables the marketer with
right questions to ask to consumers. Result of qualitative
research play a major role in designing Quantitative research.

 Qualitative research can also be conducted after quantitative

research to give managers/decision makers the perspective that
are critical in interpreting and initiating improvement efforts.

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FIGURE: 5.1 Criteria for an Effective Service Research Program 15
 ZMET – Qualitative Research
 One of the most innovative qualitative approaches is called
Zaltman Metaphor (image) Elicited (provoked) Technique (ZMET),
an approach developed by Gerald Zaltman, a cutting-edge research
organization.

It depends on ZMET interviews, which are intense two-hour

discussions with customers who are asked to collect visual images
that represent their thoughts and feelings about a research topic
beforehand and then discuss them in the interview.

This storytelling allows the researcher to deliver deep into the

metaphors that underlie their beliefs and feelings. From insightful
findings company can build an advertising or marketing campaign.

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Quantitative research in marketing is designed to describe the
nature, attitudes, or behaviors of customers and to test specific
hypotheses that a service marketer wants to examine.

Finally, results from quantitative studies can highlight specific

service deficiencies.

In evaluating service quality, customers compare what they

perceive as they get in a service encounter, with their expectations
of that encounter.

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 Balances the Cost of the Research and the Value of the
Information.

Assessment of the cost of research compared with its benefits or

value is key criterion. Monetary cost includes direct costs to
customer research companies, payments to respondents and
employees collecting the information.
 Time costs are also important, including the time needed
internally by employees to administer the research and the interval
between data collection and availability for use by the firm.

All costs must be weighed against the gains to the company in

improved decision making, retain customers, and successful new
product launches.
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 Measures Priorities or Importance.

 Customers have many service requirements, but not all are

equally important.

Most common mistakes managers is trying to improve service

spending resources on the wrong initiatives.

Measuring the relative importance of service dimensions and

attributes helps managers to channel resources effectively.

 Research must document the priorities of the customer.

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 Complaint Solicitation.

You may have complained to employees of service organizations

but found that nothing happens with your complaint. No one rushes
to solve it, and the next time you experience same problem.

Good service organizations take complaints seriously.

 Employ complaint solicitation as a way of communicating about

what can be done to improve their service and employees.

 In some resort, hires researchers to ride the lifts with skiers and
ask and record into customers’ responses to questions about their
perceptions of the resorts.

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 To be effective, complaint solicitation requires rigorous recording
of numbers and types of complaints through many channels and
then working to eliminate the most frequent problems.

Complaint channels include employees at the front line,

intermediary organizations like managers, and complaints to third
parties such as customer advocate groups/consumer org.

 Companies must both solve individual customer problems and

identify overall patterns to eliminate failure points.

Firms should build submission for this information and report

results frequently, perhaps weekly or monthly. 

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 Critical Incident Studies.

 Critical incident technique (CIT), is a qualitative interview

procedure in which customers are asked to provide verbatim stories
about satisfying and dissatisfying service encounters they have
experienced.

 Example: CIT is used to study satisfaction in hotels, restaurants,

airlines, amusement parks etc.

 It explored a wide range of service points such as consumer

evaluation of services, service failure and recovery etc.

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With CIT, customers (either internal or external) are asked the
following questions: As a customer, you had whether satisfying (or
dissatisfying) interaction….

 When did the incident happen?

 What specific circumstances led up to this situation?

 Exactly what did the employee (or firm member) say or do?

What resulted that made you feel the interaction was satisfying (or
dissatisfying)?

 What could or should have been done differently?

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 Sometimes contact employees are asked to put themselves in
the shoes of a customer and answer the same questions. In other
words, try to see your firm through your customers’ eyes.

 The stories are then analyzed to determine common themes of

satisfaction/dissatisfaction of underlying the events.

 Four common themes of pleasure and displeasure in service

encounters: a. Recovery (after failure), b. adaptability, c.
spontaneity, and d. coping.

Individual companies conduct these studies to identify sources of

satisfaction and dissatisfaction for their firms or industries.

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 CIT Benefits.

First, data are collected from the respondents’ perspective and are
usually vivid as expressed in consumers’ own words.

Second, the method provides concrete information about the way

the company and its employees behave and react, thereby easy to
translate into action.

Third, like most qualitative methods, CIT is particularly useful when

service is new and very little other information exists.

Finally, the method is well suited for assessing perceptions of

customers from different cultures.

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 Requirements Research.
 Requirements research involves identifying the benefits and
attributes that customers expect in a service.

 It determines the type of questions that will be asked in surveys

and ultimately the improvements that will be attempted by firm.

 Quantitative techniques may follow, usually during a pretest stage

of survey development.

 Companies conduct these studies to identify sources of

satisfaction and dissatisfaction for their firms or industries.

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 Relationship Survey.

They pose questions about all elements in line with customer’s

relationship with the company (including service, product, and
price).

This comprehensive approach can help a company diagnose its

relationship strengths and weaknesses.

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 For example, Federal Express (FEDEX) conducts many different
customer satisfaction studies to assess satisfaction, identify reasons
for dissatisfaction, and monitor satisfaction over time.

They conduct 2,400 telephone interviews per quarter, measuring

17 domestic service attributes, 22 export service attributes, 8 drop-
box attributes, and 8 service center attributes.

 Relationship surveys typically monitor and track service

performance annually, with an initial survey providing a baseline.

 They focus on the best competitor’s performance as a

benchmark.

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 SURVQUAL SURVEY

 A sound measure of service quality is necessary for identifying

the service needing improvement.

 Service quality is best captured by surveys that measure

customer evaluations of service.

 One of the best measures of service quality is the SERVQUAL

survey.

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 SURVQUAL SURVEY
SERVQUAL scale involves a survey containing 21 service attributes,
grouped into the five service quality dimensions of reliability,
responsiveness, assurance, empathy, and tangibles.

 The survey sometimes asks customers to provide two different

ratings on each attribute i.e. Expectation and Perception.

 Expectation from excellent companies in a sector and reflecting

the perception of the service delivered by a specific company within
that sector.

Difference between the expectation and perception ratings will

constitute a quantified measurement of service quality.

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SERVQUAL scale has following purposes:

To determine the average gap score (between customers’

perceptions and expectations) for each service attribute.

To assess a company’s service quality along each of the five

SERVQUAL dimensions.

To track customers’ expectations and perceptions (on individual

service attributes and/or on the SERVQUAL dimensions) over time.

 To compare a company’s SERVQUAL scores against those of

competitors.

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To identify and examine customer segments that differ significantly
in their assessments of a company’s service performance.

To assess internal service quality (that is, the quality of service
rendered by one department or division of a company to others
within the same company).

 This instrument is used all over the world in service industries

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Process Checkpoint Evaluations.

With professional services such as consulting, construction, and

architecture, services are provided over a long period.

Waiting until the entire project is complete—which could last

years—is undesirable.

In such situation, feedback around the journey, checking in at

frequent points to ensure that the client’s expectations are being
met.

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For example, a management consulting firm might do: (1) collect
information, (2) diagnose problems, (3) recommend alternative
solutions, (4) select alternatives, and (5) implement solutions.

 Communicate at major checkpoints after diagnosing the problem.

These process checkpoints are key places along customer journey.

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 Market-Oriented Ethnography (studies different races and
cultures).

 Structured questionnaires with key assumptions about what

people are conscious of about their behavior and what they are
willing to explain to researchers about their opinions.

Allows researchers to observe consumption behavior in natural

settings.

The goal is to enter the consumer’s world as much as possible.

 Among the techniques used are observation, interviews,

documents, and examination of material such as relic. ZMET, is a
form of ethnographic research.
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 Mystery Shopping.

Companies hire outside research organizations to send people into

service establishments and experience the service as if they were
customers.

These mystery shoppers are trained in the criteria important to

customers of the establishment.

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They deliver objective assessments about service performance by
completing questionnaires about service standards or open-ended
questions for qualitative value.

For example, sends mystery shoppers to its stores to buy meals

and then complete questionnaires about the servers, the restaurant,
and the food.

 Servers are evaluated on standards that include :

 Acknowledged pleasantly.

 Server suggested additional items.

 Received receipt etc.

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 Customer Panels.

 Customer panels are groups of customers assembled to provide

attitudes and perceptions about a service over time. They offer the
company regular and timely customer pulse on the market.

 Used in the entertainment industry to screen movies before they

are released to the public. Movie is viewed by a panel of consumers
that matches the target group.

Based on comments, movies are revised and edited to ensure that

they are communicating the desired message and that they will
succeed in the marketplace.

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Lost Customer Research.

Deliberately seeking customers who have dropped the company’s

service to inquire about their reasons for leaving.

Some lost customer research is similar to exit interviews with

employees in that asks open-ended, in- depth questions to expose
the reasons for defection and dissatisfaction.

It is also possible to use more standard surveys on lost customers.

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For example, a western manufacturer used a mail survey to ask
former customers about its performance during different stages of
the customer–vendor relationship.

 It identifies failure points and common problems in the service

and can help establish an early-warning system for future defectors.

It can be used to calculate the cost of lost customers.

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 Future Expectations Research.

 Customer expectations are dynamic and can change very rapidly

in markets that are highly competitive and volatile.

As competition increases, companies must continue to update

their information and strategies.

In dynamic market situations, companies want to understand not

just current customer expectations but also future expectations. 

 It may be of different types. Environmental scanning and querying

of customers about desirable features of possible services.

 Asks them what requirements are not currently being met by

existing products or services.

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 Analyzing and Interpreting Customer Research Findings.

 Biggest challenge is to convert the complex set of data to a form

that can be read and understood quickly by executives, managers,
and other employees who will make decisions.

 For example, “Big Data” is being adopted as strategic initiative by

many firms, but merely having sophisticated data does not ensure
that the findings will be useful to managers.

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STRATEGY INSIGHTBIG DATA PROVIDES NEW TOOLS
TO RESEARCH CONSUMERS

According to McKinsey Global Institute, “Big Data refers to data-

sets whose size is beyond the ability of typical database software
tools to capture, store, manage, and analyze.”

 It involves accessing vast new flows of information available to

companies to understand and link virtually. Big data is only relevant
when used to make decisions and influence company strategy.

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You may be familiar with Amazon’s (Owner Jeff Bezos, the richest
man in the world) big data and algorithms.

Not only can Amazon track what you buy, but also what else you
view, how you move through the website, how offers and reviews
affect you, and even what you will buy next.

Andrew McAfee describe that big data possesses three pivotal

differences from other analytical approaches:

 Volume in Exabytes, not gigabytes. In Internet, companies can

now collect petabytes on its customers. A petabyte is one
Quadrillion bytes (equal to 20 million file cabinets of text) and an
Exa- byte is 1,000 times more than that!

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 Velocity No longer in months or weeks to collect data; can now be
done in real time, providing virtually instant insights.

 Variety Big data includes information social networks, mobile

phones, images, text, locations, sensor readings etc.

 Disbeliever say that big data is just that—data—unless companies

have ways to use algorithms to make it useful in decision making.

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 For example: Google reported a clue: it was able to track an
influenza’s spread across the United States more quickly than the
Centers for Disease Control. Unfortunately, the following year
Google was unable to replicate this feat.

 As this example shows, big data is helpful only when it allows

managers to reliably make decisions and influence strategy.

 Big data provides, leaders’ and researchers’ insights that are

needed.

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 Customer Journey and Experience Maps.

By looking at clusters from the customer point of view, companies

can completely redesign the journey to be simpler and superior.

 Individual service encounters can be positive and employees in

touchpoint can answer questions or solve issues as they arise.

 The aggregate effect on customer experience can be positive or

negative based.

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FIGURE 5.2 Customer Journey and Experience Map for
Measurement of a Kitchen Remodel
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 In first cluster, customers typically depend on friends and
neighbors.

In the second cluster, customers visit stores and look at sample
kitchens, talk to salespeople, and try to resolve their issues about
price and process. For improvement company could make computer
model of a kitchen with the attributes and give an estimate of cost.

 During next journey cluster, a company can contact the customer

in person with exact specifications and schedules for delivery.

 Journey cluster could also include provision of price cut to

motivate the customer to take immediate action.

 Delivery and installation would be the next cluster, and follow-up

would complete the end-to-end experience.
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Using Marketing Research Information.

Conducting research about customer expectations is only the first

part of understanding the customer, if the research is appropriately
designed, executed, and presented.

A service firm must use the research findings in a meaningful way

to drive change or improvement in the way service is delivered.

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Upward Communication.

In large service organizations, managers do not always get the

opportunity to experience firsthand what their customers want.

 The larger a company, more difficult for managers to interact

directly with the customer and the less first hand information they
have about customer expectations.

Even when they read and digest research reports, managers can
lose the reality of the customer if they never get the opportunity to
experience delivery of the actual service.

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RESEARCH FOR UPWARD COMMUNICATION
 Executive Visits to Customers. Applicable in business-to-business
service marketing. Sometimes make calls with customer contact
personnel (salespeople).

 Executive or Management Listening to Customers. Direct

interaction with customers adds clarity and depth to managers’
understanding of customer expectations and needs.

Many companies require executives to perform entry-level jobs to

promote understanding of their customers.

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RESEARCH FOR UPWARD COMMUNICATION

In many service companies including Walt Disney, Amazon.com etc

…managers spend time on the line, interacting with customers and
experiencing service delivery

Research on Intermediate Customers. Intermediate customers

(such as contact employees, dealers, distributors, agents, and
brokers) are people the company serves and in tern, who serves the
end-customer. Researching the needs and expectations of these
customers in serving the end-customer can be a useful.

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Research on Internal Customers. Employees who perform
services are themselves customers of internal services on which they
depend heavily to do their jobs well. There is a direct link between
the quality of internal service that employees receive and the quality
of the service they provide to own customers.

Employee research complements customer research when service

quality is the issue being investigated.

 Customer research provides insight into what is occurring,

whereas employee research provides insight into why. Companies
that focus service quality research exclusively on external
customers are missing a rich and vital source of information.
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 Employee Suggestions.

 Most companies have some form of employee suggestion

program where contact personnel can communicate to management
about their ideas for improving.

 Effective suggestion systems are ones in which employees are

empowered to see their suggestions are implemented immediately.
Then they participate for continuous improvement in their jobs.

 Employees are facilitated by self-directed work to encourage to

identify problems and then work to solve those problems.

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 ANSWE
QUEST
and R
ION
Session

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THANK YOU VERY MUCH

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