CU - BCOM Sem VI -CRM

1. Which of the following statements is not true? A. Service purchases are perceived as riskier than goods purchases B. The participation of the consumer in the service process increases the amount of perceived risk. C. The variability in services increases the perceived risk associated with the Purchase D. Consumers of services have less pre-purchase information versus goods 2. Service consumers tend to be more brand loyal than goods consumers because A. More choices are available B. Brand loyalty lowers the amount of perceived risk C. Each service provider provides many brands D. Location of the provider is the major driver in the consumer selection process 3. Competitor intelligence should be gathered A. Once a year. B. Twice a year. C. Continuously D. When competition is more. 4. Which of the following is not a benefit of customer satisfaction? A. The firm is more insulated from price competition. B. The firm provides a positive work environment for its employees C. Positive word-of-mouth is generated from satisfied customers D. Satisfied customers make purchases more frequently Answers 1-b, 2-b, 3-c. 4-b 8.9 REFERENCES References book  Aswathappa, K. (2002). Customer Relationship Management.New Delhi: Tata McGraw-Hill.  Dessler, G. (2012). Customer Relationship Management.New Delhi: Prentice-Hall of India. 1 5 1

UNIT – 9 CUSTOMER COMPLAINT MANAGEMENT STRUCTURE 9.0 Learning Objectives 9.1 Introduction 9.2 Customer Complaint Management 9.3 CRM Implementation Road Map 9.4 CRM Roadblocks (4P’s) 9.5 Phased development 9.6 Summary 9.7 Keywords 9.8 Learning Activity 9.9 Unit End Questions 9.10References 9.0 LEARNING OBJECTIVES After studying this unit, you will be able to:  Describe nature of Customer Complaintsmanagement  How to analyse Customer Complaints  Identify scope of customer roadblocks  State the need and importance of phased development  List the functions of roadmaps 9.1 INTRODUCTION Customer complaint management is a crucial part of the overall customer experience. Read on to learn how to develop a complaint management process and how to avoid future complaints. Customer complaint management refers to the way customer complaints are handled within a company. And since every company inevitably receives complaints, it’s important to have a complaint management process in place to effectively deal with these inquiries. 1 5 2

While complaints may seem inherently like a negative thing, it’s important to note that when a customer complains, they’re letting you know what’s wrong and giving you the opportunity to rectify the situation. Not all customers will give you that opportunity. By providing a complaining customer with solutions to their problem or some other sort of compensation, you can actually regain their loyalty. Negative feedback can also allow your company to detect flaws within its products or services and improve the quality for future customers. Maintaining effective complaint management Complaint management is most effective when you have a procedure that's precise and consistent. From the initial acknowledgment and assessment of it, through the investigation and response, to the final follow up with the customer, staff should be made aware of exactly how to deal with each step of this process to ensure consistency within your company. While every company’s process for managing complaints will look a little bit different, here are some general guidelines for an effective complaint management process:  Acknowledge the problem and empathize with the customer (some people simply want to feel heard!)  Reiterate the problem so you and the customer are both on the same page  Investigate what went wrong and why  Follow up and make it right (fix the problem and/or offer something extra) 9.2CUSTOMER COMPLAINTS MANAGEMENT Customer complaints refer to when a business does not deliver on its commitment and does not meet customer expectations in terms of the product or services. The vital aspect of every business is its clients. For greater success, businesses need more satisfied clients. And the best way to obtain new clients and maintain the existing ones is by providing them with satisfactory service. But how to understand whether your customers are happy or unhappy? A customer complaint emphasizes a problem that might be related to an organization’s product, employees or internal processes, and by hearing these problems directly from customers, an organization can investigate and improve to avoid additional complaints in the future. How to analyze Customer Complaints? Analytics is used to categorize, track, and handle customer complaints and uncover insights. Here are some points on how to better analyze customer complaints and use them to drive more business: Analyze all customer feedback: It is important to analyze all the feedback that an organization gets because some feedback gives remarkable details that could potentially be a major breakthrough for your business. 1 5 3

Categorize each feedback: Sorting feedback into categories provides a larger picture of how customers view your business and services and can help to highlight the less noticeable elements of your business operations. Identify the root causes: Customer feedback will help an organization to understand what driving customer loyalty is by analyzing the root causes. To achieve this, it is necessary to have a management system to qualify feedback and search through potentially large amounts of data that will help identify root causes of issues. Consolidate results and determine a plan of action: Once an organization understands the feedback results, it is time to fabricate a feasible and effective plan of action to address the issues. Alert the right teams within your organization: After collecting all feedback, it is important to share it with the customer service and support teams for resolution. Steps Involved in Handling Customer-complaint After receiving a customer complaint and solving the problem in order to retain that customer, an organization must use this five-step process for handling customer complaints.  Always ask the right questions: Asking the right questions helps you get to the root of the complaint, investigate if there’s a way to resolve the issue, and determine if the complaint contains useful feedback.  Find out the type of customer an organization is dealing with: There are different persona types of customers, each motivated by different needs, beliefs, attitudes, and different customers present different complex mixtures of motivations and behaviors. So, being aware of the different customer persona types can help you respond most appropriately to the person you are assisting.  Respond to the customer immediately Customer complaints can be resolved if an immediate response goes to the unhappy customer.  Present a quick solution, and verify that the problem is solved 1 5 4

After identifying the root cause of the customer’s complaint, an organization should find a solution and resolve the issue. It is also crucial to verify whether the solution solves the problem.  Log the complaint to track trends It is important for an organization to have a system to track high-volume complaints so that they can capture them, monitor how often they are hearing recurring concerns, and use this information to find long-term solutions to prevent a recurrence. What are the different types of Customer Complaints? According to a study conducted by the University of Florida, there are five identified types of customer complaints including  The Modest Customer An organization should start a conversation using check-in call or by sending a Net Promoter Score (NPS) survey in case of a modest customer who usually avoids submitting a complaint to assess customer satisfaction and actively resolve any complaints.  The Aggressive Customer Aggressive customers loudly express any complaints and will not accept excuses. So, the organization should initially thank the customer for sharing their concern, then agree on the definition of the problem and explain what is required to resolve the situation and when.  The Imprudent Customer An imprudent customer is used to complain in a reasonable manner so it is advisable to listen respectfully, acknowledge the existing problem, understand the details of the situation, and resolve the issue as quickly as possible.  The Swindle Customer An organization should respond objectively in case of the swindle customer because they often look for a handout instead of searching for an answer or satisfactory support experience. If the customer repetitively and constantly says the provided solution is not satisfactory, then use accurate quantified data to back up your response.  The Constant Grouch Customer 1 5 5

The constant grouch customer can never be happy and continuously reports issues. So, in this kind of a situation, an organization should listen to them respectfully, then provide an honest effort to correct the situation. 9.2 CRM IMPLEMENTATION ROADMAP CRM ROADMAP CRM plays a vital role in corporate digital transformation. CRM solutions help businesses manage customer relationships and gain valuable insights into who their customers are and what they want. This post will explain what a CRM implementation roadmap is, why it is crucial, and the basic steps involved in a CRM roadmap. A CRM roadmap is an implementation plan that aligns the features and functionality of CRM with a company’s business strategy. Before an organization can develop a CRM roadmap, it must understand its sales and customer retention processes, how each department or team interacts with customers, and what impacts or outcomes the organization is hoping for by implementing CRM. For example, here are a few good questions businesses can ask themselves to better understand some of those points:  How does the company currently gain insights about customers?  How do internal teams and departments share customer information and work towards common goals?  How does the business gauge which service offerings should be produced to meet customer needs? If you are struggling with CRM implementation, it is a wise choice to work with an implementation partner. A CRM implementation partner will help you choose the best CRM system for your organization’s needs, and they will also help you understand the importance of developing a CRM roadmap. Why Are CRM Roadmaps Important? Whether you are investing in desktop software, a web app, a mobile app, or SaaS, CRM solutions are a financial investment. Without a CRM roadmap, you will blindly implement a CRM system and hope that it meets the needs of your business. On the other hand, if you choose a CRM solution that does not fit your business’s short and long- term objectives or reflect its priorities, you will have wasted valuable time and financial resources. It is unwise to invest in technology without understanding if it has the features and functions that are important to your business. For exam1ple, you wouldn’t purchase a car without ensuring that it had at least some of your wanted5features. 6

Like cars, thousands of different CRM solutions are available on the market. So how do you ensure that you choose a CRM solution suited for your present and future needs? By developing a CRM roadmap. Without a CRM roadmap, your implementation project is bound to fail. A CRM roadmap is the foundation upon which an implementation can be successfully carried out, ensuring that functionality and future enhancements are planned strategically and logically. With a strategic CRM roadmap, your business can maximize its ROI for CRM. A Basic CRM Roadmap If you are ready to begin a CRM implementation project, these are the basic steps your organization should follow to guarantee successful CRM implementation:  Identify issues  List required features and functions  Create budget  Find an implementation partner  Setup and data migration  Testing and training  Evaluate Identify Issues CRM solutions are powerful tools used to manage relationships with prospects, customers, and other contacts. If you are thinking about CRM implementation, it is likely because your sales team or other departments have run into issues. So the first step is to identify what issues your business is experiencing. Listen to feedback from your teams to accurately identify pain points that can be addressed with CRM. It is vital to accurately identify the issues your teams face so that your business can purchase and implement a CRM solution that will improve daily operations. Required Features and Functions As previously mentioned, there are thousands of different CRM solutions available. To find the best CRM solution for your business, you need to know which features and functions are most important to address your identified issues. It is helpful to list which features and functions are the most important and which ones are the least important if there are CRM options that only have some of the features you are looking for. Create Budget Now that you have an idea of what issues your 1business needs to address and which features are best suited to accomplishing this, you need5to create a budget. Creating a budget will 7

help your business prioritize CRM solutions and choose the best option for your requirements. A budget will also help your business communicate your needs and requirements to an implementation partner. Find An Implementation Partner An implementation partner will make the technical aspects of CRM implementation easy. Setting up the proper tools, building the architecture, and migrating data are all tasks that are likely too technical for your business to handle on its own. Simplify the CRM implementation process and find a partner that can help you through the entire process. Setup and Data Migration Setting up the proper tools and migrating your existing customer data into your new CRM is the most technically challenging portion of CRM implementation. Therefore, it is highly recommended that you work with an implementation partner to accomplish these technical tasks. Improperly implemented CRM will not support your business processes, and it will be a waste of time and money. Testing and Training Once your new CRM has been implemented, it is time for you to test it and train your employees on using it. Once again, your CRM implementation partner should help your business test your CRM and train your employees. In addition, it is important to give your implementation partner feedback during this phase of the CRM implementation process to make the necessary adjustments. Finally, after everything has been thoroughly tested and your employees trained, you are ready to go live with your new CRM. Evaluate After your CRM is deployed, it is important to continuously evaluate your CRM to ensure it is living up to expectations. How have the results lived up to your expectations? Adjustments might need to be made over time which is why regular evaluations are important to the long-term success of your CRM solution. Final Thoughts CRM implementation is necessary for businesses that want to compete at the highest levels. Take control of your processes and customer interactions with a powerful CRM solution. If you’re ready to get started with CRM, contact a CRM implementation partner. An implementation partner will help you develop a CRM implementation roadmap so that your organization finds the best CRM for its needs. 1 5 8

9.3 CRM ROADBLOCKS (4P’S) CRM roadblocks are the obstacles occur during the business planning or requirements gathering which do not allow the CRM to set right thing at right time Four Ps’ of CRM roadblocks 1. Process : Many companies make the mistake of purchasing a CRM tool that supports repeatable processes only to discover that their business processes are not defined well enough to be repeatable. Some companies are slow or unwilling to modify their business processes to support better customer relationship 2. Perception: After CRM has been deployed business people should be able to accomplish the same work in less time or be able to perform new tasks that ultimately make their jobs easier and at the same time enhance customer relationships. And customer perception, after all a customer perception of the company is the basis for whether she will return to your web site or store. CRM can either deliver or destroy a customer’s high opinion of your company and its offerings. 3. Privacy: Consumers are more likely to share their personal information with your company if they receive something valuable in return. Incorporate this into your CRM planning to ensue that customers are sufficiently motivated to continue interacting with you at every touchpoint. Understand permission marketing and the trade offs between asking customers to opt in versus opt out. Customer can log on to a secure website and actually change their own profiles benefiting both parties. Appoint a chief privacy officer to enforce a corporate privacy policy and communicate then both internally and externally. 4. Politics: It involves the development of a data warehouse or other CRM related technology solution and labeling it CRM without defining a clear CRM strategy, planned process improvements, organizational changes or business participation. Declaring an activity or technology project to be CRM does not make it so and risk tampering the high impact business message of any bonafide CRM project awaiting approval. CRM in a vaccum simply does not work long term and can actually delay or destroy an entire CRM program. Other CRM saboteurs 1. Lack of CRM integration 2. Poor organizational planning 3. Demanding customers 4. Poor customer service Future of CRM 1. The customer as Subject Matters Expert (SME) 1 a. Companies asking customers how to plan their5 CRM strategies 9

b.Rendering customers as subject matters expert c.Leveraging customers to improve business process and recording the feedback ofcustomers who have taken the time to participate d.Customers helps in prioritizing the tasks 2.The Rise of intermediaries a.Intermediaries act to simplify the purchase process by acting as one stopinformation resources. b.Companies try to keep pace with their customers purchases and feedbackintermediaries triangulate a two way interaction between company and customers c.Intermediaries help identify purchases and feedback as part of customer’s overallprofile. 3.Digital and Broadband Revolutionize Advertising a.Enable advertisers to send personalized commercials to households that fit acertain desired customer profile b.Allow companies to target market in real time c.Supports mass marketing with customized manner 4.The threat and promise of customer communities a.Communicate improvements b.Virtual meeting place of buyer and sellers c.Communicate experiences d.Streamlined supply chains 5.CRM goes global a.Country specific strategy b.Direct mail communication c.Expensive d.Multi language support e.Serve a growing base of international customers 6.The Coming CRM backlash a.Improve customer experience b.Increasing expectations for CRM c.Increases customer satisfaction d.Improved customer perceptions 1 6 0

9.4 PHASED DEVELOPMENT 1. Discovery & Requirements Gathering Define your sales process  How do customers find you, move through the process and buy from you? (You need to define how you currently move this process forward.)  You need to understand the steps in the buying process to inform the CRM configuration reflects your business model in order to act on detailed sales intelligence. (Sales pipeline)  The process needs to be linked to the member’s journey as well as how the account is managed for the long-term to ensure relationships continue to be developed  Staff should be involved from the start, especially to have a group understanding of the sales process being agreed. This will help to identify gaps that need filling with training or technology. Map out your business processes  This helps to determine the CRM project focus and to document the high-level requirements  It also helps prospective CRM vendors to understand the overarching desired business results Establish your budget  How much can you afford to spend on your CRM? This will set the mark for your initial vendor research. Document your detailed features & functionality requirements  Documenting detailed functional specifications can take a few days to several weeks depending on what’s required from your CRM system, your processes, and number of departments and people that need to be involved.  With a detailed specification, a more precise estimate for the initial CRM implementation can be provided.  The sooner this step happens the better in order to prevent unnecessary time or money being lost  Finally, this document should help you formally validate and prioritise your requirements. 2. Research & Shortlist Vendors Do your research to identify potential CRM vendors  Search online, ask colleagues about systems they use in their businesses, you could even ask competitors about their CRM experiences. The idea is to do as much research as possible to be able to sort through your options.  There are so many CRM vendors to choose from, but not all of them will suit your business and be able to deliver what you need. Most of them will say they can do what you’re asking, but the purpose of your research is to test that assumption with as much in- depth analysis as possible. It’s important to keep a clear understanding of your sales process and challenges in acquiring and retaining customers to find something that addresses these needs. The systems you choose to shortlist should be focused on helping your team to sell better to new and existing customers.  You can immediately eliminate providers that don’t tick your “fixed” boxes. For example, if they don’t integrate with certain systems y1ou have to connect with or if their starting/ “from” price is above your budget. 6 1

 Specific features to select for in a CRM will revolve around the processes and functionality you’ve already established, so it’s crucial that the vendor understands your business and needs. Consider the key features you need to have in your CRM sales tool  Contact & interaction management  Deal management  Sales team coordination  Integrations Shortlist possible vendors for more information & demos  You’ll receive some fancy marketing material touting system benefits and have lots of interesting conversations about all the impressive things the vendor’s CRM can do for you, but you’ll learn more from a demo.  Establish your shortlist to a handful of vendors that you think will meet your needs then set up a demo and/or presentation from them.  It’s worth noting that any CRM vendor doing their job properly will want to understand more about your organisation and its processes. The result of earlier steps can help provide this information, but you need to allow time for this liaison.  It’s useful to prepare a vendor scorecard for you to assess the ability of each vendor to address your key functional requirements. This shouldn’t simply be a feature checklist but should take on board the relative ease to meet each requirement. 3. Conduct Tailored Vendor Demos Vendor presentations Seeing a vendor’s demo of their system is essential. The way you do this is up to you but it’s important that you use this presentation to:  See how the system looks and how easy to use it appears.  Ask lots of questions and invite your stakeholders to ask questions.  Gauge how easy or difficult it may be to deliver on certain requirements. The vendor should answer your questions in a way that everyone clearly understands – and should ideally demonstrate their understanding of your business by showing how the CRM should help your company. The more focused their presentation is on delivering your functional requirements the higher they should score. 4. Select Your CRM Solution & Vendor Vendor selection  It should be clear which vendor will present the best match for you by now from how they presented a CRM solution that specifically addresses your business’ issues for the long- term.  If any of the up-front steps were missed (regarding mapping processes and creating detailed functional specifications), this will need to be done now.  To avoid too much unnecessary delay to the project, it could be worth building this work into your CRM vendor’s quote. Negotiate price and procure  Request a final quote from the selected vendor. Now’s the time to ask about any extras.  Normally the longer the duration of your contract commitment, the better the price you can get.  Try to make sure your implementation has started before the subscription clock starts ticking. 1 6 2

5. CRM Implementation Implement in Phases How your CRM is implemented depends on your vendor and the system development needed. A recommended approach is to focus on having “Phase 1” address the highest priority business needs so that it can be completed in a reasonable amount of time and the business can see the benefits sooner. Allow time for testing, training & practice It’s inevitable that adjustments will be needed. Make sure you have resource organised to test and re-test the system. Coordinate your end users, managers and administrators to set aside time to get into using the system. This should include dedicated training but also further practice time before “go live”. Champion your new system Once all the post-implementation adjustments have been made, it’s important that the person or team originally championing the new CRM can demonstrate the benefits of the system. Not only will this help users to adopt it but should also help with attaining budgetary approval for additional implementation phases. 9.5 SUMMARY Customer complaints refer to when a business does not deliver on its commitment and does not meet customer expectations in terms of the product or services. The vital aspect of every business is its clients. For greater success, businesses need more satisfied clients. And the best way to obtain new clients and maintain the existing ones is by providing them with satisfactory service. But how to understand whether your customers are happy or unhappy? A customer complaint emphasizes a problem that might be related to an organization’s product, employees or internal processes, and by hearing these problems directly from customers, an organization can investigate and improve to avoid additional complaints in the future. CRM plays a vital role in corporate digital transformation. CRM solutions help businesses manage customer relationships and gain valuable insights into who their customers are and what they want. This post will explain what a CRM implementation roadmap is, why it is crucial, and the basic steps involved in a CRM roadmap. CRM roadblocks are the obstacles occur during the business planning or requirements gathering which do not allow the CRM to set right thing at right time 1 6 3

9.6 KEYWORDS A CRM roadmap is an implementation plan that aligns the features and functionality of CRM with a company’s business strategy. Before an organization can develop a CRM roadmap, it must understand its sales and customer retention processes, how each department or team interacts with customers, and what impacts or outcomes the organization is hoping for by implementing CRM. Customer complaints refer to when a business does not deliver on its commitment and does not meet customer expectations in terms of the product or services. The vital aspect of every business is its clients. For greater success, businesses need more satisfied clients. And the best way to obtain new clients and maintain the existing ones is by providing them with satisfactory service. CRM roadblocks are the obstacles occur during the business planning or requirements gathering which do not allow the CRM to set right thing at right time 9.7 UNIT END QUESTIONS A. Descriptive Questions Short Questions: 1. How to analyze Customer Complaints? 2. What are the different types of Customer Complaints? 3. Explain the required Features and Functions of CRM roadmaps. Long Questions: 1. Describe the steps in handling customer’s complaints. 2. Why Are CRM Roadmaps Important? 3. Explain the concept phased development. B. Multiple Choice Questions 1. ___ is a firm view toward planning its operations according to market needs A. Marketing orientation B. Marketing functions. C. Marketing department. D. Marketing forecast. 2. Which of the following is not a criterion for effective price discrimination? A. The segments should be identifiable, and a mechanism must exist to price them differently B. Different groups of consumers1should have similar responses to price. C. Segments should be large enou6gh to be profitable 4

D. Incremental revenues should exceed incremental costs. 3. 46. Service firms often find themselves in a three-cornered fight between D. Human resources, marketing, and operations A. Engineering, production, and accounting B. Marketing, finance, and human resources C. Operations, accounting, and marketing 4. 47. Customer frustration resulting from receiving poor service is most similar to A. Image costs. B. Monetary price C. Energy costs. D. Psychic costs. 5. Among many services, the demand for medical services tends to be ___. A. Inelastic. B. Elastic. C. Substitute demand D. Price cross elastic demand Answers 1-a, 2-b, 3-d, 4-d 5-a 9.8 REFERENCES References book  Aswathappa, K. (2002). Customer Relationship Management.New Delhi: Tata McGraw-Hill.  Dessler, G. (2012). Customer Relationship Management.New Delhi: Prentice-Hall of India.  Rao, V.S.P. (2002). Human Resource Management: Text and cases. New Delhi: Excel Books. 1 6 5

UNIT – 10 CRM PLANNING STRUCTURE 10.0 Learning Objectives 10.1 Introduction 10.2 Learning from customer defections 10.3 Evaluating customer retention plan 10.4 Emerging trends in CRM. 10.5 Summary 10.6 Keywords 10.7 Learning Activity 10.8 Unit End Questions 10.9 References 10.0 LEARNING OBJECTIVES After studying this unit, you will be able to:  Describe the Learning from customer defections  Evaluating customer retention plan  Discuss about Emerging trends in CRM. 10.1INTRODUCTION Customer Defection is the loss of users or consumers (churn/ attrition) or the decrease in purchases by them, with the following impact on reducing the Company's business. On average, CEOs of US companies lose half of their customers every five years. This surprises many people including the CEOs of these companies. Some customer defections are easy to identify; some are not. Customers that close all their accounts with a bank and begin to work entirely with another are obviously deserters. But so are (in different degrees) customers who transfer part of their purchases to another supplier, and those who actually buy more from another provider even if they do not significantly reduce their purchases with the Company. These are most commonly referred to as Share of Wallet changes. Customer Defection may also refer to other unwanted behaviours such as ceasing the recommendation or referral of the co1mpany or commencing the recommendation or referral of the competition. 6 6

Measuring Customer Defection (churn/ attrition/reduced share of wallet) is one of the most useful methods for a company to identify how the value that the company offers might be changing and need to change versus the competition. Customers are difficult to maintain and it costs a lot to acquire new customers than to retain an old one. Hence it becomes even more imperative to retain customers and try and see that one size fits all strategy does not work here. Every customer is unique and needs to be handled differently. Some of the major reasons why customers defect are:  Pricing: Customers are very sensitive to pricing and any increase in the same can lead to termination of relationship. This is especially true when the economy is on a downturn and customers are trying to cut corners at all possible costs. This defection can happen for any product whether it is banking service, mobile services, rental services etc. The moment price is increased and is offered a better pricing somewhere else, customer defects.  Service: Customers have varied options to choose from and a slightest dip in service standards will lead to customers’ defection. Service plays a vital part in the relationship and should not vary irrespective of what channel customers uses. Customers tend to be very finicky about how their servicing requirements are handled and tend to defect at a slightest hint of service not meeting their expectation.  Product: A bad product can lead to customer dissatisfaction leading to customer defection. A simple example of a new car introduced in the market without much emphasis given to after sales service and bad quality spares can lead to a bad publicity and word of mouth. This is worst publicity for an organization and will spell doom. The obvious signs like sales going down, market share decreasing and negative word of mouth publicity are some of the pointers which convey that everything is not well. What customers really want is simple and meaningful relationship with organizations and expects a seamless experience to them when they call, contact, communicate, or go to buy something. Organizations need to be extra careful and need to take care of certain things which will go a long way in understanding the customers mind and stop them from leaving. Some of the concerns which can be addressed in this regard are as follows. 1 6 7

Keeping promises Customers would have been sold a product or service with certain assurances on the pricing, servicing or the product features itself. Stick by it and don’t deviate. Don’t expect customers to run around the organization hierarchy to get their issues sorted. Deliver what has been promised. A good example was of bank whose sales representative promised a free gift during a sales promotion but did not stick by the promise. The affected customer life became a hell trying to get the issue resolved. The process of servicing needs to be simple and customers need to be clear on how to do business with the organization which will be beneficial to them. Adhering to what has been committed and sticking by it is an important component. Social Media Customers are becoming net savvy and access many social media sites like Face book, Orkut etc., for social networking purposes. The social media sites act as reference points between customers for experience sharing. Of late it is observed that the Social Media sites have gained ground for customers to air the good and bad experiences while dealing with a product, company etc. Organizations need to be watchful of such sites and ensure that negative publicity is nipped in the bud. Suitable customer centric strategies and policies need to be devised to ensure that proper grievance redressal mechanism exists along with specified SLAs. Most of major airline companies have twitter account wherein the customers tweet about their experiences, lost flights/luggage etc and they are responded by the concerned airlines staff. This shows that social media is here to stay and is playing an important role in assessing how a customer is going to behave and what is expected. Cross-Function Experience Customers expect seamless experience across the different organizations departments. All information required and communication should be available in one single place and if the customer approaches a branch irrespective of where he or she has an account, the front office agent should be able to help. An example of this was of a customer calling the bank to check the balances on his savings account. The next question he had on his credit card account and the agent referred him to another number to get clarifications and which was not the customer expected. So this means creating a single view of customer for all the organization staff to access and also provide uniform response across the different channels. Uniform data should be available across the different channels creating a feeling of one organization across the hierarchy. Customer Satisfaction Surveys 1 6 8

Have regular surveys conducted to see how satisfied the customer is and what are the issues which are bothering them. The surveys can be conducted online, through face to face interactions, through feedback from websites or response received from mailers. Once the feedback is there it is of prime importance to see that action is taken on those points. Top management commitment is of vital importance here in resolving the issues and also helping people in closing the gaps. Empowering Staff Many times customers defect because the agent or employee whom they were interacting with was not able to help them or provide the right information. It basically boils down to the organization not having a proper empowerment policy in place. Give adequate powers to people across the hierarchy to take decisions and close issues which need urgent action. Employees should be able to close call or offer an up sell / cross sell or reverse finance charges without escalating the matters to their superiors. A major bank has seen its customer satisfaction scores drastically go up after it empowered its front end staff. The staffs were able to take the right decision resulting in less customer calls and also leading to increased customer referrals. Innovative Products The market is full of newer products which will be an incentive for customers to defect. It is important to have the feet firmly on the ground and build a culture of innovation within the organization. Have regular meetings between the teams which interact directly with customers and also the marketing team to know what will fly and what will not. Such interactions help the backend product/marketing staff to understand the pulse of the market. Have regular customers meets across the different customer segmentation to understand what is it that the customer is looking for and if need be encourage them to come out with ideas which can be rewarded. A brilliant example was of an IT company which came out with a tool which actually helped customers to cut down the processing speed and actually save millions of dollars. The innovation was a byproduct of regular interactions between the customer and the IT Company. Customers expect products which are innovative and can help them and it is the responsibility of the organization to provide the same. 10.2 LEARNING FROM CUSTOMER DEFECTIONS On average, the CEOs of U.S. corporations los1e half their customers every five years. This fact shocks most people. It shocks the CEOs th6emselves, most of whom have little insight 9

into the causes of the customer exodus, let alone the cures, because they do not measure customer defections, make little effort to prevent them, and fail to use defections as a guide to improvements. Yet customer defection is one of the most illuminating measures in business. First, it is the clearest possible sign that customers see a deteriorating stream of value from the company. Second, a climbing defection rate is a sure predictor of a diminishing flow of cash from customers to the company—even if the company replaces the lost customers— because new customers cost money to acquire and because older customers tend to produce greater cash flow and profits than newer ones. By searching for the root causes of customer departures, companies with the desire and capacity to learn can identify business practices that need fixing and, sometimes, can win the customer back and reestablish the relationship on firmer ground. But if so much useful information can be wrung from a customer loss, why don’t businesses learn or even try to learn from customer defections? In ten years of studying customer loyalty, customer defections, and their effects on corporate cash flow and profits, I have uncovered seven principal reasons: Many companies aren’t really alarmed by customer defections—or they’re alarmed too late— because they don’t understand the intimate, causal relationship between customer loyalty on the one hand and cash flow and profits on the other. It is unpleasant to study failure too closely, and in some companies trying to analyze failure can even be hazardous to careers. Customer defection is often hard to define. Sometimes customer itself is a hard thing to define, at least the kind of customer it’s worth taking pains to hold onto. It is extremely hard to uncover the real root causes of a customer defection and extract the appropriate lessons. Getting the right people in your organization to learn those lessons and then commit to acting on them is a challenge. It is difficult to conceptualize and set up the mechanisms that turn the analysis of customer defections into an ongoing strategic system, closely supervised by top managers and quickly responsive to changing circumstances. Loyalty and Profits In general, the longer a customer stays with a company, the more that customer is worth. Long-term customers buy more, take less of a company’s time, are less sensitive to price, and bring in new customers. Best of all, they have no acquisition or start-up cost. Good long- standing customers are worth so much that in some industries, reducing customer defections by as little as five points—from, say, 15% to 10% per year—can double profits. CEOs buy the idea that customer loyalty matters; they would prefer to have loyal customers. But without doing the arithmetic that shows just how much a loyal customer is worth over the whole course of the customer life cycle, aCnEdOws i71tghaouugte ccaolcmuplaatninygptehrefonremt apnrceeseonnt value of the company’s present customer base, most the basis of 0

cash flow and profit. They rarely study the one statistic that reflects how much real value the company is creating, the one statistic with predictive power: customer retention. What keeps customers loyal is the value they receive. One of the reasons so many businesses fail is that too much of their measurement, analysis, and learning revolves around profit and too little around value creation. Their CEOs become aware of problems only when profits start to fall, and in struggling to fix short-term profits, they concentrate on a symptom and miss the underlying breakdown in the value-creation system. They see customer issues as subsidiary to profits and delegate them to the marketing department. In the most egregious cases, years of continuing defection can mean that former customers—people convinced by personal experience that the company offers inferior value—will eventually outnumber the company’s loyal advocates and dominate the collective voice of the marketplace. When that moment arrives, no amount of advertising, public relations, or ingenious marketing will prop up pricing, new-customer acquisitions, or the company’s reputation. Although some executives do realize that profits are really a downstream benefit of delivering superior value to customers—and that customer loyalty is therefore the best indicator of strategic success or failure—they lack the tools they need to focus their organizational learning on this most basic building block of profitable growth. They make the most of standard market research, including customer-satisfaction surveys, but such tools are simply not up to the task. (See the insert “The Satisfaction Trap.”) And yet the message that relative value is declining—and all the information a company needs to make sense of that bad news and design possible remedies—is available from the day trouble starts. Defecting customers have most of that information. They are always the first to know when a company’s value proposition is foundering in the face of competition. The Satisfaction Trap Many companies that use satisfaction surveys to learn how happy their customers are with their products or services. In Search of Failure The lifeblood of adaptive change is employee learning, and the most useful and instructive learning grows from the recognition and analysis of failure. A first step in getting the people in your organization to focus on failure analysis—in this case, customer defections—requires overcoming their preoccupation with success. Of course, success has lessons to teach. But businesspeople today are obsessed with success—and sometimes more obsessed with other people’s success than with their own. Benchmarking has become a feverish search for the nation’s or the world’s lowest costs, highest volumes, fastest growth. Academics, consultants, and executives scour the globe for approaches that have led to big profits in one situation so they can apply them in others. Yet this quest for best practice has created much less value than one might expect, and the people who stud1y systems can tell us why: When a system is working well, its success rests on a long chain17 of subtle interactions, and it’s not easy to

determine which links in the chain are most important. Even if the critical links were identifiable, their relative importance would shift as the world around the system changed. So even if we could point to the critical links and more or less reproduce them, we still could not reproduce all the relationships or the external environment in which they operate. What can help is the study of failure. The people who build, fly, and regulate airplanes understand this. Airline performance in the United States, as measured by the fatality rate, actually exceeds six sigma—3.4 defects per million opportunities—which is the demanding standard of quality many manufacturers pursue but probably don’t reach. When a plane crashes, investigators retrieve the flight recorder and spend whatever it costs to find out what went wrong. The result is that in a vastly complex and extremely dangerous operating environment, accidents have become rare events. One of the world’s consummate investors, Warren Buffett, reached a similar conclusion in his very different field. In 1991, he gave a speech at the Emory Business School in Atlanta, Georgia. He told his audience, “I’ve often felt there might be more to be gained by studying business failures than business successes. In my business, we try to study where people go astray and why things don’t work. We try to avoid mistakes. If my job was to pick a group of ten stocks in the Dow-Jones average that would outperform the average itself, I would probably not start by picking the ten best. Instead, I would try to pick the 10 or 15 worst performers and take them out of the sample and work with the residual. It’s an inversion process. Albert Einstein said, ‘Invert, always invert, in mathematics and physics,’ and it’s a very good idea in business, too. Start out with failure, and then engineer its removal.” In addition to their preoccupation with success, there is another reason companies make so little use of failure analysis. Psychologically and culturally, it’s difficult and sometimes threatening to look at failure too closely. Ambitious managers want to link their careers to successes; failures are usually examined for the purpose of assigning blame rather than detecting and eradicating the systemic causes of poor performance. Defining Defection Some customer defections are easier to spot than others. Customers who close their accounts and shift all their business to another supplier are clearly defecting. But what about customers who shift some of their purchases to another supplier, and what about those who actually buy more but whose purchases represent a smaller share of their total expenditures (a smaller share of wallet)? The story of MicroScan—then a division of Baxter Diagnostics and now of Dade International, recently acquired by Bain Capital—is illustrative. In mid-1990, MicroScan was neck-and-neck with Vitek Systems in a race for market leadership in automated microbiology. Both companies made the sophisticated instruments medical laboratories use to identify the microbes in patient cultures and determine which antibiotics will be most effective. Both companies were growing rapidly, converting customers from manual testing and edging out other manufacturers of automate1d equipment. MicroScan had worked hard to 7 2

improve quality and was thinking about applying for the Malcolm Baldrige National Quality Award. Perhaps because diagnostics was its business, perhaps because competition had heightened its quality awareness, MicroScan was intrigued with the notion of failure analysis. To make itself an even stronger, more profitable competitor, the company decided to seek out defectors and use them to uncover and correct shortcomings. It began by asking its sales force to identify customer defectors. The sales force assumed that the company’s executives meant total—that is, complete—defections and responded that there were almost none. A few customers had gone out of business, but in automated microbiology as in many other industrial businesses, total defections are relatively rare. Once companies have purchased equipment, they continue to buy consumables and service for many years. State Farm’s core customers are good drivers who value service. But the sales force was ignoring the fact that defections can be partial. A customer may buy some equipment, some consumables, some service from other suppliers, and these fractional defections have meaning. MicroScan was not getting 100% of subsequent sales on all its accounts, and given the hotly competitive environment in which the company found itself, management chose to use this more demanding standard to measure failure. As it happened, the sales force was ignoring another fact as well: Systematic analysis of billing records revealed that, in fact, there were quite a few total defections among small customers. The company interviewed every one of the lost customers and a large number of the partial defectors, searching for the root causes of each defection, especially when customers had defected to alternative microbiological testing equipment. The picture that emerged was clear, instructive, and painful. The customers interviewed were concerned about the reliability of MicroScan’s instruments. They had complaints about certain features of the equipment and felt the company was insufficiently responsive to their problems. There is always a strong temptation to rationalize these kinds of complaints: Those weren’t good customers to begin with; it’s not our fault that the customer’s technical staff is not sophisticated enough to use our instruments; customers that use our hot line all the time aren’t profitable anyway. But rationalization is just a way of failing at failure analysis, and MicroScan’s managers overcame their natural impulse to explain complaints away. Instead, they listened, learned, and took corrective action. They shifted R&D priorities to address the shortcomings customers had identified, such as test accuracy and time to result. Having learned that their line of instruments was too expensive for many small labs, they accelerated development of a low-end model and brought it to market in record time. They also redesigned their customer-service protocol to make sure that they gave immediate attention to equipment faults and delivery problems. MicroScan’s ability to learn from failure paid of1f. Two years later, the company pulled away from Vitek to achieve clear market leadership, a73nd it now enjoys the bottom-line benefits that

go with it. Tracking and responding to customer defections, however uncommon—and they are now less common than ever—have become central to the way MicroScan does business. Core Customers In the process of deciding how it wanted to define customer defections, MicroScan had to make two critical judgment calls. The first involved the size of the unit of failure. Managers tightened the definition of defection: It no longer meant the total loss of a customer but rather the loss of any portion of that customer’s business. Then they defined just who the company’s core customers really were, recognizing that small labs were indeed important customers. Giving core customers good reason to stay loyal was, in the long run, what made the decisive competitive difference between MicroScan and Vitek. Unfortunately, identifying core customers is not always as easy as it looks, especially in industries where the competitive landscape is changing. But the effort is well worth it. In fact, defining core customers can be one of the most critical strategic processes a CEO ever sets in motion. Although it may uncover an unexpected well of uncertainty and inconsistency, it will lead to a deep, animated discussion of the company’s basic mission and its ultimate goals. The most practical way to get started is by answering three overlapping questions. First, which of your customers are the most profitable and loyal? Look for those who spend more money, pay their bills more promptly, require less service, and seem to prefer stable, long- term relationships. Second, which customers place the greatest value on what you offer? Some customers will have found that your products, services, and special strengths are simply the best fit for their needs. Third, which of your customers are worth more to you than to your competitors? Some customers warrant extra effort and investment. Conversely, no company can be all things to all people: Customers who are worth more to a competitor will eventually defect. The answers to these three questions will produce a list of your most obvious core customers. Identifying that group will give your management team a head start on the much more difficult task of developing the larger definition of core customer that your company will use in screening its customer base to see which defections warrant analysis. The discussion should also involve close scrutiny of some measurements and statistics that you ought to make sure you have available, among them the life-cycle profit pattern and the net present value of each customer segment, your share of customer wallet, and average customer retention by segment, age, and source. Mass marketers such as banks and insurance companies often believe they must serve and satisfy all customers equally, and they therefore give equal attention to finding the root causes of all defections. Many companies give equal weight to first-class and third-class defectors in allocating resources to counteract defections, and some overzealous customer- recovery units spend money to save unprofitable customers or customers with negative value. Companies with high fixed costs, such as automakers, airlines, and telephone companies, fall easily into this trap. Every customer brings in1 revenue that helps offset fixed costs, they reason, so every customer is a good custom74er. But the companies that have achieved

extraordinary levels of customer loyalty have discovered they must concentrate their efforts on that subset of customers to whom they can deliver consistently superior value. State Farm Insurance, for example, which serves more than 20% of North American households, knows it must focus intently on its own kind of auto-insurance customer: the better-than-average driver who values agent service. Sir Colin Marshall, chairman of British Airways, put it this way in a recent interview (HBR November–December 1995): “Even in a mass-market business, you don’t want to attract and retain everyone… The key is first to identify and attract those who will value your service and then to retain them as customers and win the largest possible share of their lifetime business.” This is a good place to point out that all the techniques of root-cause defection analysis are important not just for customer retention but also for new-customer acquisition. After all, your new customers are some other company’s defectors. By interviewing them to find out why they left and came to you and by watching to see how much of their spending you earn and retain, you can learn a great deal about them and about how to improve your company’s customer-acquisition strategy. What percentage of newly acquired customers fits your definition of core customers? Are you effectively promoting your real strengths and attracting the kinds of customers your value proposition was designed to serve? How do your new customers compare with your competitors’ new customers and how do they compare to your defectors? One of the secrets of sustainable growth is to find and keep the right customers— core customers. If your advertising, sales incentives, or marketing promotions draw unprofitable or marginal customers, the sooner you know it—and fix it—the better. Root-Cause Analysis Getting to the root causes of human behavior takes a lot of time, effort, and experience. In a factory setting, where root-cause failure analysis has been perfected over decades, the process is known as the five why’s because you usually have to ask why something happened at least five times to get to the root of a failure. For example: Why did the product get returned as defective? The connector came loose. Why did the connector come loose? The plug was out of tolerance. Why was the plug manufactured out of tolerance? The intermediate stamping machine failed. Why did the stamping machine fail? 1 Routine maintenance wasn’t done on schedule. 7 5

Why? There is an attendance problem in the maintenance department. After five why’s, you begin to see what needs to be fixed, though it may actually take a few more questions to figure out the best solution. Since applying this type of rigorous analysis to every single defect a plant experiences would be absurdly expensive, smart companies first perform a statistical frequency analysis, so they can concentrate their efforts on the 20% of categories that account for 80% of defects (applying Vilfredo Pareto’s 80/20 rule). Understanding weaknesses in customer value is much more difficult than understanding why a part was stamped out of tolerance in a plant. Objective fact is a big part of the five why’s. The plug did not meet the precisely defined specifications for all such plugs. But the specifications for customer value are individual and tend to be subjective, so the only way to assess them is to interview customers and ex-customers and learn what they want and their views of the value they have received. The level of value a customer perceives can be defined as the time-weighted sum (more recent experiences are weighted more heavily) of all interactions with the company. So a good place to begin the search for failure is by reviewing the history of those interactions. (See the insert “Rooting Out the Causes of Defections: A Case Study.”) Occasionally, a single event is so powerful it leads to defection all by itself (“your clerk swore at me”), but that is the exception. In most cases, a series of events leads slowly to a decision to seek better value elsewhere. To assess the root cause of a defection, the interviewer must typically identify three or four disappointing events and weigh them appropriately. The Customer Corridor In many businesses, including banking, insurance, and other service industries, the customer corridor has a second set of doorways made up of the major changes in a customer’s private life, which, along with competitors’ efforts to lure the customer away, are represented by arrows below the corridor. Career moves, relocations, lifestyle changes, and almost any family watershed—a marriage, birth, divorce, or death—are often occasions for delivering additional value to the customer. In fact, if a company does not gear its products and services to such events, family upheavals will almost certainly produce defections. Banks that have analyzed defection frequencies find that changes of this kind increase the probability of defection by 100% to 300%. For obvious reasons, relocation is a prime culprit; but root-cause interviewers looking only at the arrows along the top of the corridor would miss that cause. Once you have mapped out the customer corridor for your business, it is time to begin interviewing defectors in earnest—probing customer behavior, uncovering the root causes of each defection, and testing various solutions to see which, if any, would have saved the relationship. One secret to this process is to have the right people take part. It can’t be done with focus groups. Professional focus-group lea1ders from outside the company cannot have the deep knowledge of the business they need 76to ferret out root causes, and asking groups

why they made individual purchase decisions produces nothing but groupthink. (If focus groups have a role, it may be to brainstorm solutions to specific root causes once they have been determined to have a high priority for core customers.) You can’t contract the interviewing to a group of market research specialists, either, because they simply cannot know enough about your organization and its competitive situation, market and pricing strategies, cost position, and capabilities. Failure analysis demands a thorough understanding of the business system and its economics and a clear sense of what scale and unit of failure to scrutinize. In other words, failure analysis requires the guidance of senior managers. And if there is any uncertainty about precisely who the company’s core customers are, or if the company needs to think about altering its value proposition or modifying its distribution channels, or if the defection data is incomplete, or if competitive conditions are undergoing rapid change, or if the organization is setting about failure analysis for the very first time— and there are probably very few businesses that meet none of those conditions—then senior managers must actually perform the failure analysis themselves. The first step is to gather the senior management group (five or ten top executives) plus a sampling of respected frontline personnel—branch managers, say, or leading salespeople. Be sure to include people whose behavior will probably need to change. You must convince them that this diagnostic process has a top priority, and you must make it clear that they will not escape without making personal phone calls to defectors. Some will be very reluctant. Most people don’t relish the idea of phoning strangers, let alone strangers who’ve been unhappy with the value they’ve received, and you will have to overcome that reluctance with leadership, peer pressure, and, if necessary, coercion. There is simply no substitute for having senior executives learn directly from defectors why the company’s value proposition is inadequate. There’s no substitute for having executives hear for themselves what went wrong. Before making the calls, the group must determine which defectors are worth calling. You need to look at market research and satisfaction surveys, consider the opinions of frontline personnel about why particular customers behaved as they did, and identify differences between your company and your competitors with regard to business processes, structure, financial incentives, quality measurement, and value proposition. If your current information system is not up to the task of identifying key defectors, it is possible to assign telephone reps to call a large sample of apparent defectors and separate the wheat from the chaff by getting answers to half a dozen questions. You need to know something about their demographics— age, income, education, and so forth. You want to know how long they’ve been doing business with your company and to find out enough about their actual purchase history to determine whether or not they are core customers. And you need to make sure they have actually defected to a competitor, not simply stopped buying the product altogether. (The auto-insurance customer who sells the family car and switches to public transportation is not a defector but simply a former customer.) Phone reps are often a good investment because they not only collect basic data about each c1ustomer’s demographics and true purchase history, they also can set up appointments for co77mpany executives to call back for a full root-

cause interview. Most ex-customers will be so delighted at the prospect of a senior executive listening to their problems and complaints that they will leap at the opportunity. Sometimes, of course, you will need to offer them an incentive. Go ahead and spend what it takes to talk with a true representative sample of your target defectors. When you’ve done all this, assign each executive (yourself included) 10 to 25 defectors. When you’ve interviewed a quarter to a third of your defectors, you should reconvene to discuss what everyone is hearing, resolve any problems with the process, share best practices, and most important, use these early interviews to develop a preliminary list of corrective actions the company might take. Additional interviews can then focus on the most important questions and test hypotheses. The final step is the joint development of an action plan based, of course, on the results of the defector interviews. The group will probably come up with some remedies that require little spending or preparation and can therefore be tested at once. Others may require further research or analysis because of the size of the necessary investment. The frontline managers included in the executive group will help to ensure that your interpretations of customer behavior are reasonable and that your proposed improvements can be carried out. One word of warning: The realization that every company has some customers it’s better off losing poses a special hazard to companies engaged in defection analysis. The danger is that on the basis of inadequate information, the company will mistakenly identify potentially valuable customers as dispensable, ignore the lessons they have to teach, and make no effort to retain them. Such mistakes are easy to make because some first-class defectors are disguised as third-class. They were once outstanding customers and could be again, but by the time they’re ready to leave, they’ve already moved a substantial share of their wallet to a competitor. As partial defectors, they look like unprofitable customers. But accepting the disguise at face value means accepting undesirable defections; it can tempt the company to under-invest in the kinds of improvements that make customers want to stay. These situations call for something resembling defection archeology—uncovering and analyzing several layers of historical and current data. For example, one leading credit card company has built a computer system that lets its telephone reps instantly evaluate any customer who calls to cancel an account. The system is based on the potential profit from the customer’s entire wallet, not merely on the company’s present share, so a shift of spending to a competitor won’t fool it. The phone rep can offer appropriate incentives to the best customers, and the company can watch to see whether the offers provide enough value to keep customers on board. Because of the inevitable tendency to dismiss all defectors as undesirable, knowing the true, sometimes hidden value of a defector turns out to be critically important in activating root-cause tracking systems. In the case of a credit card company, information about a customer’s entire wallet can be derived from credit-bureau reports. In banking, you can look at customers’ mortgage applications to see where they keep their assets1. In a few other industries, vendors make a business of collecting such data (the Nielsen rat78ings for television are one example). In most

industries, however, the only way to determine share of wallet is to conduct a survey of your own and your competitors’ customers. In other words, you have to ask. Getting the Right People to Learn the Right Lessons Unfortunately, useful learning is not closely related to the quantity of information available. If it were, we’d all be swimming in skills and expertise. Useful learning is instead a matter of getting the right information to the right people and giving them good reason to want to use it. Market research with its customer questionnaires, satisfaction surveys, and focus groups was developed to give marketing departments the information they needed to set prices and design packaging, advertising, and promotions. It was not invented to help frontline employees provide better service or to give them better incentives or to solve the problems that cross departmental boundaries. Market research has the added drawback that those who learn most about customers are often the researchers, who usually are outside experts. They produce reports for managers (usually in marketing) who then interpret the findings for senior management. By the time information works its way back down the organization to frontline managers and employees in sales or service, it is too general to be at all useful. The research we call root-cause analysis eliminates many of these weaknesses. When frontline managers and employees know the causes of customer dissatisfaction but cannot convince senior managers, the interviews that executives themselves conduct are nearly always persuasive. When frontline managers are mistaken about what is actually driving customers away, the immediacy, depth, and credibility of root-cause interviewing—they can often listen to taped interviews for themselves—overwhelms skepticism. But although root-cause analysis enables people to learn, you still need some systematic way of getting them to want to learn. Therefore, the indispensable first step in unleashing the power of defection analysis is to make appropriate changes in measures, incentives, and career paths. In many organizations, the current incentives do little or nothing to make anyone care about fixing defections. Branch managers in a typical bank are paid bonuses on a variety of measures ranging from budgets to satisfaction surveys. Learning why customers defect takes time and energy, so unless it’s clear to branch managers that their annual bonuses are tied to reducing attrition, supplying them with world-class failure-analysis technology won’t improve their decision making. Likewise, the marketing manager whose bonus is based on the volume of new deposit dollars generated through CD promotions doesn’t really care if new depositors defect next year. And the credit-collections manager whose bonus is based on the balances collected from delinquent credit cards doesn’t long to learn why customers defected from other bank products, such as savings and checking accounts. Often the most important barrier to learning from defections is that employees can’t see how the learning relates to their own success. Even in companies that care enough about re1tention to engineer effective incentives, it’s sometimes necessary to remind employees h79ow important it is to continue improving

retention rates. Even though State Farm’s agent-compensation structure was more heavily geared to retention than most competitors’, managers at headquarters discovered that some of the company’s agents had grown complacent. To shake them up a bit, the company calculated what would happen to an agent’s income if he or she could achieve a one-percentage-point improvement in customer retention. The answer—a 20% increase in average annual earnings!—was just the tonic the company needed for its agents. Lexus is another company that has cared passionately from the beginning about earning customer loyalty. The new carmaker chose dealers who had demonstrated a commitment to customer service and satisfaction. But like State Farm, Lexus has found it useful to let dealers know exactly how much their improved retention of customers is worth to them in dollars. The company has constructed a model that can be used to calculate how much more each dealership could earn by achieving higher levels of repurchase and service loyalty. These cash-flow calculations are important reminders, even for those who already believe in the importance of customer retention, because for some reason, raising annual retention rates just a few points doesn’t impress people. Perhaps we should multiply all our numbers by 100 or 1000. Every baseball fan knows there’s a world of difference between a .280 hitter and a .320 hitter, but the actual difference is only four percentage points. Business needs a similar way to dramatize the enormous potential of a four-percentage-point improvement in customer retention. Making Failure Analysis Permanent Once you have mastered the interviewing and analysis techniques, customer defections become such a rich source of information that you will want to make the system permanent. This is both harder and easier than it might seem. To begin with, you need to build a measurement system to monitor whether and how effectively the solutions you’ve arrived at are reducing defection rates. Share of wallet is one such measure, and to make it really useful you need to break it down further into the percentage of customers giving your business an increasing share of wallet and the percentage giving you a decreasing share. Another essential measure is the defection rate itself, calculated separately for separate groups of customers— your best core customers, the rest of your core customers, the rest of your customers, and, perhaps, the customers you wouldn’t mind losing. You also need to monitor the frequency of various root causes to make certain that problems are actually being solved and that new problems don’t arise undetected. And you need to create an ongoing mechanism that keeps senior managers permanently plugged into frontline customer feedback. Lexus asks every member of its headquarters staff to interview four customers a month. MBNA, the credit card giant, asks every executive to listen in on telephone conversations in the customer-service area or the customer-recovery units. Some of those executives make the phone calls themselves. Every company benefits when executives can combine decision-making economics with lessons learned directly from customers and defectors. The alternative is to depend on research conducted by outsiders who will never really understand your business, you1r competition, or your customers, and who 8 will never really care. 0

Executives at MBNA listen in on customer-service calls. Deere & Company, which makes John Deere tractors and has a superb record of customer loyalty—nearly 98% annual customer retention in some product areas—uses retired employees to interview defectors and customers. USAA—the insurance and financial- services company based in San Antonio, Texas, that has come closer than any other U.S. company to eliminating customer defections altogether (it loses target customers at a rate of 1.5% per year, and most of that number are people who die)—treats customer defections very, very seriously and has pushed its analysis of them to a kind of pinnacle. The company recognizes that any event on the internal or external customer corridor that produces a spike in defection frequency highlights a dimension of customer value that needs improvement. USAA also tracks wallet share and retention rates separately by life-stage segment—for example, it knows when customers defect partially or entirely because their children have reached driving age and need auto insurance—so the company can spot problems and opportunities early and develop responses. In addition, focus groups of employees frequently review their customer interactions and draw up recommendations. Finally, to supplement its defector surveys, USAA has built an on-line system called Echo that enables telephone sales and service reps to input customer suggestions or complaints as they occur. Managers analyze all this data regularly to look for patterns, and they review problems and potential solutions at a monthly meeting with the CEO. The CEO then makes a formal quarterly report on customer retention to the board of directors. This careful, thorough, methodical approach to customer loyalty makes a striking contrast to the practice at most companies, where customer defection is either ignored, undervalued, or misunderstood. The key to customer loyalty is the creation of value. The key to value creation is organizational learning. And the key to organizational learning is grasping the value of failure. As Vilfredo Pareto said more than 70 years ago, “Give me a fruitful error any time, full of seeds, bursting with its own corrections.” Customer defection is a unit of error containing nearly all the information a company needs to compete, profit, and grow. 10.3 EVALUATING CUSTOMER RETENTION PLAN 1. Determine what success means to you. 2. Identify the customer retention metrics that can help you inform your goals. 3. Get the data you need to calculate your metrics. 4. Determine your benchmark. 5. Set a SMART goal. 6. Monitor the data at an ongoing cadence. 7. Adjust as necessary. 1. Determine what success means to you. 1 8 1

First things first, you need to figure out what success means to your business. This will vary depending on your scale, industry, or previous performance in the market. So, in order to improve something, you need to determine what needs to be improved, and how to improve it. Some examples of questions you should ask yourself include: Are customer lifecycles too short? Are too many customers churning? Is it taking too long for them to purchase again? Once you’ve identified your problem, you’ll understand what success means to you. A customer lifecycle for our business should be X. X% fewer customers should churn. We should be able to upsell them X times sooner. And if you were able to achieve this success, what would it mean to your business? Those results could give you $X more revenue annually. If you know what your areas of focus are, you can more concretely measure the things that matter. 2. Identify the customer retention metrics that can help you inform your goals. You know what success means to you, but you need to figure out how to get there. Take a step back and look at the factors that affect that definition of success. Different metrics are used for different goals, and measuring the wrong thing could take the focus off the right things. Click here to jump to the full list of metrics. For this step, customer retention is good for determining how well customers like your business, while churn rate is more specifically to see the customers lost. By isolating the factors you need to look for, you’re more likely to calculate precise results than if you used too many variables. 3. Get the data you need to calculate your metrics. Upon identifying the metrics necessary, pull from your data the information that’s needed. If you’re using a customer relationship management system to track your customers and their buyer journey, then you should be able to easily extract the numbers from recorded history. For example, we’ll use the customer retention rate for this section. This formula calls for the number of customers you have at different times. Customers at the beginning of the period 1 Customers acquired during the period 8 Customers at the end of the period 2

Pull only the data relating to your number of customers from those time periods and input them into the correlating formula. 4. Determine your benchmark. A benchmark is a standard or point of reference against which things can be measured. It’s important to know your benchmark because it can tell you where you are in comparison to your previous data, and see if you’re improving or falling behind. For example, we’ll reference back to the customer retention rate example for setting a benchmark. Customer Retention Rate = (Customers at the End of the Period) - (New Customers Acquired) / Customers at the Start of the Period If you had 100 customers at the start, 90 customers at the end, and 5 new customers, your retention rate would be 85%. This 85% could be your new benchmark. Now ask yourself two questions: Are we improving based on the original benchmark? Is our performance good or bad vs. the rest of the industry? Use your original benchmark to set realistic goals for the coming period to see how you measure against it. 5. Set a SMART goal. With your benchmark in mind, it’s time to set your SMART goal. This gives criteria to guide in the setting of objectives in things like project management, employee performance management, and personal development. The acronym SMART stands for the parameters needed to assign your goal: Specific: Make your goal specific or narrow. Measurable: Define how you’ll track and prove its progress. Attainable: Make your goal realistic for the period. Relevant: Align your goal with your values or purpose. Time-based: Assign an end date to your goal to prioritize. Remember, your SMART goal is relative to your business, so don’t overshoot or exaggerate it to compare to your competitors. So back to that customer retention example, you have a benchmark of 85% retained customers. Based on your business, you may want to make your new SMART goal 90% by the end of the year, measured monthly in the CRM, to create a business your customers love coming back to and advocating for. 1 8 3

6. Monitor the data at an ongoing cadence. You want to keep up with the metrics you're tracking so that you understand what progress you're making toward your goal. However, it's unreasonable to watch the data every minute of every day. Determine how often you pull the numbers again. This could correlate with a monthly meeting, quarterly report, or another time frame that works for your business. You also want your metrics to be accurate, so check for any surprises in the numbers and see what conclusions you can draw upon as time progresses. 7. Adjust as necessary. Whether you reached your goal or missed the mark, you don’t stop there. Keep adjusting your goals as you scale and grow your business to accommodate any changes your business experiences, and keep customers coming back to — or even advocating for — your business. Now we know how to measure customer retention, but let’s dial it back and define what customer metrics are in the first place. 10.4 EMERGING TRENDS IN CRM CRM is, probably, one of the least clearly defined business acronyms, as there is no single definition for it. It is probably easier to say what CRM is not. Unfortunately, CRM has also become a misnomer for a range of solutions from vendors, each providing its own spin on the idea. CRM is variously misunderstood as a fancy sales strategy. It is none of these. CRM is a simple philosophy that places the customer at the heart of a business organizations processes, activities and culture to improve his satisfaction of service and, in turn, maximize the profits for the organization. A successful CRM strategy aims at understanding the needs of the customer and integrating them with the organizations strategy, people, technology and business process. Therefore, one of the best ways of launching a CRM initiative is to start with what the organization is doing now and working out what should be done to improve its interface with its customers. Then While this may sound quite straightforward, for large organisations it can be a mammoth task unless a gradual step-by-step process is adopted. It does not happen simply by buying the software and installing it. For CRM to be truly effective, it requires a well- thought-out initiative involving strategy, people, technology, and processes. Above all, it requires the realisation that the CRM philosophy of doing business should be adopted incrementally with an iterative approach to learn at every stage of development. FUTURE CRM TRENDS Here are some upcoming trends the CRM solutio81n vendors are following − 4

Integrating Data from Multiple Channels The CRM solution providers are working on moving social media data to more secure communication channel. They are also exploring how they can integrate unstructured data coming from multiple channels such as Email and mobile smartphones. Handling Big Data As the data is penetrating from multiple channels with high volume, velocity, and variety, the CRM solution providers are exploring how this big data can be managed well to be able to use effectively. Shifting to Cloud-based CRM The businesses are preferring cloud-based CRM software to overcome the problems with on premise CRM software (in which every new feature development requires an expensive upgrade). The cloud-based CRM also lessens the burden of business for investing in infrastructure. Social CRM The customers are into the practice of reading reviews, recommendations, and judging the product or service before deciding to purchase. The businesses are keen to employ social CRM tools in their CRM software as the social media can bring an insight of customer preferences and behavior. The Mobile CRM is Expected to be Powerful Today’s CRM solution providers are investing a handsome amount to bring more rigor in the mobile platforms of CRM applications. Using CRM data effectively The historical and current data of the customers is so huge that the CRM users spend more time in entering the same in the system than using it effectively for beneficial purpose. CRM solution providers are also working on providing simpler and easier ways of handling customer data using mobile devices. CRM Software Systems with Wearables It is the next big revolution in the development of CRM software systems. Wearable are the devices worn by the consumers to track their health and fitness information. If CRM applications are integrated with wearable computing devices, then the businesses can get benefited by having real time information of customers and access to their account data. The businesses can then engage with their customers effectively and discover opportunities of selling and enhancing customer relationships. Creating Best Customer Experiences 1 8 5

Though life is not all segregated between black and white moments; for the customers and businesses it is. The customers remember business products and services by associating with best and worst experiences. The businesses using CRM are placing the activities related to making their customers feel good in their list of top priorities. CRM to XRM xRM is evolved CRM. There is little limitation in the word CRM which depicts Customer Relationship Management. XRM is eXtreme Relationship Management, or Any (replace X with any value) Relationship Management. The scope of XRM is different and larger than the scope of CRM. For example, a business is managing contracts, grievances, policies, building assets, parking violations, property taxes, etc. The list is near to endless. This all management is catered by XRM, a business can manage the relationship of anything within itself. 10.4 SUMMARY Customer complaints refer to when a business does not deliver on its commitment and does not meet customer expectations in terms of the product or services. The vital aspect of every business is its clients. For greater success, businesses need more satisfied clients. And the best way to obtain new clients and maintain the existing ones is by providing them with satisfactory service. But how to understand whether your customers are happy or unhappy? A customer complaint emphasizes a problem that might be related to an organization’s product, employees or internal processes, and by hearing these problems directly from customers, an organization can investigate and improve to avoid additional complaints in the future. The company interviewed every one of the lost customers and a large number of the partial defectors, searching for the root causes of each defection, especially when customers had defected to alternative microbiological testing equipment. The picture that emerged was clear, instructive, and painful. The customers interviewed were concerned about the reliability of MicroScan’s instruments. They had complaints about certain features of the equipment and felt the company was insufficiently responsive to their problems. CRM roadblocks are the obstacles occur during the business planning or requirements gathering which do not allow the CRM to set right thing at right time. CRM is, probably, one of the least clearly defined business acronyms, as there is no single definition for it. It is probably easier to say what CRM is not. Unfortunately, CRM has also become a misnomer for a range of solutions from vendors, each providing its own spin on the idea. CRM is variously misunderstood as a fancy sales strategy. It is none of these. CRM is a simple philosophy that places the customer at the heart of a business organizations processes, activities and culture to improve his satisfaction of service and, in turn, maximize the profits for the organization. 1 8 6

10.5 KEYWORDS Defection: Some customer defections are easier to spot than others. Customers who close their accounts and shift all their business to another supplier are clearly defecting. But what about customers who shift some of their purchases to another supplier, and what about those who actually buy more but whose purchases represent a smaller share of their total expenditures Customer complaints refer to when a business does not deliver on its commitment and does not meet customer expectations in terms of the product or services. The vital aspect of every business is its clients. For greater success, businesses need more satisfied clients. And the best way to obtain new clients and maintain the existing ones is by providing them with satisfactory service. 10.6 UNIT END QUESTIONS A. Descriptive Questions Short Questions: 1. How to analyze Customer Complaints? 2. What are the different types of Customer Complaints? 3. What keeps customers loyal is the value they receive. Long Questions: 1. Describe the steps in handling customer’s complaints. 2. How to Measure Customer Retention 3. Explain the emerging trends in CRM. B. Multiple Choice Questions 1. Which among the following is a major part of applications and techniques that help in gathering, storing, analyzing, and accessing the data? a. Business analytics b. Data visualization c. Data mining d. Virtual reality 2. The process of analyzing and extracting the important information from a pile of collected data is defined as ___. a. Process Management b. Success data 1 c. Knowledge Discovery 8 7

d. None of the above 3. Visualization or data visualization is a ___ tool that helps in interpreting data using visuals or images. a. Business Analytical b. Program Analyst c. Data Analyst d. Customer Analyst 4. The ___ protocol is the most commonly used enabling technology in tackling integration issues. a. Session Initiation b. Session Transmission c. Network d. Data Transfer 5.___ is a technology that computerizes interactions with telephone callers a. Software Response b. Interactive Voice Response c. Application Response d. None of the above Answers 1-a, 2-c, 3-b 4-a 5-a 10.7 REFERENCES References book  Aswathappa, K. (2002). Customer Relationship Management.New Delhi: Tata McGraw-Hill.  Dessler, G. (2012). Customer Relationship Management.New Delhi: Prentice-Hall of India.  Rao, V.S.P. (2002). Human Resource Management: Text and cases. New Delhi: Excel Books. 1 8 8

UNIT – 11SERVICE MARKETING STRUCTURE 11.0 Learning Objectives 11.1 Introduction 11.2 Growth of Service in India 11.3 Service Customer Classification 11.4 Service Marketing Mix 11.5 Service Recovery 11.6 Characteristics of Business Markets 11.7 Summary 11.8 Keywords 11.9 Learning Activity 11.10 Unit End Questions 11.11 References 11.0 LEARNING OBJECTIVES After studying this unit, you will be able to:  Describe Growth of Service in India  Identify Service Customer Classification  State the need and importance of Service Marketing Mix  List the Characteristics of Business Markets 11.1 INTRODUCTION Services marketing is a form of marketing businesses that provide a service to their customers use to increase brand awareness and sales. Unlike product marketing, services marketing focuses on advertising intangible transactions that provide value to customers. 1 8 9

Advertisers use effective services marketing strategies to build trust with their customers and show them how their service can benefit them. Businesses may base their services marketing strategies on the promotion of ideas, benefits and promises to help them sell their services. For example, a company that provides wellness coaching may promote the benefits of adopting a healthier lifestyle, the promise that they can help their customers achieve their fitness goals and the idea that incorporating an effective wellness routine is easier with the help of a certified coach. Here are some tips to help you create an effective services marketing strategy for your next campaign:  Incentivize potential customers. One strategy to market your services is to provide customers with an extra incentive. Consider offering new customers a one-time discount or a free gift as part of a special promotion.  Implement a referral program. Another great way to market your services is to encourage your current customers to tell their friends, family members and colleagues about your business. You can offer customers a discount, upgrade or another incentive for every person they refer that signs up for your service.  Nurture existing customer relationships. Continue to check in with your current customers regularly to ensure they are happy with your service and identify any additional needs they may have. You can reach out to them via email, phone call, survey or by providing exclusive discounts to current customers.  Embrace digital marketing. In addition to creating a professional website to promote your services, consider creating business pages and profiles on popular social media platforms. This can make it easier for potential customers to connect with you and learn more about the services you provide.  Get involved with your community. Get involved by attending trade shows, networking events and volunteer opportunities. This can help you showcase your values as a service-based business, meet potential customers and increase referrals. It can also help you form valuable partnerships with other businesses in your area.  Ask for customer testimonials. Incorporating customer testimonials into your services marketing strategy can help you generate trust with your target audience. Customer testimonials can be effective because they show people how you have helped other customers who may have similar needs.  Showcase your awards and badges. If you've received any service verification awards or badges that set your business apart from your competitors, consider incorporating them in your services marketing strategy.  Focus on the process. While your customers are interested in the end result your service can provide, the way you offer your service can also provide value. Let 1 9 0

potential customers know about unique features you offer such as flexibility, responsiveness, personalized services or payment plans.  Highlight your people. Show the people behind your services through employee advocacy. Include employees in your marketing materials. You can use professional photos of your team, video interviews or quotes from your employees. 11.2 GROWTH OF SERVICE IN INDIA India has the fastest growing (9.2 percent in 2015-16) service sector in the world with the lowest share of services employment (28 percent in 2014), contributing about 66 percent to the Indian GDP. The government is taking aggressive steps to increase India’s commercial services exports share in the global services market (from 3.3 percent in 2015), and to enable multi-fold growth in the GDP ($2.3 trillion in 2016). In addition, not only 34 percent of the manufacturing jobs are service-type functions but also a dollar’s worth of final demand for manufacturers generates $1.48 in other services and production. This further increases the importance of services in the economy and job creation. India’s distinctive competencies and competitive advantage formed by the knowledge-based services makes it unique emerging market in the world. Backed by several government initiatives, the services sector in India has the potential to unlock a multi-trillion dollar opportunity which can create symbiotic growth for all nations. Deloitte India has worked with the Confederation of Indian Industry on a publication highlighting and introducing the opportunities in various services sectors in India. This publication provides the industry profile of key services sectors, such as IT, telecom, media and entertainment, health care, banking and financial services, retail, railways, environment, energy, logistics, exhibition and events, facility, education, space, skills, start-ups, and sports. The publication in particular highlights the focus of each sector on various government initiatives—Skill India, Digital India, Start-up India, and Make in India. It also focusses and delves into special areas such as cyber security, trade facilitation, and start-ups/SMEs in services sectors. The services sector is not only the dominant sector in India's GDP, but has also attracted significant foreign investment, has contributed significantly to export and has provided large- scale employment. India's services sector covers a wide variety of activities such as trade, hotel and restaurants, transport, storage and communication, financing, insurance, real estate, business services, community, social and personal services, and services associated with construction. 1 9 1

MARKET SIZE The services sector of India remains the engine of growth for India's economy and contributed 53% to India's Gross Value Added at current prices in FY22 (until January 2022). India's services sector GVA increased at a CAGR of 11.43% to Rs. 101.47 trillion (US$ 1,439.48 billion) in FY20, from Rs. 68.81 trillion (US$ 1,005.30 billion) in FY16. Between FY16 and FY20, financial, real estate and professional services augmented at a CAGR of 11.68% (in Rs. terms), while trade, hotels, transport, communication and services related to broadcasting rose at a CAGR of 10.98% (in Rs. terms). India's IT and business services market is projected to reach US$ 19.93 billion by 2025. Services exports comprise a major part of the total export from India. According to the RBI, between April-September 2021, India's service exports stood at US$ 117.6 billion, whereas imports stood at US$ 65.20 billion. In February 2022, the Purchasing Managers' Index stood at 51.8, compared with 51.5 recorded in January 2022. The India Services Business Activity Index/ Nikkei/IHS Markit Services Purchasing Managers' Index stood at 55.2 in September 2021, compared with 56.7 in August 2021. In February 2022, the Purchasing Managers' 1Index stood at 51.8, compared with 51.5 recorded in January 2022. 9 2

INDUSTRY DEVELOPMENTS Some of the developments in the services sector in the recent past are as follows:  In October 2021, India's service exports increased by 23.52% to reach US$ 20.86 billion, while imports stood at US$ 12.71 billion.  In June 2021, India's exports increased by 48.34% to US$ 32.5 billion, marking the seventh consecutive month of growth.  The Indian services sector was the largest recipient of FDI inflows worth US$ 88.95 billion between April 2000 and June 2021. The services category ranked 1st in FDI inflow as per data released by the Department for Promotion of Industry and Internal Trade (DPIIT).  In the first-half of 2021, private equity investments in India stood at US$ 11.82 billion, as compared with US$ 5.43 billion in the same period last year.  In August 2021, the Department of Telecommunications (DoT) issued a letter of intent (LoI) to OneWeb (backed by Bharti Group) for satellite communication services licence.  In July 2021, Tata Teleservices collaborated with Zoom Video Communications to offer bundled communication services.  In April 2021, the Ministry of Education (MoE) and University Grants Commission (UGC) started a series of online interactions with stakeholders to streamline forms and processes to reduce compliance burden in the higher education sector, as a follow-up to the government's focus on ease of doing business to enable ease of living for stakeholders.  By October 2021, the Health Ministry's eSanjeevani telemedicine service, crossed 14 million (1.4 crore) teleconsultations since its launch, enabling patient-to-doctor consultations, from the confines of their home, and doctor-to-doctor consultations.  In April 2021, Elon Musk's SpaceX has started accepting pre-orders for the beta version of its Starlink satellite internet service in India for a fully refundable deposit of US$ 99. Currently, the Department of Telecommunications (DoT) is screening the move and more developments will be unveiled soon.  In December 2020, a cohort of six health-tech start-ups—AarogyaAI, BrainSightAI, Fluid AI, InMed Prognostics, Wellthy Therapeutics, and Onward Assist—have been selected by the India Edison Accelerator, fueled by GE Healthcare. India Edison Accelerator, the company's first start-up partnership programme focused on Indian mentors, creates strategic partners to co-develop healthcare solutions.  The Indian healthcare industry is expected to shift digitally enabled remote consultations via teleconsultation. The telemedicine market in India is expected to increase at a CAGR of 31% from 2020 to 2025. 1 9 3

 In December 2020, Gamma Skills Automation Training introduced a unique robotics & automation career launch programme for engineers, an 'Industry 4.0 Hands-on Skill Learning Centre' located at IMT Manesar, Gurgaon in Haryana.  In December 2020, the 'IGnITE' programme was initiated by Siemens, BMZ and MSDE to encourage high-quality training and technical education. 'IGnITE' aims to develop highly trained technicians, with an emphasis on getting them ready for the industry and future, based on the German Dual Vocational Educational Training (DVET) model. By 2024, this programme aims to upskill ~40,000 employees..  In October 2020, Bharti Airtel entered cloud communications market with the launch of business-centric 'Airtel IQ'. GOVERNMENT INITIATIVES The Government of India recognises the importance of promoting growth in services sector and provides several incentives across a wide variety of sectors like health care, tourism, education, engineering, communications, transportation, information technology, banking, finance and management among others. The Government of India has adopted few initiatives in the recent past, some of these are as follows:  In October 2021, Prime Minister, Mr. Narendra Modi, approved the establishment of 157 new medical colleges to boost accessibility of affordable health treatments among citizens.  In October 2021, the government launched a production linked incentive (PLI) scheme to boost manufacturing of telecom and networking products in India. The scheme is expected to attract an investment of ~Rs. 3,345 crore (US$ 446.22 million) over the next four years and generate additional employment for >40,000 individuals.  In October 2021, the government launched phase-II of the Mahatma Gandhi National Fellowship to empower students and boost skill development.  In October 2021, the PM Ayushman Bharat Health Infrastructure Mission was launched by the government, to strengthen the critical healthcare network across India in the next four to five years.  In September 2021, India and the UK joined the 11th Economic and Financial Dialogue (EFD) to discuss the FTA (Free Trade Agreement) opportunities in services.  Credit to non-food industries stood at Rs. 110.86 trillion (US$ 1.49 trillion), as of November 5, 2021.  The Indian government is planning to introduce a credit incentive programme worth Rs. 50,000 crore (US$ 6.8 billion) to boost hea1lthcare infrastructure in the country. The 9 4

programme will allow companies to access funds to ramp up hospital capacity or medical supplies with the government acting as a guarantor.  In June 2021, India and Australia announced its collaboration in cyber-enabled critical technologies, highlighting the requirement to boost the critical information security infrastructure such as 5G telecom networks.  Under Union Budget 2021-22, the government allocated Rs. 7,000 crore (US$ 963.97 million) to the BharatNet programme to boost digital connectivity across India.  FDI limit for insurance companies has been raised from 49% to 74% and 100% for insurance intermediates.  In May 2021, the Ministry of Commerce and Industry announced that India received an FDI inflow of US$ 81.72 billion, the highest FDI during FY 2020-21.  In March 2021, the central government infused Rs. 14,500 crore (US$ 1.99 billion) capital in Central Bank of India, Indian Overseas Bank, Bank of India and UCO Bank through non- interest bearing bonds.  On January 15, 2021, the third phase of Pradhan Mantri Kaushal Vikas Yojana (PMKVY) was launched in 600 districts with 300+ skill courses. Spearheaded by the Ministry of Skill Development and Entrepreneurship, the third phase will focus on new-age and COVID- related skills. PMKVY 3.0 aims to train eight lakh candidates.  In January 2021, the Department of Telecom, Government of India, signed an MoU with the Ministry of Communications, Government of Japan, to strengthen cooperation in the areas of 5G technologies, telecom security and submarine optical fibre cable system.  On November 4, 2020, the Union Cabinet, chaired by the Prime Minister, Mr. Narendra Modi, approved to sign a memorandum of understanding (MoU) between the Ministry of Communication and Information Technology and the Department of Digital, Culture, Media and Sports (DCMS) of United Kingdom Government to cooperate in the field of telecommunications/information and communication technologies (ICTs).  In October 2020, the government selected Hughes Communications India to connect 5,000 village panchayats in border and naxal-affected states and island territories with satellite broadband under BharatNet project by March 2021.  In September 2020, the government announced that it may infuse Rs. 200 billion (US$ 2.72 billion) in public sector banks through recapitalisation of bonds  In the next five years, the Ministry of Electronics and Information Technology is working to increase the contribution of the digital economy to 20% of GDP. The government is working to build cloud-based infrastructure for collaborative networks that can be used for the creation of innovative solutions by AI entreprene1urs and startups. 9 5

 On Independence Day 2020, Prime Minister Mr. Narendra Modi announced the National Digital Health Mission (NDHM) to provide a unique health ID to every Indian and revolutionise the healthcare industry by making it easily accessible to everyone in the country. The policy draft is under 'public consultation' until September 21, 2020.  In September 2020, the Government of Tamil Nadu announced a new electronics & hardware manufacturing policy aligned with the old policy to increase the state's electronics output to US$ 100 billion by 2025. Under the policy, it aims to meet the requirement for incremental human resource by upskilling and training >100,000 people by 2024.  Government of India has launched the National Broadband Mission with an aim to provide Broadband access to all villages by 2022. 11.3 SERVICE CUSTOMER CLASSIFICATION Effective customer service is a key part of any successful business venture. In recent years, customers have started using digital communication tools to give companies feedback about products, which has resulted in the creation of new customer service tools. Now that customers can leave public reviews all over the internet, it has become a necessity for companies to offer multiple channels for customer service. In this article, we outline eight types of customer service that agents around the globe have adopted to address customer needs. What is customer service? Customer service is the support a company offers to its customers. This support begins during the purchasing process and usually extends past the purchasing date. During the purchasing process, companies typically provide customers with advice and information about products or services they sell. This can help consumers make informed decisions. Then, when customers commit to buying a product or service, companies often provide them with troubleshooting tools and problem-resolution support. Offering excellent customer service is important for businesses looking to grow their brand loyalty and maintain their customer base. Successful companies create an environment where customers feel comfortable coming to customer service agents for assistance. When customers are confident that they will receive the help they need, they're more likely to return to that same company for future purchases. Customer service is all about fulfilling the promise your brand makes to customers during the purchasing process. With the increasing use of digital communication tools, many companies have started offering customer support on various platforms. Beyond the telephone, customers can now find support via email, webchat, text message and even on social media. There are many tools at a company's disposal to help agents provide customers with the help they need. 8 different types of customer service Here are eight different types of customer service that companies can offer: 1 Live chat support 9 6

Customers can use live chat support to instant message a service agent on a company's website. Agents instant message back and forth with customers to provide solutions and answer questions. This tool is very popular because it provides customers with quick and direct support compared to typical phone conversations. Not only do customers usually reach service agents within a matter of seconds with live chat, but the instant and web-based format usually means customers can multitask when wait times do occur. Email support Email was one of the first digital innovations used for customer service purposes, and it's still a great way for companies to offer support. Customers contact companies by sending messages to a designated email address, which is typically displayed on the company's webpage. While email support is often a little slower than live chat support, it still provides customers with the ability to contact service agents through a text-based format without directly interacting with another human. This helps customers document important information, explain themselves clearly and avoid time-consuming efforts to receive support. Self-service support Self-service support primarily exists in the form of frequently asked questions (FAQs) published on a company's website. This tool works well for customers who typically do their own research before contacting customer support through more direct channels. Also, customers who know a fair amount about the products they use can usually navigate self- service support technologies easily to find the exact answers they're seeking. Most companies offer self-service support options nowadays, and they typically supplement other direct forms of customer service. Interactive voice support Interactive voice support is an automated telephone system that interacts with customers in a limited fashion through a dial pad and voice requests. Interactive voice is a great way for companies to support customers with very simple questions without needing to have actual agents present. Also, interactive voice systems can be updated frequently to store relevant information that customers are looking for. This makes it so that live support agents don't need to answer every single question customers have. They can focus on helping them resolve issues that the voice support can't handle. The fundamental challenge of using interactive voice systems is that customers aren't interacting with an actual human, which means they will sometimes be redirected or put on hold many times. Companies can avoid this if they strategically and purposefully design their interactive voice systems to allow customers to request help from a live agent when necessary. Social media support Now that social media is one of the most popular digital tools used for communication across the globe, companies have adapted it to serve as a powerful channel for customer service. To offer social media support, agents constantly mo1nitor a company's social media presence on 9 7

platforms like Facebook, Twitter and Instagram to answer customer inquiries in comments and messages. A large portion of social media support is done through crisis management—customers often publish reviews of companies and products on these public platforms in order to get the help they need urgently. Agents then respond to these reviews publicly and offer solutions, which can help maintain customer loyalty. An added bonus occurs when other users read positive exchanges between customers and service agents. This can be a great marketing tool for a company, as it shows their commitment to meeting customer needs. Web commerce support Web commerce support is when companies offer advice and information for customers during the purchasing process. It typically occurs when customers sign on to a website to purchase a product or service and find themselves with questions. To answer those questions, companies often publish Q&As about certain products or allow customers to ask each other questions on the product's page within their web platform. This type of support helps customers find answers on their own—similar to self-service support—but makes it easier for customers to find product-relevant information in a timely manner. On-site support On-site support is offered in person at business locations or customers' homes. Companies use on-site support to provide repairs and troubleshooting services to customers with technological issues or consulting needs. The biggest advantage of offering on-site support is that it allows agents to interact with customers on a more personal basis, which can help them build stronger customer relationships to make repeat business more likely. Even further, customers are typically drawn to support solutions that are convenient for them, such as when service is delivered to their door. Telephone support Telephone support is a classic way of offering customer service. To receive telephone support, customers call agents on the phone to ask questions and explain their problems verbally. This allows them to describe complicated situations with ease. There are some challenges in telephone support processes, like poor cellular service that can lead to dropped calls and limited staff availability that can lead to long wait times. Nevertheless, telephone support allows agents to better assess a customer's tone and emotions, and it helps older generations who are not as technologically savvy access great service. 11.4 SERVICE MARKETING MIX The service marketing mix is a combination of the different elements of services marketing that companies use to communicate their organizational and brand message to customers. The mix consists of the seven P’s i.e. Product, Pricing, Place, Promotion, People, Process and Physical Evidence. The service marketing mix, also known as the extended marketing mix, treats the service that the business offers just as it would treat a product. While the first four P’s are involved in product marketing too, the 1remaining three P’s focus mainly on service 9 8

delivery and enhancing customer satisfaction. For an in-depth knowledge on extended marketing principles, take this course on Service Sector marketing. Elements of Service Marketing Mix 1. Product – Unlike a product, a service is intangible and cannot be measured in terms of look, feel and other qualities present in a commodity. However, it can be customized to suit the user requirements and give a personal touch. However, the service product is heterogeneous and perishable in nature just like a normal product and needs to be designed with the utmost care to increase customer satisfaction. Master positioning your B2B services with this course. 2. Pricing – The pricing strategy for services is difficult to achieve unlike in products, wherein the final price depends on the raw materials, cost of production and distribution etc. However, in service pricing, you cannot measure the cost of the services you offer that easily. For example, in the education industry, how would you set the price of the quality of education imparted? Or if you are in the food and hospitality industry, how would you charge the customers for the care shown by the host or hostess, the ambience in the restaurant or the fine taste of your delicacies? Therefore, pricing plays a crucial role in the services marketing mix for your business. Learn how to price your service with confidence in this course. 3. Place – The place where you choose to conduct your service business can make or break your organizational growth. You need to understand how visible your setup would be to potential customers and how frequently it would be visited by consumers. For example, would you set up a fast-food centre near a college or office hub, where students and professionals can quickly grab a bite or next to a big restaurant in a classy neighbourhood? 4. Promotion – The service industry usually has stiff competition across different verticals and your business would need a lot of promotions to pass on the right message to potential customers. While advertising, online and direct marketing are the best ways to promote your service you need to have a good mix of communication channels to address a larger audience. 5. People – Your business is not just built on your goals, company vision and principles but also depends heavily on your employees. It is the people who work for you who are responsible in creating happy and returning customers. People in your organization are the epicentre of the quality of your services and need to have the best of talents to gain customer loyalty and trust. 6. Process – How efficiently your services are delivered to the customer is an important aspect of your service blueprint and you need to emphasize on setting up a process for doing so. You need to ask yourself “Do I want to have a process in place that is quick, reliable and easy to monitor or one that is sluggish but necessarily passes through several layers of hierarchy?” In today’s competitive world, companies are always in the race to deliver services quickly, efficiently and with the highest quality. 7. Physical Evidence – While offering y1our services, you can either do it without adding a personal touch or by differentia9ting your offerings by adding an element of 9

delight to the customer. For example, would you prefer to visit a bookstore that only has a stack of books with a cashier nearby or one that also has a place to sit, where you can browse through the book you are interested in and enjoy the light music in the backdrop while you make a choice? The ambience of a bookstore or restaurant, the music, the friendly face of your travel host etc. are all part of the physical evidence of a service and they are an important element of the service marketing mix. The services sector has various kinds of businesses catering to the needs of individual consumers or bigger enterprises and larger businesses. Whatever industry domain you conduct your business in ensure to create the right service marketing mix for better customer satisfaction. This in-depth course can help you map out the proper marketing mix for your company. 11.5SERVICE RECOVERY Service recovery is all about righting your wrongs. It’s the process of recovering from a poor customer service experience and regaining customer loyalty. The key is to react as fast as possible and rectify your errors when you spot them. However, this is only made possible by planning for such an event. When you equip your frontline employees with the right information to assist customers, it can help to soften the blow if disaster does strike. 2 0 0