In some applications of the model, organizations found it easier to apply an impact factor analysis for a particular strategy for a segment...
In some applications of the model, organizations found it easier to apply an impact factor analysis for a particular strategy for a segment rather than across all the strategies identified for that segment. Using the call centre example described in this chapter, researching the needs of consumers identified the need to improve significantly the level of service provided to callers. The first step was therefore to establish the qualifying factors for delivering a telephone-based customer service by studying the needs of consumers and the service provided by competitors (using mystery shopping methods) – what the norm was that was expected in the market. The second step was to identify what would deliver a service level that would clearly create additional benefits in the minds of consumers – the critical success factors. The final step was to define the productivity factors to ensure that the improved service would be delivered as efficiently as possible. This process would be repeated for each strategy, identifying any common factors that apply across strategies, and across key segments of customers. The revised template to capture the required information and identify the metrics is shown in Table 7.4.
The template records the criteria required for each type of impact factor. These show that the organization does not currently meet the qualifying factors expected by customers in the particular segment ‘Wealthy empty-nesters’. However, as shown for the competitive advantage factors, customers would like to see service levels above those currently provided by competitors. Finally, the organization has also identified opportunities to provide service more efficiently, use the opportunity of contacts with customers to update information held about them on the customer database, and increase cross-selling additional products by the call centre. The current position, the target levels (and by when in the plan), the metrics that will track performance, how the performance will be measured, and who will be responsible are recorded.
● tangibles: the physical aspects or service, such as the equipment used, the appearance of the service personnel, etc;
● reliability: the ability to deliver the promised service dependably and accurately;
From this initial research, the authors developed a service quality gap model. In this model, service quality was defined as a function of the gap between customers’ expectations of a service and their perceptions of the actual service delivered. This is the part of the overall SERVQUAL model that is useful in identifying whether an organization is aligned with the needs of customers, and is shown in Figure 7.6. While SERVQUAL is widely used, it is not without its critics who argue that it focuses too much on particular customer service episodes rather than the customer’s experience over time and across multiple channels. One of the authors has proposed EXQ (Experience Quality) to address some of these limitations (Klaus and Maklan, 2012). Lemke, Clark and Wilson (2011) also extend SERVQUAL to capture a more holistic conceptualization of customer experience.
The customer/organization interface is where the expectations, and perceptions, of the consumer – based on needs, past experience, the views of others and the claims made by the organization in its marketing and public relations activity – meet the reality of what the company is actually delivering. Obviously, market research can play a major role in understanding consumers, their needs and expectations, and what influences their attitudes and behaviour. As important is to ensure that all of those responsible within the organization (or those responsible for external, thirdparty providers) for ensuring that a defined level of service is delivered are committed to meeting the defined level of service that will create competitive advantage. Each of the ‘gaps’ shown in Figure 7.6 can lead to the service provision failing to match market needs. In essence, this is the customer service subset within Porter’s value chain described earlier in this chapter. The point is that marketers need to ensure that there is alignment at the customer/organization interface. However, traditionally, marketing may be responsible only for the marketing activity that informs consumers or makes the promises, but this must be aligned with perceived, or expected, levels of service – Gap 4 in Figure 7.6. Therefore, marketers need to take responsibility for ensuring this alignment is in place and committed to by all others involved in service delivery, and that the appropriate internal and external metrics are in place to measure performance over time.
● Not taking the consumer’s perspective when assessing what will create competitive advantage in the market.
● There are some offers and levels of performance that are now expected by this segment. What do you have to do just to stay in the market alongside good competitors?
–– Identify the qualifying factors that are the least you must do.
–– What metrics enable you to track them?
● In the Marketing Metrics model, strategies are derived from the impact factors, which in turn determine the responses to the needs of the segment.
● There are three kinds of impact factors:
–– qualifying: maintain position, potential business losers;
–– critical success: differentiators, business winners (to provide competitive advantage);
–– productivity: internal efficiency/cost improvements.
● Addressing the issues raised in the factor analysis will often require the marketing team to liaise with other key teams within the company in order to develop effective business cases, or arguments, to stimulate commitment and change.
Do not forget that, regardless of who has to take action to address any of the impact factors, the responsibility for monitoring their impact rests with marketing.
The template records the criteria required for each type of impact factor. These show that the organization does not currently meet the qualifying factors expected by customers in the particular segment ‘Wealthy empty-nesters’. However, as shown for the competitive advantage factors, customers would like to see service levels above those currently provided by competitors. Finally, the organization has also identified opportunities to provide service more efficiently, use the opportunity of contacts with customers to update information held about them on the customer database, and increase cross-selling additional products by the call centre. The current position, the target levels (and by when in the plan), the metrics that will track performance, how the performance will be measured, and who will be responsible are recorded.
Impact factors: using ‘gap’ analysis for creating organizational alignment
A further tool helpful in identifying whether the organization is in tune with the needs of the consumer is a form of gap analysis, such as can be found within the SERVQUAL (Parasuraman, Berry and Zeithaml, 1988, 1991) model for measuring customers’ perceptions of service quality. The full model was developed in the 1980s and based on a questionnaire covering 22 criteria most commonly found in the initial qualitative research conducted among consumers to identify the factors that participants used in assessing service quality. These were divided into five initial dimensions, with a further one added a few years later:
● tangibles: the physical aspects or service, such as the equipment used, the appearance of the service personnel, etc;
● reliability: the ability to deliver the promised service dependably and accurately;
● responsiveness: the willingness to help customers and provide service promptly;
● assurance: the attitude of employees, their knowledge and the extent to which they inspire trust and confidence;
● empathy: the ability to deliver a caring, individualized service;
● recovery: the ability of the organization to rectify problems (added in the late 1980s by a further researcher).
From this initial research, the authors developed a service quality gap model. In this model, service quality was defined as a function of the gap between customers’ expectations of a service and their perceptions of the actual service delivered. This is the part of the overall SERVQUAL model that is useful in identifying whether an organization is aligned with the needs of customers, and is shown in Figure 7.6. While SERVQUAL is widely used, it is not without its critics who argue that it focuses too much on particular customer service episodes rather than the customer’s experience over time and across multiple channels. One of the authors has proposed EXQ (Experience Quality) to address some of these limitations (Klaus and Maklan, 2012). Lemke, Clark and Wilson (2011) also extend SERVQUAL to capture a more holistic conceptualization of customer experience.
The customer/organization interface is where the expectations, and perceptions, of the consumer – based on needs, past experience, the views of others and the claims made by the organization in its marketing and public relations activity – meet the reality of what the company is actually delivering. Obviously, market research can play a major role in understanding consumers, their needs and expectations, and what influences their attitudes and behaviour. As important is to ensure that all of those responsible within the organization (or those responsible for external, thirdparty providers) for ensuring that a defined level of service is delivered are committed to meeting the defined level of service that will create competitive advantage. Each of the ‘gaps’ shown in Figure 7.6 can lead to the service provision failing to match market needs. In essence, this is the customer service subset within Porter’s value chain described earlier in this chapter. The point is that marketers need to ensure that there is alignment at the customer/organization interface. However, traditionally, marketing may be responsible only for the marketing activity that informs consumers or makes the promises, but this must be aligned with perceived, or expected, levels of service – Gap 4 in Figure 7.6. Therefore, marketers need to take responsibility for ensuring this alignment is in place and committed to by all others involved in service delivery, and that the appropriate internal and external metrics are in place to measure performance over time.
Helpful pointers
Common mistakes when undertaking an impact factor analysis are:
● Thinking that improving performance for qualifying factors beyond that of competitors will confer competitive advantage. This will only lead to wasting scarce resources that could be more effectively employed in addressing needs identified in the competitive advantage analysis.
● Not being objective when comparing the performance of their own organization against that of key competitors, or not considering the actions competitors might take in response to their own moves in the market.
● Not taking the consumer’s perspective when assessing what will create competitive advantage in the market.
● Not undertaking a thorough enough analysis of their supply chain to identify areas where efficiencies or improvements might be possible in order to reduce costs or improve profitability.
● Not monitoring the impact of productivity factors to ensure that these do not compromise achieving necessary performance against qualifying and competitive advantage factors, for example forcing customers to use a particular channel when contacting the organization in order to create maximum cost savings.
Finally, think of the following points when analysing impact factors and how the appropriate metrics can be identified:
● There are some offers and levels of performance that are now expected by this segment. What do you have to do just to stay in the market alongside good competitors?
–– Identify the qualifying factors that are the least you must do.
–– What metrics enable you to track them?
● What would make consumers want to buy from you, rather than from a competitor?
–– Which critical success factors would really make a difference to this segment?
–– What would you measure to establish whether this competitive advantage, or a strategy/value proposition based on it, was achieving your goals?
–– Which critical success factors would really make a difference to this segment?
–– What would you measure to establish whether this competitive advantage, or a strategy/value proposition based on it, was achieving your goals?
● You want to optimize your return from the segment while making sure that any efficiency measures do not impact negatively.
–– Identify the productivity factors that are relevant.
–– What metrics will help you monitor them?
–– Identify the productivity factors that are relevant.
–– What metrics will help you monitor them?
● While the analysis is segment specific, some impact factors may span other, or all, segments.
–– This could apply, for example, to customer service. One leading financial services organization when introducing a website to reduce the load on the call centre, and thereby reducing costs, promoted this development to high-value customers as providing the benefit of 24/7 access.
–– This could apply, for example, to customer service. One leading financial services organization when introducing a website to reduce the load on the call centre, and thereby reducing costs, promoted this development to high-value customers as providing the benefit of 24/7 access.
● In the Marketing Metrics model, strategies are derived from the impact factors, which in turn determine the responses to the needs of the segment.
● There are three kinds of impact factors:
–– qualifying: maintain position, potential business losers;
–– critical success: differentiators, business winners (to provide competitive advantage);
–– productivity: internal efficiency/cost improvements.
● Identifying impact factors will often require external market research, which will require external spend. However, the cost should be balanced against the danger of not having the information. Opportunities exist to consolidate research and keep costs to manageable levels. Do not ignore the knowledge and experience that are available within most established organizations which can be harnessed in developing a full picture of the market and filling gaps in information – just ensure that the final agreed view is objective.
● Addressing the issues raised in the factor analysis will often require the marketing team to liaise with other key teams within the company in order to develop effective business cases, or arguments, to stimulate commitment and change.
Do not forget that, regardless of who has to take action to address any of the impact factors, the responsibility for monitoring their impact rests with marketing.
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