Retaining customers – What forms a high quality relatioship?

Retaining Customers – What forms a high Quality Relatioship?

Because of the wide knowledge of what forms a high quality relationship and because of the assignments limited extent, the author has been compelled not to make in-depth analysis about the areas, and therefore not be able to cover it all.

What forms a high quality relationship?

To give a suggestion of what forms high quality relationship from the business to business point of view the author of this paper has looked relationship marketing and quality service, what it means and furthermore how it can be improved.

“ Relationship marketing is to identify and establish, maintain and enhance and when necessary

also to terminate relationship with customers and other stakeholders, at a profit, so that the

objectives of all parties are met, and that this is done by mutual exchange and fulfilment of

promises” (Grönroos 1994)

Tubull and Wilson advocate that a long - term relationship is build on bonds. It can be ether social or structural bonds which keeps the relationship together. Social bonds are more healthy for the company because both parties are in the relationship on their own will, not because they are trapped by some investment or switching costs.

According to Gummesson (1987) long –term relationships with customers are very important, especially where relationships can be more expensive to establish. It can lead to continuing exchanges, and thereby be profitable for both parties. E.g. customers are being served by the same salesperson, which knows them and their needs. Therefore they don’t have to waste time with explain themselves to a new person every time. The firm requires lower marketing costs in keeping their customers, when they don’t need to look for new ones. Business success and profitability is customers’ satisfaction, the more satisfied customers, the more durable, is the relation ship (Bain & Co.).

Providing the customer with what they want when they want it, at acceptable cost, within the operating constraint of the business, means service quality and customer satisfaction (Lewis 1988)

Quality service is measurement of how well the service level is delivered and whether it matches the customers’ expectations. The quality of the delivery service means conforming to customer expectations on consistent basis (Lewis and Booms 1983)

It is not only the outcome that involves service quality but also the manner in which the service is delivered. (Sasser, Olsen and Wyckoff 1978)

Research has shown strategic benefits of ...

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Providing the customer with what they want when they want it, at acceptable cost, within the operating constraint of the business, means service quality and customer satisfaction (Lewis 1988)

It is not only the outcome that involves service quality but also the manner in which the service is delivered. (Sasser, Olsen and Wyckoff 1978)

Research has shown strategic benefits of quality which contribute to market shares which leads to investments (e.g. Anderson and Zeithaml 1984) and lowering manufacturing costs and improving productivity ( Garvin 1983).

The prevailing Japanese philosophy says that quality is ‘Zero defect – doing it right the first time’ which is very important to have in mind. If a customer has had a bad first experience they do not what to go back and deal with the same company when having other options.

To understand service quality, it is not enough to have knowledge about the goods quality. There are three characteristics of service – intangibility, heterogeneity and inseparability, which has to be known.

As Bateson 1977, Berry 1980 said, most services are intangible, because they are performances rather than objects. Therefore the company may find it difficult to understand how consumers perceive their services and thereby evaluate the service quality ( Zeithaml 1981). This means that the company has to spend more time with customers so they are sure what the customers needs and expectations of service is.

Especially high labour service content, are heterogeneous, which means their performance varies often. Like the difficulty of assuring (Booms and Bitner 1981) the consistency in service personnel behaviour, because the company’s intention of service delivery may not be the same as the consumer receives. The firm has to train their salesperson by e.g. letting them participate in role-playing, where they are the customers. This is to make them understand the customers need better.

Most services are inseparable in production and consumption ( Regan 1963, Grönroos

1978) e.g. Services which are labour intensive, the quality occurs during the delivery process. This is normally in the interaction between the buyer and the salesperson from the company ( Lehtinen and Lehtinen 1998).

One main part of quality is the delivery system, how the firm deliver service to their customers, which are seen as a competitive advantage in today’s marketing environment. Therefore it has to be controlled and managed right by the company if the firm want to be leaders in servicing their customers.

When talking about the delivery process, we mean all the service encounters. Lynn Shostack defines service encounters as ’A period of time during which a customer directly interacts with a service’. Service encounters are divided in three: - The remote encounter, e.g. mails, catalogues, machines, all of no human interaction; - Indirect personal encounter, verbal but no face to face interaction, e.g. the operating service for the company; - direct personal encounter, involving only human interaction.

The service encounters are very important, it can help the firm to manage and control the service encounter quality in greater extent, when paying closer attention to what the customer sees and hears, one of the five senses.

All contact between buyer and supplier are defined as encounters, including the physical delivery of the product. According to Carlzon, J. 1987), they are all called the ‘Moments of truth’.

Service quality has only been discussed by a few writers ( Grönroos 1982; Lehtinen and Lehtinen 1982; Lewis and Booms 1983; Sasser, Olsen and Wyckoff 1978) After examining their work and other literature, three underlying themes where suggested:

Service quality is more for the consumer to evaluate than good service: The service the firm provide is intangible; therefore it is difficult for the company to understand the consumer’s perception of service and service quality. This means that the firm has to pay more attention to the customer.
Service quality perceptions result from a comparison of consumer expectations with actual service performance: as mentioned before, Lewis and Booms 1983, defined service quality as a measure of how service is delivered and the consumers expectation. If the customer does not feel that they are given the expected service they might consider finding a new supplier and end the relationship.
Quality evaluations are not made solely on the outcome of a service; they also involve evaluations of the process of service delivery. If it’s difficult for the consumer to get in contact with the right person, they don’t want to wait event though he is giving them good service.

To this Grönroos postulate that service quality can be divided into two parts: - Technical quality: what customers receive from the service and when they receive it. e.g. providing them physical safety; - Functional quality: how they receive the service. e.g. meeting the customers expectation or recognising their needs.

Quality is defined as a match between what customers expect and what they experience. If these two do not match each other, there will be mismatch or quality gab. That happens most likely when the service marketers do not understand what the consumer expect in a service ( langeard et al. 1981, Parasuraman and Zeithaml 1982).

Perceived quality is determined by the gab between customers’ expectations of service and perceptions of the actual experience. Parasuraman et al.

Customers are comparing what they want or expect to with what they get or perceive they are getting. ( Barry, Parasuraman and Zeithaml, 1989)

There are 10 quality dimensions that the firm has to have in mind, when dealing with the consumer.

- Reliability, the customer rely on the firm to met their needs and expectation; – Responsiveness, the company has to recognise the consumers needs and acting to satisfy them within the context of the service; - Competence, the firm must have the knowledge of what is required and skills to deliver it; – Access, The consumer must be able to get in contact with the service organization and the sellers they need to talk with; - Courtesy, the service personnel have to have consideration for the customers and their belonging; - Communication, The salesman has to ask about the customers needs for service and weather they are satisfied with the service they are getting or not, feedback ; - Credibility, means that the firm has to show the consumer that they are trustworthy, otherwise it could mean the termination of the relationship; - Security, the customers physical safety and financial security; - Understanding the customer: They need to make an effort to understand the customers needs as in spending more time with they; - Tangibles, the customer must have some proofs of the service they have been given.

Conclusion

There is no golden rule what forms a high quality relationship. The reason is that no relationship between the selling company and their customer are the same. Every interaction, which involves the two parties, is different, and therefore the way customers are served can be an important source of

competitive advantage.

However, the author means that the most important buyer – seller relationships are built with mutual exchange and trust. Another important thing is for the company it understand their customers needs and expectation in order to give them what they want, high quality service.