CHAPTER 2
Value from customers service
to satisfaction and loyalty
, 1. Benefits of Providing Better Service
Improved service levels offer organisations a competitive edge, particularly where
several organisations offer virtually identical services to the same market.
Differentiation can offer the entity many benefits, including:
Increased market share
o Improved service quality can enticed competitor’s customers to move-
over or switch, thereby increasing the entity’s market share. It’s fairly
easy to match a competitor’s actual service offering their price and their
advertising, but to match superior service delivery is for more difficult.
Improved value proposition
o Adding superior customer service to a technically superior service
product increases the customer’s perceived value.
Financial impact
o Improved financial performance (improved profitability) is the outcome
of higher sales income as well as lower costs due to improved efficiency.
o Some of financial gains emanate from the fact that such organisations
usually generate more sales with less advertising and it also does not
need to use resources on unnecessary activities such as rectifying
service delivery mistakes or handling customer complaints.
To gain marketing benefits
o Quality accreditation or awards are used by many service organisations
to substantiate their marketing communication claims.
2. Increasing Benefits
As its most basic, value can be defined as the difference between the customer’s
perception of benefits received from purchasing and consuming the service, and the
customer’s perception of the costs incurred in exchange for the service.
Marketers trying to maximise the value they offer to customers believe that customers
will buy a service when:
The benefit of the exchange exceeds the costs of the market exchange
The service offers superior value compared toother alternatives in the market.
The value definition implies that the market is competitive and only those organisations
offering superior value will attract business. This realisation should place customer
satisfaction and the creation of value high on the priority list of service organisations.
Value Levels
Value is not a simple concept. When evaluating how customers make their purchasing
decisions it is apparent that value can be described on two levels:
The value the customer derives from the service itself
The value the customer derives from the quality of the supporting service act.
Service providers should thus try to establish what proportion of their customer’s total
value perception is based on each element in the equation.
In some cases, the tactical components (the actual service) are more important and in
others the functional component (the customer service) becomes more important.
Evaluation qualities indicate the qualities present in the service that can be evaluated
by the customer. These evaluation qualities can be categorised as follows:
Value from customers service
to satisfaction and loyalty
, 1. Benefits of Providing Better Service
Improved service levels offer organisations a competitive edge, particularly where
several organisations offer virtually identical services to the same market.
Differentiation can offer the entity many benefits, including:
Increased market share
o Improved service quality can enticed competitor’s customers to move-
over or switch, thereby increasing the entity’s market share. It’s fairly
easy to match a competitor’s actual service offering their price and their
advertising, but to match superior service delivery is for more difficult.
Improved value proposition
o Adding superior customer service to a technically superior service
product increases the customer’s perceived value.
Financial impact
o Improved financial performance (improved profitability) is the outcome
of higher sales income as well as lower costs due to improved efficiency.
o Some of financial gains emanate from the fact that such organisations
usually generate more sales with less advertising and it also does not
need to use resources on unnecessary activities such as rectifying
service delivery mistakes or handling customer complaints.
To gain marketing benefits
o Quality accreditation or awards are used by many service organisations
to substantiate their marketing communication claims.
2. Increasing Benefits
As its most basic, value can be defined as the difference between the customer’s
perception of benefits received from purchasing and consuming the service, and the
customer’s perception of the costs incurred in exchange for the service.
Marketers trying to maximise the value they offer to customers believe that customers
will buy a service when:
The benefit of the exchange exceeds the costs of the market exchange
The service offers superior value compared toother alternatives in the market.
The value definition implies that the market is competitive and only those organisations
offering superior value will attract business. This realisation should place customer
satisfaction and the creation of value high on the priority list of service organisations.
Value Levels
Value is not a simple concept. When evaluating how customers make their purchasing
decisions it is apparent that value can be described on two levels:
The value the customer derives from the service itself
The value the customer derives from the quality of the supporting service act.
Service providers should thus try to establish what proportion of their customer’s total
value perception is based on each element in the equation.
In some cases, the tactical components (the actual service) are more important and in
others the functional component (the customer service) becomes more important.
Evaluation qualities indicate the qualities present in the service that can be evaluated
by the customer. These evaluation qualities can be categorised as follows:
