How to Use Your Heart

Topics: Marketing, Loyalty program, Frequent-flyer program Pages: 66 (17200 words) Published: August 21, 2013
Services Marketing
2nd Edition

Essentials of

Service from the heart

Jochen Wirtz Patricia Chew Christopher Lovelock

Brief Contents
Dedication About the Authors About the Contributors of the Cases Preface Acknowledgments v vii xi xxiii xxxv

Part I:
Chapter 1 Chapter 2 Chapter 3

Understanding Service Products, Consumers, and Markets
Introduction to Services Marketing Consumer Behavior in a Services Context Positioning Services in Competitive Markets

4 34 66

2

Part II:
Chapter 4 Chapter 5 Chapter 6 Chapter 7

Developing Service Products: Core and Supplementary Elements Distributing Services through Physical and Electronic Channels Setting Prices and Implementing Revenue Management Promoting Services and Educating Customers

Applying the 4 Ps of Marketing to Services

94

96 122 150 188

Part III:
Chapter 8 Chapter 9 Chapter 10 Chapter 11

Designing and Managing Service Processes Balancing Demand and Capacity Crafting the Service Environment Managing People for Service Advantage

Designing and Managing the Customer Interface

224

226 264 296 322

Part IV:
Chapter 12 Chapter 13

Managing Relationships and Building Loyalty Complaint Handling and Service Recovery

Developing Customer Relationships Striving for Service Excellence Cases

356 428 502

358 394

Part V:

Chapter 14 Chapter 15

Improving Service Quality and Productivity Organizing for Service Leadership

430 476

Part VI:
Glossary Credits Name Index Subject Index

649 657 661 671

12

CHAPTER

managing

RELATIONSHIPS and BUILDING LOYALTY
LO 7

LEARNING OBJECTIVES
Bytheendofthischapter,thereadershouldbeableto:
LO 1

Recognize the important role customer loyalty plays in driving a service firm’s profitability. Calculate the lifetime value (LTV) of a loyal customer. Understand why customers are loyal to a particular service firm. Know the core strategies of the Wheel of Loyalty that explain how to develop a loyal customer base. Appreciate why it is so important for service firms to target the “right” customers. Use service tiering to manage the customer base and build loyalty.

Understand the relationship between customer satisfaction and loyalty. Know how to deepen the relationship through cross-selling and bundling. Understand the role of financial and non-financial loyalty rewards in enhancing customer loyalty. customization, and structural bonds in enhancing loyalty.

LO 2 LO 3 LO 4

LO 8

LO 9

LO 10 Appreciate the power of social,

LO 5

LO 11 Understand what factors

LO 6

cause customers to switch to a competitor, and how to reduce such switching. by Customer Relationship Management (CRM) systems in delivering customized services and building loyalty.

LO 12 Understand the part played

Figure 12.1 Fromhigh-rollerstocasualgamblers,the glitteringlightsofHarrah’spromisecustomersatisfaction.

358

Chapter12 • Managing Relationships and Building Loyalty

OPENINGVIGNETTE
Harrah’s Entertainment’s Customer Relationship Management1 Harrah’s Entertainment is the world’s largest gaming company with its four main brands Harrah’s, Caesar’s, Horseshoe, and the London Clubs family of casinos. It is a leader in the use of highly sophisticated loyalty programs. Harrah’s was first to launch a tiered customer loyalty program in the gaming industry. Today, it has four tiers in its loyalty program—Gold, Platinum, Diamond, and Seven Stars (by invitation only). The program is integrated across all its properties and services. Customers identify themselves (and earn points) at every touchpoint throughout the company, ranging from its gaming tables, restaurants, and hotels, to the gift shops and shows. The points collected can be used to obtain cash, merchandise, lodging, show tickets, vacations, and events. What is special about Harrah’s is not its loyalty program, but what it does with the information gleaned about its customers when they...

References: Kevin P. Gwinner, Dwayne D. Gremler, and Mary Jo Bitner, “Relational Benefits in Services Industries: The Customer’s Perspective,” Journal of the Academy of Marketing Science 26, no. 2 (1998): 101–114.
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