Articles

Customer Relationship Management in Services Marketing

The customer relationship management professional should consider the specific qualities of services in his CRM design.

Service industries universally claim to be customer-focused, and no one denies the importance of the customer relationships. What's more, the services offer unique CRM opportunities to get to know and retain the customer. Indeed, there's more to customer relationship management (CRM) than software. It needs a commitment to a marketing orientation and it's most effective when customized to the product and the customer.

While analyses vary, three elements are almost universally identified in the nature of a service.

• Inseparability. As a rule, the purchase of a service is inseparable from its consumption. It follows that the sales force is in a particularly crucial position--they are very nearly the product itself. The customer's perception of the sale is largely his perception of the product, and this perception needs to be addressed.

 

• Intangibility. Because services are intangible, they're particularly hard to define. It's a truism of goods marketing that the product is more than the object, but in the services there's hardly any good as an objective referent. The marketer needs to probe more to identify what need is met for the individual customer. An intangible product is more subjective than a good.

 

• Nonstandardization. The same salesperson selling to the same customer doesn't mean that it's the same service. A service is never the same twice. Isolating the variables that define these differences is one of the first steps in CRM input.

Customer Relationship Management, Expectations, and Word-of-Mouth

In the service industries, the perception of quality is more dependent on customer expectations than in the marketing of goods. Oddly, lower expectations can make for greater satisfaction. What are the individual customer's expectations? What parameters can be defined to measure these for the specific product?

As with expectations, word-of-mouth is of special importance in the journey toward a services purchase. It follows that social networking Web sites demand more of the marketer's attention. What's more, the real-world community is a more important player in the market.

Customer Relationship Management, Products, Goods, and Predicting Customer Behavior

Of course, a product is a bundle of goods and services. The more pure the service, the more true these tenets are. What's more, the principles are relevant to the service element of any product.

The CRM practitioner's response to these product qualities lies, first, in the nature of the feedback solicited. The marketer needs to define the questions customer answers. Secondly, the manner of solicitating feedback offers unique opportunities in services. The marketer is much closer to the customer than in product transactions.

Moreover, there are better ways to predict customer behavior than asking the consumer himself. Qualitative research is particularly important in the services. It's the observation that probes the purchase transaction and identifies the issues that precipitate and characterize that transaction.

Customer lifetime value, a key metric of CRM, depends on customer retention. That loyalty is particularly dependent on the dyad (sales/customer) relationship in the services transactions. The characteristics of sales force are the characteristics of the product, and these characteristics need to be defined as factors in the CRM input. The sales force is the subject and the observer in the services transaction.

The customer relationship management designer will not limit himself to the paradigm of product marketing. He should note the particular opportunities that his service affords.