Using Services Marketing to Develop

and Deliver Integrated Solutions at

Caterpillar in Latin America
Section A | Group 5

ISSUES
GAP
GAP 1
1
Service
Service Reliability
Reliability and
and responsiveness
responsiveness
Customer
Customer Relationships
Relationships
Huge
Huge potential
potential for
for Improvement
Improvement
Product
Product Differentiation
Differentiation and
and Quality
Quality
Dealer
product
support
operations
Dealer product support operations
Customer
Customer Surveys
Surveys were
were Sporadically
Sporadically performed
performed
Inability
Inability to
to deliver
deliver and
and calculate
calculate costs
costs and
and
benefits
benefits of
of CSAs
CSAs

GAP
GAP 3
3
Inadequate
Inadequate supply
supply of
of qualified
qualified mechanics
mechanics
Limited
Limited number
number of
of Technicians
Technicians were
were selected
selected and
and
trained
trained
Lack
Lack of
of teamwork
teamwork and
and communication
communication among
among
various
departments
various departments
Lack
Lack of
of aa reliable
reliable system
system for
for keeping
keeping track
track and
and
monitoring
monitoring
Complex
Complex scheduling
scheduling process
process for
for field
field technicians
technicians
Lack
Lack of
of feedback
feedback communication
communication between
between
consumer
and
dealers
consumer and dealers

GAP
GAP 2
2
Poor
Poor positioning
positioning and
and marketing
marketing of
of CSAs
CSAs
CSAs
CSAs were
were created
created in
in an
an AD
AD HOC
HOC manner
manner
Consumers
were
unaware
of
what
Consumers were unaware of what was
was promised
promised
about
about CSAs
CSAs
Performance
Performance standards
standards were
were operationally
operationally
focused
focused and
and not
not consumer
consumer driven
driven
Absence
Absence of
of and
and standards
standards and
and measures
measures

GAP
GAP 4
4
Improper
Improper focus
focus on
on product
product features
features and
and benefits
benefits
No
No advertising
advertising brochures
brochures // advertisements
advertisements
Ability
to
sell
CSAs
both
externally
Ability to sell CSAs both externally and
and internally
internally
was
was limited
limited
Lack
Lack of
of tangible
tangible representations
representations or
or written
written
descriptions
descriptions
Lack
Lack of
of written
written communication
communication confused
confused verbal
verbal
communication
communication
Absence
Absence of
of clearly
clearly defined
defined service
service features
features

Caterpillars formula for success

Find out what products customers want
Design and build them
Keep them running
When they wear out, rebuild or recycle
Do it better than anybody else

CATERPILLAR - GAP 1
Customer Expectations
Inadequate
customer
research
orientation
Customer
surveys
sporadically
performed,
catered to only
service quality
feedback
Individual
interactions,
were missing

Upward
communication
Dealers, not
employees,
were the
contact points
for end
customers
Non renewal of
CSAs, CSAs
went unnoticed,
resulting in
inefficient
feedback
mechanism

Insufficient
relationship
focus
Recognising the
correct segment
Focus on costs,
revenue and
operations, and
not customer
profitability or
customer
service quality
perception

Company Perceptions of Customer Expectations

Inadequate
service recovery
Required to be
taken care of in
case of failed
technician
appointments,
technician
shortage,
unattractive
presentation of
inspection
reports etc.

Question
What else did they need to learn in Gap 1 about customer
needs and expectations?

Kanos Model

1. Basic Expectations: The bad frustrates,

yet the good does not impress
Caterpillar served high on basic expectations
(high customer performance perception of
tangibles), but these had low impact on
customer satisfaction
2. Performance Payoff: The more
organisational investment, the more user
satisfaction
Caterpillars investing in shifting from product
focus to services focus (in the form of CSAs)
3. Excitement Generators: Design
elements and features that delight the
user
What Caterpillar needed to know: How to work
upon achieving potential level of performance
in responsiveness, reliability, empathy and
assurance areas to address customer gap.

 Capturing and addressing customer satisfaction with individual interaction

Addressing individual issues by customized service in terms of duration and cost,
relaxing financial burden by having credit policy in place

Knowledge and courtesy of employees to inspire trust from the customer

Attention to their interaction and communication skills in describing issues to
customers and valuable recommendations
Maximum up time of equipment at minimum cost
Minimum risk and cost for unplanned machine down time
Timely services such as oil/ filter change, condition monitoring, visual machine
inspection
Standardisation of technicians skill set and training to achieve speed in service offered
Sophisticated processes, tools, feedback mechanisms to register and address
customers issues

Empathy

Assurance

Reliability

Responsiven
ess

Different needs for different customers, hence different zones of

tolerance
Small
customers

Mid range
customers

Large
customers

Segments:

Do it myself

Work with me Do it for me

Activities:

Used internal or
competitive
resources to
satisfy product
support needs

Managed dayto-day product

support; dealer
support for
complex repairs

Outsourced
majority of
their product
service
activities

Zone of
tolerance:

Large

Medium

Small

Expectations:

Ways to avoid
costly repairs
and unplanned
downtimes,
policy to
overcome cash
flow limitation

Versatility
preferred to
productivity

Machine up
time most
important
requirement

Question : What features were expected by customers in CSAs

Hard Features
Frequency of the services
offered -weekly, monthly or oncall
Standardization of CSAs
elimination of variance across
dealers
Performance measure Ex:
maximum machine up time
What is the average machine
down time that the customer is
comfortable with?

Soft Measures

How important is it to the customers that the contact

employee has good communication skills?

Are the employees responsive, courteous and possess the

required skill set?

Level of customer satisfaction with customization of service?

Question :
could they find out the features expected by customers in CS
SERVQUAL Surveys
- Matching expectations statements, referent
expectations format, combined
expectations/perceptions statements, expectations
distinguishing between desired and adequate service
- Measuring customer perceptions of service on
reliability, responsiveness, assurance, empathy and
tangibility dimensions

Capturing customer satisfaction and

individual interactions
-Relationship Surveys
- Post interaction customer surveys
- Segment-oriented research

Question
Closing Gap 1 : To find out the needful to know how to
establish standards for Gap 2

CSSP FRAMEWORK
Using Customer Satisfaction To Improve Quality and
Access
to Goods, Services and Supports In Vulnerable
Neighborhoods
DESIRED RESULTS

DESIRED RESULTS

Responsive
Responsive providers
providers and
and effective
effective services.
services.
Customer
feedback
continuously
linked
Customer feedback continuously linked to
to service
service
improvements
improvements
Empowered
Empowered customers
customers who
who expect
expect satisfaction
satisfaction and
and
exercise
exercise their
their influence
influence and
and rights
rights
Informed
Informed consumers
consumers who
who take
take action
action

INFORMED,
INFORMED, ENGAGED,
ENGAGED,
EMPOWERED
EMPOWERED
CONSUMERS
CONSUMERS

Judge
Judge service
service quality
quality
Test
Test local
local goods
goods and
and services
services
Set
Set service
service standards
standards
Advocate
Advocate for
for customer
customer
satisfaction
satisfaction

CONSUMER
CONSUMER ADVOCACY
ADVOCACY
GROUP
GROUP

Educate
Educate and
and train
train
neighborhood
neighborhood consumers
consumers
Monitor
customer
Monitor customer satisfaction
satisfaction
Provide
Provide neutral,
neutral, credible
credible
consumer
consumer information
information
Serve
Serve as
as consumer
consumer
ombudsman
ombudsman // advocate
advocate
Promote
customer
Promote customer
satisfaction
satisfaction strategies
strategies and
and
accountability
accountability

CUSTOMER
CUSTOMER FOCUSED
FOCUSED
AGENCY/SERVICE
AGENCY/SERVICE
PROVIDERS
PROVIDERS

Customers
Customers who
who care
care about
about quality
quality
services
services and
and are
are continuously
continuously informed
informed about
about actual
actual
performance
performance

Work
Work to
to improve
improve
organizational
organizational performance
performance
Strive
Strive for
for 100%
100% customer
customer
satisfaction
satisfaction
Treat
Treat staff
staff as
as they
they want
want
customers
to
be
treated
customers to be treated
Establish
Establish continuous
continuous
improvement
improvement
Utilize
Utilize customer
customer feedback
feedback as
as
aa measure
measure of
of accountability
accountability

Source : CSSP - Center for the Study of Social Po

CLOSING GAP 1
DETERMINANTS OF PERCEIVED
SERVQUAL
Communicati
on
Courtesy
Providing
customized
solution
Credibility
Security

Word
Word of
of
mouth
mouth

Service
Service
Quality
Quality
Dimensions
Dimensions
Reliability
Reliability
Responsiven
Responsiven
ess
ess
Empathy
Empathy
Assurance
Assurance
Competence
Competence
Access
Access
Tangibles
Tangibles

Persona
Persona
ll
needs
needs

Expecte
Expecte
dd
service
service

Perceive
Perceive
dd
service
service

Past
Past
experien
experien
ce
ce

Perceived
Perceived
Service
Service
Quality
Quality

CUSTOMER RELATIONSHIP MATRIX

Source : Report on closing delivery gap Bain and

THE SOLUTION

he
c
rs

Strategic Businesses | Customer

Focus |
Valued Products/Services |
Supplier Collaboration | Superior
Dealer Support |Expertise | Flexible
Cost Structure

nt
a le

CUSTOMERS
Help customers succeed

t
st

Innovation /
Technology
Extend Customer
Expectations
Extend Global
Leadership

e
LE e b
OP th
PE elop
ev

d
nd

VISION 2020

De
liv
e

STENGTHEN OPERATING
PRINCIPLES

ta
ac

up ST
er OC
ior
K
re HO
tu
rn LDE
st
hr R S
ou
gh
t

Superior Results | Global Leader | Best

Team

tr
At

yc
les

DEFINE STRETEGIC GOALS

PUT VALUES IN ACTION

Source : Caterpillar Inc

MARKETING STRATEGY

OPERATIONAL
OPERATIONAL
EXCELLENCE
EXCELLENCE
Long Term Goal

Short Term Goal

Cost consideration, Delivery

Operational competence

Product Design, Style

Product differentiation
PERFORMANCE
PERFORMANCE
SUPERIORITY
SUPERIORITY

Customization, Unique Customer Demands

Customer Responsiveness
CUSTOMER
CUSTOMER
INTIMACY
INTIMACY
Source : Coursera ; Course in strategic marketing, Wharton

Question 2:
A) Should they offer different CSAs
to different segments of General
Construction?
B) What would that imply for
research, standards, and
implementation?

Issues with Existing CSAs

Lack of consistency across LACD, and inability to deliver and inability to calculate
costs and benefits of CSAs (dealers)
Inconsistent approach towards customer service focus (largely focused on very
large mining customers); dealers had different customer service philosophies
Highly customizable in terms of content, length and cost; sold separately from
machines/equipment
o Limited marketability and dealers operational efficiency
Sales organizations reluctant to sell CSAs due to concerns regarding delivering on
promises, as well as due to intangible nature of CSA, making it hard to explain, sell
and differentiate

Need for Segment-wise CSAs

Identifying target customers and optimizing service offering, marketing and sales
approach
Developing and communicating attractive service packages that cater to needs of
the various segments
Developing relationship strategies (financial bonds, social bonds, customization
bonds, and structural bonds) leading to higher customer loyalty and CSA renewal

Key Variables for CSA Customer

Segmentation

Criteria for Effective

Segmentation

Demographi
c

Operating
Variables

Measurable

Purchasing
Approaches

Situation
Factors

Substantial

Personal
Characteristi
cs

Levels of Segmentation

Accessible
Differentiable
Actionable

Need-based Customer
Segmentation Model

Relevance of value
Source: Peppers and Rogers Group Website

proposition increases
with enhanced
understanding of
individual needs

customers based on
qualitative (e.g. FGD,
also to be used for
hypothesis development
to be used in
quantitative research)
and quantitative
research (to find
statistically distinct
homogeneous needs
segments)
Integrated segmentation
methodology is more
adaptive to changing
customer preferences,
and develop truly
targeted services
Common needs: needs
shared among all
customers; must be
served to survive
competition
Shared and
Differentiated needs:
must be served to

Do It For Me

High
customer
loyalty can
be expected

Work With
Me
Do it Myself

Behavioural
Behavioural (Needs
(Needs and
and Benefts)
Benefts)
Customer
Customer Segments
Segments

Behavioural Segmentation: CSA

Needs and Benefits vs.
Highly
Engagement
Customized;

Targeting
Specific
Segments for
CSAs for higher
customer
loyalty

Focus on
educating
the
customer;
continue
relationship

Low

Medium
Level of
Engagement

High

Note: Level of engagement refers to the product support service package being offered. Low refers to simple preventive maintenance kits, while
High refers to the total maintenance and repair package, which may include (but is not limited to) multiple machines/equipment, training, spare

Value-based Pricing Services Pricing Strategies

based on Customer Definition of Value
Value is low price
Discounting
Odd Pricing
Synchro-pricing
Penetration pricing

Value is everything I want in a

Service
Prestige pricing
Skimming pricing

Pricing
Strateg
ies

Value is all that I get for all that

I give
Value is the quality I get from
the price I pay
Price framing
Value pricing
Price bundling
Market segmentation pricing
Complementary pricing
Results-based pricing
The company should adopt a perceived value pricing strategy, wherein, it will charge separate
prices for the various segments (based on criticality/perceived value of a service to various
customers); it may also adopt a tiered service pricing on similar lines as is done by companies in
telecom sector to address CSA pricing at various engagement levels

Implications for Research

Existing research Issues

o Interactions with customers largely through dealers increased importance of
customer research
o Customer surveys were sporadically performed and only partially designed for
the purpose of service quality feedback
o Inadequate customer value survey measures for capturing and addressing
customer satisfaction
o Lack of tools to interpret the results of surveys and to translate them into specific
strategies
o Segmentation issues: overlapping; assumption-based
Possible Solutions
o Conduct customer research to identify customer requirements and service
expectations (identify zones of tolerance for each, mapping various standards
against expectations); will also help in identifying more profitable customer
segments and new service opportunities
Conduct quantitative research (e.g. factor and cluster analysis) to segment
customers into mutually exclusive segments based on their expectations and
perceptions
o Monitor and track service performance - Post interaction customer surveys and
trailer calls; will also help in performance evaluation of employees and dealers

Implications for Standards

Existing Issues
o Ad-hoc approach towards CSA design and development; varied widely across
dealerships (and often across customers within dealerships)
o Performance standards operationally focused (e.g. cost, revenue, profit) and not
customer driven (e.g. reliability, responsiveness, empathy, assurance, and
tangibles)
o Customer location varied widely hard to standardize service promises
o Dealerships organized in silos inconsistent internal interactions
o Issues with CSA renewals
Possible Solutions
o Moving to customer-driven performance standards (segment-wise) hard
standards (e.g. response time when complaint is received and service person
arrival on-site, and repair time) and soft standards (empathy and etiquettes,
trailer calls)
o Developing service blueprint and adhering to it strictly
o Training salesforce and product support team to ensure consistent service
delivery and communication

Machine/Equipment repair flow chart

2
Customer want to
get
machine/equipment
(M/E) repaired

Wants M/E
pick up?

Ye
s
Customer
arrive at
service
center with
M/E

No
Worksheet is
prepared

Machine/equip
ment is
inspected

Customer
contacts
customer
support service

Check customer
has CSA for M/E

M/E worksheet
and BOM is
given to the
customer

Field mechanic
goes to client
site and
perform M/E
inspection

Does
custom
er
agree?

1
CSA is checked
and BOM is
calculated

Does
custo
mer
agre
e?

Yes

Ye
s

Delivery
time is
different
?

No

No

Customer
leaves

M/E is
repaired

No
Yes

Customer pays
as applicable
field mechanic
leaves
When
M/E gets

repaired service
center follows
up
Customer pays
as per BOM

M/E inspection flow chart

Customer wants to
get
machine/equipment
(M/E) condition
monitoring

Customer
contacts
customer
support service

Check customer
has CSA for M/E

Field mechanic
goes to client
site and
perform M/E
inspection

Field mechanic
advices
customer for
any need
additional work

Preventive maintenance flow chart

Customer service
center informs
customer for E/Ms
scheduled service

Wants E/M
serviced?

Yes
No

2
Customer can be
informed about PMs
benefits

Service center follow up sub-flow chart

Customer
service center
contacts
customer

Wants M/E
delivered?

Ye
s
No

E/M is delivered
to customer
Customer picks
up E/M

Customer
pays as
per BOM

CRM operations
CRM operations
Equipment/Machin
e repair

Customer

CRM operations
Equipment/Machin
e delivery and
trailer calls

Customer

Customer

Machine/Equipment
Servicing
Grievance redressal
Educate customer

Needs CSA
information

Preventive
maintenance
Machine
condition
monitoring

New Customer
Information
Existing
Customer
Information

Customer
Database

Customer
Grievance
redressal

Physical Evidence

Customer Action

Customer
calls
customer
service
center

Customer asks
for field
mechanic

CSA, Repair
Equipment,
Tells the
forms
appointment
time to
customer

_ _ Line
_ _ _ of
______________________________________________________
_ _interaction
_____
Ask for CSA and
Field mechanic
Field mechanic
book
Employee Actions
performs
visits the
appointment
condition
customer,
Greets
with the
(onstage/visible)
monitoring
inspect M/E
customer

_ _ Line
_ _ _ of
_ _visibility
____________________________________________________
_Employee
_ _ _ _ _ _Actions
Checks
(backstage/Invisible)

customer
information and
mechanic
availability

_ _ _Line
_ _ of
_ _internal
____________________________________________________
_ _interaction
_____
Customer
Support Processes
database

Physical Evidence

Customer Action

Worksheet ,
BOM
Customer
agrees for
repair

Worksheet ,
BOM
Customer waits
till M/E date of
delivery

Customer
decides time of
delivery

Customer
receives and
checks M/E

_ _ Line
_ _ _ of
______________________________________________________
_ _interaction
_____
Field
Mechanic
Employee Actions
Field Mechanic
Customer care
suggests
M/E delivered
picks
up
the
informs
repairs
(onstage/visible)
truck
customer
needed and
cost

_ _ Line
_ _ _ of
_ _visibility
____________________________________________________
_Employee
_ _ _ _ _ _Actions
(backstage/Invisible)

M/E gets
repaired

_ _ _Line
_ _ of
_ _internal
____________________________________________________
_ _interaction
_____
Support Processes
Customer
database

Blueprint

Implementation

Tools for serving

customers
High quality support
services and policies
Defined standards
Integrated services

Reduced repair
cost
Reduced
unplanned
downtimes

Service
designed and
delivered to
targeted
customers

Repeat
business
Word of
mouth
publicity

Question
What standards and measures should be set in Gap 2 to
deliver to customer expectations?

About CSAs
Highly customized and complex content, length, cost
Sold separately and delivered through dealer product
support
Large customers high loyalty
Medium and Small customers low renewals
Limited the CSA marketability among general
construction customers
Preventive Maintenance Agreements (PM CSA)
technician activities were not build explicitly into
contracts

The Loyalty Loop

Source: www.mckinsey.com

Customer
Customer Driven
Driven Service
Service Designs
Designs &
&
Standards
Standards

GAP
2
The
Service
Design
and
Standar
ds Gap

Poor Service
Design

Few CSAs
CSAs were not branded
CSAs were created in an
ad hoc manner
Promised but
expectations not met
Operationally focused
not customer driven

Customer
Driven
Standards

Inadequate
physical
evidence and
Servicescape

Customers interact with

sales people
What to offer and what to
deliver
Cultural differences

Company
Company perceptions
perceptions of
of customer
customer
expectation
expectation

Standards and measures to be set up

in Gap 2
Hard Standards:
Standardized CSAs Make CSAs part of performance
evaluation for dealerships and their employees.
Focus on response time and service speed minimize machine
downtime
Soft Standards:
Employees need to be empathetic and responsive
Customer satisfaction through customization and delivery of
service

Kotters 8-Step Change Model

Create a Sense of Urgency - Use CSAs as a medium
to capture the growing services market
Create a guiding coalition Meeting with the Dealer
Advisory Panel
Create a vision for change The customers, along
with Machine and Product Support Sales
Representatives to be the key stakeholders
Communicate the vision - Performance standards to
be customer centric. Adequate literature for CSAs to be
made available. Better relations with buyers

Kotters 8-Step Change Model

Remove Obstacles Dealership departments must work in
tandem. Better coordination between sales and service
departments.
Create short-term wins Address each country
individually. Create uniform CSAs.
Consolidate Improvements Keep on learning. Switch to
multiple CSAs but with consistent options
Anchor the changes Initiate customer feedbacks on a
quarterly basis to make sure adequate services are delivered
to the customer. Once complete, freeze the process but keep
enough space for uncertainties.

CSAs for General Construction

Customers
Large
Small

Do it for
me

Medium

Do it with
me

Do it
myself

Highly customized
with little standard
services

Less customized
+
Basic standard
services

Less customized with

more emphasis on
consultation, information
dissemination,
diagnosis , a readily
available service team.
Offer Inspection CSAs so
that clients can compare
among services.

Monthly/Yearly
subscription

Cost for the service

performed

Service charge at
heavy discount.

Strategy matrix fit

Caterpillar
Products

Existing
New

Market

Existing

New

Market
Penetration of CSA

Development of
existing CSAs

Market
Development

Diversification of
CSA

Balanced CSA strategy

Creating new CSAs

Idea Generation
Service concept and evaluation

Front end Planning

Business analysis
Service prototype development and testing
Market testing

Implementation
Commercialization
Post introduction Evaluation

Objectives for the dealerships

Separate training for product and service dealers
ERP, CRM systems implementation
Employee reward schemes/performance based bonus appraisals.
Internal audits and checks
Readily available brochures and informational guides for quick reference.
Automated reminder about services.
Manufacturing products with the important attributes as found out in the research.

Dynamics within a dealership

To increase coordination between product support and
machine sales department

This can be achieved by common training and

development programs where the employees are taught
about the companys service standards and CSAs

Common rewards for both the teams for achieving the

desired service quality targets

Set up common employee goals and priorities that are in

line with companys activities

How should the dealership overcome

all the Gap 3 issues that they faced
to insure consistent delivery?

Bou
ndar
y
Spa
nner
s

Interaction and
communication
skills of
technicians

Sup
ply
and
De
ma
nd

Issues
Identified

Co
ordi
nati
on

Syst
em
and
Proc
ess
es

Lack of a reliable
system for
dealers to better
manage
customers

Inadequate
supply of
qualified
mechanics

Lack of teamwork
and
communication

Service
Culture

Product Focused to Integrated Customer Focused

Business Solution
New customer driven goals to be communicated through
all verticals.
New benchmarks : Recording and minimization of
machine downtime, no. of CSAs sold and serviced
successfully

Map

Incorporate

Customer Journey
and Lifecycle

customer
feedback into
process and
behavior

Refine

Operating model
to enable
customer
centricity

Align

Measure

change using key

metrics

Customer Centric
Culture

Transform

processes to
support and drive
customer
engagement

Engage

culture top to
bottom

executives and
leaders

Integrate

Disparate
business unit
culture

Focus

development
around target
areas and
behavior change

Hire the right people :

Hire technicians who are not only technically
strong but also good in customer interaction
and communication
Hire sales force oriented towards both
product and service marketing.
Make new dealership ties who are capable of
CSA deployment
Develop people to deliver service quality :
Communicate and engage people in the new
service oriented business model: Goals
Train dealers and technicians in customer
interaction, competency matching, empower
them like other dealers
Sensitization of both sales team and
technicians to CSAs
Provide needed support systems :
Carefully designed CSAs to be given to sales
force.
Better CRM software tool, defined processes
Technician to be provided new checklists
which target more customer oriented
specifications
Retain the best people :
Contracts for technicians
Upgrading PM techs
Incentivize CSAs sales and good service
delivery performance

Compete
for the
best
people
Measure and
reward strong
service
performers
Treat
employees
as
customers

Retain
the best
people

Include
employees
in the
companys
Develop
vision
service
oriented
internal
processes

Hire for
service
completeness
and service
inclination

Be the
preferred
employer
Train for
technical
and
interactive
skills

Hire the
right people
Custome
r
Oriented
Service
Delivery
Provide needed
support
systems
Provide
supportive
technology
and
equipment

Develop
people to
deliver
service
quality

Empower
Employees

Promote
Team
work
Measure
internal
service
quality

Boundary Spanning Roles

Mechanics and Technicians
Compensation and Incentive plans :
Contracts to ensure there is no
shortage in supply thus creating a
bottleneck

Sources of conflict

Training : Both technical and non

technical

2. Organization / Client Conflict

Emotional Labor : Understanding

sources of conflict to improve
Interaction and communication skills
Quality Trade off

1. Person Role Conflict

3. Inter client Conflict

Boundary Spanning Roles

Dealership Employees (Sales Force: Product and Product
Support)
Emotional Labor :
1. Person Role Conflict: Clearly defined goals for each department
2. Organization / Client Conflict: Communicating the importance and
effectiveness in CSA (building confidence)
3. Inter client Conflict : Better segmentation, Create bands of
customer

Internal Service Marketing

Technicians and
Dealership
Employees

Delivering the promise

(Interactive Marketing)

Enabling the promise

(Internal Marketing)

Owners

Making the promise

(External Marketing)

Management

Coordination
Clear Goals for each Department
CRM through better CRM software tool enabling formal and transparent way to
communicate
Caterpillar
Dealers
Field Technician
Owner ( may be through a mobile app)

Confidence in CSA
Early adapters, Medium adapters, Late adapters
(Wow, Moment of truth, free pilot, generate word of mouth)
Best to be put on the job, incentives to be given to high performers
Service guarantees if service falls below a level (return a %age of price which has
already been incorporated in price estimation), offer pilots

Customers Roles in Service Delivery

Six key elements of a

customer-centric strategy by PWC
Using customer insight to
inform effective customer
segmentation
Creating multiple delivery
Channel

Aligning service delivery to customer journeys

Setting service standards

Creating and empowering customer champions

Continuous improvement through customer feedback

Effective Customer Participation

Define Customers Roles
Clarify level of participation on the basis of segmentation
Identify specific jobs and tasks
Understand implications for productivity, quality and satisfaction

Educate and Reward Customers

Educate customers for their roles
Provide reasons to participate
Reward customer performance

Manage the customer mix

Assess compatibility of segments
Isolate incompatible segments
Enhance segment compatibility

Dealers Roles in Service Delivery

They are the Service Providers
They are the Organization in the
customers eyes
They represent the Brand
They are the Marketers

Assurance: Communicating their credibility to

inspire trust
Reliability: Delivering the service as promised
Responsiveness: The promptness in serving
customers
Relationship: Flexibility in delivering the
services
Tangibles: The after effects of service (on
Custome
Customer
machine parts)

r Loyalty

Satisfactio
n

Customer Retention

Perceived
Expectatio
ns

Perceive
d
Quality

Perceived
Value

Managing Demand & Capacity

Timing of demand is not
correlated to whether the
customer is paying more
or less

Capacity is limited &

cannot be easily
changed

Product demand

Predictable
Peak
construction
season

Unpredictable
Short notice or after
business hours

Product demand may

sometimes be
satisfied early
Managing Demand &
Capacity

Try to predict the

demand

Managing Demand & Capacity

Shift Demand
Demand Too
High

Demand Too
Low

(Reduce Demand during Peak

Times)

(Increase Demand to Match

Capacity)

Communicate busy days &

times to customers
Offer incentives for nonpeak
usage
Set priorities by taking care of
loyal or high-need customers first
Charge full price

Educate customers about peak

time

The Customer Pyramid

Pl
at
in
u
Gold
m
Iron
Lead

Customer Profitability Map

Platinu
m

Gold

Iron

Lead

Price

Cost to Serve

Managing Demand & Capacity

Platinum

Communicate with customers

Gold

Offer incentives for Nonpeak Usage

Try to lock-in

Top priority high lifetime value

Iron

Educate Customers

Lead

Provide Discount in Nonpeak times

Managing Demand & Capacity

Adjust Capacity
Demand Too
High

Demand Too
Low

(Reduce Demand during Peak

Times)

(Increase Demand to Match

Capacity)

Cross-train employees
Use part-time employees
Stretch people, facilities

Schedule vacations &

employees training strategically

What internal and external materials were necessary to

communicate the CSAs to salespeople and customers?

Internal Materials
GAPS
No brochures or advertisements describing CSAs
Absence of clearly defined service features
Lack of written communication
No consistent selling process or message explaining the differentiated individual
CSA offerings

External Materials
GAPS
No brochures or advertisements
No tangible representations
No differentiation among CSAs not explaining the difference in value

SERVICES MARKETING TRIANGLE

COMPAN
Y
Internal Marketing
Communications

External Marketing
Communications

PROVIDE
RS
Interactive Marketing

CUSTOM
ER

Approaches to Overcome Service

Communication Channels
Address
service
intangibility

Manage
internal
marketing
communicati
on

Goal= service
delivery greater
than or equal to
promises

Manage
customer
education

Manage
service
promises

Manage
customer
expectations

Address Service Intangibility

Use narrative to demonstrate the service experience - story-based appeals
Present vivid information- evoke strong emotions
Feature service employees and satisfied customers in communication
Aim messages to influencers
Generate word of mouth through Employee Relationship

Manage Service Promises

Create a Strong Service Brand- brand becomes the companys method of
integrating marketing communication
Coordinate External Communication

Manage Customer Expectations

Make realistic promises
Offer service guarantees
Offer choices
Create tiered-value service offerings

Manage Customer Education

Prepare customers for the Service Process
Confirm performance to Standards and Expectations
Clarify expectations after the sale

Manage Internal Marketing Communication

Create effective vertical communications
Create effective horizontal communications
Sell the brand inside the company
Create effective upward communication
Create cross-functional teams

Closing the gaps

Internal
Downward communication - Newsletters and magazines, internal promotional
campaigns
Familiarize employees with external marketing communication before it is aired
Horizontal communication Coordination between marketing and operations
(reducing the gap between customer expectation and service delivery)
Hold GAP workshops
Effective upward communication Know when the service breakdowns are
occurring and why
Create cross functional teams

Closing the gaps

External
Educate the customers
Communicate to the customer what has been accomplished
Generate word of mouth through Employee Relationships
Advertising testimonials featuring actual customers