1. Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin

2. Part 7 SERVICE AND THE BOTTOM LINE 16-2

3. The Financial and Economic Impact of Service  Service and Profitability: The Direct Relationship  Offensive Marketing Effects of Service: Attracting More and Better Customers  Defensive Marketing Effects of Service: Customer Retention  Customer Perceptions of Service Quality and Purchase Intentions  The Key Drivers of Service Quality, Customer Retention, and Profits  Company Performance Measurement: The Balanced Performance Scorecard Chapter16 16-3

4. Objectives for Chapter 16: The Financial & Economic Impact of Service  Examine the direct effects of service on profits.  Consider the effect of service on getting new customers.  Evaluate the role of service in keeping customers.  Discuss what is known about the key service drivers of overall service quality, customer retention, and profitability.  Discuss the balanced performance scorecard that allows for strategic focus on measurements other than financials. 16-4

5. The Direct Relationship between Service and Profits 16-5

6. Offensive Marketing Effects of Service on Profits 16-6

7. Defensive Marketing Effects of Service on Profit 16-7

8. Top Box Scores, Repurchase Intentions, and Referral Intentions 16-8

9. The Effects of Service on Behavioral Intentions and Behavior 16-9

10. The Key Drivers of Service Quality, Customer Retention, and Profits 16-10

11. Sample Measurements for the Balanced Scorecard 16-11

12. Service Quality Spells Profits Customer Retention Lower costs Price premium Word of mouth Margins Profits Defensive Marketing Volume of purchases Market share Reputation Sales Price premium Offensive Marketing Service 16-12

13. The Measures That Matter Most: Fast Food Example 16-13