1. Essentials of Health Care Marketing 2nd Ed. Eric Berkowitz
Chapter 7
Developing Customer Loyalty

2. Learning Objectives Understand the concept of relationship marketing
Recognize the distinction between satisfaction and loyalty
Describe the necessary components of a value added service delivery system
Appreciate the importance and role of a recovery system

3. Learning Objective 1 Relationship marketing
An organization’s attempt to develop a long-term, cost-effective link with a customer for the benefit of both the customer and the organization.
Shift from individual transactions to the establishment of longer term relationships
Table 7-1, page 196 shows a change in marketing efforts
Regular, ongoing contact with patients

4. Learning Objective 1 Relationship marketing
Focus on what the customer is buying, not what the organization is providing
VALUE
Empowering employees to meet customer needs
Quality focus – beyond the clinical side of service delivery

5. Learning Objective 2 Satisfaction or Loyalty?
Organizations benchmark, depending on their measurement programs.
Must aim for more than satisfaction
Open up the floor for discussion based on personal experiences

6. Learning Objective 2 The Customer Loyalty Pyramid
Progression of customer psychological movement toward loyalty
Awareness
Interest
Evaluation
Trial
Satisfaction
Repeat purchase
Loyalty
See fig. 7-1, p. 199

7. Learning Objective 2 The value of loyalty
The loyal customer makes frequent and repeat purchases
Is immune from the pull of competition
Reduction in acquisition costs
5:1 ratio
Lifetime value of customer
Referrals, word-of-mouth referral
More tolerant if there is a problem
Discuss the 5:1 ratio

8. Learning Objective 3 Creating customer value
The customer defines the appropriate service quality and price level.
Customer defines the price/value relationship of the service.
This value is relative to competitive offerings.

9. Learning Objective 3 Creating customer value (continued)
Health care service value equation
Value=Clinical quality provided=process quality-(Price + Service Acquisition Cost)
Clinical Quality Provided – technology and expertise
Process quality – the ease with which a customer can access the clinical quality

10. Learning Objective 3 Conducting a Gap Analysis
See figure 7-2 on page 203
Five possible Gaps
Between Expectations of service quality and management perceptions of customer expectations
Between management perceptions of customer expectations and service quality specifications
Between service quality specifications and service delivery
For these two slides on the gap analysis, discuss in detail using real-life experiences of the students (see pp )

11. Learning Objective 3 Conducting a Gap Analysis
Five possible Gaps continued
Between service delivery and external communications to customers
Promotional in nature
Between expected service and perceived service
PERCEPTION IS REALITY TO OUR CUSTOMERS!
Marketers set the expectations
For these two slides on the gap analysis, discuss in detail using real-life experiences of the students (see pp )

12. Learning Objective 3 Measuring service performance
Must meet three criteria:
Measurement tool must be managerially useful
Tool must recognize the role of customer expectations
Tool must direct action to the most relevant areas

13. Learning Objective 3 Measuring service performance
Step 1 in developing a measurement tool is to conduct a customer audit
Use of flow charts to observe process and identify potential difficulties
Medical service blueprints – mapping processes
Moments of truth – customer contact points
See figures 7-3 and 7-4 on pp

14. Learning Objective 4 Developing a Customer Recovery System
An organized system that anticipates service delivery failures or problems
Defined scripts for handling problems

15. Learning Objective 4 Developing a Customer Recovery System
Critical components for implementation
Focused recovery training must be conducted with all employees
Recovery standards must exist
The organization must be ‘easy to complain to’
Frontline employees must see themselves as part of the system
Employees need to believe they are a part of a quality-conscious organization.

16. Summary
Relationship marketing is a shift from a transactional perspective to the development of longer term loyalty.
In a transactional focus, the perspective is more on what the organization is selling; in a relationship marketing focus, it is more on what the customer values.
Satisfaction is not a sufficient goal for customer behavior; rather, the focus must be loyalty.
The customer loyalty pyramid has multiple stages: awareness, interest, evaluation, trial, repeat, satisfaction, and ultimate loyalty.

17. Summary continued
The lower levels of the customer pyramid are referred to as the promotional levels.
Loyal customers have multiple benefits in terms of reduced acquisition costs, longer term per revenue growth, more profitable to serve, able to refer others, and more willing to pay a price premium.
Loyal patients have a broader zone of tolerance or are more willing to forgive an organization’s service lapses.

18. Summary continued
Customer value equation has four variables’ clinical quality, service process quality less out of pocket cost less effort expended.
Conducting a Gap Analysis can help identify the opportunities for the delivery of customer value.
A customer contact audit or medical service blueprint is a flowchart of each step in service delivery.

19. Summary continued
A customer contact audit highlights opportunities for establishing a differential advantage.
Measuring satisfaction is a function of expectations and the importance of each point of contact.
A customer recovery system is defined script that anticipates how to react when a problem arises in service delivery.