Service Logic – a new Dominant Logic for Social Customer Relationship Marketing
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Service Logic – a new Dominant Logic for Social Customer Relationship Marketing

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Why and how Marketing should shift their focus from creating momentum for value exchange towards a focus on co-creating value "in use" for the Customer and the Company.

Why and how Marketing should shift their focus from creating momentum for value exchange towards a focus on co-creating value "in use" for the Customer and the Company.

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  • Full Name Full Name Comment goes here.
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  • p.s. making comments here is not a great experience.. no possibility whatsoever to format / lay out the text.. I hope you can still read and make sense of it..

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  • Hi Nick,

    Thx for the compliment, and you make some valid points. With regard to your example of car insurance I follow your line of thoughts, and would like to add some:

    It is my assumption/hypothesis that most value for insurance Customer lies in the use of the insurance. Meaning that when they need to claim on the insurance it is proven to the Customer what the value is. They probably have been paying for months or years, but the claim is the moment of truth. The way you handle the claim-process is an important set of interactions, or experience, which requires you to really think about how you want to design that experience in a way that satisfies their needs. How can you help the Customer create value in that process? Not something many marketers think about when designing the product, but they should. They should because it is highly likely that this Customer experience will result in word of mouth. If it is a positive experience they might tell friends about it, if it is a negative one you can be sure they will. Of course your insurance product itself will be talked about, but I think that the claims experience will be talked about more. Marketers should care for this if they take word-of mouth seriously.

    An important take away here is that marketers need to understand what Customers talk about (which is a great sign of what they value) and how that effects the networks of their Customers and furthermore how that effects buying behavior (repurchase, buy other insurances too etc) of your Customer and their networks.

    On top of that, when letting go of the insurance as the product, but looking at what is at stake for the Customer (what the job is he needs to do), it is likely to be his mobility (assumption that needs validation too) as you state. This is where more value for the Customer can be. How can you help Customers with the mobility issue, when they need to claim on the insurance. In my experience lots of insurers by the way offer solutions for this problem already. Again, how well you have designed and executed this experience (of guaranteeing mobility) will have significant more impact on the value Customers create from having your insurance, than having the insurance policy itself. It is likely that insurers are not the only ones delivering this experience. Partners and employees are involved too.

    Bottom line: having a clear understanding of when and how value is created by Customers, what experiences really create value when using the product, and understanding who is playing a role in these experiences (including the Customer's role) will provide you with the insights you need to design the experiences and develop a clear value proposition. Is your value proposition a peace of mind? is it mobility? is it both, more?

    It could make sense to see whether you can further your interactions with Customers and help them to create more value, depending of your value proposition. Assuming it is mobility, you can build in (social network) elements as you describe. I would judge whether a certain element makes sense based on an analysis of how it can create value for your Customers, and how it creates Customer Lifetime Value, Network Value, Referral Value and/or even Value of Customer (network) knowledge/insights for the Company.. and all those need to outweigh the costs too... ;-)

    These are my thoughts.. What do you think? Can you relate? Does it make sense to you?
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  • Love the presntation Wim. Can we try and apply this to a real life situation, let's say, car insurance. As a consumer, I have to have it ... pretty much a grudge purchase. And once I've made the purchase, I tend to forget about it ... and the insurance brand as well, except for claims. So if value co-creation happens after value exchange, how do we mainatin a relevent presence in the customer's mind [and networks] such that we have the chance to build and strengthen that value. For something as functional as insurance we need to become something more than just 'peace of mind = back of mind'. That means insurance brands need to do more than just insure!! Am I getting this right? May be your insurance brand also helps with other aspects of motoring: group buying to save on servicing for its customers, lift sharing scheme, car share clubs etc, track days for petrol heads. Even then, is this suitable subject matter to allow me [brand] into a customer's social networking space? Any thoughts from anyone?

    Nick

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  • This presentation is part of a blog-post, which can be viewed here:
    http://contactcenterintelligence.wordpress.com/2009/11/25/service-logic-and-the-implications-for-a-new-social-customer-relationships-marketing-logic/
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Service Logic – a new Dominant Logic for Social Customer Relationship Marketing Presentation Transcript

  • 1. Service Logic – a new Dominant Logic for the Social Customer Relationship Marketerby WimRampen
    image courtesy: http://www.flickr.com/photos/stuartslimp/3936066556/in/pool-crowded_multitude
  • 2. Goods dominant logic:
    value is created at the moment of exchange, after that, the Customer is on his own
    value exchange: when money and ownership or rights change hands
    image courtesy: http://www.flickr.com/photos/mithril/2764675971/
  • 3. The new dominant logic: Service Logic
    is not about selling services
    image courtesy: http://www.flickr.com/photos/ptrktn/3801479228/
  • 4. Service Logic: value co-creation happens AFTER value exchange
    image courtesy: http://www.flickr.com/photos/viriyincy/3594764008/
  • 5. Value for customers means that, after they have been assisted by a self-service or full-service process, they are – or feel – better off than before
    image courtesy: http://www.flickr.com/photos/yalcin_arsan/4055973255/in/pool-crowded_multitude
  • 6. Whether a Customer is – or feels – better off is determined by the Customer
    image courtesy:: http://www.flickr.com/photos/yalcin_arsan/4001627189/in/pool-crowded_multitude
  • 7. Value is co-created when customer desired outcomes are met
    in other words: when the Customer’s job is done to his satisfaction
    image courtesy: http://www.flickr.com/photos/cassandrasarmanho/4006047824/in/pool-crowded_multitude
  • 8. Fact: most Customers can use some help in creating value
    image courtesy: http://www.flickr.com/photos/cleopatra69/4033747792/in/pool-crowded_multitude
  • 9. If value for the Customer is dominantly created after value exchange, i.e. IN USE, both scope and content of marketing strategies should shift from dominantly focused on creating momentum for value exchange to a continuum of interactions in networks of relationships aimed to support customers’ value creation
    image courtesy: http://www.flickr.com/photos/beeteeoh/3298373727/
  • 10. The “new” goal for marketing is to support (and improve) customers’ value creation “in use”
    image courtesy: http://www.flickr.com/photos/msdm/3491968596/
  • 11. Value “in use” is determined by Customer outcomes of experiences during the lifetime of consumption of products & services
    image courtesy: http://www.flickr.com/photos/seasonalplume/2607760460/
  • 12. Touch-points and interactions (in networks) of relationships are the building blocks of personalized experiences in a socially networked eco-system
    image courtesy: http://www.flickr.com/photos/rakustow/3942156152/
  • 13. The firm (marketing) should strive for engagement in interactions and relationships with its customers’ (net)work or process to create value
    image courtesy: http://www.flickr.com/photos/caribb/185905926/
  • 14. 5 Questions for today’s marketers
    image courtesy: http://www.flickr.com/photos/downingstreet/3386080464/
  • 15. 1. Do you understand how and to what extent your customers are meeting their desired outcomes when using (experiencing) your product or services (over its lifetime)?
    image courtesy: http://www.flickr.com/photos/amirjina/2282812623/
  • 16. 2. What interactions with your product, services, partners, employees, touch-points, their networks and relationships influence and shape customers’ experiences in use?
    image courtesy: http://www.flickr.com/photos/laughingsquid/383433646/
  • 17. 3. What opportunities do you see to engage in the customer’s value-creation process?
    image courtesy: http://www.flickr.com/photos/defaultbb/3753829500/
  • 18. 4. What opportunities do you see to pro-actively help the customer meet their desired outcomes through (new ways of) interacting (in & via networks) and building relationships?
    image courtesy: http://www.flickr.com/photos/vorticeassurdo/167001806/
  • 19. 5. Who do you need to collaborate with to purposefully design & execute experiences over a lifetime of use to exploit these opportunities?
    image courtesy: http://www.flickr.com/photos/marcelgermain/3956114555/in/photostream/
  • 20. How does “Social” tie into all this?
    image courtesy: http://www.flickr.com/photos/nycviarachel/507963159/
  • 21. A. SOCIAL CRM STRATEGY FRAMEWORK STATEMENT (version 2)
    A socialcrmstrategy is aboutunderstandingwho the customer is throughlistening to, engagingwith and collaborationbetweencustomers, employees and partners. It is aimed at developinginnovations, interactions in networks of relationships and communitiesthat support customers in doing the jobs theyneed to do. The means are a personalized design of the service experiencethatempowerscustomers, employees and partners to influencehowwelltheycan meet theirdesiredoutcomes
  • 22. B. 3 out of 15 new trends driving Social Business
    Courtesy: Graham Hill
    image courtesy: http://www.flickr.com/photos/azarov/3279771862/
  • 23. B#1. From Individual Customers to Networks of Customers
  • 24. B#12. From Stand-alone Companies to an Ecosystem of Networked Partners
    image courtesy: http://www.flickr.com/photos/mattsabo17/143172563/
  • 25. B#15. From Customer Lifetime Value to Customer Network Value
    image courtesy: http://www.flickr.com/photos/marxpix/471485822/
  • 26. Implications for Marketing
    image courtesy: http://www.flickr.com/photos/ahmadnawawi/3808452611/
  • 27. Marketing’s 1st job is to understand customers’ value creation process (= jobs & desired outcomes) and where in the process Customers fail to meet their desired outcomes.
    image courtesy: http://www.flickr.com/photos/berkeleylab/2826536670/in/set-72157606890009024/
  • 28. Marketing’s 2nd job is to build relationships in communities of individuals with similar desired outcomes and behavior
    image courtesy: http://www.flickr.com/photos/loveforphotography/457269816/
  • 29. Marketing’s 3rd job is to support Customers’ value creation process
    image courtesy: http://www.flickr.com/photos/romec1/3246065362/
  • 30. Marketing’s 4th job is to design experiences that stimulate company’s engagement through interactions in networks of relationships
  • 31. Marketing’s 5th job is to engage employees and partners in supporting Customers in their process of value creation
  • 32. Marketing’s 6th job is to extract actionable insights from 360-degree feedback to foster innovations and to turn them into value propositions that attract new Customers
    image courtesy: http://www.flickr.com/photos/ableman/534153791/in/set-72157600321756478/
  • 33. Marketing’s 7th job is to redesign metrics to capture the network value for the firm and to ensure there is high correlation between these metrics an Customers’ value created.
    image courtesy: http://www.flickr.com/photos/toastforbrekkie/3440023097/
  • 34. What about Marketing Laws?
  • 35. The P’s remain valid, but less dominant. Focus is no longer dominantly on product and value chain towards value exchange.
    image courtesy: http://www.flickr.com/photos/jasmic/1472319885/
  • 36. Segmentation based on demo/sociographics come 2nd, after segmentation based on Customer jobs & (desired) outcomes.
    image courtesy: http://www.flickr.com/photos/un_photo/3815987498/
  • 37. THANK YOU LET’S START THE DEBATELeave a comment or contact me on Twitter:twitter.com/wimrampen
  • 38. RESOURCES
    Gummeson, Evert (2007):
    Exit Services Marketing – Enter Service Marketing
    Michael A. Merz & Yi He & Stephen L. Vargo (2008):
    The evolving brand logic: a service-dominant logic perspective
    David Ballantyne & Richard J Varey (2008):
    The service-dominant logic and the future of marketing
    Sara Sandstro¨m, Bo Edvardsson, Per Kristensson & Peter Magnusson (2008):
    Value in use through service experience
    ChristiaanGrönroos & AnikaRavald (2009)
    Marketing and the Logic of Service; Value Facilitation, Value Creation and Co-Creation and their marketing implications
    Graham Hill (2009)
    A Manifesto for Social Business