Managing internal customers is important for service organizations. There are four main roles internal customers can play: contactors, modifiers, influencers, and isolateds. Contactors and modifiers directly interact with external customers while influencers impact customer experience indirectly. Isolateds perform support functions without customer contact. Training, empowerment, involvement and rewards can motivate employees. Career development and reducing dependency on human resources also impact internal customer management. The goal is to convert people from a liability to an asset through human resource development practices.

1. Managing People In Service
Organization

2. Managing People in Service
Organization
 Internal Marketing: It is means of applying the philosophy and practices of
marketing to people who serve the external customers so that –
 The best possible people can be employed and retained and
 They will do the best possible work.

3. Employees as internal Customers
 A diverse group of employees who engage in exchanges between each
other.
 In order to have their needs met, employees are often dependent upon
internal services provided by other departments or individuals within their
organization.
 These includes relationships between customer contact staff, back room
staff, managers, and contact between head office and branch office etc.

4. Value chain for internally produced
services
Employees process
Stage 1
Employees process
Stage 2
Employees process
Stage 3
Front line service employees
Intermediaries
The final consumers
Input form outsider suppliers

5. Value chain for internally produced
services
 Different internal suppliers and customers, some of which deal directly with
the service delivery process and some of which provide support services to
the service delivery process, closely related to the concept of the value
chain.

6. Different roles internal customers play
in a service firm
 Internal customers play a variety of roles that leads to four categories by
employees of a service firm.
 Analysis of the groups and consequent roles will reveal the importance of the
people factor to the following:
 The efficiency and effectiveness of the service firm
 Customer responsiveness
 Image and positioning of the firm, especially where any relevant tangibility to
service. They form the major part of differentiation of the service firm.
 Opportunity to create additional value.

7. Roles of employees and their
influence on customers
Contactors Modifiers
Influencers Isolateds
Frequency of periodic
Customer contact
Infrequent or no
Customer contact
Involved with
Conventional
Marketing Mix
Not directly involved
With marketing
Mix

8. Contactors
 They are having very frequent contact with customers and very involved
with all front line marketing activities like sales, promotions, handling
customers enquiries and also complaints.
 They make maximum impression on the customers and are wholly
responsible for moments of truth.
 They are trained to deal with customers, and situations-and require being
highly motivated on a continuous basis.

9. Modifiers
 They have regular encounters with customers and also go on to build the
Moments of Truth of a service firm
 They occupy less points of interaction with the marketing activities.
 They constitute receptionists, call centre personnel, direct sales agents of
banks and insurance companies.
 When service personnel end up interacting with customers without being
fully aware of the management objectives and strategic goals. Customers
relationship building becomes, one of the most important skills for these
categories of employees.

10. Influencers
 They are senior personnel who have planned and devised strategies but
they very infrequent contact with customers.
 It is in their involvement with different marketing activities like
marketing research, strategy, product development, and marketing
communication that they influence the service firm.
 The objective and goal of influencers should revolve around developing
customers orientation amongst the work groups and the organization.
They have a potential to develop customers responsiveness amongst his
peers and subordinates.

11. Isolateds
 These role players perform support functions like data processing, back
office operations, maintenance, purchasing etc
 They do not interact with customers, nor are they deeply involved with
usual marketing activities.
 There handle functions that are critical to the effectiveness of the service
firm. They tend to display minimum customer responsiveness.

12. Human Resource Development
 The most important assets for gathering a competitive (aggressive)
advantage and distinctive (individual) positioning was its internal
customers.
 HRD can convert the people factor, which is generally perceived as
liability, into assets.

13. Controlling and empowering staff
 Controlling: Staff can be supervised closely and corrective action are
taken where they fail to perform to standard.
On the other hand, staff can be made responsible for controlling their own
actions.
 Empowerment: It may be crucial for turning service failures into effective
recovery, and for closely tailoring a service to individual customers needs.
The degree of empowerment given to employees, or the control exercised
over them depends on the format of a service delivery system.

14. Creating involvement by employees.
 Strategies to empower employees to create more effective service encounters
will not be effective if employees do not feel involved in their job.
 Motivation, consent, participation, Moral involvement and communication
form essential focal points for an organization’s HRM strategy.

15. Creating involvement by employees.
 Consent: It covers a variety of management –led initiatives and strategies
which seek to give it authority without actively emphasizing its coercive
power.
For many services provided on a one-to-one basis, direct monitoring and
supervision of employees by management may be impossible to achieve
anyway.
 Moral involvement: It refers to some mechanism whereby employees can
identify with the corporate goals of their employer and relay their feelings
about these goals back to management.
Management can generate moral involvement through joint consultation with
employees on decisions made by management.

16. Creating involvement by employees
 Motivation: Motivation concerns goals and rewards. It is based on
individuals desire to satisfy various levels of needs. Rewards for
reaching goals can be tangible e.g. money or can be intangible e.g.
awards which add to status or self-esteem.
 Participation: An employees participation in an organization itself
through more qualitative measures such as employee involvement
in decision making through quality circles or team briefings. e.g.
selecting, recruiting and appraising employees within a work group
 Communication: Improving communication between a company
and its employees. effective communication should be based on a
one-way channel of information from managers to employees
through such media as staff newsletters.

17. Training and Development
 Training becomes a important tool and it can bring at par all those
employees who are lagging behind some of their peers in skills and
capability.
 This would give the image and impression of consistency in service
delivery to the customers
E.g. call centre employees in handling voice calls would speak with same
accent irrespective of their backgrounds, only due to the training in soft
skills imparted to them.

18. Career Development
 An organization in it goals of recruiting and retaining staff is a clearly
defined career progression pathway.
 Career progression refers to a mechanism which enables employees to
visualize how their working life might develop within a particular
organization.

19. Rewarding Staff
 The purpose of rewarding staff is to improve the standard of staff
performance by giving employees something which they consider to be of
value in return for good performance.
 Rewards to employees can be divided into two categories-
 Non-monetary rewards cover a wide range of benefits. E.g. subsidized housing or
sports facilities and public recognition for work achievement.
 Monetary rewards are more direct and the principal motivator for employees
which helps for improving the performance of employees.

20. Reducing dependency on human
resources
 Employees represent an expensive and difficult asset to manage, and
furthermore, the quality of output received by final consumers can often
be perceived as being highly variable.
 The aim of employee replacement schemes can be to increase consistency
or to reduce costs.
 The number of strategies can be identified to reduce dependency such
as:-

21. Reducing dependency on human
resources
 A human development in a service production and delivery process can be
completely replaced by automatic machinery.e.g. ATM machines, vending
machines, automatic car washes etc.
 Equipment can be used alongside employees to assist them in their task.
 So these are the HRD Practices can convert the people as a factor, perceived
from liability to assets.

22. Satisfy the Dissatisfied
 Hear the customer out.
 Empathize
 Apologize
 Take responsibility for action.

23. Thank you