Module 2:

Customer Relationship: Customer Service

This module includes the definition of relationship marketing, customer value, relationship
development strategies and successful customer service strategy in the Philippine business
enterprise.

At the end of this module, you will be able to:

a. Define relationship marketing;

b. Explain the value of customers;
c. Identify and describe relationship development strategies; and
d. Illustrate successful customer service strategy in the Philippine business enterprise.

Lesson 1: Relationship Marketing

What you already know?

Today, most organizations turn to view customers as equal partners in the buying and
selling transaction. Through encouraging customers to enter a long-term relationship with
repeat purchases or buy multiple brands at the same time from the firms, marketers are able
to get an apparent understanding of customer needs. Kick-Start
Take a minute to ask your parents if they have one of this discount cards or ―suki‖
cards. Prepare a set of questions that will
enable you to know their personal reasons
motivation for availing the card. Conduct a
short/informal interview using your guide
question. Take note of their answers and
share their response in class.

Most likely they will answer that they

want to take advantage of the points earned
in every purchased made, thus ensuring to bring the card every time they go out for
shopping or would most likely buy items in stores where they have the card to avail the
points. This is an example of Customer Relationship Management (CRM) strategy the
companies are utilizing right now to build loyalty and keep track of the transactions of their
customers.
DISCUSSION

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RELATIONSHIP MARKETING DEFINED
Relationship Marketing includes activities aimed at developing and managing
trusting and long-term relationship with larger customers. In relationship marketing,
customer profile, buying patterns, and history of contacts are maintained in a sales database
and an account executive is assigned to one or more major customers to fulfill their needs
and maintain the relationship.

Relationship Marketing is a strategy designed to foster customer loyalty, interaction

and long-term engagement. This customer relationship management (CRM) strategy
focuses more on long-term customer retention than acquiring large numbers of new
potentially single-transaction customers.

Relationship Marketing is designed to develop strong connections with customers

by providing them with information directly suited to their needs and interests and by
promoting open communication. This approach often results in increased word-of-mouth
activity, repeat business and willingness on the customer‘s part to provide information to
the organization.
Relationship marketing is contrast with transactional marketing is an approach that
focuses on increasing the number of individual sales. Traditional transaction marketing
(TM) tended to ignore relationships and relationship building. The company was viewed
as an independent agency always maneuvering to secure the best terms. The company was
ready to switch from one supplier or distributor to another if there was an immediate
advantage. The company assumed that it would normally keep its current customers, and
it spent most of its energy to acquire new customers. The company neglected the
interdependence among its main stakeholders and their roles in affecting the company‘s
success. Most organizations combine elements of both relationship and transaction
marketing strategies.

Relationship marketing (RM) marks a significant paradigm shift in marketing, a

movement from thinking solely in terms of mutual interdependence and cooperation. It
recognizes the importance of various parties such as suppliers, employees, distributors,
dealers, retailers that are cooperating to deliver the best value to the target customers. Here
are the main characteristics of relationship marketing:

1. It focuses on the long-term rather than the short-term.

2. It focuses on partners and customers rather than on the company‘s products.
3. It puts more emphasis on customer retention and growth than on customer
acquisition.
4. It relies on cross-functional teams rather on departmental-level work.
5. It relies more on listening and learning than on talking.
6. Relationship marketing calls for new practices within the 4Ps.

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 a. Product
- More products are customized to the customers preferences
- New products are developed and designed cooperatively with suppliers and
distributors.

b. Price
- The company will set a price based on the relationship with the customer
and the bundle of features and services ordered by the customer.
- In business-to-business marketing, there is more negotiation because
products are often designed for each customer.

c. Place
- RM favors more direct marketing to the customer, thus reducing the roles
of middlemen.
- RM favors offering alternatives to customers to choose the way they want
to order, pay for, receive, install and even repair the product.

d. Promotion
- RM favors more individual communication and dialogue with customers.
- RM favors more integrated marketing communication to deliver the same
promise and image to the customer.
- RM sets up extranets with large customers to facilitate information
exchange, joint planning, ordering, and payments.

The shift toward relationship marketing does not mean that companies abandon
transaction marketing altogether. Most companies need to operate with a mixture of the
transactional and relational marketing approaches. Companies selling in large consumer
markets practice a greater percentage of TM while companies with a smaller number of
customers practice a higher percentage of Relationship Marketing.

KNOWLEDGE SELF-CHECK 1.1

BENEFITS OF RELATIONSHIP MARKETING
Retaining customers for the long-term offers many benefits. The aim is for the company
to obtain lifetime customers. In the world of business and management, the cost of retaining
a customer is at least eight times lesser as compared to acquiring a new one.
Thus, this marketing capitalizes on the same fact and is beneficial to the company in several
ways.

1. Understanding customer characteristics – Relationship marketing helps the

company understand its customer better. The company can segregate its customers
into groups based on their characteristics like purchasing power, frequency and

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 volume of sales transactions. It also helps the company get valuable feedback from
its customers and understand their needs and expectations. This subsequently helps
in value addition to products and services based on these demands and leads to
happier customers as they get involved into the value creation process.

2. Delivery and meeting expectations – If the company knows what its

customers‘needs are, it will help reduce wastages due to trial and error methods.
When required product features and specifications are known, it is easier to make
modifications that will please customers and increase sales turnover. It also helps
reduce costs incurred from the research and development process.

3. Repeat business – people would not be interested in getting involved in any

business transaction with a seller who appears rude or indifferent to their needs.
People buying wouldn‘t feel any special need to resist switching sellers if they are
not given an incentive to stay bounded. Here, relationship marketing steps in and
provides a positive reinforcement for them to make a repeat purchase.

4. Prevents negative transition – Trust and loyalty go hand in hand and it is super
beneficial for all business. It will help prevent customers from turning competitors.
Enhancing and maintaining relationship with existing customers will prevent the
tendency of customers to switch to other products/services for a better offer.

5. Word-of-mouth marketing – A happy customer will always promote business by

telling ten other people about the amazing services or performance received from a
company. They will be excited to recommend the business to other people around
them so they can try it too. Also, research suggests that people are more motivated
to try product/service based on reviews from an existing customer they know than
they will be from persuasion from advertisement. Hence, this marketing is an
effective strategy beyond expensive advertising campaigns that create product
awareness but not to promise a remarkable rise in sales.

6. Increasing customer base – It is no secret that a happy customer will bring in new
ones. In fact, a satisfied customer is 100% more likely to recommend a product to
a prospective customer. Apart from customer referrals, there are several other ways
to increase customer satisfaction by employing methods of utilizing social
networking websites, blogs, informal surveys, benefits on loyalty cards, timely
response to complaints and requests as a constant reminder of its presence around
customers through consistent communication. A company‘s value equity and
retention equity is improved by enhancing customer satisfaction. This type of
marketing benefits, especially, in creation of new customers apart from maintaining
existing ones.

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 7. Reduced marketing costs – Benefits also include lesser marketing costs and more
value creation. This can be explained by stating the following statistics: Every 5%
increase in customer retention can increase a company‘s annual profits from at least
25% to as much as 125%, while simultaneously leading to a reduction of 10% in
marketing costs. An existing customer will spend 33% more than a new customer
to buy company‘s product. Most business spends as much as 80% of their budget
for marketing expenditure to make new customers.

8. Minimization of customer price sensitivity – a happy customer will be willing to

pay more for a product if there is a guaranteed satisfaction of products and after
sales services attached to the price. Hence, a company will gain repeat business
from its existing customers in the long term even if there is a rise in prices at which
it sells its products and services. However, quotation for a premium price must come
with benefits of value addition. Customer loyalty and satisfaction are proven major
contributors to profit maximization.

9. Identification with the company – The benefits is reaped both by the company
and customers. It helps customers identify more with the company. Staying in touch
with customers makes them feel like they are important to the company. It will keep
customers makes them feel like they are important to the company. It will keep
customers coming in and build brand equity for company in the long run. Also,
familiarity with the company and the fact that it understand its customer‘s need
better due to time period of its association as compared to that with new company,
plays as de-motivators for customers to make a switch.

10. Product market expansion – This one is tricky and most companies fail to
recognize this benefit. The company‘s employees must be ready to deliver beyond
the company‘s boundaries on customer demand. Customers play an important role
in value generation process. They are the ultimate consumers of products, thus they
can help identify potential profitable fields for expansion and diversification. A
company that is willing to venture outside its set boundaries, can constantly grows
with the support of its customers through this marketing.

Lesson 2: Customer Value

What you already know?

Customers now have an overwhelming abundance of choice. They are accustomed to
competition, and the fragmentation of the market because of the choices this provides. They

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have high expectations and little loyalty to spare if they are not met. Today it is a buyers‘
market.

This means that companies must

try even harder to create and
communicate value in everything they
do. To do that, they have to understand
what value really is, and more
importantly, what is not.

Kick-Start
Identify how each of the following
consumers perceives value, based on
their statements listed below. You
should note that the perception of
value varies across most of these consumers.
For each consumer statement, in this activity, identify how each of the following
consumers perceives value. (For example, value = low price, or value = good service,
and so on. Share your observation in class.

Consumer Statements

“I drive a BMW. Why? Because I always want the best, that’s important to me. I usually
buy high quality products.”

“I also drive a BMW, but I don’t really care about the car – I just want to show my family,
friends and neighbours how well I’m doing in life.”

“I like going to McDonald’s – it’s such great value – sure, the food isn’t that great, but you
get a lot for your money.”

“I’m happy to pay PhP5, 000.00 for a pair of shoes – because they last for years. I really
can’t understand people who buy a PhP300.00 pair of shoes every six months.”

“I always buy my families clothes from either Target or Walmart (discount stores). Look,
a shirt’s a shirt – why pay more that you have to!”
“I won’t shop at those stores; they are much cluttered and too busy. I prefer to shop at
specialist clothing stores. They are quieter, they are much nicer to be in, and you can take
your time and comfortably try on clothes.”

“I still shop at the local butchers, rather than going to the big supermarkets. Sure, it’s a
bit more expensive, but the butchers are always friendly, you can have a laugh, and they
even tell you how to cook the meat if you’re not sure about it.”

“I switched my loan from one of the big banks to a credit union. It’s going to cost me a
little bit more, but I know that I can trust them, I’m not sure about the banks anymore.”

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 Customer value varies among all customers and entirely dependent on consumer
perspective moreover it encompasses the total experience of the customer regarding the
organization, its products and services, purchase and post-purchase services and customer
support, as well as the overall impact of the interaction between consumer and product, the
benefits conferred and how these affect well-being and are perceived by influential others.

DISCUSSION

CUSTOMER VALUE DEFINED

People make buying decisions every day. In every decision, a consumer asks the
same question about the worth they will receive and the worth they will give up in order
to get a certain product. The gain the consumer received for the benefit is weighed
against the cost the consumer receives for the benefit. The value the individual
consumer places on a product or service becomes the customer value for that offering.
Customer value is a relationship between benefits and the costs including money,
stress and time to sacrifice that is necessary to get the benefits or simply stated in a
mathematical equation: Benefits – Cost = Customer Value.

Customer value is not simply about high quality. It is not also about pricing alone.
Customer value products and services that are of quality they expect and that are sold
at prices they are able and willing to pay.
In essence, customer value entails extraordinary delivery of four value-points or
components known also as SQIP:
1. Service – the intangible value offered to customers
2. Quality – customer‘s perception of how well a company‘s products and services
meet expectations.
3. Image – customer‘s reception of the company or business they interact with
4. Price – the price a company can command for its products and services and its
customers are able and willing to pay.

Each of these four components contributes to customer‘s perception of value or

definition of value and affects their levels of dissatisfaction or satisfaction with a product,
service, or business. Thus in order to design and deliver superior customer value, each of
these components must be treated with equal attention and importance. Service, quality,
image and price are what constitute customer value in terms of conferred benefits, meeting
customers‘ needs, wants, and expectations, and hence affecting and determining customer
satisfaction, company performance, market share, competitive advantage, profits, revenue,
market position, brand loyalty, and ultimately company success and survival. Basically,
everything that a company does ultimately funnels into customer value and this translates

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into the bottom line that it is so important to measuring and defining business success in
the globally competitive economy of the 21st century.

The prices of the products and services depend highly on the service quality, the quality
of products and services being offered, the image of the company and the benefits that the
products and services bring to consumers. Organizations must remember that consumers
are limitless and delighted in their need and desire for value for their money. Consumers
want to experience the joy of every hard-earned peso they spend on products and services
and companies must understand that this is a basic idea in their approach to meeting
customer needs and wants.

This customer value is weighed against the customer values assigned for similar products
and services that provide a similar benefit. Consumers will typically purchase the item with
highest customer value among all offerings in the marketplace.
Every consumer has a unique set of needs and resources, so no two consumers will place
the same customer value on the same product or service. The highest-quality product or
service does not always provide the highest customer value, since the benefit of each item
is measure against the cost. Some consumers are willing to pay high price for a quality
product or high level of service, but others will make the decision that the same benefits
―are not worth the price‖.

DELIVERING CUSTOMER VALUE

Customers are the lifeblood of all business. They are the source of current profits
and the foundation of the future growth. There are three ways a company can establish
customer value to its customer base:
1. Provide consumer with the best cost – Companies can choose to focus their efforts
on providing a reliable product at a reasonable price. The low price helps to increase
the value of their offering to their consumers even if it is weighed against a low
benefit. For instance, a person might place a high customer value in a meal at
McDonald‘s restaurant because he knows he will receive a consistent, satisfactory
meal at a low price.

2. Provide the consumer with the best product – Companies that offer top quality
products increase the customer value of their offerings to their consumers by
providing a high benefit which exceeds the high cost. Lexus, for instance, makes a
luxury car that many consumers consider to be top quality. Lexus, along with other
luxury car manufacturers, is able to charge a premium price for their cars, since they
consistently produce cars of high quality in the minds of their consumers.

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 3. Provide the consumers with best service – Companies that provide a high level
of service to their consumer increase the customer value of their services by
providing a high benefit which exceeds the cost for many consumers. Consumers
who buy from these companies are willing to pay more to be treated with
exceptional service. The retailer Nordstorm, for instance, has legendary customer
service that unmatched in the retail industry. Nordstorm employees are provided
great lengths in order to keep existing customer happy and forge relationships with
new customers. The company gives employees the autonomy to make their own
decisions instead of having to send questions up to ubiquitous corporate flagpole.

IMPORTANCE OF CUSTOMER VALUE

The strategic and overall importance of customer value can be summarized in ten salient
points made by Professor Art Weinstein in his book, Superior Customer Value: Strategies
for Winning and Retaining Customers (Third Edition, 2012):

1. Designing and providing superior customer value are the keys to successful
business strategy in the 21st century.
2. Value reigns supreme in today‘s marketplace and market-space.
3. Customers will not pay more than a product is worth and will reward excellence
4. A customer-centric culture provides focus and direction for the organization,
ensuring the exceptional value will be offered to customers.
5. Designing and delivering superior customer value propels organizations to market
leadership positions in today‘s highly competitive global markets – absolute
advantage.
6. Providing outstanding customer value has become a mandate for management.
7. In choice-filled arenas, the balance of powers has shifted from companies to value-
seeking customers.
8. Managing customer value is even more critical to organizations in the new service
and information-based economy.
9. Firms not providing adequate value to customers will struggle or disappear –
customer value is a key ingredient in building competitive advantage.
10. Today‘s customer are quite smart and sophisticated and are looking for companies
that:
a. create maximum value for them based on their needs and wants, and
b. demonstrate that they value their business.

CREATING MORE CUSTOMER VALUE

With great importance of customer value in marketing, companies must think about ways
to improve customer value to grow their business. Here are steps a company can pursue:

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 1. Understand what drives value to customers – Talk to them, survey them, and watch
their actions and reactions. In short, capture data to understand what is important to
customers and what opportunities the company has to help them.

2. Understand value proposition – The value customers receive is equal to the

benefits of a product or service minus its costs. What value does the company
product or service create for them? What does it cost them – in terms of price plus
any ancillary costs of ownership or usage (like how much of their time they have to
devote to buying or using the product or service?)

3. Identify the customer and segments where the company can create more value
relative to competitors – Different customers will have varying perceptions of value
relative to competitors, based on geographic proximity, for instance, or a product
attribute that one segment may find particularly attractive.

4. Create a win-win price – Set a price that makes it clear that customers are receiving
value but also maximizes the ‗take‖ of the company. Satisfied customers that
perceive a lot of value in the company‘s offering are usually willing to pay more,
while unsatisfied customer will leave, even at low price.
Using ―cost-plus‖ pricing (pricing at some fixed multiple product costs) often
results in giving away margin unnecessary to some customers while losing
incremental profits from others.

5. Focus investments on the most valuable customers – Disproportionately allocate

sales force, marketing pesos, and R&D investments toward the customers and
segments that the company can best serve and will provide the greatest value in
return. Also, allocate growth capital toward new products and solutions that serve
best customer or can attract more customers that are similar to those best customers.

Lesson 3: Customer Relationship Development Strategies

What you already know?

When it comes to increasing profits, it‘s tempting to concentrate on making new
sales or pursuing bigger accounts. But attention to existing customers, no matter how small
they are, is essential to keeping business thriving. The secret to repeat business is following
up in a way that has a positive effect on the customer. Kick-Start

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 Search for Philippine base companies who
are practicing Customer
Relationship Management (CRM)
and prepare a power point presentation that
includes images and descriptions of the
CRM strategies that they are doing. Share
your work in class.

DISCUSSION

BENEFITS OF DEVELOPING CUSTOMER RELATIONSHIP

Customer relationship is a marketing approach that focuses on creating an ongoing and
long-term relationship with customers. It is geared toward building a nurturing strong
customer connections and affiliations, rather than pushing sales or purchases.
Building a strong customer relationship is not a rocket science. All a company needs to do
is to take into consideration the little things that matters. Creating long lasting relationships
helps to ensure long-lasting customers and repeat sales.
Customers want to know that they are valued and appreciated as an individual. Showing
existing customers that value and appreciation encourages them to refer their colleagues,
friends, and others to the business. So armed with customer relationship strategies, a
company can build a strong customer relationship and out-perform the giants.

Some of the benefits in developing and implementing customer relationship strategies are
the following:

1. Consistent customer experience – Organizations that are aligned across all touch
points seamlessly share information and work together to ensure customer‘s needs
are addressed with minimum effort. This is particularly important when consumer
is experiencing challenges with the product or service. Quickly resolving issues
builds trusts and it can improve customer satisfaction.

2. Customer feedback – When the organization‘s culture facilitates open

communication and cooperation, consumer concerns, complaints and compliments
can quickly be addressed. By paying careful attention to positive and negative

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 trends, organizations can use this feedback to make appropriate adjustments to
product or service offerings, ensuring customer satisfaction.

3. Customer profitability – Relevant communications and offers motivate

consumers to use the full complement of product and service offerings. Because
consumers understand the benefits of the offerings, they are typically more
compliant and they remain customers for longer period of time.

4. Customer advocates – Consumers who are pleases and enjoy a consistent

experience increasingly share this information with each other. Increasingly
consumers are turning to each other for suggestions and recommendations. Make it
easy for customers to share their experience, but first make sure they have a
consistently good experience.

5. Innovation – Organizations like Starbucks through MyStarbucksIdea.com invite

their customers to provide ideas. Consumers are allowed to share, vote and discuss
each other‘s‘ idea. Most important, they are kept appraised of the status of ideas.
There are other ways organizations can invite consumers to share ideas and insights.

STRATEGIES IN DEVELOPING CUSTOMER RELATIONSHIP

Customers are known to be indecisive but they are all looking for something in common,
―value at a fair price‖. Customers are looking for solutions to their problem and how do
companies know their problems when they have no relationship with them. Customers
value relationship a lot, they are always looking for someone to discuss their problems with
and this is where the company comes in.

1. Make every customer interaction count - The first strategy to build a strong
customer relationship is to make every customer interaction count. Don't take a
single customer for granted. Each and every interaction with a customer is
a gift and should be valued. An interaction can be achieved by setting up a focus
group made up of loyal customers. A focus group can be a vital tool to getting into
the mind of customers and knowing their needs.

2. Follow-through on commitments and claims about products or services - A

business must make a specific promise to the customer and deliver on that promise
if it intends to win the heart of the customer. False claims however should be
avoided at all cost as it can harm the company's credibility.

3. Develop employees - Customers appreciate service from well-trained and friendly

customer service staff. Take the time consistently to develop the customer service
team and there will be a direct chain reaction that affects customers.

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4. Offer benefits and product value that responds to the customer's desires - Another
positive step to building a strong customer relationship is to offer value to the
customer. Go all out to let customers know that the company is a stickler for quality.

5. Treat customers as individuals who are respected and valued - All businesses
know how hard it is to find one good customer. Companies must also know that it
cost more to find a new customer than to take care of existing ones.

6. Listen to customers - Even complaints can be a gift if handled properly and quickly.
Be available and accessible when customers have questions, concerns, or
comments. Humans always look for someone to talk to or share their problems with.
If companies can listen more to their customers, they will end up knotting the bond
between the customer and their business.

7. Build a strong brand identity - Make it easy for customers to identify ones business
or products in the midst of the crowd. Create a winning slogan, tagged with a catchy
logo and a unique theme. Most important, make a specific promise and deliver on
that promise.

8. Surround customers with valuable information by using emails, website content,

social media, and other methods of outreach but do not be invasive - Keep them
informed on the latest trend, price or development. Companies must also make it
easy for customers to reach them; if possible, be their next door neighbour. For best
results, it's important to communicate frequently and vary the types of messages
being sent. Instead of a constant barrage of promotions, sprinkle in helpful
newsletters or softer-sell messages. The exact frequency depends on the industry
and even seasonality, but for many types of businesses,
it's possible to combine e-mail, direct mail, phone contact and face-to-face
communication to keep prospects moving through the sales cycle without burning
out on any message.

9. The business must have a website - If the company has none, then it's time to get
one. If it has it should consider making its website user-friendly and easy to navigate
for new and existing customers. The World Wide Web is making it easier for
businesses to build a strong customer relationship with their customers. Every
business should take advantage of it.

10. Reward loyal customers — This is a point that can never be over emphasized. Most
businesses go after new customers while forgetting that the existing customers need
to be taken care of. Introducing a loyalty program is a very effective relationship
marketing strategy. Customer loyalty or reward programs work well for many types
of businesses, from retail to cruise and travel. The most effective programs offer

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 graduated rewards, so the more customers spend, the more they earn. This rewards
the best, most profitable clients or customers and cuts down on low-value price
switcher-customers who switch from program to program to get entry-level
rewards. Whenever possible, offer in-kind rewards that remind customers of one's
company and its products or services.

11. Nothing strengthens a bond more than appreciation — Thanking customers for
sticking to the company's brand will go a long way to make them know they are
important. A simple "thank you" package might be all the business needs to connect
personally with existing customers.

12. Create a blog about the business where discussion is more casual and inviting —
Blogging is a trend that has come to stay. Almost all businesses today maintain a
blog. A blog is a powerful communication tool that can help a company stays in
touch with its customers. A blog improves customer relationship process and can
be a tool to obtaining instantaneous feedback from customers.

CUSTOMER SERVICE STRATEGY DEFINED

Customer service is the act of taking care of the customer's needs by providing and
delivering professional, helpful, high quality service and assistance before, during, and
after the customer's requirements are met.

A customer service strategy consists of the following elements:

1. A vision for customer service - Communicating the customer service vision is an
important first step in service strategy. Employees need to understand their role in
meeting the needs of customers and how their work contributes to the vision. It is
easy to recognize businesses that are strong in service and those that aren't. Service
training is the key to a great customer service experience.

2. Assessing customer needs - It is important to find out what the customer needs and
expects. There are several approaches to soliciting customer feedback. It can be
done by using customer comment cards, satisfaction surveys or focus groups. Each
method can be used to acquire feedback that can then be used to develop a plan that
strives to exceed customer expectations. Customer expectations change at a rapid
pace and many organizations fall short when they think they know what the
customer wants without asking them. Unfortunately, some businesses waste a lot of
time and money developing products and services that don't meet customer
expectations. Successful organizations have learned to find out what the customer
wants and to develop products and services that meet those expectations. It is also
important to remember that customer expectations are a moving target and what a
customer wants today could be very different tomorrow.

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 3. Hiring for service - Successful organizations have figured out how to hire service-
oriented employees. This is done by screening potential candidates that have a
natural tendency for service. Technical skills can be taught but personality and
attitude cannot. Therefore, not every employee should be interacting with
customers.

4. Organizational goals for customer service - Customer satisfaction should be

measured against identified customer needs. There should be measurable customer
satisfaction goals, and employees should be aware of those goals so they can help
the organization achieve its service objective.

5. Customer service training - Every business should develop customized employee

training that expresses the organization's approach to service. This should be
practical teaching that demonstrates how the employee is expected to respond in all
service interactions. This would include how to answer the telephone, respond to
complaints, fulfil a customer need or provide a basic service recovery. Much of
this can be spelled out with defined customer service standards that dictate basic
employee behavior.

6. Employee accountability - Employees should be held accountable for the

organization's customer satisfaction goals. Achieving these goals should be a
cultural norm that is incorporated into the performance management process. It is
imperative that all employees understand the part they play and the responsibility
they have for helping to achieve the organization's overall customer satisfaction
goals.

7. Rewarding good service - Strong service behaviors are reinforced through a defined
reward and recognition system. This ensures that employees receive positive
feedback when they exhibit the desired customer service behaviors.

Any successful organization understands the importance of a strong service culture.

This is accomplished by creating systems and processes that help to identify who the
customers are and what the customers want, and developing strategies to achieve those
expectations.

THE SUKI SYSTEM IN THE PHILIPPINES

The "suki" system is a system of patronage in which a customer regularly buys their
merchandise from a certain client. In the merchandising business, Filipinos often buy from
specific suppliers who will grant their customers reduced prices, good quality and credit as

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well. These factors are the usual components of becoming a "suki." The existence of trust
and the development of friendship between the two parties is a crucial aspect in the
establishment of an economic exchange relationship. In some instances, regular patrons of
restaurants, small neighbourhood retail shops and tailoring shops receive special treatment
in return for their patronage.
Suki is basically a partner system of doing business in the Philippines, wherein a
customer buys certain products from a particular vendor, who in turn offers discounts and
other perks for such exclusivity. Filipinos use the word suki to refer to both buyers and
sellers, indicating their equal roles and obligations in an eponymous relationship.

In the Philippine suki system, however, the commitment between buyer and seller goes
even further. Though the relationship seems informal, it can be as binding as a formal
contract, complete with personal and social clauses. This contractual aspect of suki may be
traced to its original purpose as a kind of credit check between vendor and customer. If the
customer proves to be loyal and dependable, the vendor may feel protected enough to
broaden credit or defer payment. In turn, buyers with limited means expect that their loyalty
will result in the best prices and products to stretch each peso. Developing and maintaining
this level of trust is not taken lightly.
For that matter, establishing suki in the first place is no mean feat. Given its unwritten
and, for the most part, unspoken terms, initiating the relationship is a vague process that is
part mating dance and part intuition. Simply declaring oneself a suki is not enough, a buyer
or seller first needs to demonstrate his commitment. In order to establish suki relationship
with a local produce vendor, the buyer has to purchase items several times in a row, making
sure to greet the seller before shopping, asking for the seller's recommendations, and
complimenting any offerings. Becoming a suki can be done without ever uttering the word.

Responsibility for maintaining this mutually beneficial relationship falls equally on

both sides. Sellers are expected to offer lower prices than those quoted to walk-by shoppers
or to add a little something extra or "dagdag".
Customers reciprocate with more than just their exclusive patronage but also through
referrals to friends and relatives. Such word of mouth advertising is indispensable to small
business operators who have limited marketing opportunities and are constantly looking to
add to their regular clientele, which represents a sizable chunk of business.
Trust and friendship are key elements in suki. A strong sense of trust that each party is
dealing fairly with the other means that bargaining, usually a common practice at the
Filipino street market is minimal, if not entirely eliminated. Even if a regular customer
doesn't buy on a particular day, stopping by the vendor's booth for a quick chat helps to
reinforce the personal connection.
While invoking the word suki wasn't necessary to establish an understanding with a
vendor, it does help to remind both parties of an existing relationship. A regular customer
who finds oneself crowded out of a popular stall may call out 'Suki!' to make sure he's not

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ignored. Similarly, sellers may greet a passing client as suki, perhaps as a subtle indication
that he has not been buying recently. Although suki is first and foremost an economic
alliance, the need for a high level of trust means that personal connections made are not
easily dissolved.

CUSTOMER SERVICE STRATEGY IN THE PHILIPPINES

In the Philippines just like in other parts of the world, the "you-scratch-my-back-
I'llscratch-yours" concept is a cornerstone of modern marketing, with large companies from
airlines and hotels to supermarkets and coffee shops offering reward programs in exchange
for customer loyalty.
Loyalty and rewards programs is already been a proven method of increasing business
profits. Most of the Philippine businesses invest on this customer service strategy.
1. Cebu Pacific - By continuing their strategy of "unbundled fares" and cutting out
frills, like in-flight food service, the low-cost
carrier (LCC) is able to offer tickets at, a
lower price and appeal to the price-sensitive
Philippine market. Regular customers can be
members of GetGo, CEB's newest lifestyle
rewards program. They can earn GetGo
points when flying with Cebu Pacific. Their
GetGo points can earn them free flights.
GetGo encourages members to Get Points and Go Places.

2. Starbucks - Starbucks, the goliath of coffee, has

made a name for itself with its customer service. For
good or bad, its strategy has helped the company
become recognized the world over. In Starbucks
Reward campaign, loyalty holders need to earn stars.
This can be achieved only by buying their products
with their loyalty cards. More claimed rewards;
higher level of rewards can be received. Enjoying
coffee to have more of it is the essence of the
program. Below are three takeaways on how
Starbucks' customer service strategy can be applied to any brand:

a. Meet customers where they want to be met - Find the white space and where
audience is reaching out and put emphasis on that platform. Overall, Starbucks has
35 million likes on its Facebook page, 8 million followers on Twitter and 4.8 million
followers on Instagram. Starbucks is constantly reaching out to its customers on
these platforms for feedback and engaging in conversation.

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b. Think mobile, mobile, mobile - It's not surprising that 18 percent of Starbucks Card
transactions come through its mobile app. Consumers spend more time today
connecting on their phone than on any other device. It's important to tailor mobile
experience to audience.

c. Focus on personalization - Starbucks recognizes that it's not just about the product,
it's also about the experience. Each Starbucks location has the same look and feel,
yet is personalized to the geographic area. Baristas serve coffee to customers by
name. And if it isn't exactly what has been ordered, they make sure to correct it and
ask how they can make the customer's experience better. Just recently, Starbucks
announced a deal with. Spotify where employees will make personalized playlists
for each store location.

3. Globe Telecom - Globe was

awarded Best Customer Experience
for its innovative customer service
program that harnesses the power of
social media. Globe launched a social media strategy geared at significantly changing
the way the company provides customer service through
Social networking site Twitter in a manner that is engaging, meaningful, and
personal. This strategy created an avenue for honest and sincere communication,
enabling the brand to proactively build lasting relationships with customers through
their social networks.

Globe Blue is the newest tier in the Globe Rewards membership portfolio
that will reward mid-value customers with special perks and top-notch after-sales
service. In order to qualify for a Globe Blue membership, post-paid subscribers
should have a monthly service fee (MSF) or actual usage spend of at least P2,000
to P3,499 monthly. Members will also enjoy seasonal treats like free movies,
special offers from partner merchants for travel, dining, and other lifestyle
establishments throughout their membership year.

4. Shoe Mart - SM is the Philippines' leader in the retail industry. For the last
50 years, it has been committed in providing quality products and services at reasonable
prices and to meet the ever-changing needs of its customers in a responsible

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 and responsive manner. Its chain of
Department Stores spans from Luzon,
to Visayas and Mindanao. Mr. Henry
Sy, Sr.'s innovative approach to
customer service helped build a highly
recognized brand which, in turn,
enabled Shoemart to grow and evolve
into a full service department store;
hence, changing its brand name into the more simple and appropriate SM. Always
aiming to make life better for his customers, Mr. Sy expanded his merchandise to
fulfill his commitment to offer a one-stop shopping experience. SM's tagline,
"We've Got It All for You" has become a guiding principle for the level of service
that SM lives up to until today and has helped transform it into a household name.
Over the last 55 years, SM has developed generations of loyal customers, many of
whom still fondly call the store Shoemart.

5. Bank of the Philippine Island - BPI

has continued the tradition of excellence and
customer service through its products and
services that makes the lives of both internal and
external customers easy. Products such as Easy Saver Program, Ka-Negosyo and
BPI Globe Banko have extended banking services and expertise to the lower end of
the spectrum. BPI has been an advocate of financial literacy to support business
goals and strategy. Apart from these, literacy programs have also been started to
give better access to financial advice and solutions.

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