Overview. There are two possible exercises listed below -- the first deals with relationship marketing (specifically retention strategies) and the second with service recovery. Choose whichever one you would like to do.

Exercise on Relationship Marketing Leonard Berry and A. Parasuraman have developed a framework for understanding types of retention strategies (Marketing Services NY: Free Press, 1991). They suggest four types of retention strategies and some tactics to be used within. The four types are:

1. Financial Bonds. The customer is tied primarily through financial incentives -- lower costs for greater volume purchases or lower prices for customers who have been with organization for a long time. One examples is a frequent flyer program. Are there any financial bonds you can think of for an organization of your choice that would help retain customers?

2. Social Bonds. Long-term relationships are build through social and interpersonal connections. Customers are viewed as "clients," not nameless faces, and individuals whose needs and wants the organization tries to undersgtand. Services are customized and the org. finds ways to stay in touch with its customers. Social bonds are common among professional service providers (lawyers, teachers) and among personal care providers (hairdressers, counselors). Social bonds may be formed among customers that are effective as well. What social bonding activities might your organizations encourage?

3. Customization Bonds. Two commonly used terms fit within the customization bonds approach: mass customization and customer intimacy. The former deals with the use of flexible processes and structures to provide varied and often individually customized products and services at the cost of standardized, mass-produced alternatives. The "my library" approach is one example. Customer intimacy involves knowing enough about the customer (perhaps through database tracking systems) to anticipate their needs and to supply them. An example is desk delivery of a new book on a topic known to be of interest to a client. Can you think of others?

4. Structural Bonds. Structural bonds are created by providing services to the client that are often designed into the service delivery system for the client. An example from the business world is Fed Ex providing free computers to customers with stored addresses and shipping data, printed mailing labels, and a tracking system for packages. Can you think of structural connections for library clients?

Write up a short summary of ways that you think of to tie cusomers to your library organization. Are there other retention strategies you can recommend? Provide some reasons on what you think would work and what might not.

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Exercise on Service Recovery

When a customer confronts a service failure, he or she can choose to take action or do nothing. Many customers are very passive about their dissatisfaction and say or do nothing but they will decide whether to stay with the organization providing the service or not. Generally, those who take action are more apt to return than those who do nothing (a reason why it's good to encourage complaints).

When a customer decides to take action, he/she may choose to complain to the provider, complain to family and friends, or complain to a third party. Four categories of response types have been identified:

• Passives. These are the ones who do nothing. They often doubt the effectiveness of complaining and think the consequences aren't worth the time and effort. Others have personal values or norms against complaining. Usually these folks are less alienated than the more extreme types described below.

• Voicers. These customers actively complain to the service provider but usually not to third parties, and usually don't switch providers. These customers are the organization's best friends, in a way. Their complaints allow the service provider a second chance. This group believes complaining has social benefits and that the consequences of their complaining can be positive.

• Irates. These customers complain to friends and relatives and usually switch providers. They tend to feel somewhat alienated and are more angry with the provider than either of the first two. They are less likely to give the provider a second chance.

• Activists.. These customers have an above average propensity to complain on all dimensions. They will complain to the provider, tell others, and compalin to third parties. They have an optimistic sense of the potential positive consequences of all types of complaining. Sometimes they can become "terrorists."

When customers complain, they have high expectations of what will happen. They expect justice and fairness in handling their complaints in three ways -- outcome fairness (the outcome or compensation should fit the level of their dissatisfaction, i.e., money, an apology, future free services, reduced charges, repairs, and/or replacements), procedural fairness (customers want easy access to the complaint process and want it handled quickly preferably by first person. They want procedures characterized by clarity, speed, and absence of hassles), interaction fairness (customers expect to be treated politely, with care and honesty. This form of fairness can dominate all the others).

Describe an instance of service failure (or less-than-desirable service) that you have either experienced or observed. Analyze the elements of service failure and the effects of any efforts made at service recovery. What did the customer (or you do) as a result of the service failure (if you know)? If you don't know, what would you have done in the customer's place? How does (or will) the customer's actions affect the organization in the future, in your opinion? Use the scenario that you have described to build a plan for service recovery for the organization concerned.

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Send me your response in electronic form or post it as a website that all can see. Be prepared to discuss it and to generalize from it to a library situation.

6/19/2001.