CHAPTER 16:
THE FINANCIAL AND ECONOMIC IMPACT OF SERVICE
CHAPTER TOPICS
Service and Profitability: The Direct Relationship
Offensive Marketing Effects of Service: Attracting More and Better Customers
Defensive Marketing Effects of Service: Customer Retention
Customer Perceptions of Service Quality and Purchase Intentions
The Key Drivers of Service Quality, Customer Retention, and Profits
Technology Spotlight: Cost Effective Service Excellence through Technology
Global Feature: Measurement of Customer Satisfaction Worldwide
Strategy Insight: Customer Equity and Return on Marketing: Metrics to Match a Strategic
Customer-Centered View of the Firm
CHAPTER OBJECTIVES
1. Examine the direct effects of service on profits.
2. Consider the impact of service on getting new customers.
3. Evaluate the role of service in keeping customers.
4. Discuss what is known about the key service drivers of overall service quality, customer retention,
and profitability.
5. Discuss the balanced performance scorecard that allows for strategic focus on measurements other
than financials.
QUESTIONS TO USE WITH CHAPTER OPENING VIGNETTE
Chapter 16: Share of Wallet
1. What is meant by “share of wallet?”
2. What is the “wallet allocation rule?”
3. What makes this metric so different and more helpful to companies as compared to more traditional
metrics such as customer satisfaction, customer loyalty, and the NPS?
ACTIVE LEARNING ACTIVITIES
1. On the Internet, use a search engine to locate three companies that make enterprise software. Include
SAP, the industry leader, as one of the companies. What are the software companies’ current
offerings? How can the software firms help individual companies understand the concepts and
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relationships discussed in this chapter? Which of the three companies would you select based on the
information you locate?
2. Interview a local firm and see what they know about the key drivers of financial performance for their
firm. What are the key service drivers of the firm? Does the company know whether these relate to
profit?
POSSIBLE WEB SITES FOR CHAPTER 16
Company Location
FedEx Corporation www.fedex.com
Granite Rock www.graniterock.com
Redbox www.redbox.com
APPROPRIATE CASES FOR CHAPTER 16
From previous Zeithaml, Bitner, and Gremler Services Marketing texts:
Michelin Fleet Solutions: From Selling Tires to Selling Kilometers [included in the sixth
edition of this text: Zeithaml, Bitner, and Gremler (2013) Services Marketing: Integrating
Customer Focus Across the Firm, New York, NY: McGraw-Hill Companies]
ISS Iceland [included in the sixth edition of this text: Zeithaml, Bitner, and Gremler (2013)
Services Marketing: Integrating Customer Focus Across the Firm, New York, NY: McGraw-Hill
Companies]
Using Services Marketing to Develop and Deliver Integrated Solutions at Caterpillar in Latin
America [included in the sixth edition of this text: Zeithaml, Bitner, and Gremler (2013) Services
Marketing: Integrating Customer Focus Across the Firm, New York, NY: McGraw-Hill
Companies]
Custom Research Inc. (A) [included in the fourth edition of this text: Zeithaml, Bitner, and
Gremler (2006) Services Marketing: Integrating Customer Focus Across the Firm, New York,
NY: McGraw-Hill Companies]
Starbucks: Delivering Customer Service [included in the fourth edition of this text: Zeithaml,
Bitner, and Gremler (2006) Services Marketing: Integrating Customer Focus Across the Firm,
New York, NY: McGraw-Hill Companies]
From other sources:
Chemical Bank: Implementing the Balanced Scorecard [Harvard Business School Case
9-195-210, 1999; Teaching Note 5-198-090, 1998]
Wells Fargo Online Financial Services (A) [Harvard Business School Case 9-198-146, 1999]
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