Internal Marketing

InternalMarketing Foreword: “In a service organization if you are not serving the customer, you had better be serving someone who is.” -Jan Carlzon Hospitality is present when something happens for you. It is absent when something happens to you. -Danny Meyer

OBJECTIVES After reading this chapter, you should be able to: • Understand why internal marketing is an important part of a marketing program. • Explain what a service culture is and why it is important to have a company where everyoneis focused on serving the customer. • Describe the three step process involved in implementing an internal marketing program. • Explain why the management of nonroutine transactions can create the image of being an excellent service provider.

Internal Marketing Dear Mr. Marriott, See this feature on page 267 of your textbook. tab

Internal Marketing Introduction • Marketing in the hospitality and travel industries must be embraced by all employees. • it cannot be left to the marketing or sales department • Marketing must be part of the philosophy of the organization, and the marketing function should be carried out by all line employees. • In service industries, the line employees carry out a majority of the marketing function. • Internal marketing involves marketing to the firm’s internal customers, its employees. tab

Figure 10-1 The relationship between the marketing function and the marketing department. From Christian Gronroos, “Designing a Long Range Marketing Strategy for Services,” Long Range Planning (April 1980): 40. Internal Marketing Introduction tab

Internal Marketing Description • A study by the American Society for Quality Control found when consumers were asked what quality in services meant, a majority of responses cited contact skills such as courtesy, attitude & helpfulness. • Because employees are an important part of our product, we must make sure they are excited about our product and care about their customers. • The importance of employees & internal marketing is supported by a study finding it to be one of the top three determinates of a company’s financial performance. tab

Internal Marketing Description • A key ingredient in almost all service companiesis some innovative arrangement or formula for mobilizing and focusing human energy. • A moment of truth occurs when employee and customer have contact. • when this occurs, what happens is no longer directly influenced by the company • Skill, motivation & tools employed by the firm’s representative and the expectations & behavior of the client together create the service delivery process. tab

Internal Marketing Description • The hospitality industry is unique in that employees are part of the product. • People usually think of marketing as efforts directed externally toward the marketplace. • a hotel or restaurant’s first marketing efforts should be directed internally to employees • Managers must make sure that employees know their products and believe they are a good value, or it will be impossible for the guests to become excited. • all managers must understand marketing & its customer orientation tab

Internal Marketing Description • External marketing brings customers, but does little good if employees do not perform to the guest’s expectations. • Product differentiation often derives from the people who deliver the service. • the employees’ delivery of service brings customers back • A study by the National Restaurant Association found the most important issue facing food-service managers was employees. • As Christine Andrews, of Hostmark Hospitality, states, “If your people don’t perform, your property won’t perform.” tab

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The Internal Marketing Process Introduction • The internal marketing concept evolved as marketers formalized procedures for marketing to employees. • the objective of internal marketing is to enable employees to deliver satisfying products to the guest • It ensures employees at all levels of the organization experience the business & understand its various activities and campaigns in an environment that supports customer consciousness. • Internal marketing uses a marketing perspective to manage the firm’s employees. tab

The Internal Marketing Process Establishment of a Service Culture • An internal marketing program flows out of a service culture. • a service marketing program is doomed to failure if its organizational culture doesn’t support serving customers • An internal marketing program requires a strong commitment from management. • A major barrier to most internal marketing programs is middle management. • managers have been trained to watch costs, increase profits • reward systems are based on achieving certain cost levels tab

The Internal Marketing Process Establishment of a Service Culture • If management expects employee attitudes to be positive toward customers, management must havea positive attitude toward the customer & employees. • Too often, organizations hire trainers to come in fora day to get their customer-contact employees excited about providing high-quality customer service. • The effect is usually short lived because the organizations do little to support the customer-contact employees • managers tell receptionists to be helpful & friendly, yet often the receptionists are understaffed tab

The Internal Marketing Process Establishment of a Service Culture • Management must develop a service culture: a culture that supports customer service through policies, procedures, reward systems, and actions. • An organizational culture is the pattern of shared values & beliefs giving members of an organization meaning, providing them with rules for behavior in the organization. • A strong culture helps organizations in two ways • it directs behavior • it gives employees a sense of purpose & makes them feel good about their company tab

The Internal Marketing Process Establishment of a Service Culture • Culture serves as glue to hold an organization together, and when an organization has a strong culture, the organization & employees act as one. • A strong service culture influences employees to act in customer-oriented ways and is the first step toward developing a customer-oriented organization. • Developing a customer-oriented organization requires a commitment from management of both time and financial resources. • management must be committed to these changes, they do not result from a memorandum sent by the CEO tab

The Internal Marketing Process Establishment of a Service Culture • In some companies, including Hyatt, McDonald’s, and Hertz, management spends time working alongside customer-contact employees serving customers. • this makes it clear management doesn’t want to lose touch with operations and cares about employees & customers • A service culture & internal marketing program can’t be developed without the support of management. • Organizations cannot expect their employees to develop a customer-oriented attitude if it is not visibly supported by company management. tab

The Internal Marketing Process Weak Culture • In firms that have weak corporate cultures, there are few or no common values and norms. • employees are often bound by policies & regulations that may make no sense from a customer service perspective • Employees become insecure about making decisions outside the rules and regulations. • Because there are no established values, employees do not know how the company wants them to act. • they spend time trying to figure out how to behave • When they come up with a solution, they must get a supervisor’s permission before applying it. tab

The Internal Marketing Process Weak Culture • Supervisors, in turn, may feel the need to pass the responsibility upward. • during the decision process, the guest is kept waiting • In a company with a strong service culture, employees know what to do, and they do it. • customers receive a quick response to their questions& quick solutions to their problems • When you come into contact with an organization that has a strong service culture, you recognize it right away. tab

Figure 10-2Turning the organizational structure upside down. The Internal Marketing Process Turning the Organizational Structure Upside Down • Conventional organizational structure is triangular. • In a hotel the chief executive officer (CEO)& chief operating (COO)officer are at the peak • The general manager isnext level, followed by department heads, supervisors, lineemployees & customers tab

The Internal Marketing Process Turning the Organizational Structure Upside Down • The problem with a conventional organizational structure is that everyone is working for their boss. • everyone is concerned with satisfying people abovethem and very little attention is paid to the customer • When a company has a service culture, the organizational chart is turned upside down. • customers are now at the top of the organization,and corporate management is at the bottom • In this type of organization, everyone is working to serve the customer. tab

The Internal Marketing Process Turning the Organizational Structure Upside Down • In a hotel with a conventional organizational structure, if any employee makes a mistake, they hope their supervisor never finds out about it. • they may even try to cover it up because they know iftheir supervisor finds out, they may be reprimanded • When you turn the organization upside down, everyone works to serve the guest. • When you have a conventional organizational structure, everyone works to please the boss. tab

The Internal Marketing Process Nonroutine Transactions • An advantage of a strong culture is that it prepares employees to handle nonroutine transactions. • a guest transaction that is unique & usually experiencedfor the first time by employees • The number of possible nonroutine transactions is so great that they can’t be covered in a training manual. • A service culture provides employees with the right attitude, knowledge, communication skills, and authority to deal with nonroutine transactions. • ability to handle nonroutine transactions separates excellent hospitality companies from mediocre ones tab

The Internal Marketing Process Nonroutine Transactions • Management must be willing to give employees the authority to make decisions that will solve guests’ problems. • Management should exhibit confidence in their ability to hire and train employees by trusting the employees’ ability to make decisions. • Simon Cooper, former president of Delta Hotels & Resorts, now president of Ritz-Carlton, believes a degree of trust makes employees far better workers. • trusted employees solve guest problems more effectively and create fewer causes for guests to complain tab

The Internal Marketing Process Nonroutine Transactions • The issue of nonroutine transactions will become increasingly important in the future. • Hospitality firms are now using technology to serve routine customer transactions, and self-confident guests will take advantage of technology designedto enhance and hasten guest service. • the uncertain guest or guests with problems will wish to deal with an employee • Employees will take a greater role in answering questions and solving guests’ problems. • they must be prepared to handle nonroutine transactions tab

The Internal Marketing Process Creating Jobs that Attract Good People • Managers must use the principles of marketing to attract & retain employees. • They must research and develop an understandingof their employees’ needs • just as they examine the needs of customers • Marketers can use marketing research techniques to segment the employee market, choosing the best segments for the firm and developing a marketing mix to attract those segments. • for employees, the mix is the job, pay, benefits, location, transportation, parking, hours, and intangible rewards tab

The Internal Marketing Process Creating Jobs that Attract Good People • Customers look for different attributes when buying a product; employees look for different benefits. • Advertising should be developed with prospective employees in mind, building a positive image of the firm for present and future employees and customers. • Employees choose employers and leave them the same way that guests select certain hotels and then decide to switch. • it is expensive to lose both guests and employees • A reduction in turnover can result in hundreds of thousands of dollars in savings. tab

The Internal Marketing Process The Hiring Process • The service product, in part, is the attitude employees display as they deliver the service experience. • It is unlikely the service provider can teach the service attitude that all their customer-contact employees need. • service organizations must hire for attitude, train for skills • Finding employees who are good at creating a service experience is a vital goal & major hiring criterion of service organizations. • Careful selection can have a positive effect on the employees that are hired because they feel special. tab

The Internal Marketing Process The Hiring Process • In times of low unemployment, companies mayneed to look at nontraditional labor sources to find employees with a good attitude. • The Hospitality Industry Diversity Institute developed a program to help companies attract minorities. • the program suggests using community resources such as churches & ethnic newspapers for recruiting employees • Selection methods that identify customer-oriented candidates must be used as part of the hiring process. tab

The Internal Marketing Process The Hiring Process • Employee attitude, appearance, and willingness to handle the guest’s requests help form a first impression of a hotel or a restaurant. • It is often hard to differentiate the tangible part of the product of competing companies. • product differentiation often derives from the people who deliver the service • In the hospitality industry, most marketing activityis carried out by employees outside the marketing department, not the marketing staff. tab

The Internal Marketing Process The Hiring Process • A hotel’s marketing program brings guests to the hotel, the staff must turn the first-time guest into a repeat customer. • For these reasons, an effective internal marketing program demands close cooperation between marketing and human resources management. • Hiring and training, traditionally the responsibilityof human resources management, are key areas in any internal marketing program. • a marketing-like approach to human resources management starts with hiring the right employees tab

The Internal Marketing Process Teamwork • Employees who are not customer oriented often try to pass responsibility for serving customers to others. • In companies that practice internal marketing, if one employee makes an error, other employees try to cover it before the guest notices. • guests do not have to understand the hotel’s organization and business to ensure their needs are met • In restaurants with a service culture, staff members cover for each other. • employees who see that a guest needs something willserve the guest, even though it may not be their table tab

The Internal Marketing Process Teamwork • Organizations that lack teamwork create an uncomfortable environment for the guest. • The first employee contacted should take care of the customer’s request & pass it along to the appropriate person, referred to as ownership of the problem. • Customers should not have to learn the hotel or restaurant’s organizational chart and shouldn’t have to redirect a request for service to another employee. • Hiring procedures need to identify those employees who are team players. tab

The Internal Marketing Process The Importance of Initial Training • Too often, employees know nothing about the hotel they work for or its products and other items of interest to guests. • If employees are not enthusiastic about the company they work for and the products they sell, it will be difficult to create enthusiastic customers. • If we hire right employees and provide good training, we will be well on the way to having enthusiastic employees create repeat guests. • When we spend a great deal of time & effort selecting employees, we want to keep them. tab

The Internal Marketing Process The Importance of Initial Training • ask the employee to arrive at a time when someone has time to greet them • make the team aware they are coming so everyone can welcome them • use bulletin boards or even marquees to say “Welcome Robert!” • give them a basic tour and introduce them to as many people as possible • Suggestions on how to make an employee feel welcome during their first week: tab

The Internal Marketing Process The Importance of Initial Training • make sure they participate in an organized orientation • provide them with a partner/mentor during those first tenuous days • have a skills training program for them to participate in • tailor training to the level of expertise they bring • Within week one: • The company’s history, current businesses, and its mission statement and vision are important for employees to know. • they must be encouraged to feel proud of their new employer, and desire to contribute to the company’s success must be instilled in them tab

The Internal Marketing Process Continuous Training • Two principal characteristics have been identified in companies leading their industry in customer service: • they emphasize cross-training • they insist everybody share certain training experiences • Most hotel training programs for college grads rotate new employees through all departments in the hotel. • this gives the trainees insight into the importance of each department and how they work together to provide service • Embassy Suites Hotels goes a step further, providing employees an opportunity to increase their wages based on the number of positions they master. tab

The Internal Marketing Process Continuous Training • Companies must make sure that their employees are familiar with all the products the organization sells. • a restaurant service person in a hotel should be able togive directions to the hotel’s health club • Often, employees do not have knowledge of products in their own areas because they have never been given the opportunity to sample them. • In well-managed restaurants, employees know the menu and are trained to direct guests to menu selections that will best suit their taste. • and instructed in how to sell the choices on the menu tab

The Internal Marketing Process Continuous Training • Product training is a continuous learning process and should be part of a company’s employee training. • This results in the circular effect of creating satisfied, proud employees who in turn create satisfied guests. • a study of effect demonstrated that “as employees’ job satisfaction, job involvement, and job security improve, their customer focus also improves.” • Development of a good training program can start organizations on an upward spiral. • a research study found that service quality is related inversely to staff turnover tab

The Internal Marketing Process Continuous Training • Some firms ask why they should spend money training employees if they are just going to leave, which can turn into a self-fulfilling prophecy. • employees are not properly trained and thus are not capable of delivering quality service • unable to deliver good service, they feel uncomfortablein their jobs and quit • Unfortunately, this reinforces employer beliefs that they should not spend money training employees. • not investing in employee training programs leads to a cycle of high employee turnover & guest dissatisfaction tab

The Internal Marketing Process Managing Emotional Labor • Just as we try to understand the customer needs, we need to understand the needs of our employees. • one of these needs is the ability to manage their emotions • Friendliness, courtesy, empathy, and responsiveness all require huge amounts of emotional labor. • emotional labor has been defined as necessary involvement of the provider’s emotions in the delivery of the service • The display of emotions can strongly influence the customer’s perception of service quality. • managers must hire employees who can cope with the stress caused by dealing with customers tab

The Internal Marketing Process Managing Emotional Labor • Common techniques used to manage emotional labor include monitoring overtime, avoiding double shifts, encouraging work breaks, and support from fellow workers and managers. • A big cause of emotional stress is long hours. • employees often find it hard to manage their emotionsafter working for ten hours straight • We have all observed or experienced service people who were rude or uncaring after a long shift. • when employees are overworked emotionally, service suffers tab

The Internal Marketing Process Implementation of a Reward and Recognition System • To sustain a service culture, policies must create a system that rewards and recognizes employees & managers that provide good customer service. • employees must receive feedback on how they are doingto perform effectively • An internal marketing program includes service standards and methods of measuring how well the organization is meeting these standards. • If you want customer-oriented employees, seek out ways to catch them serving the customer • and reward and recognize them for making the effort tab

The Internal Marketing Process Implementation of a Reward and Recognition System • Reward systems in the hospitality & travel industry used to be based on meeting financial objectives. • such as achieving a certain labor cost or food cost or increasing revenue • Well-managed companies are now giving rewards based on customer satisfaction. • If companies want to have customer-oriented employees, they must reward them for servicingthe customer. tab

The Internal Marketing Process Dissemination of Marketing Information to Employees • Often, the most effective way of communicating with customers is through customer-contact employees. • Employees often have opportunities to solve guest problems before these problems become irritants. • to do this, they need information • Unfortunately, many companies leave customer-contact employees out of the communication cycle. • Marketing tell managers & supervisors about upcoming events, ad campaigns and new promotions. • but some managers may feel employees do not need to know this information tab

The Internal Marketing Process Dissemination of Marketing Information to Employees • All staff should be informed about promotions. • they should hear about promotions & new products from management, not from ads meant for external customers • Management must understand that employees are watching them for cues about expected behavior. • if the general manager picks a piece of paper up off the floor, other employees will start doing the same • A manager who talks about the importance of working together as a team can reinforce the desire for teamwork through personal actions. tab

The Internal Marketing Process Dissemination of Marketing Information to Employees • Ongoing communication between management and employees is essential—not just group meetings but regular individual meetings between the employee and management. • Managers should meet with customer-contact employees to gain customer need insights. • and determine how the company can make it easier for the employee to serve the customer tab

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The Internal Marketing Process Dissemination of Marketing Information to Employees • Hotels can use technology and training to provide employees with product knowledge. • information can be readily accessible to employees, who should then be trained in the hotel’s products & services • Employees should receive information on new products and product changes, marketing campaigns, and changes in the service delivery process. • All action steps in the marketing plan should include internal marketing. • when a company introduces a new media campaign, the plan should include actions to inform employees tab

The Internal Marketing Process Dissemination of Marketing Information to Employees • The first time most employees see company ads isin the media in which the advertisement is placed. • Before the advertisements appear in the media, the company should share the ad with its employees. • managers should also explain the objective of the campaign and the implications tab

Internal Marketing