Chapter 10

An Introduction to Internal Marketing

“In a service organization if you are not serving the customer, you had better be serving
someone who is.” – Jan Carlzon

Outline:
I. Internal Marketing
a. Employee Satisfaction and Customer Satisfaction Are Linked
II. The Internal Marketing Process
a. Establishment of a Service Culture
b. Development of a Marketing Approach to Human Resources
Management
- The Importance of Initial Training
- Managing Emotional Labor
c. Dissemination of Marketing Information to Employees
d. Implementation of a Reward and Recognition System
III. Nonroutine Transactions

The words internal marketing is not new to you…we have discussed this during
the first few weeks of classes...remember the triangle?...I hope you do.

Internal marketing is critically important in a service industry. The unique

characteristics of service, specifically the characteristic of INSEPARABILITY
emphasizes that employees are part of the product. Problems arise when both
employers and employees are not aware of this fact, focusing only with what is tangible,
like how food products should look and taste like, or how linens should be properly
folded, etcetera…etcetera.  Although I’m not saying these aren’t important…but these
are things that would NOT generally translate into SATISFIERS…these are things that
would just remove dissatisfiers. Remember herzberg’s two factor theory, stating that the
absence of dissatisfiers is not enough, satisfiers must be actively present to motivate
purchase. Yes, theories are applicable in real life…if you decide to choose and make
the topics discussed in class interesting…look for ways on how you can apply it to you
personally…it will help you remember and appreciate theories, that can sometimes be a
tad boring. Hmmm…anyhow…

I think by now, you’re already familiar with the company Southwest Airlines…
having a competitive advantage, focus and low cost, are just two of the reasons that
made Southwest Airlines the ‘hottest thing in the sky’. The officers and CEOs of the
company stated that processes can be imitated but what make their competitive
advantage SUSTAINABLE are its people.

Go back to the illustration we had on the dynamic relationships among

stakeholder groups in a high-performance business. Stakeholders’ satisfaction basically
stems from EMPLOYEE SATISFACTION, remember the arrows…and I remember you
all agreed with this argument, no doubt that it’s agreeable…right?

Internal marketing has two benefits: customer satisfaction and employee

satisfaction. One is more dependent from the other…which is it?

Employee satisfaction and customer satisfaction are linked. Studies have shown
that a direct relationship exists between employee satisfaction and customer
satisfaction…it’s a never ending cycle (as if there is such a thing as an ending
cycle??)…and if you’re company is breeding dissatisfied employeesdissatisfied
customersincrease in employee dissatisfaction  increase in customer
dissatisfaction…the cycle goes on and on and on…until you, as a manager intervene
and stop the decaying cycle that will probably lead to your company’s demise.

A study was also conducted as to the relationship between employee turnover

and customer satisfaction…also a direct relationship exists…increased turnover is a
warning that the company is not customer focused.

I don’t need a study to tell me this…because I’ve experienced it firsthand …

although a study such as what was conducted would heighten the fact that company’s
must indeed look at an increase in employee turnover as a warning sign of an increase
in customer dissatisfaction.

An increase in employee turnover is a very critical and reliable indicator of

employee dissatisfaction…businesses not belonging to the service industry may survive
this ‘feat’…but I think a service industry where employees are part of the product would
not last long if an increase in employee turnover will not be looked into as something
that would drastically affect business’ performance.

…to make ‘internal marketing’ more precise and systematic (and more bearable
 )…Kotler (author of various management books) came up with an internal marketing
process that involves the following steps:
1. Establishment of a service culture
2. Development of a marketing approach to human resource management
3. Dissemination of marketing information to employees
4. Implementation of a reward and recognition system

ESTABLISHMENT OF A SERVICE CULTURE, ‘easier said than done’…culture is not

something you can change overnight…you need a miracle for that.  It is a process
that must be continuously monitored and continuously strengthened…I think you can
never have enough of a ‘service culture’…(TQM105)

Establishing a service culture should not be limited only to ‘servers’…line

employees. Support from management is important; the irony is that…managers are
usually given incentives based on quantitative achievements, such as increases in
profits and decreases in costs…the belief that service quality is dependent only on
short-term quantitative terms can most probably result to short-term operations…and
this should not be the case.

A strong culture helps organizations in two ways:

1. it directs behavior;
2. gives employees a sense of purpose and makes them feel good about their
company

Initiative from employees is important…a strong sense of commitment is needed

to provide customers/clients the best service that they need. Policies should not limit
employees to act according to what they think is best for the company, procedures
should not be prohibitive, that employee initiatives are curtailed, and reward systems
should hinge NOT ONLY on increases in profits or decreases in costs but on factors that
encourages a service culture.

A strong service culture empowers employees to make decisions, thus, setting

up common values and norms is more critical and more important (therefore…harder)
than setting rigid procedures, policies, rules and guidelines. Although rules, procedures,
etcetera are important for a firm to be organized…managers should focus not just
merely on controlling people/employees but motivating and encouraging them to think
beyond these rules, et. al. and improve them as needed.

A conventional organizational structure emphasizes on a top-down approach…

employees exists in a hierarchy, where employees are used to ‘just doing the job’ just to
please those ‘above’ them or their immediate supervisors. Do you think an organization
with this perspective has a strong service culture?

Therefore, the word marketing is not just about advertising…promotions…or the

typical definition one would link ‘marketing’ to. Marketing goes beyond external
marketing…and this would entail implementing different marketing strategies to a firm’s
employees.

DEVELOPMENT OF A MARKETING APPROACH TO HUMAN RESOURCES MGT.

How would a firm do that?

Creating jobs that attract good people – the same concepts apply on knowing
one’s customers, knowing what their needs and wants are and providing them with
those needs and wants. Thus, it is important to know who your ‘target’ employees are…
knowing what factors would want them to work for you. Wouldn’t it be nice to work for
an organization you know only hires the best in the industry.

Service organizations need to hire for attitude and train for skills. (no need to
expound on this…otherwise I can get emotional again…jk)
 Teamwork is important to enhance a firm’s strong service culture. Employees
should be committed and motivated enough to strive in achieving a single goal…a
single focus…customer oriented, customer driven.

Ownership of the problem should be encouraged…loafers should be

discouraged. Employees should be team players in the truest sense of the word. 

THE IMPORTANCE OF TRAINING AND MANAGING EMOTIONAL LABOR

Initial and continuous training are both important (for my class in 105…our
discussion of Deming’s TQM clearly differentiated the two among the 14 points of
TQM…for those who are not in my 105 class…ask your classmates taking HTM 105…
they’re an expert on Deming’s TQM )

Managing emotional labor…you’ve experienced this…most people had/have.

But managing emotional labor at work specially in a service industry is of utmost
importance because of (again) the inseparability of the service provider to the end
product (service). Emotions play a crucial role as to how service is provided. Your
professors are part of the service industry…and you might have observed that emotions
do affect…sometimes (or most of the time?? ) how professors teach. (I don’t have to
elaborate on this…you get the point…) There are a lot of ways on how a firm can
manage emotional labor…although, it isn’t possible to control emotional labor
100%...firm’s can manage parts of it…like….

To be continued…………………………………………needed somewhere……….