A renewed approach to services marketing effectiveness

Antonio Pimenta da Gama

Antonio Pimenta da Gama is based at IADE (Institute for Visual Arts, Design and Marketing), Lisboa, Portugal.

Summary Purpose Marketing as a function is under increasing pressure to develop and implement business-oriented methods and measures to improve its effectiveness. This paper approaches the subject of marketing audits and aims to examine its impact and perceived benets in service organizations. Based on the Index of Services Marketing Excellence framework, it seeks to develop an updated instrument and to test the hypothesized relationships connections between input and output marketing measures. Design/methodology/approach Data were taken from DunsPep Financial Sector Database. First, to validate the measurement instrument content, ve individual interviews with marketing managers were carried out. Then, the same type of professionals were surveyed. Regarding structural equations modelling, a PLS-GRAPH was utilized. Findings This work tries to demonstrate the connection between marketing activities and company performance, sustaining the importance of a framework designed to evaluate the former. Findings were able to conrm the usefulness of marketing auditing. Research limitations/implications The major limitation of this paper is traduced in sample size (n 51). Practical implications According to conclusions, marketing audits can be viewed as a tool to evaluate activities and to increase marketing awareness and comprehension, leading to practice improvement. In this sense, the awakening seems to be achieved of an instrument that presents itself with interest to marketers and managers of service companies. Originality/value In this work, the theoretical perspective was used not only to update the original instrument, but also to study the subject from a perspective beyond that usually associated with audits. Keywords Marketing, Company performance, Marketing audit Paper type Research paper

1. Introduction
Organizations intending to improve their performance as a condition of survival and future development need to analyse their main functions periodically, through operational methods that allow the evaluation of current performance and function as management guides. Marketing, while a major corporate function, appears to be a relevant aspect for evaluation due to the increasingly difcult market challenges facing the majority of rms nowadays (Kotler, 1999). As the adage says, we cannot manage what we can not measure. Most existing measures of marketing performance focus on outputs. However, processes are the glue that binds together everything a company does. Therefore, input measures must also merit attention (OSullivan and Abela, 2007; Grewal et al., 2009). However, broad understanding of marketing input quality under the form of processes has had a less clear impact, largely because of the difculty inherent to their complexity. This is the reason why the denition of good marketing practice has been most often object of conceptual and qualitative treatments rather than rigorous empirical studies.

DOI 10.1108/13683041111131583

VOL. 15 NO. 2 2011, pp. 3-17, Q Emerald Group Publishing Limited, ISSN 1368-3047

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Additionally, some recent management concerns and research directions in services marketing point to the impact of processes on organizational performance (Grove et al., 2003; Ye et al., 2004). It is a fact that audits have been presented almost exclusively on the perspective of what to measure and how to measure, paying little attention to the benets of the process. In this work we aimed to demonstrate the connection between input marketing measures and output marketing measures, fullling an existing gap in the literature. In this sense, the theoretical perspective was used not only to update the original instrument, but also to study the subject on from an additional perspective. By doing so, we intended to empirically prove an objective reason for the usefulness and importance of auditing as a way to improve marketing performance. We begin by introducing marketing performance evaluation conceptual framing, followed by an approach to marketing audits. Next, hypotheses are stated, together with results, discussion, and conclusions.

2. Literature review
2.1 Marketing performance assessment Marketing performance assessment has been studied for decades, remaining although a difcult resolution subject. In recent years, the study of marketing performance and the relationships between its measures has come to attract renewed attention from the academic community. Unfortunately, marketing performance is the product of a host of processes and conditions: marketing activities span multiple functions both within and outside the rm, and their results are subject to many lagged effects (Clark et al., 2006), which makes it even harder to disentangle cause-and-effect relationships. The subject is also responsible for the continuing erosion of relative power suffered by marketing departments, and a great deal of internal pressures to which area professionals have been subjected (Sheth and Sisodia, 1995, 2002). Despite the proliferation of nancial and non-nancial isolated measures (Ambler et al., 2004), marketing performance as a whole, translated into a clear and reliable universal instrument by which the respective merits can be evaluated, has received limited attention in the literature (Ambler and Riley, 2000). In fact, besides the conceptual modelling works proposed by Bonoma and Clark (1988), Morgan et al. (2002), Rust et al. (2004), Woodburn (2006), the concept of market orientation (e.g. Kohli and Jaworski, 1990; Narver and Slater, 1990; Desphande et al., 1993) and the instrument known as marketing audit, it is difcult to nd other relevant contributions on the specic subject. Given this situation, it will probably not come as a surprise the fact that the Marketing Science Institute has chosen for the last decade (2000-2010) the subject marketing performance/marketing productivity as one of its main research priorities. The Marketing Leadership Council has also contributed with important reports (Marketing Leadership Council, 2001, 2002), and in the UK, the Metrics project has come to attract considerable industry support. Traditionally, marketing productivity analysis mainly from efciency perspective and the marketing audit concept mainly from effectiveness perspective have dominated the approaches to marketing performance evaluation (Morgan et al., 2002). A historical revision of the subject (Clark, 1999) suggests that the respective measures have evolved in three consistent directions throughout the years: 1. from nancial measures to non-nancial measures; 2. from output measures to input measures; and 3. from one-dimensional measures to multidimensional measures. This does not mean a radical shift from some forms of evaluation to others, but only the need to consider a broader set of indicators. We took that evolution to sustain the theoretical model followed in this research, depicted in Figure 1.

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Figure 1 The expanding domain of marketing performance

Non Financial Output Measures/Market Performance (Customer Satisfaction) Multidimensional Input Measures/Marketing Processes and Activities (Marketing Audits) Financial Output Measures/ Financial Performance (Company Profit)

2.2 Marketing audits The introduction of the concept in the relevant literature dates back to the late 1950s, through a report produced by the American Management Association, entitled Analysing and Improving Marketing Performance: Marketing Audits in Theory and Practice (Newgarden and Bailey, 1959). The report dened, for the rst time, this activitys domain and some associated elements concept, objectives, problems, types, and content, a consequence of the seminal work by Shuchman et al. (1959). The process of marketing auditing is, for many organizations, still a relatively new and under-utilised activity. Our judgement is that, beyond the objective problems and pitfalls involved in its implementation, the fact that some companies use just some of their elements sometimes very few in an unsystematic way, has contributed to the lack of clarity surrounding their broad application. The situation, however, seems to evolve positively, as the method is increasingly being used. A common approach to marketing audits consists of the use of diagnosis questions ranging from a few dozen to more than 1,000 checklists (Kotler et al., 1989; Parkinson and Zairi, 1993; Brownlie, 1996; Wilson, 2002), from which the conceptual and normative nature of most of the literature on the subject is derived. As for whether marketing audits have reached a high degree of methodological sophistication, the answer is generally negative. Whereas two certied accountants will handle a given audit assignment using approximately the same methodology, two marketing auditors are likely to bring different conceptions of the auditing process to their task. Nonetheless, despite the weaknesses, its more enthusiastic supporters maintain that it is the better way to analyse, evaluate, and improve the marketing function (Kotler, 1999, p. 232), or the disciplines most complete strategic control mechanism (Rothe et al., 1997, p. 2). More recently, in one of the few empirical studies, Taghian and Shaw (2008) revealed evidence that justies periodic accomplishment of marketing audits as a prerequisite for well-succeeded market strategies. 2.3 Marketing audits and services The basic notion of accurately assessing an organizations marketing effectiveness applies as well to service contexts as to manufacturing ones, but the current state of the art in conducting marketing audits falls short of what is needed by service organizations. The marketing audit literature generally places little direct emphasis on the distinguishing characteristics of services. Wilson (2002) provides the most direct treatment of services in the marketing audit literature, identifying the service element in marketing and service businesses as two of 28 major marketing audit components. However, dissimilarly to Berry et al. (1991), the author does not advance an integrative audit framework based on services marketing literature.

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Other contributions within the domain of services-based organizations marketing audits have focused on the evaluation of a certain aspect of its functioning, as for example culture (Webster, 1992), or on respective practices in specic contexts (Woodside and Montelepre, 1994; Solod and Glisson, 1996; Reid, 2008), these last situations limiting its generalised application. Heskett et al. (1997) also consider a service-prot chain management audit checklist, although focusing more on the sequence and interdependence of elements leading to superior global performance than on the conditions determining good marketing practice. A certain number of differences between goods and services (intangibility, heterogeneity, simultaneity, perishability) have been consistently cited in the literature (e.g. Shostack, 1977; Berry, 1980), justifying the rationality of an individualised treatment of the respective marketing, namely through the consideration of an enlarged marketing mix including people, processes, and physical evidence. In fact, a nuclear aspect in services marketing derives from the circumstance that consuming a service is consuming a process, not only its nal outcome. In the case of tangible goods, production and consumption are processes separated in space and time, so there is a need to bridge this gap. In services, production and consumption are frequently simultaneous and involve interactions between client and provider. So, marketing has to be included in the system in a different way, once the process is broader and more spread through the organization. This stresses the role of marketing in facilitating marketing throughout the organization, not just performing marketing for the organization (Gummesson, 1994; Berry, 1999; Gronroos, 2000, Lovelock, 2001). The Index of Services Marketing Excellence (ISME), as an approach to marketing auditing that both accommodates the unique characteristics of services and has the versatility to be applied across a variety of such contexts, was dened as the systematic, periodic, objective, and comprehensive examination of an organizations or organizational units preparedness for services marketing and its current effectiveness along the dimensions of marketing orientation, marketing organization, new customer marketing, existing customer marketing, internal marketing, and service quality (Berry et al., 1991, p. 261). The original instrument incorporates a total of 66 items evaluated on a seven-point Likert scale (totally agree to totally disagree). The ISME framework, while anchored in the relevant literature, differs from traditional marketing audit frameworks in two important ways. First, it explicitly incorporates a number of evaluative criteria that reect goods-services differences and are therefore essential for accurately assessing services marketing performance. Second, it does not directly addresses external environmental issues that are often included in other frameworks. Evaluating performance using this framework is therefore designed to complement, rather replace, the examination of external issues that are normally included in the strategic and marketing planning process.

3. Research
3.1 Hypotheses and rationale Hypotheses statements were driven by the need to demonstrate the relationships between input marketing measures (independent variables) and output marketing measures (dependent variables) on the evaluation of marketing activities impact. In fact, literature about performance measurement has been criticized, among other reasons, for its limited predictive power. It is hypothesised that: H1a. H1b. There is a positive relationship between market orientation and company protability. There is positive relationship between market orientation and customer satisfaction.

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The majority of empirical works about the subject shows a positive relationship between market orientation and some measures of nancial performance, particularly protability (e.g. Narver and Slater, 1990; Dobni and Luffman, 2000; Matear et al., 2002). There is also evidence about the connection between market orientation and customer satisfaction (Webb et al., 2000; Gray et al., 2002; Castro et al., 2005): H2. There is a positive relationship between marketing organization and company protability.

Although the investigation about the impact of organizational arrangements on company performance is scarce, there are some works who suggest a positive relationship between marketing organization and company protability (Krohmer et al., 2002; Vorhies and Morgan, 2003; Olson et al., 2005): H3. There is a positive relationship between new customer marketing and company protability.

As Peter Drucker pointed out 50 years ago, the only valid reason for the existence of a company is to have customers. Therefore, it appears obvious that customer acquisition remains a necessary condition for business survival and development: H4. There is a positive relationship between existing customer marketing and company protability.

Several studies have demonstrated the contribution of customer retention to nancial performance (e.g. Reichheld and Sasser, 1990; Loveman, 1998; Edvardsson et al., 2000): H5. There is a positive relationship between internal marketing and customer satisfaction.

Because of the lack of empirically tested models, investigation regarding internal marketing in all its conceptual broadness is somehow limited. Nevertheless, there are some studies who positively relate some of the main internal marketing goals with customer satisfaction (Brady and Cronin, 2001) Service quality from customer perspective was not considered in the model, although there is a host of literature to support the positive relationship between this variable and company performance, both nancial and non-nancial (e.g. Cronin et al., 2000; Dabholkar and Overby, 2005). As dependent variables, Company protability (return on sales two items) and Customer satisfaction (one item) were selected, both evaluated by respondents in self-reported terms. These metrics constitute a frequent choice when organizational performance is used (e.g. Gray et al., 2002; Matear et al., 2002). 3.2 Method Data were taken from DunsPep Financial Sector database, including banks, insurers, and other related business (factoring and leasing, capital management, credit acquisitions). Financial industry is one of the most dynamic sectors in the economy, and also a fertile ground for the application of services marketing principles. First, we aimed to validate the content of the updated ISME instrument (the literature review which allowed to operate the concepts is summarily presented in Table I; full-scale composition is shown in the Appendix). It is worthwhile noting that all new items regard topics where a positive relationship between its practice and some measure of organizational performance, and/or having been sustained by reference authors was empirically proved. Five individual meetings with marketing managers from the most representative companies (banks and insurance companies) were carried out. Then, the same type of professionals were surveyed. Questionnaires (n 227) were sent electronically, with items being

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Table I Variable composition

Variable Market orientation Description Extent of the set of cross-functional processes and activities directed at creating and satisfying customers through continuous needs-assessment. The evaluation of market orientation involves examining the extent to which a customer focus pervades the organization Degree to which the company and marketings structures encourage and support an effective marketing. Evaluating an organization along this dimension requires assessing marketing departments impact on organizational decisions and activities, the extent to which the department facilitates performance of marketing functions throughout the organization, and the extent to which the overall organizational structure is conductive to being customer-oriented Degree to which attracting new customers is given sufcient priority in marketing programming. Contributing to superior performance along this dimension are the existence of carefully and systematically developed strategies for attracting new customers and the allocation of adequate resources to implement those strategies effectively. Degree to which retaining and building relationships with existing customers is given sufcient priority in marketing programming. As in the case of new customer marketing, the existence of formal strategies and adequate resource allocation are critical to performance. An additional evaluative facet is loyalty management Extent to which an organization gives importance and uses marketing concepts to attract, prepare, motivate and retain high-quality employees, as with communicating with them. Assessing this dimension involves evaluating employee recruitment strategies, training and internal communications, employee satisfaction, and employee reward programs Sales protability (ROS) Items Literature source 10 The Desphande and Farley (1998) scale was used. The authors recommend this parsimonious measure of market orientation when the concept is part of a broader study, as in the case

Marketing organization

12

In addition to the original scale (Berry et al., 1991), two new items were included, respecting the t between organizational marketing structure and business strategies (Ruekert et al., 1985; Walker and Ruekert, 1987; Vorhies and Morgan, 2003) and marketing structure contribution to an effective and cross-functional marketing practice (Ruekert and Walker, 1987; Krohmer et al., 2002)

New customer marketing

12

Existing customer marketing

15

Internal marketing

14

In addition to the original scale (Berry et al., 1991), three new items were included, respecting the importance of conducting regularly formal market research (Lovelock, 2001; Zeithaml and Bitner, 2003), knowing consumers choice criteria (Fitzsimmons and Fitzsimmonns, 1994), and providing value to potential customers (Gale, 1994; Woodruff, 1997; Berry et al., 2002) In addition to the original scale (Berry et al., 1991), four new items were included, respecting customer classication according to their protability (Zeithaml et al., 2001), monitoring customer loyalty (Dick and Basu, 1994; Reichheld, 1996), providing value to existing customers (Gale, 1994; Woodruff, 1997; Berry et al., 2002), and knowing reasons for customer defection (Reichheld, 1996) With the exception of two items from Berry et al. (1991), the Foreman and Money (1995) scale was used owing to its to superior psychometric properties

Company protability

Customer satisfaction

Internal perception of customer satisfaction

Company protability is part of a reduced set of metrics associated with higher-performing rms (Ambler and Riley, 2000; Ambler et al., 2004) Customer satisfaction is part of a reduced set of metrics associated with higher-performing rms (Ambler and Riley, 2000; Ambler et al., 2004)

evaluated on a seven-point Likert scale. From these, 51 were received and used, representing a satisfactory response rate of 22.4 per cent. With respect to structural equation modelling (SEM), PLS-GRAPH was utilised. The preference for a method based on ordinary least squares and principal component analysis, such as PLS, arose from the advantages in relation to methods based on covariance and factor analysis, namely with regard to sample size, prediction orientation, and condence level on the theory that links measures with their respective constructs (Barclay et al., 1995; Chin et al., 2003).

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4. Results
Interview results conrmed the soundness of ISME dimensions for the stated purpose. In fact, the interviewees revealed total unanimity regarding the adequacy of the considered dimensions and considerable agreement on their content, conrming the concept of theoretical consolidation and therefore suggesting the instruments content validity. For hypotheses testing, as recommended in the literature (Anderson and Gerbing, 1988; Bollen, 1989; Barclay et al., 1995), analysis was conducted by stages: the rst respecting measurement model evaluation individual item reliability (l), scales reliability (Cronbach a; composite reliability-rc), convergent validity (average variance extracted AVE), discriminant validity (AVE squared root), and the second respecting structural model evaluation dependent variables explained variance (R 2), structural paths (b) and respective signicance (t-value), model predictive relevance (Q 2), and goodness of t (GoF) criterion. After three iterations, were it was necessary to remove some items (MOR 1, 9, 10; MOG 6; NCM 3; ECM 7, 8) due to correlation similarity, all items reported load factors (l) superior to the most demanding level of 0.7. Information in Table II allows a positive conclusion on the remaining conditions for model stability: Cronbach a and rc . 0:7 (Nunnally, 1978; Hair et al., 1998), AVE . 0:5 (Fornell and Larcker, 1981), and AVE squared root (superscripta in Table II). As can be observed from Table III, both R 2 and Q 2 dependent variables values ll up established criteria results: R 2 $ 0; 1 (Falk and Miller, 1992) and Q 2 . 0. In what regard to b signicance, it can be concluded a non conformance in the rst proposed relationship (t , 1). Finally, the models global quality test (GoF) reported a reasonable value of 0.544.

5. Discussion
Most of the published empirical works concerning the effects of market orientation on nancial performance have shown a general positive relation between these variables (e.g. Narver and Slater, 1990; Desphande and Farley, 1998; Kumar et al., 1998; Dobni and Luffman, 2000; Gray et al., 2002). In our situation, the relationship between market orientation and protability, although modestly positive (b 0:198), cannot be considered statistically signicant (t value 0:812). We think the divergence between the results here obtained and the existing ones was due to the crisis still affecting the nancial industry. Table II Descriptive statistics and correlation matrix
Descriptive statistics Mean SD Scale reliability and convergent validity a pc AVE Correlation matrixa 3 4

Variable 1. 2. 3. 4. 5. 6. 7. Market orientation (MOR) Marketing organization (MOG) New customer marketing (NCM) Existing customer marketing (ECM) Internal marketing (IM) Company protability (PRO) Customer satisfaction (CS)

5.012 4.828 4.724 4.213 3.663 4.915 4.740

1.148 0.983 1.020 0.995 1.089 0.850 0.957

0.821 0.875 0.903 0.890 0.917 0.773

0.849 0.911 0.897 0.934 0.903 0.868

0.715 0.636 0.597 0.631 0.578 0.788

(0.845) 0.511 0.614 0.597 0.503 0.488 0.610 (0.794) 0.732 0.651 0.308 0.312 0.502 (0.773) 0.443 0.628 0.517 0.730 (0.794) 0.494 0.450 0.586 (0.760) 0.618 0.546 (0.887) 0.632 (1)

Note: aThe italicized numbers on the diagonal are the square root of the variance shared between the constructs and their measures. Off-diagonal elements are correlations among constructs. For discriminant validity, diagonal elements should be larger than off-diagonal elements

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Table III Path values, t statistics (t-student), explained variance (R 2), model predictability (Q 2), and hypotheses support
Proposed relationships () Market orientation (MOR) company protability (PRO) Market orientation (MOR) customer satisfaction (CS) Marketing organization (MOG) company protability (PRO) New customer marketing (NCM) company protability (PRO) Existing customer marketing (ECM) company protability (PRO) Internal marketing (IM) customer satisfaction (CS) Notes: *Bootstrap; p , 0; 05; at(0,05;499) 1.9647 Structural paths (b)* t-valuea R 2; Q 2 Hypotheses support

0.198 0.546 0.228 0.403 0.395 0.269

0.812 3.210 2.713 3.661 1.844 2.009 R 2 (PRO) 0.549 Q 2 (PRO) 0.417 R 2 (CS) 0.312 Q 2 (CS) 0.538

No Yes Yes Yes Yes Yes

As for the relationship between market orientation and customer satisfaction, the results (b 0:546; t value 3:210) conrm the proposed hypothesis and are compatible with those presented in the literature (Webb et al., 2000; Matear et al., 2002, Castro et al., 2005). The distinction between nancial performance and market performance is not only valid, but also relevant, since the latter helps understanding the mechanisms through which the links between market orientation and nancial performance are established (Desphande and Farley, 1998). In the last two decades there has been a movement to understanding marketing less as a separate corporate function than as a set of values and processes that allow customer acquisition and retention, in which all functions and employees should be involved). Although scarce attention has been paid to the impact of marketing organization in company performance, some works managed to positively relate these two aspects (Moorman and Rust, 1999; Krohmer et al., 2002; Vorhies and Morgan, 2003; Olson et al., 2005). Our conclusions (b 0:228; t value 2:713) are in line with those presented in the literature. The most obvious circumstance of acquiring customers as a prerequisite for companys nancial performance was conrmed (b 0:403; t value 3:661). In the same line, the importance of customer retention (Reichheld and Sasser, 1990; Loveman, 1998; Edvardsson et al., 2000) also revealed a positive conrmation (b 0:395; t value 1:844). Dissimilarly to what happens in consumer goods markets, where there is little or no contact between consumers and manufacturers, services frequently allow some degree of personal contact, which translates itself in the possibility of establishing relationships with customers, with mutual benets to both parties (Gwinner et al., 1998). The idea that internal marketing is of particular relevance in service organizations, an that employees are all part of an internal market are the concepts most prominent aspects (Foreman and Money, 1995). Also, the sense of internal marketing in service organizations is usually associated with aspects related with recruitment, training, motivation, and retention oh high quality employees, in order to provide superior service to customers. Given limited research on the direct impact of internal marketing activities, the proposed relationship was predominantly supported on the works that positively relate one of its goals, such as employee motivation, with organizational performance, here evaluated in terms of customer satisfaction (Brady and Cronin, 2001; Hwang and Chi, 2005). The results (b 0:269; t value 2:009) conrm the stated hypothesis.

6. Conclusions
In this work we tried to stress the connection, within a service context, between marketing activities and company performance, sustaining the importance of an instrument designed to evaluate the former.

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The marketing audit here advocated offers some promise for researching activities based on services marketing performance and its consequences, since marketing as a discipline has historically focused more on the results than on the processes and systems which allow it (OSullivan et al., 2009; Grewal et al., 2009). Additionally, on a theme that has received scarce attention in the literature and is also characterised by conceptual and normative treatments, this study provides empirical evidence of marketing auditing usefulness. As to management practice, there seems to be achieved the awakening of an instrument, that, although subject to improvements, presents itself with undeniable interest to the marketing and management of service companies. In fact, audits can be viewed as a tool to evaluate processes and therefore to increase marketing awareness and comprehension, leading to practice improvement. Based on results, we are convinced that if companies develop an adequate set of measures and systematically collect and analyse relevant information, then marketing could be viewed in a more objective and credible way. We are aware of a major limitation of this paper, traduced in sample size. Although PLS makes it possible to work with relatively small samples, results eventually could have been more consistent if respondent number was larger. Also, the use of self-reported measures for dependent variables, namely in the case of customer satisfaction, can lead to some bias. Nevertheless, the option was dictated by severe company rules restricting access to such information. For those reasons it is prudent to consider conclusions as exploratory in nature. In order to deepen the study of marketing performance in service organizations, we suggest the evaluation of some additional variables impact on the considered theoretical model. Specically, we refer to marketing culture (Webster, 1992, 1995) and marketing capabilities (Day, 1994; Vorhies, 1998) as probable antecedents of ISME dimensions. Finally, we think longitudinal studies could prove very useful towards achieving a better understanding of the effect of good marketing practices on company performance.

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Further reading
Appiah-Adu, K., Fyall, A. and Singh, S. (2001), Marketing effectiveness and business performance in the nancial services industry, Journal of Services Marketing, Vol. 15 No. 1, pp. 18-34. Brownlie, D. (1993), The marketing audit: a metrology and explanation, Marketing Intelligence & Planning, Vol. 11 No. 1, pp. 4-12. Carmines, E. and Zeller, R. (1979), Reliability and validity assessment, Sage University Paper Series on Quantitative Applications in the Social Sciences, No. 07-017, Sage, Beverly Hills, CA. Reichheld, F. (2003), The one number you need to grow, Harvard Business Review, Vol. 81 No. 12, pp. 47-54.

Appendix
Market orientation 1. Our business objectives are driven primarily by customer satisfaction. 2. We constantly monitor our level of commitment and orientation to serving customer needs. 3. We freely communicate information about our successful and unsuccessful customer experiences across all business functions. 4. Our strategy for competitive advantage is based on our understanding of customers needs. 5. We measure customer satisfaction systematically and frequently. 6. We have routine or regular measures of customer service. 7. We are more customer focused than our competitors. 8. I believe this business exists primarily to serve customers. 9. We poll end users at least once a year to assess the quality of our products and services. 10. Data on customer satisfaction are disseminated at all levels in this company on a regular basis.

Marketing organization 1. The senior marketing executive in this company has organizational clout to inuence customer satisfaction. 2. The marketing department has enough people to get the job done. 3. The marketing department staff has the authority it needs to be effective. 4. The marketing department does a lot to help other employees in this company to be effective marketers. 5. The marketing department in this company plays an important role in formulating strategy. 6. The relationship between the marketing department and the top management of this company is good. 7. I feel the marketing department understands the needs of employees in other departments. 8. The activities of various departments in this company are well coordinated to ensure customer satisfaction. 9. The strengths and weaknesses of our marketing department are considered when we make strategic decisions. 10. The organizational structure of this company facilitates entrepreneurial thinking.

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11. I consider that the marketing department structure is adequate to the implementation of business strategy in this company. 12. When making decisions, the marketing department takes into account the opinion of this companys executives.

New customer marketing 1. Formal strategies are in place in this company to attract new clients. 2. We devote sufcient resources to attracting new clients. 3. In this company we market our services to specic market segments rather to one overall market. 4. The market segmentation strategy we use in this company seems appropriate to me. 5. Our employees are well prepared to sell our services to prospective clients. 6. Our employees are strongly motivated to sell our services to prospective clients. 7. We do a good enough job differentiating our company from the competition in the eyes of clients. 8. We have a solid understanding of our competitors strengths and weaknesses. 9. I am normally condent about our capability in fullling promises made to clients. 10. We regularly do formal marketing research in order to identify clients needs. 11. We seek to understand clients choice provider criteria. 12. In this company we pay attention in providing value to prospective customers.

Existing customer marketing 1. We have formal strategies for marketing to existing clients. 2. We devote sufcient resources to marketing to existing clients. 3. We give existing clients specic reasons to do additional business with us. 4. We demonstrate our clients how much we value their patronage. 5. When a client has a problem with our services, we will do whatever it takes to rectify the situation. 6. The way we respond to client complaints and problems is a strength of this company. 7. We communicate with existing clients for the express purpose of reminding them of the benets they receive from us. 8. Our company stands behind what it sells. 9. Our employees are well prepared to sell our services to existing clients. 10. Our employees are strongly motivated to sell our services to existing clients. 11. When clients have problems or special needs, they do not experience difculty in reaching appropriate company personnel quickly. 12. We internally classify our clients, according their protability and loyalty proles. 13. We regularly monitor our clients loyalty, through appropriate measures. 14. In this company we pay attention in providing value to existing customers. 15. If a client abandons this company, we try to know the causes and we utilise the obtained information to improve our future action.

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Internal marketing 1. Our company offers employees a vision that they can believe in. 2. In this company the organizations vision is well communicated to employees. 3. This company has formal marketing strategies for recruiting new employees. 4. This company places considerable emphasis on hiring excellent people for open positions. 5. Skill and knowledge development of employees happens as an ongoing process in our company. 6. In our company, the employees are properly to perform their service roles. 7. Our performance measurement and reward systems encourage employees to work together. 8. In this company, those employees who provide excellent service are rewarded for their efforts. 9. Our company recognises outstanding employees in internal media (for example, company newsletters). 10. This company measures and rewards employee performance that contributes most to the organizations vision. 11. This company places considerable emphasis on communicating with employees. 12. This company communicates to employees the importance of their service roles. 13. This company has the exibility to accommodate the differing needs of employees. 14. Our company uses data gathered from employees to improve their jobs, and to develop business strategy.

Company protability 1. How do you evaluate this companys protability (ROS) during the last year? (intervals range: 1 ,0 per cent; 7 . 25 per cent). 2. How satised or unsatised do you consider yourself with this companys protability (ROS) during the last year?

Customer satisfaction Globally, how satised or unsatised do you think this companys customers were, during the last year?

About the author

Antonio Pimenta da Gama has a PhD in Management and Marketing. He has been Professor and Department Coordinator at IADE (Institute for Visual Arts, Design, and Marketing) since 1996 and is a member of IADE-UNIDCOM (Research Unit for Design, Communication, and Marketing). He has held several sales and marketing management responsibilities in companies such as Bull and Hewlett Packard, and as an international lecturer. He is also the author of the book Marketing Audits. Antonio Pimenta da Gama can be contacted at: antonio.gama@iade.pt or anpgama@clix.pt

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