Learning Objectives • Exploring the service encounter triad to describe a service firm’s delivery process. • Describe features of an organization’s service culture. • Understanding the role of information technology in employee empowerment. • The role of customer as co-producer. • Understanding the concept of a service profit chain and it’s effects on revenue growth and profitability.
Moments of Truth • Each customer contact is called a moment of truth. • You have the ability to either satisfy or dissatisfy them when you contact them. • A service recovery is satisfying a previously dissatisfied customer and making them a loyal customer.
Cycle of Service Begin Service Encounter End Service Encounter = MOT
The Service Encounter Triad Service Organization Efficiency versus autonomy Efficiency versus satisfaction Contact Personnel Customer Perceived control
Definitions of Culture • Schwartz and Davis (1981) - Culture is a pattern of beliefs and expectations shared by the organization’s members. • Mintzberg (1989) - Culture is the traditions and beliefs of an organization that distinguish it from others. • Hoy and Miskel (1991) - Culture is shared orientations that hold the unit together and give a distinctive identity.
The Service Organization • Culture ServiceMaster (Service to the Master) Disney (Choice of language) • Empowerment Invest in people Use IT to enable personnel Recruitment and training critical Pay for performance
Contact Personnel • Selection 1. Abstract Questioning 2. Situational Vignette 3. Role Playing • TrainingUnrealistic customer expectationsUnexpected service failure
Difficult Interactions with Customers Unrealistic customer expectations Unexpected service failure 1. Unreasonable demands 1. Unavailable service 2. Demands against policies 2. Slow performance 3. Unacceptable treatment of 3. Unacceptable service employees 4. Drunkenness 5. Breaking of societal norms 6. Special-needs customers Use scripts to train for proper response
The Customer • Expectations and Attitudes Economizing customer Ethical customer Personalizing customer Convenience customer • Customer as Co-Producer
Employee Perceptions of Customer Service at a Branch Bank Outstanding Terrible Terrible Outstanding
More Repeat Purchases More Familiarity with Customer Needs andWays of Meeting Them Stronger Tendency to Complain about Service Errors Greater Opportunity for Recovery from Errors Higher Employee Satisfaction Higher Productivity Lower Costs Better Results Improved Quality of Service Satisfaction Mirror Higher Customer Satisfaction
Service Profit Chain • Internal quality drives employee satisfaction • Employee satisfaction drives retention and productivity • Employee retention and productivity drives service value. • Service value drives customer satisfaction. • Customer satisfaction drives customer loyalty. • Customer loyalty drives profitability and growth.
The Links in the Service-Profit Chain Operating Strategy and Service Delivery System Employee Retention Revenue Growth Internal Service Quality External Service Value Customer Satisfaction Employee Satisfaction Customer Loyalty Employee Productivity Profitability • retention • repeat business • referral • Service concept: • results for customers • workplace design • job design • employee selection • and development • employee rewards • and recognition • tools for serving • customers • service designed • and delivered to • meet targeted • customers' needs
The Cycle of Capability • Careful employee and customer selection • High-quality training • Well-designed support systems • Greater latitude to meet customer’s needs • Clear limits on expectations of employees • Appropriate rewards and recognition • Satisfied employees • Employee referrals of job candidates
Topics for Discussion • What are the organizational and marketing implications of considering a customer as a “partial employee”? • Comment on the different dynamics of one-on-one service and group service in regard to perceived control of the service encounter. • How does use of a “service script” relate to service quality? • If the roles played by customers are determined by cultural norms, how can services be exported?