Chapter 9 The Service Encounter McGraw-Hill/Irwin Service Management: Operations, Strategy, and Information Technology, 6e Copyright 2008 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Learning Objectives Use the service encounter triad to describe a service firm s delivery process. Explain how the culture and level of employee empowerment in an organization affect the service encounter. Differentiate four organizational control systems for employee empowerment. Describe the classification of customers into four groups based on their attitudes and expectations. Prepare abstract questions and write situational vignettes to screen recruits. Describe how the creation of an ethical climate leads to job satisfaction and service quality. Discuss the role scripts in customer coproduction. Describe how elements of the service profit chain lead to revenue growth and profitability. 8-2
The Service Triangle Service Organization Control versus autonomy Efficiency versus satisfaction Contact Personnel Perceived control Customer Note: Perceived control determines if a relationship or encounter is established between contact personnel and customer. 8-3
Service Encounter Success Factors Customer Service Provider Human Machine Human Machine Employee selection Interpersonal skills Support technology Engender trust Easy to access Fast response Verification Remote monitoring User friendly Verification Security Easy to access Compatibility Tracking Verification Security 8-4
The Customer Expectations and Attitudes Economizing customer Ethical customer Personalizing customer Convenience customer Customer as Coproducer 8-5
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. 8-6
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 8-7
Organizational Control Control System Objective Employee Challenge Management Challenge Key Issues Belief Contribute Uncertainty about purpose Communicate core values and mission Identify core values Boundary Compliance Pressure or temptation Specify and enforce rules Diagnostic Achieve Lack of focus Build and support clear targets Risks to be avoided Critical performance variables Interactive Create Lack of opportunity or fear of risk taking Open organizational dialogue to encourage learning Strategic Uncertainties 8-8
Contact Personnel Selection 1. Abstract Questioning 2. Situational Vignette 3. Role Playing Training Unrealistic customer expectations Unexpected service failure 8-9
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 8-10
Examples of Unethical Behaviors Misrepresenting the Nature of the Service Promising a nonsmoking room when none is available Using bait-and-switch tactics Creating a false need for service Misrepresenting the credentials of the service provider Exaggerating the benefits of a specific service offering Customer Manipulation Giving away a guaranteed reservation Performing unnecessary services Padding a bill with hidden charges Hiding damage to customer possessions Making it difficult to invoke a service guarantee General Honesty and Integrity Treating customers unfairly or rudely Being unresponsive to customer requests Failing to follow stated company policies Stealing customer credit card information Sharing customer information with third parties 8-11
Employee Perceptions of Customer Service at a Branch Bank Outstanding 6 5 Terrible Customer 4 3 2 1 1 2 3 4 5 6 Terrible Employee Outstanding 8-12
Satisfaction Mirror More Repeat Purchases Stronger Tendency to Complain about Service Errors Higher Customer Satisfaction Lower Costs More Familiarity with Customer Needs and Ways of Meeting Them Greater Opportunity for Recovery from Errors Higher Productivity Higher Employee Satisfaction Better Results Improved Quality of Service 8-13
Service Profit Chain Internal Operating strategy and service delivery system Service concept External Target market Satisfaction Capability Loyalty Customers Productivity & Service Employees Satisfaction Loyalty Output value quality Service quality Revenue growth Profitability Customer orientation/quality emphasis Allow decision-making latitude Selection and development Rewards and recognition Information and communication Provide support systems Foster teamwork Quality & productivity improvements yield higher service quality and lower cost Attractive Value Service designed & delivered to meet targeted customers needs Solicit customer feedback Lifetime value Retention Repeat Business Referrals 8-14
Topics for Discussion How does the historical image of service as servitude affect today s customer expectations and service employee behavior? 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. 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? 8-15
Interactive Exercise The class breaks into small groups and each group comes up with an example from each of the four organizational control systems (i.e., belief, boundary, diagnostic, and interactive) 8-16
Amy s Ice Cream 1. Describe the service organization culture at Amy s Ice Cream. 2. What are the personality attribute of the employees who are sought by Amy s Ice Cream? 3. Design a personnel selection procedure for Amy s Ice Cream using abstract questioning, a situational vignette, and/or role playing. 8-17
AMY S ICE CREAM Situational Vignette A particular customer has the irritating habit of always showing up about two minutes before closing and staying late. Often this occurs on the night when weekly store meeting are held after closing time. This delays starting the meeting and furthermore employees are on the clock waiting for the customer to leave. What would you do? 8-18
AMY S ICE CREAM Situational Vignette As a new employee at a busy store, you have been routinely performing cleanup tasks (garbage removal and restroom cleaning). Company policy dictates that these are tasks to be shared. It has become clear that two employees consistently avoid these jobs in favor of more pleasant duties. How would you handle this situation? 8-19