The Service Encounter

Technology in the Service Encounter Advances in communications and information technology are having a profound effect on ways customers interface with service providers. Internet and airport kiosks have changed the expectations and behavior of airline passengers. Customers no longer need to wait on hold to reach a reservation clerk or wait in line at the airline counter to receive a boarding pass

Role of Technology in the Service Encounter Technology does not play direct role Service provider has access to technology Both customer and service provider has access to technology Technology replaces human service provider that allows self-service for the customer Customer and human service provider are not co-located physically; no face-to-face contact

Emergence of Self-Service The vignette of a typical business trip illustrates many opportunities for self-service and suggests that provider motivation and customer benefits can drive the growth of self-service. Service has migrated from human interaction to substitution of machines for service employees or, where feasible, to anywhere-anytime electronic service.

The Service Encounter Triad

Service manager wants efficiency in service delivery to increase profits. They will impose rules and procedures on contact personnel (service provider) to bring standardization, which may result in dissatisfied customers. Alternatively, service provider wants to control the behavior of the customer to make their own work manageable and less stressful. However, the customer wants to control the service encounter to derive the most benefit from it. Ideally, all three should work together to create a beneficial service encounter.

Encounter dominated by the service organization To achieve efficiency and follow a cost leadership strategy, an organization may standardize service delivery by imposing strict operating procedures and limit the discretion of contact personnel, example, McDonald’s. Success here can come from teaching the customer what not to expect from their service.

Contact Personnel-Dominated Encounter Service personnel attempt to limit the scope of the service encounter to reduce their own stress in meeting demanding customers. The customer is expected to place considerable trust in the contact person’s judgment because of the service provider’s perceived expertise. Example doctor-patient.

Customer-Dominated Encounter In standardized service, self-service is an option that gives the customer complete control over the limited service that is provided. Example, gas station that is equipped with a credit- card reader, the customer need not interact with anyone. The result can be very efficient and satisfying to the customer who needs or desires very little service.

Balance of Control A satisfactory and effective encounter should balance the need for control by all three participants. The organization’s need for efficiency can be satisfied when contact personnel are trained properly and the customer’s expectations and role in the delivery process are communicated effectively.

The Service Organization Culture Empowerment Control Systems

Culture Interaction between customer and contact personnel occurs within the context of an organization’s culture and physical surroundings. For example, Disney’s culture affects their interaction with customers. In other words, an organization’s values when consistently communicated by management, permit contact personnel to act with considerable autonomy, because their judgment is based on shared set of values. Definition 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.

Empowerment The discretion of contact personnel is limited by procedures and design. The organization’s structure is a pyramid-shaped, with layers of supervision to ensure consistency of service delivery across all locations. A new model supported with technology has inverted ‘T’ organizational structure, where layers of supervision are significantly reduced because contact personnel are well trained, motivated, and supplied with timely information. ‘People want to do good work if they are given the opportunity’. Therefore: Invest in people (training) Use IT to enable personnel Recruitment and training is critical Link compensation to performance

Control Systems

Control Systems (cont’n) The table in the previous slide describes four organizational control systems to encourage creative employee empowerment Belief system – articulated through organizational culture Boundary – defines limits to employee initiatives Diagnostic – defines measurable goal to achieve performance Interactive – pressures from customers for creative solutions

Contact Personnel Ideally , customer contact personnel should have personality attributes that include: Flexibility Tolerance for ambiguity An ability to monitor change Empathy for customers Some individuals may find the frontline service to be boring and repetitive, whereas others see the job as providing an opportunity to meet and interact with a variety of people.

Contact Personnel (cont’n) Selection (during the interview, consider the following) 1. Abstract Questioning 2. Situational Vignette 3. Role Playing From your previous work, what type of customer was difficult to deal with and why? The day after a catering service, a customer returns some small cakes, claiming they were stale. Although the one demanding for refund, hew was so softspoken. You know your business did not make those cakes. What would you do?\

Contact Personnel (cont’n) Training Unrealistic customer expectations Unreasonable demands Demands against policies Unacceptable treatment of employees Drunkenness Breaking of societal norms Special-needs customers

Unexpected service failure Unavailable service due to failure Slow performance (capacity issues) Unacceptable service (low standards)

Unavoidable communication difficulties with customers require contact personnel whose training and interpersonal skills can prevent a bad situation from becoming worse. Programs can be developed to train contact personnel to use prescribed responses in given situations. Another approach involves general training in communication skills. This approach should help contact personnel to anticipate the types of exchanges they might encounter, expand their repertoire of possible responses, and develop decision rules for choosing appropriate responses to a given situation. Contact personnel who are well-trained will be able to control the service encounter in a professional manner, and the results will be increased satisfaction for the customer and decreased stress and frustration for the provider.

Creating an Ethical Climate

The Customer Every interaction is important for the customer, but is routine for the service provider. Therefore, the attitude and expectations maybe different. Expectations and Attitudes Economizing customer Customer wants to maximize the value obtained for his or her expenditures of time, effort, and money. Loss of these customers is an early warning of potential competitive threats. Ethical customer Patronize socially responsible firms

Continued…. Personalizing customer Convenience customer These customers want interpersonal gratification such as recognition, respect, etc. Convenience customer These customers have no interest in shopping for the service; convenience is most important.

Customer as Co-Producer Both customer and service provider have role to play in transacting the service. Customers role maybe defined by societal norms or implied by the particular design of the service offered. If and when these roles change due to re-design and/or technology – then there is resistance.

Satisfaction Mirror Higher Customer Satisfaction Higher Employee        Higher Customer Satisfaction More Familiarity with Customer Needs and Ways of Meeting Them Greater Opportunity for Recovery from Errors Higher Employee Satisfaction Higher Productivity Improved Quality of Service More Repeat Purchases Stronger Tendency to Complain about Service Errors Lower Costs Better Results

Service Profit Chain Internal Customers Employees External Operating strategy and service delivery system   Service concept Target market Service value Customers Loyalty Productivity & Output quality Capability Satisfaction Employees Revenue growth External 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  

Service Profit Chain The service profit chain proposes a relationship that links profitability, customer loyalty, and service value to employee satisfaction, capability, and productivity. Internal quality drives employee satisfaction Employee satisfaction drives retention and productivity Employee retention and productivity drive service value Service value drives customer satisfaction Customer satisfaction drives customer loyalty Customer loyalty drives profitability and growth

Cycle of Capability Is attitude emphasized? Are job previews utilized? Are customers screened? Are employees encouraged to refer friends?   Are referrals from the “best” employees given priority? Is satisfaction measured periodically? Are measurements linked to other functions on the cycle? Careful Employee and Customer Selection (and Self-selection)) High-Quality Training Well-Designed Support Systems Information Facilities Greater Latitude to Meet Customer’s Needs Clear Limits on, and Expectations of, Employees Appropriate Rewards and Frequent Recognition Satisfied Employees Employee Referrals of Potential Job Candidates Is training for job and life? Is it an important element of quality of work life? Do they reflect needs of the service encounter? Are they designed to foster relationships? Does it reflect top management “talk”? Is it enough to allow delivery of results to customers? Do they limit the “right” risks? Are they logical to employees? Cycle of Capability Are they linked to service objectives? Are they balanced between monetary and non-monetary?