CUSTOMER-FOCUSED SERVICE Chapter 13 CUSTOMER-FOCUSED SERVICE McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved.

LEARNING OBJECTIVES Describe factors that affect customer satisfaction with the service encounter. Outline core customer needs related to service encounters. Review the service satisfaction equation and describe hot to improve customer satisfaction through managing both performance and expectations. Introduce the zone of tolerance and its implications for service delivery. Describe types of service encounters and the challenges they present. Define sources of customer satisfaction and dissatisfaction. Introduce the concept of customer relationship management and its advantages for service firms. Introduce the concepts of service recovery, service guarantees, and zero defections. Describe the concept of Six-Sigma Quality in services.

Fairness: the need for just treatment. THREE CORE NEEDS OF CUSTOMERS Fairness: the need for just treatment. Security: the need to feel free from harm. Esteem: the need to protect or even enhance one’s self concept.

Improve the customers perception of performance Decrease expectations TWO WAYS TO INCREASE CUSTOMER SATISFACTION Improve the customers perception of performance and Decrease expectations

Adequate service level Exhibit 13.1 THE ZONE OF TOLERANCE Delight Zone of Tolerance Dissatisfaction Desired service level Adequate service level

Adequate service level Exhibit 13.2 THE ZONE OF TOLERANCE FOR DIFFERENT SERVICE FACTORS Desired service level Adequate service level Delight Zone of Tolerance Dissatisfaction Factor 1 Most Important Factor 2 Most Important Factor 2 Most Important

Types of Encounters THE SERVICE ENCOUNTER Remote Encounter Phone Encounter Face-to-Face Encounter

Sources of Customer Satisfaction THE SERVICE ENCOUNTER Sources of Customer Satisfaction Recovery Adaptability Spontaneity Coping Source: Bitner, Mary Jo, Brooms, Bernard H., and Tetreault, Mary Stanfield, “The Service Encounter: Diagnosing Favorable and Unfavorable Incidents,” Journal of Marketing, Volume 54, January 1990, pp. 71-84

Exhibit 13.3 GENERAL SERVICE BEHAVIOR DOs AND DON’TS Source: Zeithaml, Valerie A. and Bitner, Mary Jo, Services Marketing, Irwin McGraw-Hill, Boston, 2000

Exhibit 13.3 cont. GENERAL SERVICE BEHAVIOR DOs AND DON’TS Source: Zeithaml, Valerie A. and Bitner, Mary Jo, Services Marketing, Irwin McGraw-Hill, Boston, 2000

Benefits for Customers BUILDING CUSTOMER RELATIONSHIPS Benefits for Customers Confidence Social Special Treatment

Benefits for the Firm BUILDING CUSTOMER RELATIONSHIPS Less costly to keep current customer Potential for positive word-of-mouth advertising Employee retention

MASS CUSTOMIZATION Customizing the service around a standardized core. Creating customizable services. Point-of-Delivery customization. Offering standard modules that can be combined in different ways.

Types of Justice for Customers RECOVERING FROM SERVICE FAILURES Types of Justice for Customers Outcome Fairness Procedural Fairness Interaction Fairness

Service Guarantees OBTAINING CUSTOMER SATISFACTION INFORMATION Force firms to focus on what their customers want and expect from each element of the service. Set clear standards. Require the development of systems for generating meaningful customer feedback and acting on it. Force service organizations to understand why they fail. Reduce the consumer’s risk of the purchase decision and build long-term loyalty.

KEY TERMS Adaptability Adequate Service Confidence Benefits Coping Desired Service Esteem Face-to-Face Encounters Fairness Phone Encounters Recovery Remote Encounters Security Service Guarantee Six Sigma Quality Social Benefits Special Treatment Benefits Spontaneity Zero Defections Zone of Tolerance