The Service encounter Chapter 4

Learning Objectives Use service encounter triad to describe a service firm’s delivery process. Describe roles of technology in service encounter. Differentiate organizational control systems for employee empowerment. Classify customers into four groups based on their attitudes and expectations. Prepare abstract questions and write situational vignettes to screen recruits. Describe how creation of an ethical climate leads to job satisfaction and service quality. Discuss role scripts in customer coproduction. Describe how elements of the service profit chain lead to revenue growth and profitability. 4-2

The Service Encounter Triad Organization Customer Contact Personnel Efficiency Versus Satisfaction Autonomy Service Delivery - Culture - Empowerment - Control Systems - Supporting Technology - Performance Evaluation - Selection - Training - Ethical Climate - Expectations - Attitudes - Coproduction - Perceived Control - Role of Scripts - Outcome - Failure Recovery 4-3

Role of Technology in the Service Encounter   Technology Technology Technology Customer Server   Customer Server   Customer   Server   A. Technology-Free Service Encounter B. Technology-Assisted Service Encounter C. Technology-Facilitated Service Encounter Technology Technology Customer Server   Customer Server   D. Technology-Mediated Service Encounter E. Technology-Generated Service Encounter 4-4

Evolution of Self-Service Service Industry Human Contact Machine Assisted Internet Facilitated Banking Teller ATM Online banking Grocery Checkout clerk Self-checkout station Online order/ pickup Airlines Ticket agent Check-in kiosk Print boarding pass Restaurants Wait person Vending machine Online order/ delivery Movie theater Ticket sale Kiosk ticketing Pay-for-view Book store Information clerk Stock-availability terminal Online shopping Education Teacher Computer tutorial Distance learning Gambling Poker dealer Computer poker Online poker 4-5

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 4-6

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. 4-7

Organizational Control System Objective Employee Challenge Management Key Issues Belief Contribute Uncertainty about purpose Communicate core values and mission Identify core values Boundary Compliance Pressure or temptation Specify and enforce rules Risks to be avoided Diagnostic Achieve Lack of focus Build and support clear targets Critical performance variables Interactive Create Lack of opportunity or fear of risk taking Open organizational dialogue to encourage learning Strategic Uncertainties 4-8

Contact Personnel Selection 1. Abstract Questioning 2. Situational Vignette 3. Role Playing Training Unrealistic customer expectations Unexpected service failure 4-9

Challenges Facing Customer Contact Personnel Problem Customers Service failure 1. Unreasonable demands 1. Unavailable service 2. Abusive or hostile attitude 2. Slow performance 3. Inappropriate behavior 3. Unacceptable service 4. Unanticipated demands 5. Demands contrary to policies Use scripts to train for proper response 4-10

Examples of Unethical Behaviors Misrepresenting the Nature of the Service Customer Manipulation General Honesty and Integrity • 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 • 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 • 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 4-11

The Customer Expectations and Attitudes Economizing customer Ethical customer Personalizing customer Convenience customer Role of Scripts in Coproduction 4-12

Service Encounter Success Factors 4-13

Employee Perceptions of Customer Service at a Branch Bank Outstanding Terrible Terrible Outstanding 4-14

Higher Customer Satisfaction Higher Employee Satisfaction Satisfaction Dualism        Higher Customer Satisfaction Higher Employee Satisfaction More repeat purchases ↔ More familiarity with customer needs and ways of meeting them Stronger tendency to complain about service errors Greater opportunity for recovery from errors Lower costs Higher productivity Better results Improved quality of service 4-15

Service Profit Chain 4-16

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? 4-17

Amy’s Ice Cream Describe the service organization culture at Amy’s Ice Cream. What are the personality attributes of the employees who are sought by Amy’s Ice Cream? Design a personnel selection procedure for Amy’s Ice Cream using abstract questioning, a situational vignette, and/or role playing. 4-18

Amy’s Ice Cream Facility 4-19

AMY’S ICE CREAM Abstract Questions What was your most rewarding past experience and why? What are you looking for in your next job? What have you done in the past to irritate a customer? What flavor of ice cream best describes your personality? 4-20

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? 4-21

AMY’S ICE CREAM Situational Vignette As a new employee at a busy store, you have been performing routine clean-up 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? 4-22

Succeeding in a Mature Market 4-23

Discussion Questions How has Enterprise Rent-A-Car (ERAC) defined its service differently than the typical national car rental company? What features of this business concept allow ERAC to compete effectively with the existing national rental car companies? Use the service profit chain to explain the success of ERAC. 4-24

Enterprise Service Concept Target Market Customer Value -convenience -rates -selection Corporate Culture -hiring -rewards 4-25

Enterprise Success Factors Virtual Car Relationship with repair shops Upgrade by replacement car customer On site dealer locations Fleet management Age of rental car fleet Motivated employees 4-26

Service Profit Chain How Does Enterprise Rent-A- Car Illustrate the Service Profit Chain? Operating strategy and service delivery system (employees) Service concept (service value) Target market (customers) 4-27

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) 4-28