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Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 1 The Customer as Co-Producer
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Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 2 Levels of Customer Participation Customer Participation Actions and resources supplied by customers during service production and/or delivery Includes mental, physical, and even emotional inputs Three Levels Low—Employees and systems do all the work - Often involves standardized service Medium—Customer inputs required to assist provider - Provide needed information and instructions - Make some personal effort; share physical possessions High—Customer works actively with provider to co-produce the service - Service cannot be created without customer ’ s active participation - Customer can jeopardize quality of service outcome (e.g., weight loss, marriage counseling)
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Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 3 Self-Service Technologies (SSTs) Ultimate form of customer involvement Customers undertake specific activities using facilities or systems provided by service supplier Customer’s time and effort replace those of employees ― e.g. Internet-based services, ATMs, self-service gasoline pumps Information-based services lend selves particularly well to SSTs Used in both supplementary services and delivery of core product ― e.g. eBay—no human auctioneer needed between sellers and buyers Many companies and government organizations seek to divert customers from employee contact to Internet-based self-service Economic trade-off between declining cost of these self-service systems and rising cost of labor Challenge: Getting customers to try this technology
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Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 4 Psychological Factors in Customer Co-Production Economic rationale of self-service Productivity gains and cost savings result when customers take over work previously performed by employees Lower prices, reflecting lower costs, induce customer to use SSTs Research shows that customers tend to take credit for successful outcomes, but not blame for unsuccessful ones Critical to understand how consumers decide between using an SST option and relying on a human provider SSTs present both advantages and disadvantages Benefits: Time and cost savings, flexibility, convenience of location, greater control over service delivery, and a higher perceived level of customization Disadvantages: Anxiety and stress experienced by customers who are uncomfortable with using them
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Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 5 What Aspects of SSTs Please or Annoy Customers? People love SSTs when … SST machines are conveniently located and accessible 24/7 — often as close as nearest computer! Obtaining detailed information and completing transactions can be done faster than through face-to-face or telephone contact People in awe of what technology can do for them when it works well People hate SSTs when … SSTs fail — system is down, PIN numbers not accepted, etc They mess up — forgetting passwords, failing to provide information as requested, simply hitting wrong buttons Key weakness of SSTs: Too few incorporate service recovery systems Customers still forced to make telephone calls or personal visits Blame service provider for not providing more user-friendly system
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Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 6 HSBC: “The world’s local bank” (Fig 8.2) Source: Courtesy HSBC Global site brought to customer’s local computer
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Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 7 Putting SSTs to Test by Asking a Few Simple Questions Does the SST work reliably? Firms must ensure that SSTs are dependable and user-friendly Is the SST better than interpersonal alternatives? Customers will stick to conventional methods if SST doesn ’ t create benefits for them If it fails, what systems are in place to recover? Always provide systems, structures, and technologies that will enable prompt service recovery when things go wrong
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Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 8 Customers as Partial Employees Customers can influence productivity and quality of service processes and outputs Customers who are offered opportunities to participate at active level are more likely to be satisfied However, customers cause one-third of all service problems Difficult to recover from instances of customer failure Focus on preventing customer failure by collecting data on problem occurrence, analyzing root causes, and establishing preventive solutions Managing customers as employees helps to avoid customer failures Conduct “ job analysis ” of customer ’ s present role in business — compare against role that firm would like customers to play Educate customers on how expected to perform and skills needed Motivate customers by ensuring that rewarded if they perform well Appraise customers ’ performance regularly
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Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 9 Dysfunctional Customer Behavior Disrupts Service Process
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Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 10 Addressing the Challenge of Jaycustomers Jaycustomer: A customer who behaves in a thoughtless or abusive fashion, causing problems for the firm, its employees, and other customers More potential for mischief in service businesses, especially when many customers are present Divergent views on jaycustomers “ The customer is king and can do no wrong. ” Marketplace is overpopulated with nasty people who cannot be trusted to behave in ways that self- respecting services firms should expect and require Insight: There ’ s truth in both perspectives No organization wants an ongoing relationship with an abusive customer
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Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 11 Six Types of Jaycustomers: The Thief No intention of paying — sets out to steal or pay less Services lend themselves to clever schemes to avoid payment For example: bypassing electricity meters, circumventing TV cables, riding free on public transportation Firms must take preventive actions against thieves, but not alienate honest customers by degrading their service experience Make allowances for honest but absent-minded customers
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Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 12 Six Types of Jaycustomers: The Rulebreaker Many services need to establish rules to guide customers safely through the service encounter Government agencies may impose regulations that service suppliers must enforce Some rules protect other customers from dangerous behavior For example: Vail and Beaver Creek, Colorado — ski patrollers issue warnings to reckless skiers by attaching orange stickers on their lift tickets Ensure company rules are necessary, not bureaucratic
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Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 13 Expresses resentment, abuses service employees verbally or even physically Confrontations between customers and service employees can easily escalate Firms should ensure employees have skills to deal with difficult situations In a public environment, priority is to remove person from other customers May be better to make a public stand on behalf of employees than conceal for fear of bad publicity See Service Perspectives 8.2: Air Rage Six Types of Jaycustomers: The Belligerent Confrontations between Customers and Service Employees Can Easily Escalate
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Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 14 Family Feuders: People who get into arguments with other customers — often members of their own family The Vandal: Service vandalism includes pouring soft drinks into bank cash machines; slashing bus seats, breaking hotel furniture Bored and drunk young people are a common source of vandalism Unhappy customers who feel mistreated by service providers take revenge Prevention is the best cure Six Types Of Jaycustomers: Family Feuders and Vandals
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Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 15 Six Types Of Jaycustomers: The Deadbeat Customers who fail to pay (as distinct from “ thieves ” who never intended to pay in the first place) Preventive action is better than cure — for example: insisting on prepayment; asking for credit card number when order is taken Customers may have good reasons for not paying - If the client's problems are only temporary ones, consider long-term value of maintaining the relationship For an industry-specific categorization, see Research Insights 8.1: Categorizing Jaycustomers in Hotels, Restaurants, and Bars
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Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 16 Consequences of Dysfunctional Customer Behavior Consequences for staff working front stage Abused employees may find their emotions negatively affected and/or suffer long-term psychological damage Productivity and quality may suffer Consequences for customers can be both negative and positive Exposure to unpleasant incidents can spoil consumption experience; some customers may even terminate their use of the service Bad behavior can be contagious But customers may rally to support of abused employee Consequences for organization Unmotivated employees may work less effectively Abused employees may take medical leave Direct financial costs of restoring damaged property, legal fees, paying fraudulent claims
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Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 17 Service blueprinting can be used to design a service and create a satisfying experience for customers. Key components of the blueprint include: Definition of standards for each front-stage activity Physical and other evidence for front-stage activities Principal customer actions Line of interaction Front-stage actions by customer-contact personnel Line of visibility Backstage actions by customer-contact personnel Support processes involving other service personnel Support processes involving information technology Blueprinting a restaurant (or other service) can be a three-act performance Prologue and introductory scenes Delivery of the core product Conclusion of the drama Summary for Chapter 8: Designing and Managing Service Processes (1)
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Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 18 Service standards need to be expressed in measurable terms and failure proofing designed into service processes to improve reliability Service process redesign can be categorized into five kinds: Eliminating non-value-adding steps Shifting to self-service Delivering direct service Bundling services Redesigning the physical aspect of service processes When the customer is a co-producer, issues to consider are: Levels of customer participation Self-service technologies (SST) Psychological factors in customer co-production Aspects of SST that please or annoy customers Customers as partial employees Summary for Chapter 8: Designing and Managing Service Processes (2)
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Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 19 Dysfunctional customer behavior of jaycustomers disrupts service processes Six types of jaycustomers: Thief Rulebreaker Belligerent Family Feuders Vandal Deadbeat Dysfunctional behavior can have consequences for staff, and positive or negative consequences for customers Summary for Chapter 8: Designing and Managing Service Processes (3)
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