1. The Service Encounter Time McGraw-Hill/Irwin
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

2. 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.
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3. 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
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4. Service Encounter Success Factors
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5. The Customer
Expectations and Attitudes Economizing customer Ethical customer Personalizing customer Convenience customer
Customer as Coproducer
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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.
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7. 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
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8. 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
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9. Contact Personnel
Selection 1. Abstract Questioning 2. Situational Vignette 3. Role Playing
Training Unrealistic customer expectations Unexpected service failure
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10. 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
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11. 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
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12. Employee Perceptions of Customer Service at a Branch Bank
Outstanding
Terrible
Terrible
Outstanding
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13. Satisfaction Mirror Higher Customer Satisfaction Higher Employee
Satisfaction Mirror   
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
Higher Customer Satisfaction
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14. Service Profit Chain Internal External Customers Employees
Operating strategy and
service delivery system
Service concept
Target market
Loyalty
Customers
Revenue
growth
Satisfaction
Productivity
&
Output
quality
Service
value
Employees
Satisfaction
Loyalty
Capability
Profitability
Service
quality
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
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15. 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?
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16. 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)
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17. Amy’s Ice Cream
Describe the service organization culture at Amy’s Ice Cream.
What are the personality attribute 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.
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18. Amy’s Ice Cream Facility
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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?
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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?
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21. AMY’S ICE CREAM Situational Vignette
As a new employee at a busy store, you have been routinely performing 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?
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22. Succeeding in a Mature Market
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23. Discussion Questions
How has Enterprise Rent-A-Car defined (ERAC) its service differently than the typical national car rental company?
What features of this business concept allow ERAC to effectively compete with the existing national rental car companies?
Use the service profit chain to explain the success of ERAC.
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24. Enterprise Service Concept
Target Market
Customer Value -convenience -rates -selection
Corporate Culture -hiring -rewards
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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
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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)
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