1. The Service Encounter

2. Learning Objectives
Use the service encounter triad to describe a service firm’s delivery process.
Discuss the role of organizational control systems for employee empowerment.
Prepare abstract questions and write situational vignettes.
Discuss the role of customer as coproducer.
Describe how elements of the service profit chain lead to revenue growth and profitability.

3. The Service Encounter Triad
Organization
Efficiency
versus
autonomy
Efficiency
versus
satisfaction
Contact
Personnel
Customer
Perceived
control

4. 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.

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

6. Organizational Control

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

8. Difficult Interactions with Customers
Unrealistic customer expectations Unexpected service failure
1. Unreasonable demands Unavailable service
2. Demands against policies Slow performance
3. Unacceptable treatment of Unacceptable service
employees
4. Drunkenness
5. Breaking of societal norms
6. Special-needs customers
Use scripts to train for proper response

9. The Customer
Expectations and Attitudes Economizing customer Ethical customer Personalizing customer Convenience customer
Customer as Co-Producer

10. Service Encounter Success Factors

11. Employee Perceptions of Customer Service at a Branch Bank
Outstanding
Terrible
Terrible
Outstanding

12. Satisfaction Mirror Higher Customer Satisfaction Higher Employee  
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

13. 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?
Careful Employee
and Customer Selection
(and Self-selection))
Is training for job and life?
Is it an important element of quality of work life?
Employee
Referrals of
Potential Job
Candidates
High-Quality Training
Is satisfaction
measured periodically?
Are measurements linked to other functions on
the cycle?
Do they reflect
needs of the
service encounter?
Are they designed to foster relationships?
Well-Designed
Support Systems
Information
Facilities
Cycle
of Capability
Satisfied
Employees
Appropriate
Rewards
and Frequent
Recognition
Greater Latitude to Meet
Customer’s Needs
Does it reflect top management “talk”?
Is it enough to allow delivery of results to customers?
Are they linked to
service objectives?
Are they balanced
between monetary
and non-monetary?
Clear Limits on, and Expectations of, Employees
Do they limit the “right” risks?
Are they logical to employees?

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

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?

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)

17. Amy’s Ice Cream on Guadalupe

18. 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.

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?

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?

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?

22. Enterprise Rent-A-Car
How has Enterprise Rent-A-Car (ERAC) defined its service differently than that of the typical national car rental company?
What features of its business concept allow ERAC to complete effectively with the existing national rental care companies?
Use the service profit chain to explain the success of ERAC.