1. MKT 346: Marketing of Services Dr. Houston Chapter 11: Managing People for Service Advantage

2. Importance of Service Personnel  Help maintain firm’s positioning  Important driver of customer loyalty  Key driver of front-line productivity  Important for generating sales

3. Front Line in Low-Contact Services  Many routine transactions are now conducted without involving front-line staff  ATMs (Automated Teller Machines)  IVR (Interactive Voice Response) systems  Websites for reservations/ordering, payment etc.  Front-line employees still remain crucially important  “Moments of truth” affect customer views of service

4. Boundary Spanning and Role Stress  Boundary spanners  front-line staff  link inside of organization to outside world  often experience role stress

5. Boundary Spanning and Role Stress  Three main causes of role stress:  Organization vs. Client  Person vs. Role  Client vs. Client Organization Client Person (Employee)

6. Emotional Labor What management expects employees to display to customers What employees feel inside

7. Good Human Resource Practices Can Alleviate Emotional Labor  Selective recruitment  Employee training  Employee counseling

8. Cycle of Failure (Fig 11.6, Page 282)

9.  The employee cycle of failure  Narrow job design for low skill levels  Emphasis on rules rather than service  Use of technology to control quality  Bored employees lack ability to respond to customers  Dissatisfied with poor service attitude  Low service quality  High employee turnover Cycle of Failure (Fig. 11.6)

10.  The customer cycle of failure  Repeated emphasis on attracting new customers  Customers dissatisfied with employee performance  Customers always served by new faces  Fast customer turnover  Search for new customers to maintain sales volume Cycle of Failure (Fig. 11.6)

11.  Costs of short-sighted policies are ignored  Constant expense of recruiting, hiring, training  Lower productivity of inexperienced new workers  Higher costs of winning new customers to replace those lost  Loss of revenue stream from dissatisfied customers who leave  Loss of customers turned off by negative word-of-mouth Cycle of Failure (Fig. 11.6)

12. Cycle Of Mediocrity (Fig. 11.8, Page 283)

13.  Most commonly found in large, bureaucratic organizations  Service delivery is oriented towards  Standardized service  Operational efficiencies  Promotions based on long service  Success measured by absence of mistakes  Rule-based training  Narrow and repetitive jobs Cycle Of Mediocrity (Fig. 11.8)

14.  Customers find dealing with organizations is frustrating  Little incentive for customers to cooperate with organizations to achieve better service  Complaints are often made to already unhappy employees  Customers often stay only because of lack of choice Cycle of Mediocrity (Fig. 11.8)

15. Cycle of Success (Fig. 11.9, Page 284)

16.  Longer-term view of financial performance  Firm seeks to prosper by investing in people  Attractive pay and benefits attract better job applicants  More focused recruitment, intensive training, and higher wages make it more likely that employees are:  Happier in their work  Provide higher quality, customer-pleasing service Cycle of Success (Fig. 11.9)

17.  Broadened job descriptions with empowerment practices enable front-line staff to control quality, facilitate service recovery  Regular customers more likely to remain loyal because:  Appreciate continuity in service relationships  Have higher satisfaction due to higher quality Cycle of Success (Fig. 11.9)

18. The Service Talent Cycle for Service Firms (Fig. 11.11)

19. Hiring the Right People  Be the preferred employer  Select the right people

20.  Observe behavior  Conduct personality tests  Employ multiple, structured interviews  Give applicants a realistic preview of the job Tools to Identify the Best Candidates

21.  Organizational culture, purpose and strategy  Interpersonal and technical skills  Product/service knowledge Actively Train Service Employees

22. Is Employee Empowerment Always Appropriate? Yes, if the company’s business strategy is based on:  Personalized, customized service  Competitive differentiation  Extended relationships rather than short-term transactions  Uses complex and non-routine technologies  Service failures are non-routine and sometimes unavoidable  Unpredictable business environment  Managers who are comfortable with independent employees  Employees who have good interpersonal & group process skills

23. Levels of Employee Involvement Suggestion Involvement Job Involvement High Involvement

24. Build High-Performance Service Delivery Teams  Excellent service delivery requires cross-functional coordination  Teams, training, & empowerment go hand-in-hand  Creating successful service delivery teams  Emphasis on cooperation, listening, coaching and encouraging  Know how to air differences, tell hard truths, ask tough questions  Management sets up a structure to steer teams towards success

25. Motivate And Energize The Frontline  Job content  Feedback and recognition  Goal achievement

26. Service Leadership and Culture  Service culture:  Shared perceptions of what is important  Shared values and beliefs of why they are important  Strong service culture:  focuses the entire organization on the frontline  Has an informed and actively involved top management  Inverted organizational pyramid

27. The Inverted Organizational Pyramid (Fig. 11.24)

28. MKT 346 Key Concepts: Chapter 11  Importance of service personnel  Boundary spanners and role stress  Three main causes of role stress  Cycle of failure  Cycle of mediocrity  Cycle of success  Service talent cycle and its components  Levels of employee involvement  High performance service delivery teams  Motivate and energize the front line  Service leadership and culture  Inverted organizational pyramid