Chapter 11 Managing service processes

Lecture objectives Understand the importance of effective management of service processes to hospitality marketing Evaluate dimensions of service quality in a hospitality context Identify the principal reasons for service failure Use service blueprinting to map a hospitality service process Understand why, when and how customers complain about their hospitality experiences Explain service recovery strategies for hospitality companies

Introduction Managing service production and delivery processes is the responsibility of operations management Marketing managers need to understand the principles of service operations management to ensure customers are satisfied Managing demand is easier when the service process delivers what customers expect When the service fails to deliver, marketing the hospitality brand is difficult Hospitality businesses must deliver consistent service quality despite the constraints of intangibility, inseparability, seasonality and variability

Types of service process Vertical processes are located within one department – food production operations Horizontal processes are cross-functional – conference/events involve sales, reservations, operations, front desk, housekeeping and general management Front-office processes interact with customers – check- in/check-out and food/beverage operations Back-office processes hidden from customers – procurement processes Some processes involve both front- and back-offices – front desk provides corporate customers with the bill and back office invoices the company

Five dimensions of service quality (SERVQUAL) Reliability Ability to perform the promised service dependably and accurately Empathy Caring, individual attention given to the customer Tangibles Appearance of physical facilities, equipment, employees and communication materials Responsiveness Willingness to help customers and provide prompt service Assurance The knowledge and courtesy of employees, and their ability to convey confidence and inspire trust Source: Parasuraman, et al. (1985), reproduced with permission of the American Marketing Association

Gaps model of service quality Gap 1: management not knowing what customers expect Gap 2: service quality standards do not match customer expectations Gap 3: service-performance gap Gap 4: delivering the service promise Closing the gaps: When Gaps 1–4 are close, the company will be promising and producing service experiences that meet customer expectations When there are significant gaps (1, 2, 3, or 4) between what the company promises and delivers, then customer expectations are not met and customers will be dissatisfied Parasuraman, Zeithaml and Berry (1992)

Service blueprinting A service blueprint is a map that specifies how a service should be delivered From the moment customers arrive to the moment they leave, all the actions that the customer and/or employees carry out are mapped on a diagram (see Figure 11.1) The service blueprint has three horizontal lines: Line of interaction – separates customers from front-of-house employees When a vertical line crosses the line of interaction (e.g. when the customer is greeted), service encounters between customers and employees takes place Line of visibility – separates front-of-house employee activities that the customer can see from those that cannot be seen When the restaurant order taker is out of the customer’s sight in the kitchen Line of internal interaction – internal service encounters take place which customers cannot see By mapping service processes from a customer’s perspective, management can set service standards, develop service production and delivery processes that meet customers’ expectations

Figure 11.1 Mapping a restaurant service, customer service encounter (x = internal service encounter)

Complexity and divergence in hospitality services Service processes can be defined by complexity and diversity The level of service complexity is the number of steps needed to perform the service: fewer steps = lower complexity; more steps = greater complexity The level of divergence refers to the degree of tolerance allowed in performing the service process: some service processes are highly standardized and have a low degree of diversity; some operations allow employees more autonomy in delivering the service and have greater diversity See Figure 11.2 for some examples

Figure 11.2 Complexity and divergence in hospitality services Level of complexity Lower Higher Sandwich shop Customized event catering Street vendor Gourmet restaurant Lower Higher Level of divergence Figure 11.2 Complexity and divergence in hospitality services

Service process strategies 1. Complexity reduction strategy Reduces complexity in service process by reducing the number of steps to produce service (restricting menu) Reducing complexity improves consistency and reduces costs Could risk alienating existing customers 2. Increased complexity strategy Increasing complexity means adding more activities to the existing service (more items on menu) Increased complexity can create service quality problems and increase costs 3. Divergence reduction strategy Reducing the level of divergence in the service implies more standardization Higher level of standardization should increase productivity and reduce costs This service process strategy is linked to volume sales and mass-marketing 4. Increased divergence strategy Increasing divergence gives greater customization of the service This might be niche positioning, e.g. human resource empowerment strategy, encouraging employees to respond to customers’ individual needs

Reasons for service failure Service failures occur when service does not match customer’s expectations Typical hospitality service failures include the following: facilities/services promoted by marketing are not available physical environment is disappointing (damaged furniture, tired décor, poor hygiene standards, atmosphere not welcoming) service is slower than expected standard of cooking is poor (overcooked/undercooked food, too much/too little seasoning, food served at the wrong temperature) employees who lack product knowledge, do not care or, even worse, are rude to customers Some service failures are relatively minor for the customer; others very important Dissatisfied customers with complaints can complain, create negative word-of-mouth and even litigate against a hospitality company

When and how customers complain Concurrently Customer complains at the same time as the service failure occurs, allows employees to respond and solve the problem. From both the company’s and the customer’s perspective, this is best time to complain Subsequently Customers telephone, email, text or write letters of complaint. Over time customers can feel more strongly about the service failure and incidents can be magnified. Since customer contacted company, complaint can still be managed Third-party complaints Unhappy customers complain to organizations (consumer bodies, governments, tourist boards, motoring organizations) hotel and restaurant guide books. Organization responds to customer complaints and agree action to resolve complaint with company Online complaints Unhappy customers complain online through travel sites (TripAdvisor). Some hotels respond effectively to online complaints – many do not Negative word-of-mouth Some unhappy customers do not complain to the company, but tell their family and friends about the ‘poor’ service and generate negative word-of-mouth publicity; this can be compounded when the negative W-o-M is online

Service recovery strategies Zero defects strategy Borrowed from manufacturing and Total Quality Management (TQM) Key idea to design out every potential problem before it can occur The special characteristics of services make the adoption of a zero defects strategy difficult to implement but working to reduce operational service failures can reduce complaints Encourage complaints!!! Companies can improve customer service by learning from complaints Encouraging customers to complain can help to improve service quality Treat customers fairly when they complain Customers have a sense of ‘fairness’ Outcome fairness refers to the tangible result the customer expects to receive after a complaint Customers expect fair compensation relative to the complaint Procedural fairness refers to the company’s policy for handling complaints. When a problem arises, customers want the first employee to sort out the problem quickly and efficiently or find someone who can Interactional fairness refers to customers expecting employees and management to treat them politely and honestly. Customers want companies to genuinely care about their problem

Conclusion Processes can be categorized as vertical or horizontal; or front office or back-office Managing service processes helps to deliver customer satisfaction Five dimensions of service quality are: reliability, empathy, tangibles, responsiveness and assurance The gaps model of service quality helps to explain the gap between customer expectations and perceptions of service quality You can map a hospitality service using blueprinting Complexity and divergence service process strategies can improve service quality and profitability The reasons for service failure in a hospitality context When and how customers complain The important role of service recovery strategies

References and further reading Gummesson, E. and Kingman-Brundage, J. (1991). ‘Service design and quality: applying service blueprinting and service mapping to railroad services’. In P. Kunst and J. Lemmink (eds) Quality Management in Services. Van Gorcu. Parasuraman, A., Zeithaml, V. and Berry, L. L. (1985). ‘A conceptual model of service quality and its implications for future research’. Journal of Marketing, 49, pp. 41–50. Parasuraman, A., Zeithaml, V. and Berry, L. L. (1992). ‘Achieving service quality through gap analysis and a basic statistical approach’. Journal of Services Marketing, 6 (1), pp. 5–14. Shostack, L. (1981). ‘Service positioning through structural change’. Journal of Marketing, 51, pp. 34–43. Singh, J. (1990). ‘A typology of consumer dissatisfaction response styles’. Journal of Retailing, 66 (1), pp. 57–99. Tax, S. S. and Brown, S. W. (1998). ‘Recovering and learning from service failure’. Sloan Management Review, 40, pp. 61–75. Zeithaml, V. A. and Bitner, M. J. (2009). Services Marketing. McGraw-Hill.