OPSM 405 Service Management Class 13: Review Koç University Zeynep Aksin

Chapters covered from the book  Introduction  Strategic positioning  New Service Development (focused on tools: blueprinting, conjoint analysis)  Managing Service Experiences: Starbucks  Service Quality (tools: Poke Yoke, service guarantees)

From lecture notes  Value proposition, focus strategy, strategic service vision, service profit chain: Shouldice, Southwest  Service encounters: Zipcar  Service guarantees  Customer relationship management: Starbucks

Firms compete on product attributes. This requires process capabilities.  Price (Cost) P  Quality Q –Customer service –Product quality  Time T –Rapid, reliable delivery –New product development  Variety V –Degree of customization “order winners” To deliver we need “capabilities”

Management challenges Service FactoryService Shop Low High Low: TaylorismHigh: High performance workplace Degree of Workplace Empowerment (Process) Degree of Customization Mass ServiceProfessional Service process design flexible technology managing loyalty managing people efficient technology creating warmth incentive design quality control

Recall: The service value chain internal quality employee satisfaction employee loyalty employee productivity Value customer satisfaction customer loyalty $ $ $ Euro $ $ $ YTL

The Value Profit Chain - Schlesinger  Determinants of employee and customer loyalty –cycle of failure - low wages, little training, => limited customer loyalty, high turnover –cycle of capability - share of profits, greater control, => highly productive employees, satisfied customers

Strategic service vision: the external view Target Market Segments what are the market segments? Positioning how do customers view the service? Service Concept what is the service bundle? Value/Cost Leveraging perceived value-cost? Operating Strategy investment / purchasing decisions? Strategy/System Integration is everything consistent? Service Delivery System what are resource needs?

Identifying quality shortfalls Customer Provider word-of-mouth personal needs past experience expected service perceived service external communications to customer service delivery service quality specifications management perceptions Gap 1 Gap 5 Gap 3 Gap 2 Gap 4

Sources of pleasure displeasure in service encounters  Recovery: how employees respond to service failure  Adaptability: employee response to customer needs and requests  Spontaneity: unprompted and unsolicited employee actions  Coping: employee response to problem customers

Controlling customer behavior  Normative controls  Instrumental controls

Service guarantees: What is a good guarantee?  unconditional  easy to understand  meaningful  easy to invoke  easy and quick to collect on

Guarantees for professional services: marketing benefits  prices are high  negative consequences of unsolved problems are high  services highly customized  brand name recognition can be tough  buyer resistance is high

Guarantees for professional services: quality benefits  understanding customer needs  understanding service delivery process  forces firm to establish measures of customer satisfaction  a general emphasis and focus on service quality

Guarantees for professional services: the risks  co-production: double moral hazard  can be giving the wrong message  doesn’t always provide good feedback on quality  ethical issues: can’t guarantee outcomes  international setting: cultural differences

The full picture: customer satisfaction, customer retention, and market share Time Us Them Enter Leave t-1 t t+1

Radikal gazetesi 28 Mayıs 2005

Creating the Process of Customer Experience Increase COMMITMENT & LOYALTY Memorabilia ContinuityDynamic TIME CONTEXT RELATIONAL Learnable – Usable – Mutable Social – Interaction Increase Emotion & Cognition PHYSICAL Theme – Layout – Sensory Increase Physical Interaction & Cognition EntertainmentEsthetic EducationalEscapist ABSORBTIONIMMERSION PASSIVE ACTIVE ENGAGEMENT

Defining terminology complexity vs. divergence what is done? how is it done?

Output analysis: PC Example (source Dolan) Weight <= 2 lbs lbs.9 >5lbs 0.0 BatteryLife 1 hr 0.0 2hrs 0.2 4hrs 1.5 8hrs 1.5 Resolution Below avg 0.0 Avg..4 Above avg..5 Price Product A: 2 lbs 1hr below average 2000 Product B: 5 lbs 4hrs average 3000 ProductC: >5lbs 8 hrs average 1000 Value of A= =1.7 Value of B = 1.9 Value of C = 3.0 Sum = 6.6 Share of preference approach: Prob. of choosing A: 1.7/6.6=26% Prob of choosing B: 1.9/6.6=29% Prob. of choosing C: 3.0/6.6=45% Market share: average purchase probability across all subjects

Summary  Blueprints for documentation  Analyze for complexity & divergence for positioning  Understand links between positioning and costs (service delivery system)  Conjoint analysis to assess customer valuations  Use output from conjoint analysis to link valuation, purchase, aggregate market share and profitability