The Service Encounter

Learning Objectives Use the service encounter triad to describe a service firm’s delivery process. Describe features of an organization’s culture. Discuss how information technology is an enabler of employee empowerment. Prepare abstract questions and write situational vignettes. Discuss the role of customer as coproducer. Discuss the concept of a service profit chain.

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

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.

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

Organizational Control

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

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

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

Service Encounter Success Factors

Employee Perceptions of Customer Service at a Branch Bank Terrible Outstanding

Satisfaction Mirror Higher Customer Satisfaction 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

The Cycle of Capability Careful employee and customer selection High-quality training Well-designed support systems Greater latitude to meet customer’s needs Clear limits on expectations of employees Appropriate rewards and recognition Satisfied employees Employee referrals of job candidates

Service Profit Chain Internal Operating strategy and service delivery system Service concept Target market Service value Customers Loyalty Productivity & Output quality Service quality Capability Satisfaction Employees SatisfactionLoyalty Revenue growth External Profitability Workplace design Job design / decision-making latitude Selection and development Rewards and recognition Information and communication Adequate “tools” to serve customers Quality & productivity improvements yield higher service quality and lower cost Attractive Value Service designed & delivered to meet targeted customers’ needs Lifetime value Retention Repeat Business Referral

Topics for Discussion 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?

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?

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?

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?