Chapter 08 The Service Encounter

McGraw-Hill/Irwin Service Management: Operations, Strategy, and Information Technology, 6e

Copyright 2008 by The McGraw-Hill Companies, Inc. All Rights Reserved.

Learning Objectives

Use the service encounter triad to describe a service firms delivery process. Explain how the culture and level of employee empowerment in an organization affect the service encounter. Differentiate four organizational control systems for employee empowerment. Describe the classification of customers into four groups based on their attitudes and expectations. Prepare abstract questions and write situational vignettes to screen recruits. Describe how the creation of an ethical climate leads to job satisfaction and service quality. Discuss the role scripts in customer coproduction. Describe how elements of the service profit chain lead to revenue growth and profitability.

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The Service Triangle

Service Organization
Control versus autonomy Efficiency versus satisfaction

Contact Personnel

Perceived control

Customer

Note: Perceived control determines if a relationship or encounter is established between contact personnel and customer.
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Service Encounter Success Factors

Customer Service Provider Human Machine
Employee selection Interpersonal skills Support technology Engender trust Easy to access Fast response Verification Remote monitoring User friendly Verification Security Easy to access Compatibility Tracking Verification Security
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Human

Machine

The Customer

Expectations and Attitudes Economizing customer Ethical customer Personalizing customer Convenience customer Customer as Coproducer

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Definitions of Culture

Schwartz and Davis (1981) - Culture is a pattern of beliefs and expectations shared by the organizations 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.
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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
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Organizational Control
Control System Objective Employee Challenge Management Challenge Key Issues

Belief
Boundary

Contribute
Compliance

Uncertainty about purpose

Pressure or temptation

Communicate core values and mission

Specify and enforce rules

Identify core values

Risks to be avoided

Diagnostic

Achieve

Lack of focus

Build and support clear targets

Open organizational dialogue to encourage learning

Critical performance variables

Strategic Uncertainties

Interactive

Create

Lack of opportunity or fear of risk taking

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Contact Personnel

Selection 1. Abstract Questioning 2. Situational Vignette 3. Role Playing Training Unrealistic customer expectations Unexpected service failure
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Difficult Interactions with Customers

Unrealistic customer expectations 1. Unreasonable demands 2. Demands against policies 3. Unacceptable treatment of employees 4. Drunkenness 5. Breaking of societal norms 6. Special-needs customers Unexpected service failure 1. Unavailable service 2. Slow performance 3. Unacceptable service

Use scripts to train for proper response

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Examples of Unethical Behaviors

Misrepresenting the Nature of the Service Promising a nonsmoking room when none is available Using bait-and-switch tactics Creating a false need for service Misrepresenting the credentials of the service provider Exaggerating the benefits of a specific service offering Customer Manipulation Giving away a guaranteed reservation Performing unnecessary services Padding a bill with hidden charges Hiding damage to customer possessions Making it difficult to invoke a service guarantee General Honesty and Integrity Treating customers unfairly or rudely Being unresponsive to customer requests Failing to follow stated company policies Stealing customer credit card information Sharing customer information with third parties

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Employee Perceptions of Customer Service at a Branch Bank

Outstanding

6 5

Customer
Terrible

4 3 2 1 1
Terrible

6
Outstanding

Employee

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Satisfaction Mirror

More Repeat Purchases Stronger Tendency to Complain about Service Errors

More Familiarity with Customer Needs and Ways of Meeting Them Greater Opportunity for Recovery from Errors

Higher Customer Satisfaction

Higher Employee Satisfaction

Higher Productivity

Lower Costs

Better Results

Improved Quality of Service

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Service Profit Chain

Internal
Operating strategy and service delivery system Loyalty Service concept

External
Target market

Customers
Satisfaction

Employees
Capability Service quality

Productivity & Output quality

Revenue growth

Service value

Satisfaction

Loyalty
Profitability

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

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Topics for Discussion

How does the historical image of service as servitude affect todays 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?
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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)

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Amys Ice Cream

1.

2.

3.

Describe the service organization culture at Amys Ice Cream. What are the personality attribute of the employees who are sought by Amys Ice Cream? Design a personnel selection procedure for Amys Ice Cream using abstract questioning, a situational vignette, and/or role playing.
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Amys Ice Cream Facility

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AMYS 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?
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AMYS 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?
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AMYS ICE CREAM Situational Vignette

As a new employee at a busy store, you have been routinely performing cleanup 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?

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Enterprise Rent-A-Car
1.

2.

3.

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.

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