UNIT -03

CUSTOMER DEFINED SERVICE STANDARDS

“Hard” & “Soft” standards, Challenges of matching supply & demand in capacity, four
common types of constraints facing services, optimum v/s maximum use of capacity,
strategies for matching capacity & demand. Yield management-balancing capacity utilization,
pricing.

Waiting line strategies- four basic Waiting line strategies. Leadership &Measurement system
for market driven service performance key reasons for GAP-2 service leadership- Creation of
service vision and implementation, Service quality as profit strategy, Role of service quality In
Types of Customer-Defined Service Standards:

Hard Customer-Defined Standards

Things that can be counted, timed, or observed through audits (time, numbers of events) – “right
first time” or “right on time”.
To address the need for reliability, companies can institute a “do it right the first time” and an
“honor your promise” value system by establishing reliability standards.
Soft Customer-Defined Standards
Opinion-based measures that cannot be observed and must be collected by talking to customers
(perceptions, beliefs).
Soft standards provide direction, guidance, and feedback to employees in ways to achieve
customer satisfaction and can be quantified by measuring customer perceptions and beliefs.
Role of Service Quality in Offensive and Defensive Marketing:
The offensive marketing strategy focuses on acquiring new clients. Your defensive marketing
strategy is about keeping your existing clients! Every interaction you have with your clients is
marketing! The quality of products and services you provide impacts future purchase decisions.
Process of customer defined service standard:

Step 1: The first step involves delineating the service encounter sequence.

John Robert’s spa have identified 7 typical service encounters:

1. Including the initial phone call to schedule visit,

2. Arrival at spa,

3. Consultation with an employee prior to receiving any treatment,

4. Delivery of the spa service itself,

5. Wrap-up of the treatment,

6. Paying and exiting the spa, and

7. Post experience contact

Step 2: In this step, abstract customer requirements and expectations must be translated into
concrete, specific behaviors and actions associated with each service encounter.

Step 3: Involves prioritizing the behaviors and actions, of which there will be many, into those for
which customer-defined standards will be established.

Step 4: The next step involves deciding whether hard or soft standards should be used to capture
the behavior and action.

Step 5: Once companies have determined whether hard or soft standards are appropriate and which
specific standards best capture customer requirements, they must develop feedback mechanisms
that adequately capture the standards.

Step 6: Requires that companies establish target levels for the standards. Without this step, the
company lacks a way to quantity whether the standards are being met.

Step 7: Customer complaints, Reduce customer dissatisfaction, increase productivity.

Step 8: Company communicates the performance on its service quality indicator daily so that
everyone in the company knows how the company is performing.

Step 9: The final step involves revising the target levels, measures, and even customer
requirements regularly enough to keep up with customer expectations.

Challenges of Matching Supply and Demand in Capacity:

Excess demand:- the level of demand exceeds maximum capacity, some customers will be turned
away , resulting in lost business opportunities.

Demand exceeds optimum capacity:- no one is being turned away, but the quality of service may
still suffer because of overuse, crowding, or staff being pushed beyond their abilities to deliver
consistent quality.(quality declines)

Demand and supply are balanced at the level of optimum capacity:- staff & facilities are
occupied at an ideal level.

Excess capacity:- demand is below optimum capacity. Productive resources in the form of labor,
equipment, and facilities are underutilized, resulting in lost productivity and lower profits.
Four common types of constraints facing services:

Time
Labor
Equipment
Facilitie

Strategies for Matching Capacity And Demand:

Shifting Demand to Match Capacity

• Demand too high-Reduce Demand during Peak times.

• Demand too low- Increase Demand to match capacity.
Adjusting capacity to Meet Demand

• Demand too high- Stretch Existing Capacity.

• Demand too low- Align Capacity with Demand Fluctuations.
Strategies for Shifting Demand to Match Capacity:

Strategies for Adjusting Capacity to Match Demand:

Yield Management:

Yield Management is a term that has become attached to a variety of methods, some very
sophisticated, employed to match demand and supply in capacity-constrained services.Using yield
management models, org’n find the best balance at a particular point in time among the prices
charged, segment sold to, and the capacity used. The goal of Yield Management is to produce the
best possible financial return from a limited available capacity.

Challenges and Risks in Using Yield Management:

• Loss of competitive focus

• Customer alienation
• Employee morale problems
• Incompatible incentive and reward systems
• Lack of employee training
• Inappropriate organization of the yield management function
Four Basic Waiting Line Strategies
1. Employ Operational Logic
2. Establish a Reservation Process
3. Differentiate Waiting Customers
4. Make waiting pleasurable, or at least tolerable

Employ Operational Logic

A first step is to analyze the operational processes to remove any inefficiency. Modifications in
the operational system were part of the solution employed by the First National Bank of Chicago
in one of the earliest efforts to reduce customer waiting and improve service.
2. Establish a Reservation Process
When waiting cannot be avoided, a reservation system can help to spread demand. Restaurants,
transportation companies, theaters, physicians, and many other service providers use reservation
systems to alleviate long waits.
Ex. Ttd, online reservations, book my show etc..

3. Differentiate Waiting Customers

Importance of the customer
Frequent customers or customers who spend large amounts with the org’n can be given priority in
service by providing them with a special waiting area or segregated lines.

Urgency of the job

Those customers with the most urgent need may be served first. This strategy is used in emergency
health care.
Duration of the service transaction
In many situations, shorter service jobs get priority through “express lanes.” at other times, when
a service provider sees that a transaction is going to require extra time; the customer is referred to
a designated provider who deals only with these special-needs customers.
Payment of premium price
Customers who pay extra are often given priority via separate check-in lines or express systems.

4. Make waiting pleasurable, or at least tolerable.

• Unoccupied Time Feels Longer Than Occupied Time.

• Preprocess Waits Feel Longer Than In-Process Waits.
• Uncertain Waits Are Longer than Known, Finite waits.
• Unexplained Waits Are Longer Than Explained Waits.
• Unfair Waits Are Longer Than Equitable Waits.
• Solo Waits Feel Longer Than Group Waits.
Key reasons for gap 2:
1. Poor Service design

• Unsystematic new service development process

• Vague, undefined service designs
• Failure to connect service design to service positioning
2. Absence of customer defined standards

• Lack of customer-defined standards

• Absence of process management to focus on customer requirements
• Absence of formal process for setting goals
3. Inappropriate physical evidence and scope for services

• Failure to develop tangibles in line with customer expectations

• Servicescape design that does not meet customer & employee needs
• Inadequate maintenance & updating of the servicescape
Role of Service Quality in Offensive and Defensive Marketing:
The offensive marketing strategy focuses on acquiring new clients. Your defensive
marketing strategy is about keeping your existing clients!
Every interaction you have with your clients is marketing! The quality of products
and services you provide impacts future purchase decisions.
 Module-4
Employee Role In Service Designing

Boundary spanning roles, Emotional labour, Source of conflict, Quality- productivity trade off,
Strategies for closing GAP 3. Customer’s role in service delivery-Importance of customer &
customer’s role in service delivery, Strategies for enhancing-Customer participation,

Delivery through intermediaries-Key intermediaries for service delivery, Intermediary

control strategies.
Boundary Spanning Roles
The frontline employees are referred to as boundary spanners because they operate at the
organization’s boundary.
Boundary spanners provide link between the external customer and environment and the internal
operations of the organization.
They serve a critical function in understanding, filtering, and interpreting information and
resources to and from the organization and its external constituencies.

Emotional Labour
“The act of expressing socially desired emotions during service transactions”.

-Arlie Hochschild

Refer to the labor that goes beyond the physical or mental skills needed to deliver quality service.
In general, boundary-spanning service employees are expected to align their displayed emotions
with organizationally desired emotions via their use of emotional labor. Such labor includes
delivering smiles, making eye contact, showing sincere interest, and engaging in friendly
conversations with strangers and who may or may not ever be seen again.

Sources of Conflict for Boundary-Spanning Workers

➢ Person vs. Role Conflict

➢ Organization vs. Client Conflict

➢ Client vs. Client/Inter client conflict

➢ Quality vs. Productivity

1. Person vs. Role Conflict-
• Boundary spanners feel conflict between what they are asked to do and their own
personalities, orientations, or values.
• Where equality and individualism are highly valued.
• Sometimes there is a conflict between role requirements and the self-image or self-esteem
of the employee.

2. Organization vs. Client Conflict

• A more common type of conflict for frontline service employees is the conflict between
their two bosses, the organization, and the individual customer.
• When a customer makes excessive demands, the employee has to choose whether to
follow the rules or satisfy the demands.

3. Client vs. Client/Inter client conflict

• Sometimes conflict occurs for boundary spanners when incompatible expectations and
requirements arise from two or more customers.
• This situation occurs most often when the service provider is serving customers in turn (a
bank teller, a ticketing agent, a doctor).
• Waiting customers may become dissatisfied because their needs are not being met in a
timely way.

4. Quality vs. Productivity

• Frontline service workers are asked to be both effective and efficient: they are expected to
deliver satisfying service to customers and at the same time to be cost-effective and
productive in what they do.

Strategies for closing gap 3:

➢ Hire the Right People

➢ Develop People to Deliver Service Quality

➢ Provide Needed Support Systems

➢ Retain the Best people

Customer’s role in service delivary

➢ Importance of Customers in Service Delivery

➢ Customers’ Roles

➢ Strategies for Enhancing Customer Participation

Customer’s Role

1. Customers as productive resources:

• Service customers have been referred to as “partial employees “of the organization.
• If customers contribute effort, time, or other resources to the service production process,
they should be considered as part of the organization.

2. Customers as contributors to service Quality and satisfaction

• Effective customer can increase the likelihood that needs are met and that the benefits the
customer seeks are actually attained.
• Health care, education, personal fitness, and weight loss. The service outcome is highly
 dependent on customer participation.
3. Customers as Competitors

if self-service customers can be viewed as resources of the firm, or as “partial employees,” internal
exchange; whether to produce a service for themselves- ex.., child care, home maintenance, car
repair external exchange; have someone else provide the service for them

Strategies for enhancing customer satisfaction.

1. Hire competent staff:
Hiring competent customer service staff is crucial any new business since they have experienced
training and are the ones who will continuously interact with and obtain fee back from consumers.
The employees should be skilled, motivated and have passion towards the work they are doing.
2. Automated sales process:
Many companies enforce an automated sales process for customers who purchase the items online.
The customer receives an automatic e-mail regarding their purchase receipt. and when the product
will be shipped. They will also able to track the delivery of their package, by adopting this type of
automated sales process the service companies can enhance the customer satisfaction.
3. Customer is always right:
Customer appreciation is one of the leading reasons why loyal customers repeatedly do business
the company. Regardless of situation, it is always good practice to satisfy customer need.
4. Take advantage of innovation and technology:
Many new companies have found fast and effective way to interact with their customers. They
have implemented live chats and other sophisticated programs on their website tailored their
customers need.
5. Get referrals and leads from existing customers.
When existing customers are satisfied with the company’s products and quality of customer
service, they are more likely to tell others of their positive experience. It is crucial for every new
business to effectively network in this manner.
6. Choose the right customer:
Before the company begins the process of educating and socializing customer for their roles, it
must attract the right customers to fill those roles. The chosen customer must be able to play his
role effectively.
7. Community involvement:
Another advantageous strategy is through support forums and instant feedback on company’s
website.

8. Reward customers for their contribution:

Customers are more likely to perform their roles effectively, or to participate actively, if they are
rewarded for doing so.
Importance of customers in service delivery:
• Increases productivity.
• Enhance two-way communication
• Improved perceived communication
• Greater repurchase and referrals
• Enhance customer satisfaction
• Enhance customer skills of Utilizing services
• Enables consumers to receive various Benefits.

Service Distribution

1. Direct or company-owned channels.

• Many services are distributed directly from provider to customer.

• Some of these are local services-doctors, dry cleaners, and hairstylists-whose area of
distribution is limited

• The major benefit of distributing through company-owned channels is that the company has
complete control over the outlets

2. Delivery of Service through Intermediaries.

1. Franchising: a franchise is a contractual agreement between a franchisor and a franchisee. This
this agreement allows the franchisee to operate a retail establishment using the name and the
franchisor is operating method.

Benefits
• Leveraged business format for greater expansion and revenues.
• Consistency in outlets.
• Knowledge of local markets.
• Shared financial risk and more working capital
Challenges
• Difficulty in maintaining and motivating franchisees
• Highly publicized disputes and conflict
• Inconsistent quality
• Control of customer relationship by intermediary.

2. Agents and Brokers: Agents are wholesalers that do not take the title of the products. They
work for commission or fee as payment for their services.

Benefits
• Reduced selling and distribution costs
• Intermediary’s possession of special skills and knowledge
• Wide representation
• Knowledge of local markets
• Customer choice
Challenges
• Loss of control over pricing and other aspects of marketing
• Representation of multiple service principals

3. Electronic Distribution of Services: Electronic channels are the only service

distributers that do not require direct human interaction. They sell the service using
software and electronic media.

Benefits
Consistent delivery for standardized services
• Low cost
• Customer convenience
• Wide distribution
• Customer choice and ability to customize
• Quick customer feedback

Challenges
• Customers are active, not passive
• Lack of control of electronic environment
• Price competition
• Inability to customize with highly standardized services
• Lack of consistency with customer involvement
• Requires changes in consumer behavior