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The Service Encounter

Learning Objectives
Use the service encounter triad to describe a service firms delivery process. Discuss the role of organizational control systems for employee empowerment. Prepare abstract questions and write situational vignettes. Discuss the role of customer as coproducer. Describe how elements of the service profit chain lead to revenue growth and profitability.

The Service Encounter Triad

Service Organization
Efficiency versus autonomy Efficiency versus satisfaction

Contact Personnel

Perceived control


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.

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
Beliefs Systems Boundary Systems Diagnostic Control Systems Interactive Control Systems To contribute Core values Identify core & mission values Risks to be avoided Critical performance variables Strategic Uncertainties To do right Specify and enforce rules To achieve Build clear targets

To create

Encourage learning

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 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

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

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



Employee Perceptions of Customer Service at a Branch Bank


6 5

Custom er

4 3 2 1 1



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

Lower Costs

Higher Employee Satisfaction

Higher Productivity

Better Results

Improved Quality of Service

Is attitude emphasized? Are job previews utilized? Are customers screened?

Are employees encouraged to refer friends? Are referrals from the best employees given priority?

Careful Employee and Customer Selection (and Self-selection)) Employee Referrals of Potential Job Candidates High-Quality Training

Is training for job and life? Is it an important element of quality of work life?

Is satisfaction measured periodically? Are measurements linked to other functions on the cycle? Satisfied Employees

Cycle of Capability

Well-Designed Support Systems Information Facilities

Do they reflect needs of the service encounter? Are they designed to foster relationships?

Are they linked to service objectives? Are they balanced between monetary and non-monetary?

Appropriate Rewards and Frequent Recognition Clear Limits on, and Expectations of, Employees Do they limit the right risks? Are they logical to employees?

Greater Latitude to Meet Customers Needs

Does it reflect top management talk? Is it enough to allow delivery of results to customers?

Service Profit Chain

Operating strategy and service delivery system Loyalty Service concept

Target market


Capability Service quality

Productivity & Output quality

Revenue growth

Service value



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

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?

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)

Amys Ice Cream on Guadalupe

Amys Ice Cream

1. Describe the service organization culture at Amys Ice Cream. 2. What are the personality attribute of the employees who are sought by Amys Ice Cream? 3. Design a personnel selection procedure for Amys Ice Cream using abstract questioning, a situational vignette, and/or role playing.

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?

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?

AMYS 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?

Enterprise Rent-A-Car
1. How has Enterprise Rent-A-Car (ERAC) defined its service differently than that of the typical national car rental company? 2. What features of its business concept allow ERAC to complete effectively with the existing national rental care companies? 3. Use the service profit chain to explain the success of ERAC.