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Services Marketing

Cycles of Failure,
Mediocrity, and Success
Submitted ToMrs. Jagjeet Singh Gill

Submitted ByJugraj singh


MBA 4th Sem
1336819

Cycle of Failure
Customer
turnover

Failure to develop
customer loyalty

Repeat emphasis on
attracting new customers

Low profit
margins

High employee turnover;


poor service quality
No continuity in
relationship for
customer

Use of technology Emphasis on


to control quality
rules rather
than service

Employee dissatisfaction;
poor service attitude

Customer
dissatisfaction

Employees
become bored

Narrow design of
jobs to accommodate
low skill level

Payment of
low wages
Minimization of
selection effort
Minimization
of training

Employees cant
respond to customer
problems

Source: Schlesinger and Heskett

Cycle of Failure
The employee cycle of failure
Narrow job design for low skill levels
Emphasis on rules rather than service
Use of technology to control quality
The customer cycle of failure
Managers short-sighted assumptions about financial
implications of low pay/high turnover human resource
strategies

Costs of short-sighted policies are ignored


Loss of expertise among departing employees*
Disruption to service from unfilled jobs
Constant expense of recruiting, hiring, training*
Lower productivity of inexperienced new workers
Loss of revenue stream from dissatisfied customers who go
elsewhere*
Loss of potential customers who are turned off by negative word-ofmouth
Higher costs of winning new customers to replace those lostmore
need for advertising and promotional discounts

Cycle Of Mediocrity
Other suppliers (if any)
seen as equally poor

Employee
dissatisfaction
(but cant easily quit)

Customers trade
horror stories

Employees spend
working life
in environment
of mediocrity
Narrow design
of jobs

No incentive for
cooperative relationship
to obtain better service

Complaints met by
indifference or
hostility

Jobs are boring and


repetitive; employees
unresponsive
Resentment at inflexibility and
lack of employee initiative;
complaints to employees

Customer dissatisfaction

Emphasis
on rules
vs. pleasing
customers

Training emphasizes
Success =
learning rules
not making
mistakes
Service not focused
on customers needs
Good wages/benefits
high job security

Promotion
and pay
Initiative is
increases based discouraged
on longevity,
lack of mistakes

Cycle Of Mediocrity
Most commonly found in large, bureaucratic organizations
Service delivery is oriented toward
Standardized service
Operational efficiencies
Prevention of employee fraud and favoritism toward specific
customers

Job responsibilities narrowly and unimaginatively defined


Successful performance measured by absence of mistakes
Ex) South Korean Army
Training focuses on learning rules and technical aspects of job
not on improving interactions with customers and co-workers

Cycle of Success
Low
customer
turnover

Customer
loyalty

Higher
profit
margins

Lowered turnover,
high service quality
Continuity in
relationship with
customer Employee satisfaction,
positive service attitude

High customer
satisfaction

Repeat emphasis on
customer loyalty and
retention

Extensive
training

Broadened
job designs

Train, empower frontline


personnel to control quality

Above average
wages
Intensified
selection effort

Cycle of Success
Longer-term view of financial performance; firm seeks to
prosper by investing in people
Attractive compensation packages attract better job applicants
More focused recruitment, intensive training, and higher wages
make it more likely that employees are:
Happier in their work
Provide higher quality, customer-pleasing service

Thank
U