CHAPTER 9

Services

• Overview
– Distinguish between services, customer service and customer relationship
management
– Understand the unique concerns of services in an online environment
– Determine the service quality of service firms on the Internet
– Understand the key drivers that have lead service firms to the Internet
– Detail what customers value about online service
– Understand what self-service technologies are
– Determine which products are better suited to the online environment
– Understand the relationship between core, supplementary and
complementary services online
– Deal with service recovery issues online
– Appreciate that not all service customers on the Internet are human
– Apply the general principles of services on the Internet to six key industries
 Services online: What are ‘online
services?’
• Services as an industry
– 25% of world trade
– Information service is the highest growth area within service.
– Service industries do not aim to produce physical goods. Their products add value
through convenience, amusement, timeliness, comfort and health.
– Some services are more tangible than others (tangibility spectrum)
– Customer service is a supplement the core product i.e. the service itself.
– intangible, perishable, heterogeneous, requiring immediate production and
consumption.
– depend on the face-to-face interaction
– The greater interaction required, the more limited the potential for the Internet to
facilitate that service
– Internet has reduced the cost of service interaction, the cost of production, cost of
monitoring, search costs and co-ordination costs and everyday customer
inteaction.
– Internet helps eliminate the geographic boundaries of increased international
trade.
 Customer Service
• All types of companies provide customer service
• Customer service includes : answering questions, taking orders, billing
and complaint handling, usually without charge or at low cost.
• For answering customer questions there is the following:
– Information transmission possibilties of the website
– FAQs that can be posted and updated
– Personalised web pages
– Chat rooms
• CRM
– CRM views the customer as participating in a lifetime of transactions.
– The goal of relationship marketing is to build and maintain a base of
committed customers who are profitable to the firm.
– To check the feasiblility of continually targeting a customer, companies
calculate the customer’s lifetime value
 Customer relationship management
(CRM)

• The Internet provides the opportunity for the

following:
– Two way interactive communication
– Real-time adjustments
– A new way for customers to initiate contact with
the company
– An opportunity to collaborate with customers
regarding new services
– Greater personalisation with the use of database
tools like collaborative filtering
 Site requirements for effective
customer service
• There exist 3 levels of service:
– Foundations of service
i. How quickly and accurately the service is provided
ii. Site effectiveness
iii. Order fulfilment
– Customer-centred service
i. Tracing/ locating customer’s orders
ii. Configuration of website to customer’s demands
iii. Customisation of service to consumer requirements
iv. Security and trust
– Value added service
i. Additional services
ii. Information provision
iii. Interaction opportunities
 SERVQUAL
• The offline environment service quality is measured by
SERVQUAL scale
• SERVQUAL 21 service attributes and 5 service quality dimensions:
reliability, responsiveness, assurance, empathy and tangibles
• The SERVQUAL dimensions need to be adapted to be used
online.
– Tangibility is replaced with user interface
– Responsiveness refers to the company responses to customer
requests
– Reliability refers to on-time delivery of the service.
– Assurance refers to the safety of online transactions and the
company’s private policy.
– Empathy can be seen as customisation of communications and the
service provider’s awareness of special needs.
 Company motivations to use
online services
• Across all sectors core values of the Internet have been seen as:
– Selling core products
– Decreasing costs in serving customers online rather than offline
– Expanding market opportunities
– Convenience
– Speed
– Ease of use
– Cost
– Establishing an interactive channel of communication with the customer
– Providing information about the organisation
– Being generally aware of the organisation
– Projecting a favourable organisational image
– Providing the opportunity for feedback
– Accessing previously inaccessible customers
– Generating qualified leads for sales people
 What customers value in onlilne
service
• Customers now want the 3Cs: control, costs
and convenience
• Consumers have greater control over choice
on the Internet.
• Consumers are offered ease of search
• Customers no longer have to rely solely on
professional advice i.e. control over
information.
 Self-service technologies
• Most service encounters offline are low tech, high
face-to-face contact. Online, consumers perform
these services themselves.
• On the Internet, self-service is ubiquitous.
• Benefits of SSTs: convenience, time-saving, cost
saving, avoidance of interpersonal interaction and
control.
• However, not all customers appreciate SSTs so
companies offers alternate service provision options
including offline options.
Nature of product and service
• Not all services (like products) can be offered
or sold on the Internet.
• When looking at selling a service online, the
following questions must be asked:
– Is the service local or global?
– Is the service high-touch or low-touch?
– Is the service high in search qualities?
– Is the service high in experience qualities?
– Is the service high in credence qualities?
 Core and supplementary
services
• Most services consist of a core service and
supplementary services.
• The Internet allows for complementary services and
the factor of the user interface.
• A core service is the main reason a customer visits a
supplier.
• Supplementary services add value to the core
service.
• Complementary services do not add value to the core
product (as they are services or products in their own
right) but add value to the web site as a whole.
 Core and supplementary services
(contd)
• User interface includes the functionality, outlook, logic
and usability of the site.
• It is easier tnd relatively cost effective to add
additional services on the web than offline.
• Companies often need to distinguish between their
added services and those of the competition.
• Supplementary and complementary services can
enhance the buying experience.
• Service centred industries must use the Internet to
demonstrate their knowledge and skills.
 Service Recovery
• Service recovery refers to the actions that companies take when service
failure occurs.
• The recovery paradox.
• Consumers respond differently to failures: do nothing, complain later, take
action through a third party, abandon the supplier or spread negative word
of mouth.
• Services more potential problems and complaints.
• The internet has empowered complaining practice.
• Companies should therefore encourage complaining.
• Companies who react to anti-domains by owning them lose out on using
the web site as a free marketing research facilility.
• Complaints can come from staff or those who rarely complain to the
company but to other people.
• Technology allows complaint data to be linked to customer records for
future use.
Non-human customers: dealing with
shopbots
• Companies will be dealing with the non-
human agents of customers rather than with
customers themselves.
• Search engines are the first of many agents
that reduce the time and effort that
consumers have to spend online.
• Other agents and bots include shopping
bots, chatter bots, gossip bots and datasheet
bots.
 Key Industries
• Financial services
– These have been greatly affected by the internet
– Most hope to do away with the middleman.
– Internet has provided cost savings, access,
convenience and consumer control.
– Internet trading for investors is far cheaper and
consumers make their own decisions at their
own pace.
 Key Industries (contd)
• Banks
– Adoption rate of Internet banking has outpaced
that of ATMs and telephone banking.
– convenient, cost effective and offers customers
great control over their accounts
– online fraud has affected nearly all major banks
– nervous about security and many are
technophobic.
– Only 1 million of South Africa’s 11 million banking
population transacts online.
 Key Industries (contd)
• Professional services
– greatly on the e.g. health industry.
– reduces the info asymmetry between professionals and
those they advise.
– In the developed world, more than two-thirds of consumers
seek medical information online.
– problem with whether the information found online is
credible.
– Consumers may not always be able to judge conflicting
information.
– Consumers are also at risk of misdiagnosing themselves.
 Key Industries (contd)
• Travel
– tour operators access to a wider audience, use dynamic
pricing and demand-based pricing.
– Consumer costs and search costs are also reduced.
– Control for the consumer comes from planning travel online.
– The developed world has taken to e-travel more than the
local market.
– The most lucrative market in the future for South African e-
travel sites is the corporate market rather than the leisure
market.
 Key Industries (contd)
• Education
– Overseas, online distance education has grown.
– Legislative reasons has hindered its growth in
South Africa
– Corporate training: reduces training and travel
costs and lessens time spent away from office
desks.
– e-learning advantages also include access to a
breadth of content, highly relevant modules and
rapid up-skilling capabilities.
 Key Industries (contd)
• Real estate
– GIS searching for real estate can be driven by access to
public facilities.
– South African sites: pre-selection offerings of market
conditions and prices, average prices per area, demographic
data.
– disintermediation occurring in the property market where
websites minimise agents and brokers.
– home-buying more focused and efficient.
– Many ‘bricks ‘n mortar’ agencies that have gone online are
empowered by the web.