Chapter 11+13: Managing People & Service Recovery · Slide © 2007 by Christopher Lovelock and Jochen Wirtz Kunz - Services Marketing 14 Chapter 11+13: Managing ... chapter_11-13.ppt

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Kunz - Services Marketing 14

Chapter 11+13: Managing People & Service Recovery


Your experience in Service Industries?

Think about a service job you have worked in, where you had

customer contact

!  What exactly is your job? Do emotions play an important role here?

!  What do you like/hate in your job the most?

!  What would motivate you more in your job?

!  What is the most annoying thing in the contact with the customer/with your boss?

!  Do you have any specific rules how to deal with the customer?

!  What would help you to serve the customer better?


Your experiences:

!  Realtor: Very free, low hierarchies, terminate a relationship, Need to break emotional attachment, standards (no yelling, ), selling pressure, idiot, They treat you like being the boss,

!  More sales, Freedom, Forces me to do procedure that don’t make sense, Win-win is a must, no discount, more lists with information,


Service Personnel: Source of Customer Loyalty and Competitive Advantage

!  Customer�s perspective: Encounter with service staff is most important aspect of a service

!  Though technology and self-service interface is becoming a key engine for service delivery, frontline employees remain crucially important

!  Firm�s perspective: Frontline is an important source of differentiation and competitive advantage. It is:

"  A core part of the product, the service firm, the brand

!  Frontline is an important driver of customer loyalty

"  Anticipating customer needs "  Customizing service delivery "  Building personalized relationships


Boundary Spanning Roles

!  Boundary spanners link inside of organization to outside world

!  Multiplicity of roles often results in service staff having to pursue both operational and marketing goals

!  Consider management expectations of service staff:

"  Entertainer: Delight customers " Machine: Be fast and efficient in executing operational tasks "  Salesmen: Do selling, cross selling, and up-selling "  Judge: Enforce pricing schedules and rate integrity


Role Stress in Frontline Employees

!  Person versus Role:

"  Conflicts between what jobs require and employee’s own personality and beliefs

"  Organizations must instill “professionalism” in frontline staff

!  Organization versus Client:

"  Dilemma whether to follow company rules or to satisfy customer demands "  This conflict is especially acute in organizations that are not customer

oriented

!  Client versus Client: Conflicts & Interaction between customers that demand service staff intervention

!  Emotional Labor: �The act of expressing socially desired emotions during service transactions�

"  Surface acting—simulate emotions they don’t actually feel "  Deep acting—psych themselves into experiencing desired emotion, perhaps by

imagining how customer is feeling "  Spontaneous response


The Service Profit Chain


Customer Base

Middle Mgmt And Top Mgmt

Support Frontline

The Inverted Organizational Pyramid Fig 11.11

Frontline Staff

Top Mgmt

Middle Mgmt

Legend: = Service encounters, or �Moments of Truth�

Traditional Organizational Pyramid

Inverted Pyramid with a Customer and Frontline

Focus

Frontline Staff


Cycle of Failure (1) (Fig 11.4)

Source: Schlesinger and Heskett

Customer turnover

Failure to develop customer loyalty

No continuity in relationship for

customer

Customer dissatisfaction

Employees can�t respond to customer

problems

Employees become bored

Employee dissatisfaction; poor service attitude

Repeat emphasis on attracting new customers

Low profit margins Narrow design of

jobs to accommodate low skill level

Use of technology to control quality

High employee turnover; poor service quality

Payment of low wages

Minimization of selection effort

Minimization of training

Emphasis on rules rather than service


Cycle of Success (1) (Fig 11.6)

Low customer turnover

Customer loyalty

Continuity in relationship with

customer

High customer satisfaction

Extensive training

Employee satisfaction, positive service attitude

Repeat emphasis on customer loyalty and

retention

Higher profit

margins Broadened job designs Lowered turnover,

high service quality

Above average wages

Intensified selection effort

Train, empower frontline personnel to control quality

Source: Heskett and Schlesinger


How to Manage People for Service Advantage?

" Hire the right people "  Enable these people " Motivate and energize your people

!  Staff performance involves both ability and motivation

!  How can we get able service employees who are motivated to productively deliver service excellence?


The Service Talent Cycle


Is Empowerment Always Appropriate?

!  Empowerment is most appropriate when:

"  Firm’s business strategy is based on personalized, customized service, and competitive differentiation

"  Emphasis on extended relationships rather than short-term transactions "  Use of complex and non-routine technologies "  Service failures are non-routine "  Business environment is unpredictable "  Managers are comfortable letting employees work independently for

benefit of firm and customers "  Employees seek to deepen skills and have good interpersonal and group

process skills


Control vs. Involvement

!  Empowerment systematically redistributes the following:

"  Information about operating results and measures of competitive performance

"  Knowledge/skills that enable employees to understand and contribute to organizational performance

"  Power to influence work procedures and organizational direction (e.g., quality circles, self-managing teams)

"  Rewards based on organizational performance (e.g., bonuses, profit sharing, stock ownership)

!  The Control model concentrates these elements at the top of the organization whereas the Involvement model pushes these features throughout the organization


Levels of Employee Involvement

Suggestion involvement •  Employee makes recommendation through formalized

program

Job involvement •  Employees retrained, supervisors reoriented to

facilitate performance

High involvement •  Information is shared for participation in management

decisions •  Employees skilled in teamwork, problem solving, etc. •  Profit sharing and stock ownership


In-Class

Please tell with your neighbor one service encounter you had last week.

!  How would you evaluate the outcome of this incident?

!  What circumstances led up to this situation?

!  What could or should the company have done better/differently?

!  Summarize your major learning for the company


Common Themes in Critical Service Encounters Research

Recovery: Adaptability:

Spontaneity: Coping:

employee response to service delivery system failure

employee response to customer needs and requests

employee response to problem customers

unprompted and unsolicited employee actions and attitudes


Understanding Customer Responses to Service Failure

!  Why do customers complain?

!  What proportion of unhappy customers complain?

!  Why don�t unhappy customers complain?

!  Who is most likely to complain?

!  Where do customers complain?

!  What do customers expect once they have made a complaint?


Complaining Customers: The Tip of the Iceberg


Customer Response Categories to Service Failures (Fig 13.1)

Service Encounter is Dissatisfactory

Take some form of Public Action

Take some form of Private Action

Take No Action

Complain to the service firm

Complain to a third party

Take legal action to seek redress

Defect (switch provider)

Negative word-of-mouth

Any one or a combination of these responses is possible


Strategies to Reduce Customer Complaint Barriers (Table 13.1)

Complaint Barriers for Dissatisfied Customers

Strategies to Reduce These Barriers

Inconvenience

"  Hard to find right complaint procedure

"  Effort involved in complaining

"  Put customer service hotline numbers, e-mail and postal addresses on all customer communications materials

Doubtful Pay Off

"  Uncertain if action will be taken by firm to address problem

"  Have service recovery procedures in place, communicate this to customers

"  Feature service improvements that resulted from customer feedback

Unpleasantness

"  Fear of being treated rudely

"  Hassle, embarrassment

"  Thank customers for their feedback

"  Train frontline employees

"  Allow for anonymous feedback


The Service Recovery Paradox

!  Customers who experience a service failure that is satisfactorily resolved may be more likely to make future purchases than customers without problems (Note: not all research supports this paradox)

!  If second service failure occurs, the paradox disappears—customers� expectations have been raised and they become disillusioned

!  Severity and �recoverability� of failure (e.g., spoiled wedding photos) may limit firm�s ability to delight customer with recovery efforts

!  Best strategy: Do it right the first time


Components of an Effective Service Recovery System (Fig 13.4)

Do the job right the first time

Effective Complaint Handling

Identify Service Complaints

Resolve Complaints Effectively

Learn from the Recovery Experience

Increased Satisfaction and Loyalty

Conduct research

Monitor complaints

Develop �Complaints as opportunity� culture

Develop effective system and training in complaints handling

Conduct root cause analysis

= +

Close the loop via feedback


How to Enable Effective Service Recovery

!  Be proactive—on the spot, before customers complain

!  Plan recovery procedures

!  Teach recovery skills to relevant personnel

!  Empower personnel to use judgment and skills to develop recovery solutions

!  See Service Perspectives 13.2: Guidelines For Effective Problem Resolution

Chapter 11+13: Managing People & Service Recovery · Slide © 2007 by Christopher Lovelock and Jochen Wirtz Kunz - Services Marketing 14 Chapter 11+13: Managing ... chapter_11-13.ppt

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