The Service Encounter Time McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

The Service Encounter

Time

McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

Learning Objectives Use the service encounter triad to describe a service firm’s

delivery process. Explain how the culture and level of employee empowerment in an

organization affect the service encounter. Differentiate four organizational control systems for employee

empowerment. Describe the classification of customers into four groups based on

their attitudes and expectations. Prepare abstract questions and write situational vignettes to

screen recruits. Describe how the creation of an ethical climate leads to job

satisfaction and service quality. Discuss the role scripts in customer coproduction. Describe how elements of the service profit chain lead to revenue

growth and profitability.

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ServiceOrganization

CustomerContactPersonnel

EfficiencyVersus

Satisfaction

EfficiencyVersus

Autonomy

Service Delivery

- Culture- Empowerment- Control Systems- Supporting Technology- Performance Evaluation

- Selection- Training- Ethical Climate

- Expectations- Attitudes- Coproduction

- Perceived Control- Role of Scripts- Outcome- Failure Recovery

The Service Encounter Triad

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Service Encounter Success Factors

Customer Service Provider Human Machine

Human

Employee selection Interpersonal skills Support technology Engender trust

User friendly Verification Security Easy to access

Machine

Easy to access Fast response Verification Remote monitoring

Compatibility Tracking Verification Security

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The Customer

Expectations and AttitudesEconomizing customerEthical customerPersonalizing customerConvenience customer

Customer as Coproducer

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Definitions of Culture

Schwartz and Davis (1981) - Culture is a pattern of beliefs and expectations shared by the organization’s 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.

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The Service Organization Culture

ServiceMaster (Service to the Master)

Disney (Choice of language) Empowerment

Invest in peopleUse IT to enable personnelRecruitment and training

criticalPay for performance

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Organizational Control

ControlSystem

Objective EmployeeChallenge

Management Challenge

Key Issues

Belief Contribute Uncertainty about purpose

Communicate core values and mission

Identify core values

Boundary Compliance Pressure or temptation Specify and enforce rules

Risks to be avoided

Diagnostic Achieve Lack of focus Build and support clear targets

Critical performance variables

Interactive Create Lack of opportunity or fear of risk taking

Open organizational dialogue to encourage learning

Strategic Uncertainties

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Contact Personnel Selection

1. Abstract Questioning2. Situational Vignette3. Role Playing

TrainingUnrealistic customer

expectationsUnexpected service failure

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Challenges Facing Customer Contact Personnel

Problem Customers Service failure

1. Unreasonable demands

1. Unavailable service

2. Abusive or hostile attitude

2. Slow performance

3. Inappropriate behavior 3. Unacceptable service

4. Unanticipated demands

5. Demands contrary to policies

Use scripts to train for proper response

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Examples of Unethical Behaviors

Misrepresenting the Nature of the Service

Customer Manipulation General Honesty and Integrity

• Promising a nonsmoking room when none is available

• Using bait-and-switch tactics• Creating a false need for service• Misrepresenting the credentials

of the service provider• Exaggerating the benefits of a

specific service offering

• Giving away a guaranteed reservation

• Performing unnecessary services

• Padding a bill with hidden charges

• Hiding damage to customer possessions

• Making it difficult to invoke a service guarantee

• Treating customers unfairly or rudely

• Being unresponsive to customer requests

• Failing to follow stated company policies

• Stealing customer credit card information

• Sharing customer information with third parties

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Employee Perceptions of Customer Service at a Branch Bank

1

2

3

4

5

6

1 2 3 4 5 6

Employee

Customer

Terrible

Terrible

Outstanding

Outstanding

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Satisfaction Mirror

Higher Customer Satisfaction

More Familiarity with Customer Needs and Ways of Meeting Them

Greater Opportunity for Recoveryfrom Errors

Higher EmployeeSatisfaction

Higher Productivity

Improved Quality of Service

MoreRepeatPurchases

Stronger Tendency to Complain about Service Errors

Lower Costs

Better Results

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Service Profit ChainInternal

Operating strategy andservice delivery system

  Service concept Target market

Servicevalue

Customers

Loyalty

Productivity&

Outputquality

Servicequality

Capability

Satisfaction

Employees Satisfaction Loyalty

Revenuegrowth

External

Profitability

Customer orientation/quality emphasisAllow decision-making latitudeSelection and developmentRewards and recognitionInformation and communicationProvide support systemsFoster teamwork

Quality & productivity improvements yield higher service quality and lower cost

Attractive Value Service designed& delivered tomeet targetedcustomers’ needsSolicit customerfeedback

Lifetime valueRetentionRepeat BusinessReferrals

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Topics for Discussion

How does the historical image of service as servitude affect today’s 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?

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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)

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Amy’s Ice Cream

1. Describe the service organization culture at Amy’s Ice Cream.

2. What are the personality attribute of the employees who are sought by Amy’s Ice Cream?

3. Design a personnel selection procedure for Amy’s Ice Cream using abstract questioning, a situational vignette, and/or role playing.

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Amy’s Ice Cream Facility

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AMY’S ICE CREAMAbstract 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?

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AMY’S ICE CREAMSituational 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?

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AMY’S ICE CREAMSituational 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?

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Succeeding in a Mature Market

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Discussion Questions

1. How has Enterprise Rent-A-Car defined (ERAC) its service differently than the typical national car rental company?

2. What features of this business concept allow ERAC to effectively compete with the existing national rental car companies?

3. Use the service profit chain to explain the success of ERAC.

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Enterprise Service Concept

Target Market Customer Value

-convenience-rates-selection

Corporate Culture-hiring-rewards

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Enterprise Success Factors

Virtual Car Relationship with repair shops Upgrade by replacement car

customer On site dealer locations Fleet management Age of rental car fleet Motivated employees

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Service Profit Chain

How Does Enterprise Rent-A- Car Illustrate the Service Profit Chain?

Operating strategy and service delivery system (employees)

Service concept (service value) Target market (customers)

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