Chapter 7The Service Encounter7Service Management (5e)Operations, Strategy, Information TechnologyByFitzsimmons and Fitzsimmons

7-*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.Learning Objectives

7-* The Service Encounter Triad

Continued.Service manager wants efficiency in service delivery to increase profits. They will impose rules and procedures on contact personnel (service provider) to bring standardization, which may result in dissatisfied customers.Alternatively, service provider wants to control the behavior of the customer to make their own work manageable and less stressful.However, the customer wants to control the service encounter to derive the most benefit from it.Ideally,, all three should work together to create a beneficial service encounter.

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Encounter dominated by the service organizationTo achieve efficiency and follow a cost leadership strategy, an organization may standardize service delivery by imposing strict operating procedures and limit the discretion of contact personnel, example, McDonalds.Success here can come from teaching the customer what not to expect from their service.7-*

Contact personnel-dominated encounterService personnel attempt to limit the scope of the service encounter to reduce their own stress in meeting demanding customers.The customer is expected to place considerable trust in the contact persons judgment because of the service providers perceived expertise. Example doctor-patient.7-*

Customer-dominated encounterIn standardized service, self-service is an option that gives the customer complete control over the limited service that is provided. Example, gas station that is equipped with a credit-card reader, the customer need not interact with anyone.The result can be very efficient and satisfying to the customer who needs or desires very little service.7-*

Balance of controlA satisfactory and effective encounter should balance the need for control by all three participants.The organizations need for efficiency can be satisfied when contact personnel are trained properly and the customers expectations and role in the delivery process are communicated effectively.7-*

7-*CultureEmpowermentControl Systems The Service Organization

7-*Interaction between customer and contact personnel occurs within the context of an organizations culture and physical surroundings. For example, Disneys culture affects their interaction with customers. In other words, an organizations values when consistently communicated by management, permit contact personnel to act with considerable autonomy, because their judgment is based on shared set of values.Definition 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.Culture

EmpowermentThe discretion of contact personnel is limited by procedures and design. The organizations structure is a pyramid-shaped, with layers of supervision to ensure consistency of service delivery across all locations.A new model supported with technology has inverted T organizational structure, where layers of supervision are significantly reduced because contact personnel are well trained, motivated, and supplied with timely information.People want to do good work if they are given the opportunity. Therefore:Invest in people (training)Use IT to enable personnelRecruitment and training is criticalLink compensation to performance

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Control systemsTable 7.1 describes four organizational control systems to encourage creative employee empowermentBelief system articulated through organizational cultureBoundary defines limits to employee initiativesDiagnostic defines measurable goal to achieve performanceInteractive pressures from customers for creative solutions7-*

7-*Ideally , customer contact personnel should have personality attributes that include:FlexibilityTolerance for ambiguityAn ability to monitor changeEmpathy for customers

Contact Personnel

ContinuedSelection 1. Abstract Questioning 2. Situational Vignette 3. Role Playing

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Continued.TrainingUnrealistic customer expectationsUnreasonable demandsDemands against policiesUnacceptable treatment of employeesDrunkennessBreaking of societal normsSpecial-needs customersUnexpected service failureUnavailable service due to failureSlow performance (capacity issues)Unacceptable service (low standards)

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7-*Every interaction is important for the customer, but is routine for the service provider. Therefore, the attitude and expectations maybe different.Expectations and AttitudesEconomizing customerCustomer wants to maximize the value obtained for his or her expenditures of time, effort, and money.Loss of these customers is an early warning of potential competitive threats.

Ethical customerPatronize socially responsible firms The Customer

Continued.Personalizing customerThese customers want interpersonal gratification such as recognition, respect, etc.

Convenience customerThese customers have no interest in shopping for the serive; convenience is most important.

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Customer as Co-Producer

Both customer and service provider have role to play in transacting the service.Customers role maybe defined by societal norms or implied by the particular design of the service offered. If and when these roles change due to re-design and/or technology then there is resistance.See figure 7.2 it presents some success factors for categories of service encounter, where the service provider could be a machine serving a human being (ex. ATM machine), or a machine serving another machine (ex. EDI), or a human being serving a machine (ex. Elevator repair).

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Continued.Study of the bank revealed:When employees perceive a strong service orientation, customers report superior serviceCustomers perceived better service in branches where employees were more enthusiastic, good training of tellers, well maintained equipment, service is considered important.After a bank employee gets to know the customer, the cost of serving that customer decreases because time is saved in identity verification and the customer needs can be better anticipated.7-*

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Satisfaction Mirror

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Service Profit Chain

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7-*Topics for DiscussionHow 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?