Chapter 7Chapter 7The Service The Service EncounterEncounter

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1.1. Use the service encounter triad to Use the service encounter triad to describe a service firm’s delivery process.describe a service firm’s delivery process.

2.2. Discuss the role of organizational control Discuss the role of organizational control systems for employee empowerment.systems for employee empowerment.

3.3. Prepare abstract questions and write Prepare abstract questions and write situational vignettes.situational vignettes.

4.4. Discuss the role of customer as Discuss the role of customer as coproducer.coproducer.

5.5. Describe how elements of the service Describe how elements of the service profit chain lead to revenue growth and profit chain lead to revenue growth and profitability.profitability.

Learning ObjectivesLearning Objectives

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Service

Organization

Efficiencyversus

satisfaction

Efficiencyversus

autonomy

CustomerContact

Personnel Perceived control

The Service Encounter The Service Encounter TriadTriad

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The Organizational ChartThe Organizational Chart

5

The Organizational ChartThe Organizational Chart

Customers

Customers

CEO

CEOContact Personnel

Middle Management

Upper Management

Upper Management

Middle Management

Contact PersonnelSAS

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• CultureCultureValues Values ServiceMaster (Service to the ServiceMaster (Service to the

Master)Master)

Behaviors Behaviors Disney (Choice of Disney (Choice of

language)language)

• EmpowermentEmpowermentInvest in people Invest in people like investing in like investing in

equipmentequipment

Use IT to enable personnel Use IT to enable personnel customer historycustomer history

Recruitment and training Recruitment and training match to match to

firm’s CSFfirm’s CSF

Anchor performance Anchor performance recognition and recognition and

rewardreward

The Service OrganizationThe Service Organization

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

• Culture is the traditions and beliefs of an Culture is the traditions and beliefs of an organization that distinguish it from organization that distinguish it from others.others. MintzbergMintzberg (1989) (1989)

• Culture is shared orientations that hold Culture is shared orientations that hold the unit together and give a distinctive the unit together and give a distinctive identity.identity. Hoy andHoy and MiskelMiskel (1991) (1991)

Definitions of CultureDefinitions of Culture

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CultureCulture

The shared beliefs and values The shared beliefs and values of an organization that guide of an organization that guide employee decision-making employee decision-making and behavior in the firm.and behavior in the firm.

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Corporate CultureCorporate Culture

Behavior

Behavior

Behavior

Behavior Behavior

Behavior

Behavior

BehaviorBehavior

Behavior

Behavior

Behavior

Behavior

Behavior

Reward

Reward

Reward

Reward

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Corporate CultureCorporate Culture• Values and beliefsValues and beliefs• Strong systemsStrong systems• Weak systemsWeak systems• HistoryHistory• RitualsRituals• SymbolsSymbols• CommunicationsCommunications• StorytellingStorytelling• Rewards and recognitionRewards and recognition

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Rewards That Encourage Rewards That Encourage BehaviorBehavior

• PayPay• PromotionPromotion• RecognitionRecognition• A Piece of the Action (Ownership)A Piece of the Action (Ownership)• Company InformationCompany Information• Freedom (Being Your Own Boss)Freedom (Being Your Own Boss)• Personal GrowthPersonal Growth• FunFun• CelebrationsCelebrations• "Thank You""Thank You"

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Corporate CultureCorporate CultureReward

Rewar

d

Reward

Rew

ard

ServiceOrganization

Efficiencyversus

satisfaction

Efficiencyversus

autonomy

CustomerContact

Personnel Perceived control

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EmpowermentEmpowerment

Providing contact personnel Providing contact personnel with the training and with the training and information to make information to make decisions for the firm without decisions for the firm without close supervision.close supervision.

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Organizational ControlOrganizational Controlfor Employee Empowermentfor Employee Empowerment

Beliefs Systems

To contribute

Core values & mission

Identify core values

Boundary Systems

To do right Specify and enforce rules

Risks to be avoided

Diagnostic Control Systems

To achieve Build clear targets

Critical performance variables

Interactive Control Systems

To create Encourage learning

Strategic Uncertainties

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Contact Personnel Contact Personnel AttributesAttributes

• FlexibilityFlexibility• Tolerance for AmbiguityTolerance for Ambiguity• Ability to Monitor and Change Ability to Monitor and Change

Behavior on the Basis of Behavior on the Basis of Situation CuesSituation Cues

• Empathy for CustomersEmpathy for Customers

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SelectionSelection1. Abstract Questioning 1. Abstract Questioning “From your past “From your past

experience, …”experience, …”

2. Situational Vignette 2. Situational Vignette ability to “think on their feet” in substance ability to “think on their feet” in substance

and deliveryand delivery

3. Role Playing 3. Role Playing requires careful scripting and customer actor requires careful scripting and customer actor

rehearsalrehearsal

TrainingTraining

1. 1. Technical SkillsTechnical Skills

2. Unrealistic customer expectations2. Unrealistic customer expectations

3. Unexpected service failure3. Unexpected service failure

Contact PersonnelContact Personnel

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1. 1. Unreasonable demands Unreasonable demands I want to take all my I want to take all my

luggage on boardluggage on board

2. Demands against policies 2. Demands against policies I have to I have to

smokesmoke

3. Unacceptable treatment of3. Unacceptable treatment of employees employees You’re You’re

an idiotan idiot

4. Drunkenness 4. Drunkenness Hey, where’s my drink?Hey, where’s my drink?

5. Breaking of societal norms 5. Breaking of societal norms I I

like to sunbath nudelike to sunbath nude

6. Special-needs customers 6. Special-needs customers Why don’t you Why don’t you

understand English?understand English?

Unrealistic customer Unrealistic customer expectationsexpectations

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Unexpected Service Unexpected Service FailureFailure

1. Unavailable service 1. Unavailable service Why Why

isn’t the ATM working?isn’t the ATM working?

2. Slow performance 2. Slow performance Why hasn’t our Why hasn’t our

plane arrived?plane arrived?

3. Unacceptable service 3. Unacceptable service There’s a fly in my soup.There’s a fly in my soup.

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Training on Unrealistic Training on Unrealistic Customer Expectations and Customer Expectations and Unexpected Service Failure Unexpected Service Failure • A prescribed response to a any given A prescribed response to a any given

situationsituation““I am very sorry, but federal safety regulations I am very sorry, but federal safety regulations

permit a passenger only two carry-on pieces permit a passenger only two carry-on pieces small enough to be stored under the seat or small enough to be stored under the seat or overhead. May I check your larger pieces overhead. May I check your larger pieces all the way to your final destination?”all the way to your final destination?”

• Anticipate the types of exchange they might Anticipate the types of exchange they might encounter through role playingencounter through role playing

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Shopping attitudesShopping attitudes1. Economizing customer 1. Economizing customer compares value with compares value with

competitioncompetition

2. Ethical customer 2. Ethical customer moral obligation (Ronald McDonald moral obligation (Ronald McDonald

House)House) 3. Personalizing customer 3. Personalizing customer know know

your nameyour name

4. Convenience customer 4. Convenience customer pay extra for hassle free pay extra for hassle free

serviceservice

Customer as Co-ProducerCustomer as Co-Producer

1. 1. What is their role?What is their role?

2. How to train?2. How to train?

3. When to retrain?3. When to retrain?

The CustomerThe Customer

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Service Encounter Service Encounter Success Factors Success Factors

Customer Service Provider Human Machine

HumanEmployee selectionInterpersonal skillsSupport technologyEngender trust

User friendlyVerificationSecurityEasy to access

MachineEasy to accessFast responseVerificationRemote monitoring

CompatibilityTrackingVerificationSecurity

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1

2

3

4

5

6

1 2 3 4 5 6

Employee

Cust

omer

Terrible

Terrible

Outstanding

Outstanding

Employee Perceptions of Employee Perceptions of Customer Service at a Customer Service at a

Branch BankBranch Bank

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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

Satisfaction Mirror Satisfaction Mirror Satisfaction Mirror Satisfaction Mirror

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Internal

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

                    

Service Profit Chain Service Profit Chain Service Profit Chain Service Profit Chain

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Is attitude emphasized?Are job previews utilized?Are customers screened?

Are employees encouraged to refer friends?

 Are referrals from the “best” employees given priority?

Is satisfactionmeasured periodically? Are measurements linked to other functions on the cycle?

Careful Employeeand Customer

Selection 

(and Self-selection))

High-Quality Training

Well-DesignedSupport Systems Information Facilities

Greater Latitude to Meet

Customer’s Needs

Clear Limits on, and

Expectations of, Employees

AppropriateRewards

and FrequentRecognition

SatisfiedEmployees

EmployeeReferrals of

Potential Job

Candidates

Is training for job and life? Is it an important element of quality of work life?

Do they reflect needs of the service encounter?

Are they designed to foster relationships?

Does it reflect top management “talk”? Is it enough to allow delivery of results to customers?

Do they limit the “right” risks?Are they logical to employees?

Cycle of

Capability

Are they linked toservice objectives? Are they balanced between monetary and non-monetary?

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Empowerment Control Empowerment Control ExerciseExercise

Comes up with an example from each of the Comes up with an example from each of the four organizational control systems (i.e., four organizational control systems (i.e., belief, boundary, diagnostic, and belief, boundary, diagnostic, and interactive) for:interactive) for:

1. Bank Teller

2. Bartender

3. Ski Lift Operator

4. University Advisor

5. Company Receptionist

6. Automotive Repairperson

7. Restaurant Waitperson

8. Financial Planner

9. Hotel Desk Clerk