MKT 346: Marketing of ServicesDr. Houston

Chapter 11:Managing Peoplefor Service Advantage

Importance of Service Personnel

Help maintain firm’s positioning

Important driver of customer loyalty

Key driver of front-line productivity

Important for generating sales

Front Line in Low-Contact Services

Many routine transactions are now conducted without involving front-line staff

ATMs (Automated Teller Machines)

IVR (Interactive Voice Response) systems

Websites for reservations/ordering, payment etc.

Front-line employees still remain crucially important

“Moments of truth” affect customer views of service

Boundary Spanning and Role Stress

Boundary spanners

front-line staff

link inside of organization to outside world

often experience role stress

Boundary Spanning and Role Stress

Three main causes of role stress:

Organization vs. Client

Person vs. Role

Client vs. Client

Emotional Labor

Good Human Resource PracticesCan Alleviate Emotional Labor

Selective recruitment

Employee training

Employee counseling

Cycle of Failure (Fig 11.6, Page 282)

The employee cycle of failureNarrow job design for low skill levels

Emphasis on rules rather than service

Use of technology to control quality

Bored employees lack ability to respond to customers

Dissatisfied with poor service attitude

Low service quality

High employee turnover

Cycle of Failure (Fig. 11.6)

The customer cycle of failure

Repeated emphasis on attracting new customers

Customers dissatisfied with employee performance

Customers always served by new faces

Fast customer turnover

Search for new customers to maintain sales volume

Cycle of Failure(Fig. 11.6)

Costs of short-sighted policies are ignored

Constant expense of recruiting, hiring, training

Lower productivity of inexperienced new workers

Higher costs of winning new customers to replace those lost

Loss of revenue stream from dissatisfied customers who leave

Loss of customers turned off by negative word-of-mouth

Cycle of Failure (Fig. 11.6)

Cycle Of Mediocrity(Fig. 11.8, Page 283)

Most commonly found in large, bureaucratic organizations

Service delivery is oriented towards

Standardized service

Operational efficiencies

Promotions based on long service

Success measured by absence of mistakes

Rule-based training

Narrow and repetitive jobs

Cycle Of Mediocrity(Fig. 11.8)

Customers find dealing with organizations is frustrating

Little incentive for customers to cooperate with organizations to achieve better service

Complaints are often made to already unhappy employees

Customers often stay only because of lack of choice

Cycle of Mediocrity (Fig. 11.8)

Cycle of Success(Fig. 11.9, Page 284)

Longer-term view of financial performance

Firm seeks to prosper by investing in people

Attractive pay and benefits attract better job applicants

More focused recruitment, intensive training, and higher wages make it more likely that employees are:

Happier in their work

Provide higher quality, customer-pleasing service

Cycle of Success (Fig. 11.9)

Broadened job descriptions with empowerment practices enable front-line staff to control quality, facilitate service recovery

Regular customers more likely to remain loyal because:

Appreciate continuity in service relationships

Have higher satisfaction due to higher quality

Cycle of Success (Fig. 11.9)

The Service Talent Cycle for Service Firms (Fig. 11.11)

Hiring the Right People

Be the preferred employer

Select the right people

Observe behavior

Conduct personality tests

Employ multiple, structured interviews

Give applicants a realistic preview of the job

Tools to Identify the Best Candidates

Organizational culture, purpose and strategy

Interpersonal and technical skills

Product/service knowledge

Actively Train Service Employees

Is Employee Empowerment Always Appropriate?

Yes, if the company’s business strategy is based on:

Personalized, customized service

Competitive differentiation

Extended relationships rather than short-term transactions

Uses complex and non-routine technologies

Service failures are non-routine and sometimes unavoidable

Unpredictable business environment

Managers who are comfortable with independent employees

Employees who have good interpersonal & group process skills

Levels of Employee Involvement

Build High-Performance Service Delivery Teams

Excellent service delivery requires cross-functional coordination

Teams, training, & empowerment go hand-in-hand

Creating successful service delivery teams

Emphasis on cooperation, listening, coaching and encouraging

Know how to air differences, tell hard truths, ask tough questions

Management sets up a structure to steer teams towards success

Motivate And Energize The Frontline

Job content

Feedback and recognition

Goal achievement

Service Leadership and Culture

Service culture:

Shared perceptions of what is important

Shared values and beliefs of why they are important

Strong service culture:

focuses the entire organization on the frontline

Has an informed and actively involved top management

Inverted organizational pyramid

The Inverted Organizational Pyramid (Fig. 11.24)

MKT 346 Key Concepts: Chapter 11

Importance of service personnel Boundary spanners and role stress Three main causes of role stress Cycle of failure Cycle of mediocrity Cycle of success Service talent cycle and its components Levels of employee involvement High performance service delivery teams Motivate and energize the front line Service leadership and culture Inverted organizational pyramid