DELIVERING AND PERFORMING SERVICE

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DELIVERING AND PERFORMING SERVICE
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Provider Gap 3
CUSTOMER
Service Delivery
COMPANY
Service Performance Gap
Customer-Driven Service Designs and Standards
Part 5 Opener
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Employees Roles in Service Delivery

• Demonstrate the importance of creating a service
  culture in which providing excellent service to
  both internal and external customers is a way of
  life.
• Illustrate the critical importance of service
  employees in creating customer satisfaction and
  service quality.
• Identify the challenges inherent in
  boundary-spanning roles.

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Overview

• Provide examples of strategies for creating
  customer-oriented service delivery through hiring
  the right people, developing employees to deliver
  service quality, providing needed support
  systems, and retaining the best service
  employees.

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Service Culture

• A culture where an appreciation for good
  service exists, and where giving good service to
  internal as well as ultimate, external customers,
  is considered a natural way of life and one of
  the most important norms by everyone in the
  organization.
• - Christian Gronroos (1990)

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The Critical Importance of Service Employees

• They are the service.
• They are the organization in the customers eyes.
• They are the brand.
• They are marketers.
• Their importance is evident in
• the services marketing mix (people)
• the service-profit chain
• the services triangle

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The Services Marketing Triangle
Company (Management)
Internal Marketing
External Marketing
Enabling the promise
Making the promise
Employees
Customers
Interactive Marketing
Delivering the promise
Source Adapted from Mary Jo Bitner, Christian
Gronroos, and Philip Kotler
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Ways to Use the Services Marketing Triangle

• Overall Strategic Assessment
• How is the service organization doing on all
  three sides of the triangle?
• Where are the weaknesses?
• What are the strengths?

• Specific Service Implementation
• What is being promoted and by whom?
• How will it be delivered and by whom?
• Are the supporting systems in place to deliver
  the promised service?

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The Service Profit Chain
Source An exhibit from J. L. Heskett, T. O.
Jones, W. E. Sasser, Jr., and L. A. Schlesinger,
Putting the Service-Profit Chain to Work,
Harvard Business Review, March-April 1994, p. 166.
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Service Employees

• Who are they?
• boundary spanners
• What are these jobs like?
• emotional labor
• many sources of potential conflict
• person/role
• organization/client
• interclient
• quality/productivity tradeoffs

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Boundary Spanners Interact with Both Internal and
External Constituents
External Environment
Internal Environment
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Boundary-Spanning Workers Juggle Many Issues

• Person versus role
• Organization versus client
• Client versus client

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Human Resource Strategies for Delivering Service
Quality through People
Hire for servicecompetencies andserviceinclinat
ion
Compete forthe bestpeople
Be the preferredemployer
Measure andreward strongserviceperformers
Train fortechnical andinteractiveskills
Hire theright people
Developpeople todeliverservicequality
Treatemployees ascustomers
Retain thebestpeople
Empower employees
Includeemployees inthe companysvision
Provideneeded supportsystems
Promoteteamwork
Developservice-orientedinternalprocesses
Measureinternal servicequality
Providesupportivetechnology andequipment
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Empowerment

• Benefits
• quicker responses to customer needs during
  service delivery
• quicker responses to dissatisfied customers
  during service recovery
• employees feel better about their jobs and
  themselves
• employees tend to interact with warmth/enthusiasm
• empowered employees are a great source of ideas
• great word-of-mouth advertising from customers

• Drawbacks
• potentially greater dollar investment in
  selection and training
• higher labor costs
• potentially slower or inconsistent service
  delivery
• may violate customers perceptions of fair play
• employees may give away the store or make bad
  decisions

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Traditional Organizational Chart
Manager
Supervisor
Supervisor
Front-lineEmployee
Front-lineEmployee
Front-lineEmployee
Front-lineEmployee
Front-lineEmployee
Front-lineEmployee
Front-lineEmployee
Front-lineEmployee
Customers
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Customer-Focused Organizational Chart
Front-lineEmployee
Front-lineEmployee
Front-lineEmployee
Front-lineEmployee
Front-lineEmployee
Front-lineEmployee
Front-lineEmployee
Front-lineEmployee
Supervisor
Supervisor
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Customers Roles in Service Delivery

• Illustrate the importance of customers in
  successful service delivery and cocreation of
  service experiences.
• Discuss the variety of roles that service
  customers play productive resources for the
  organization contributors to quality and
  satisfaction competitors.
• Explain strategies for involving service
  customers effectively to increase both quality
  and productivity.

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Table 13.1Levels of Customer Participation
across Different Services
Source Adapted from A. R. Hubbert, Customer
Co-Creation of Service Outcomes Effects of Locus
of Causality Attributions, doctoral
dissertation, Arizona State University, Tempe,
Arizona, 1995.
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How Customers Widen theService Performance Gap

• Lack of understanding of their roles
• Not being willing or able to perform their roles
• No rewards for good performance
• Interfering with other customers
• Incompatible market segments

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Importance of Other (Fellow) Customersin
Service Delivery

• Other customers can detract from satisfaction
• disruptive behaviors
• overly demanding behaviors
• excessive crowding
• incompatible needs
• Other customers can enhance satisfaction
• mere presence
• socialization/friendships
• roles assistants, teachers, supporters, mentors

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Customer Roles in Service Delivery
Productive Resources
Contributors to Service Quality and Satisfaction
Competitors
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Services Production Continuum
Customer Production Joint Production
Firm Production
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2
3
4
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Gas Station Illustration 1. Customer pumps gas
and pays at the pump with automation 2. Customer
pumps gas and goes inside to pay attendant 3.
Customer pumps gas and attendant takes payment at
the pump 4. Attendant pumps gas and customer pays
at the pump with automation 5. Attendant pumps
gas and customer goes inside to pay attendant 6.
Attendant pumps gas and attendant takes payment
at the pump
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Customers as Productive Resources

• customers can be thought of as partial
  employees
• contributing effort, time, or other resources to
  the production process
• customer inputs can affect organizations
  productivity
• key issue
• should customers roles be expanded? reduced?

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Customers as Contributors toService Quality and
Satisfaction

• Customers can contribute to
• their own satisfaction with the service
• by performing their role effectively
• by working with the service provider
• the quality of the service they receive
• by asking questions
• by taking responsibility for their own
  satisfaction
• by complaining when there is a service failure

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Customers as Competitors

• customers may compete with the service provider
• internal exchange vs. external exchange
• internal/external decision often based on
• expertise capacity
• resources capacity
• time capacity
• economic rewards
• psychic rewards
• trust
• control

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Strategies for Enhancing Customer Participation
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Strategies for EnhancingCustomer Participation

• Define customers jobs
• helping oneself
• helping others
• promoting the company
• Recruit, educate, and reward customers
• recruit the right customers
• educate and train customers to perform
  effectively
• reward customers for their contributions
• avoid negative outcomes of inappropriate customer
  participation
• Manage the customer mix

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Characteristics of Service that Increase the
Importance of Compatible Segments
Source Adapted from C. I. Martin and C. A.
Pranter, Compatibility Management
Customer-to-Customer Relationships in Service
Environments, Journal of Services Marketing, 3,
no. 3 (Summer 1989), pp. 515.
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Delivering Service Through Intermediaries

• Identify the primary channels through which
  services are delivered to end customers.
• Provide examples of each of the key service
  intermediaries.
• View delivery of service from two
  perspectivesthe service provider and the service
  deliverer.
• Discuss the benefits and challenges of each
  method of service delivery.
• Outline the strategies that are used to manage
  service delivery through intermediaries.

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Service Provider Participants

• service principal (originator)
• creates the service concept
• (like a manufacturer)
• service deliverer (intermediary)
• entity that interacts with the customer in the
  execution of the service
• (like a distributor/wholesaler)

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Services Intermediaries

• Franchisees
• service outlets licensed by a principal to
  deliver a unique service concept it has created
• e.g., Jiffy Lube, Blockbuster, McDonalds
• Agents and Brokers
• representatives who distribute and sell the
  services of one or more service suppliers
• e.g., travel agents, independent insurance agents
• Electronic Channels
• all forms of service provision through electronic
  means
• e.g., ATMs, university video courses, TaxCut
  software

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Benefits and Challenges forFranchisers of Service

• Benefits
• Leveraged business format for greater expansion
  and revenues
• Consistency in outlets
• Knowledge of local markets
• Shared financial risk and more working capital

• Challenges
• Difficulty in maintaining and motivating
  franchisees
• Highly publicized disputes and conflict
• Inconsistent quality
• Control of customer relationship by intermediary

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Benefits and Challenges forFranchisees of Service

• Benefits
• An established business format
• National or regional brand marketing
• Minimized risk of starting a business

• Challenges
• Encroachment
• Disappointing profits and revenues
• Lack of perceived control over operations
• High fees

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Benefits and Challenges in Distributing Services
through Agents and Brokers

• Benefits
• Reduced selling and distribution costs
• Intermediarys possession of special skills and
  knowledge
• Wide representation
• Knowledge of local markets
• Customer choice

• Challenges
• Loss of control over pricing
• Representation of multiple service principals

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Benefits and Challenges in Electronic
Distribution of Services

• Benefits
• Consistent delivery for standardized services
• Low cost
• Customer convenience
• Wide distribution
• Customer choice and ability to customize
• Quick customer feedback

• Challenges
• Price competition
• Inability to customize with highly standardized
  services
• Lack of consistency due to customer involvement
• Changes in consumer behavior
• Security concerns
• Competition from widening geographies

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Common Issues Involving Intermediaries

• conflict over objectives and performance
• difficulty controlling quality and consistency
  across outlets
• tension between empowerment and control
• channel ambiguity

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Strategies for Effective Service Delivery
Through Intermediaries

• Control Strategies
• Measurement
• Review
• Partnering Strategies
• Alignment of goals
• Consultation and cooperation

• Empowerment Strategies
• Help the intermediary develop customer-oriented
  service processes
• Provide needed support systems
• Develop intermediaries to deliver service quality
• Change to a cooperative management structure

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Managing Demand and Capacity

• Explain the underlying issue for
  capacity-constrained services lack of inventory
  capability.
• Present the implications of time, labor,
  equipment, and facilities constraints combined
  with variations in demand patterns.
• Lay out strategies for matching supply and demand
  through (a) shifting demand to match capacity or
  (b) adjusting capacity to meet demand.

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Overview

• Demonstrate the benefits and risks of yield
  management strategies in forging a balance among
  capacity utilization, pricing, market
  segmentation, and financial return.
• Provide strategies for managing waiting lines for
  times when capacity and demand cannot be aligned.

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Variations in Demand Relative to Capacity
Source C. Lovelock, Getting the Most Out of
Your Productive Capacity, in Product Plus
(Boston McGraw Hill, 1994), chap. 16, p. 241.
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Understanding Capacity Constraintsand Demand
Patterns
Demand Patterns
Capacity Constraints

• Time, labor, equipment, and facilities
• Optimal versus maximum use of capacity

• Charting demand patterns
• Predictable cycles
• Random demand fluctuations
• Demand patterns by market segment

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Demand versus Supply
Source C. H. Lovelock, Classifying Services to
Gain Strategic Marketing Insights, Journal of
Marketing 47, (Summer 1983) 17.
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Constraints on Capacity
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Strategies for Shifting Demand to Match Capacity
Demand Too High
Demand Too Low
Shift Demand

• Use signage to communicate busy days and times.
• Offer incentives to customers for usage during
  nonpeak times.
• Take care of loyal or regular customers first.
• Advertise peak usage times and benefits of
  nonpeak use.
• Charge full price for the serviceno discounts.

• Use sales and advertising to increase business
  from current market segments.
• Modify the service offering to appeal to new
  market segments.
• Offer discounts or price reductions.
• Modify hours of operation.
• Bring the service to the customer.

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Strategies for Adjusting Capacity to Match Demand
Demand Too High
Demand Too Low

• Stretch time, labor, facilities and equipment.
• Cross-train employees.
• Hire part-time employees.
• Request overtime work from employees.
• Rent or share facilities.
• Rent or share equipment.
• Subcontract or outsource activities.

• Perform maintenance, renovations.
• Schedule vacations.
• Schedule employee training.
• Lay off employees.

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Challenges and Risks in UsingYield Management

• Loss of competitive focus
• Customer alienation
• Employee morale problems
• Incompatible incentive and reward systems
• Lack of employee training
• Inappropriate organization of the yield
  management function

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Waiting Line Strategies

• Employ operational logic
• modify operations
• adjust queuing system
• Establish a reservation process
• Differentiate waiting customers
• importance of the customer
• urgency of the job
• duration of the service transaction
• payment of a premium price
• Make waiting fun, or at least tolerable

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Issues to Consider in Making Waiting More
Tolerable

• unoccupied time feels longer than occupied time
• preprocess waits feel longer than in-process
  waits
• anxiety makes waits seem longer
• uncertain waits seem longer than known, finite
  waits
• unexplained waits seem longer than explained
  waits
• unfair waits feel longer than equitable waits
• the more valuable the service, the longer the
  customer will wait
• solo waits feel longer than group waits

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Waiting Line Configurations
Source J. A. Fitzsimmons and M. J. Fitzsimmons,
Service Management, 4th ed. (New York
Irwin/McGraw-Hill, 2004), chap. 11, p. 296.