Chapter 10: Customer-Defined Service Standards

1. Chapter 10: Customer-Defined Service Standards Challenge - ____________ customer-defined service standards Customer-Defined Standards: operations standards set to correspond to customer expectations and priorities rather than to company concerns such as productivity or efficiency

2. Standardization of Service Behaviors and Actions Challenge: service companies often experience difficulty in setting standards to match or exceed customer expectations partly because doing so requires that the marketing and operations departments within a company work together, not separately.

3. Factors Necessary for Appropriate Service Standards Translation of customer expectations into specific service quality standards depends on the degree to which tasks and behaviors to be performed can be standardized (routinized). Standardization of service can take three forms. • Substitution of for personal contact and human effort (e.g., on-line service, voice mail, ATM) 2. Improvement in work methods: __________________ 3. Combinations of (1) and (2)

4. Formal Service Targets and Goals Service goal: “Serve your customers in a timely manner.” Implications: ______________________

5. Customer – Not Company – Defined Standards Customer Defined Standards– by identifying what the customer values, company can save money by eliminating activities and features that the customer either does not notice or will not pay for (p. 290)

6. Customer-Defined Standards (p. 291) “___________” Customer-Defined Standards: things that can be counted, timed, or observed through audits FedEx: Correct packages delivered; correct packages delivered on time; missed pickup?

7. Customer-Defined Standards “___________” Customer-Defined Standards: opinion-based measures that cannot be observed and must be collected by talking to customers, employees, or others Ritz Carlton: uniforms are to be immaculate; wear name tag; proper grooming; use proper telephone etiquette

8. One-Time Fixes – technology, policy, or procedure changes that, when instituted, address customer requirements A local Taco Bell extends its operating hours on Friday and Saturday nights to 24-hour service to satisfy its college market.

9. Development of Customer-Defined Standards (pp. 300-313) 1. Basing Standards on the Service Encounter Sequence Building blocks for customer-defined standards: _______ ______________________________ American Airlines learned business travelers don't view air travel as a simple product but as an inconsistently performed sequential process that includes making reservations, checking-in, waiting, boarding, in-flight time, and baggage pick-up. Thus the problem existed with the service encounter sequence.

10. Development of Customer-Defined Standards (pp. 300-313) 2. Expressing Customer Requirements as Specific Behaviors and Actions (p. 302) Example: behavior and action that defines the performance expected by customers Delivers by Wednesday Returns calls in two hours Knows strengths of my competitors

11. Development of Customer-Defined Standards (pp. 300-313) 3. Measuring Behaviors and Actions (p. 303-304) ______ measurements: measure by audits or operating data (Timely, accurate, responsive service) Example: National Bank of Arkansas tracks 650 service quality measures relating to timely, accurate, and responsive service. The measures include speed of telephone answering, number of abandoned calls, turnaround time on inquiries, and the speed at which the bank transfers securities.

12. Development of Customer-Defined Standards (pp. 300-313) 4. Measuring Behaviors and Actions ____ measurements: measure by transaction-based surveys Example: American Airlines conducts ongoing in-flight surveys to assess passengers' perceptions of the ticket buying process, gate agents, flight attendants, food and beverage service, condition/comfort of airplanes, and adherence to departure/arrival schedules.

13. 1. Identify existing or desired service encounter sequence 4. Set hard or soft standards Figure 10.4Process for Setting Customer-Defined Standards 2. Translate customer expectations into behaviors/actions 3. Select behaviors/actions for standards Measure by audits or operating data Measure by transaction- based surveys 5. Develop feedback mechanisms Hard Soft 6. Establish measures and target levels 7. Track measures against standards 8. Provide feedback about performance to employees 9. Update target levels and measures

14. Developing Service Performance Indexes Service performance indexes – comprehensive composites of the most critical performance standards (p. 311). 1. Understand the most important requirements of the customer 2. Link these requirements to tangible and measurable aspects of service provision 3. Use feedback from these indexes to identify and improve service problems

15. Developing Service Performance Indexes American Express's "Service Tracking Report" systematically measures both customer satisfaction and employee performance worldwide. Compiled on a monthly basis, the document uses statistics to measure the performance of business units throughout the world against more than 100 service quality factors related to their customers' three major service dimensions--responsiveness, timeliness, and accuracy.

16. Developing Service Performance Indexes Airline Performance Index • On-time flights • Number of accidents • Flight problems • Pilot errors • Overbookings • Mishandled baggage • Fare complaints • Frequent flier awards • etc.