The Service Encounter

1. The Service Encounter

2. Learning Objectives • Use the service encounter triad to describe a service firm’s 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.

3. The Service Encounter Triad Service Organization Efficiency versus autonomy Efficiency versus satisfaction Contact Personnel Customer Perceived control

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

5. The Service Organization • Culture ServiceMaster (Service to the Master) Disney (Choice of language) • Empowerment Invest in people Use IT to enable personnel Recruitment and training critical Pay for performance

6. Organizational Control

7. Contact Personnel • Selection 1. Abstract Questioning 2. Situational Vignette 3. Role Playing • TrainingUnrealistic customer expectationsUnexpected service failure

8. Difficult Interactions with Customers Unrealistic customer expectations Unexpected service failure 1. Unreasonable demands 1. Unavailable service 2. Demands against policies 2. Slow performance 3. Unacceptable treatment of 3. Unacceptable service employees 4. Drunkenness 5. Breaking of societal norms 6. Special-needs customers Use scripts to train for proper response

9. The Customer • Expectations and Attitudes Economizing customer Ethical customer Personalizing customer Convenience customer • Customer as Co-Producer

10. Service Encounter Success Factors

11. Employee Perceptions of Customer Service at a Branch Bank Outstanding Terrible Terrible Outstanding

12. More Repeat Purchases More Familiarity with Customer Needs andWays of Meeting Them Stronger Tendency to Complain about Service Errors Greater Opportunity for Recovery from Errors Higher Employee Satisfaction Higher Productivity Lower Costs Better Results Improved Quality of Service Satisfaction Mirror Higher Customer Satisfaction

13. Is attitude emphasized? Are job previews utilized? Are customers screened? Are employees encouraged to refer friends? Are referrals from the “best” employees given priority? Careful Employee and Customer Selection (and Self-selection)) Is training for job and life? Is it an important element of quality of work life? Employee Referrals of Potential Job Candidates High-Quality Training Is satisfaction measured periodically? Are measurements linked to other functions on the cycle? Do they reflect needs of the service encounter? Are they designed to foster relationships? • Well-Designed • Support Systems • Information • Facilities Cycle of Capability Satisfied Employees Appropriate Rewards and Frequent Recognition Greater Latitude to Meet Customer’s Needs Does it reflect top management “talk”? Is it enough to allow delivery of results to customers? Are they linked to service objectives? Are they balanced between monetary and non-monetary? Clear Limits on, and Expectations of, Employees Do they limit the “right” risks? Are they logical to employees?

14. Service Profit Chain Internal External Service concept Operating strategy and service delivery system Target market Loyalty Revenue growth Customers Satisfaction Productivity & Output quality Service value Employees Satisfaction Loyalty Capability Profitability Service quality Customer orientation/quality emphasis Allow decision-making latitude Selection and development Rewards and recognition Information and communication Provide support systems Foster teamwork Quality & productivity improvements yield higher service quality and lower cost Attractive Value Service designed & delivered to meet targeted customers’ needs Solicit customer feedback Lifetime value Retention Repeat Business Referrals

15. Topics for Discussion • How does the historical image of service as servitude affect today’s 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?

16. Interactive Exercise The class breaks into small groups and each group comes up with an example from each of the four organizational control systems (i.e., belief, boundary, diagnostic, and interactive)

17. Amy’s Ice Cream on Guadalupe

18. Amy’s Ice Cream • Describe the service organization culture at Amy’s Ice Cream. • What are the personality attribute of the employees who are sought by Amy’s Ice Cream? • Design a personnel selection procedure for Amy’s Ice Cream using abstract questioning, a situational vignette, and/or role playing.

19. AMY’S ICE CREAMAbstract Questions • What was your most rewarding past experience and why? • What are you looking for in your next job? • What have you done in the past to irritate a customer? • What flavor of ice cream best describes your personality?

20. AMY’S ICE CREAMSituational Vignette A particular customer has the irritating habit of always showing up about two minutes before closing and staying late. Often this occurs on the night when weekly store meeting are held after closing time. This delays starting the meeting and furthermore employees are on the clock waiting for the customer to leave. What would you do?

21. AMY’S ICE CREAMSituational Vignette As a new employee at a busy store, you have been routinely performing clean-up tasks (garbage removal and restroom cleaning). Company policy dictates that these are tasks to be shared. It has become clear that two employees consistently avoid these jobs in favor of more pleasant duties. How would you handle this situation?

22. Enterprise Rent-A-Car • How has Enterprise Rent-A-Car (ERAC) defined its service differently than that of the typical national car rental company? • What features of its business concept allow ERAC to complete effectively with the existing national rental care companies? • Use the service profit chain to explain the success of ERAC.