1 / 24

Productivity in Services

Productivity in Services. Prof. Fred Phillips April 20, 2014. Introductory Talk: Productivity in Retailing. Agenda. The sad state of US retail - details Customer rage The service “ cost disease ” Can we find our way out of this mess?.

tarika
Download Presentation

Productivity in Services

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Productivity in Services Prof. Fred Phillips April 20, 2014

  2. Introductory Talk: Productivity in Retailing

  3. Agenda • The sad state of US retail - details • Customer rage • The service “cost disease” • Can we find our way out of this mess?

  4. If news media didn’t sugar-coat the headlines, we’d see: Target Profit Plunges by $80 Million 16% Lower Than 2013, as Store Traffic Declines by 2.3% 4

  5. And... • Wal-MartProfit Plunges By $220 Million as US Store Traffic Declines by 1.4% • Sears Loses $358 Million in First Quarter as Comparable Store Sales at Sears Plunge by 7.8% and Sales at KmartPlunge by 5.1% • JC Penney Thrilled With Loss of Only $358 Million For the Quarter • Kohl’s Operating Income Plunges by 17% as Comparable Sales Decline by 3.4% • Costco Profit Declines by $84 Million as Comp Store Sales Only Increase by 2% • Lowes Misses Earnings Expectations as Customer Traffic was Flat 5

  6. Doubling of available retail space in the US even as.. Incomes are dropping Online shopping is growing US population ages with little saved for retirement Retail space per consumer in the US is 47 square feet, 3 to 8 times more than anywhere else in the developed world The number is 12 square feet in Germany. 6

  7. Empty malls 7

  8. Service as a “white box” input-output process Service Procedures Resource Inputs Effective Outputs 8

  9. Frontier vs. Regression Line 9

  10. The Customer Rage Survey* The number of households experiencing "customer rage" — very or extremely upset about the company response when they complained — jumped to 68% from 60% in the last survey, in 2011. 10 * Unless otherwise noted, text and data are from CNBC, 12/2013

  11. “The trend toward prompting customers to do it all themselves: make reservations, do their own banking, solve their own problems, may have just reached its natural limit.” 12

  12. More people than ever are dissatisfied with the products and services they buy, according to Arizona State University study. And when there is a problem, we're less happy with the customer service we receive. People who receive poor response become 12% less brand loyal than if they didn't complain at all. "Given that most complaints are not satisfied, corporate America is spending billions of dollars on customer care programs that are actually losing them customers." -UA study director Rage 13

  13. Social media make it even worse! “Businesses no longer hold absolute sway over the decisions and behavior of consumers. “The longer companies refuse to accept the influence of consumer-to-consumer communication and perpetuate the old ways of doing business, the more they will alienate and drive away their customers.” 14

  14. Automatically nurture! 15

  15. Automatically nurture??! 16

  16. Lessons Most businesses see customer service as an expense. They need to consider it as way to improve the bottom line. "There's clearly a benefit to better customer service and a real cost for poor service," Broetzmann said. "Businesses are losing billions of dollars a year because of lousy customer service." 17

  17. Prices in Higher Education Tend to Rise Faster Than in the Overall Economy 18

  18. 5/8/14: SAN DIEGO OPERA IS FIGHTING FOR ITS FUTURE AND YOUR HELP WILL MAKE IT A REALITY! Thank you for your generous support of San Diego Opera through High-Tech Night @ the Opera. For 15 years, it’s been our industry tradition to come together at the opera for exceptional networking and great performances. The Board of Directors are pleased to share that we [can] save San Diego Opera, but we need your help! If you believe in the value that San Diego Opera brings – not only to your own life, but to the economic health and vibrancy of our region, please make a contribution, whether $10, $100, $1000 or more. Click here to donate or call Patron Services at (619) 533–7000 Monday–Friday 8:30am–4:30pm. http://www.youtube.com/watch?v=HM84l5uru1M&feature=youtu.be&sc=19665 San Diego opera asks donations 19

  19. Colorado Symphony, cannabis industry, find harmony with concert series By Ray Mark Rinaldi, Denver Post. POSTED: 04/29/2014 24 COMMENTS 20

  20. “The Ratchet” New Regula-tions $$Revenues $$ $$Expenses$$ Mainten-ance, upgrades Leases, Insurance, etc Salary Increases 21

  21. “The Lattice” $$Revenues $$ $$Expenses$$ More Staff Better service Improve Technology More Options New Program More Faculty New Program 22

  22. This implies... ... It’s hard to find investors for service businesses, because labor-intensive activities are not “scalable.” That is, revenues to not grow appreciably faster than payroll.

  23. Answers seem to involve: • Planning for the future: • Demographics; Disruption • Aligning government policies: • Fiscal; Monetary • Investing in people and process • Managing risk, managing relationships, managing expectations • These are the topics we’ll focus on today.

More Related