CUSTOMER CONTACT WITH SERVICE ORGANIZATIONS

1. CUSTOMER CONTACT WITH SERVICE ORGANIZATIONS © Prentice-Hall, 1999 3-1

2. LEARNING OBJECTIVES • AFTER FINISHING THIS CHAPTER, YOU SHOULD BE ABLE TO: • Recall that the extent of customer contact with a service varies according to the nature of the underlying processes. • Recognize that there are significant differences in managing service businesses according to the level of customer contact. • Distinguish between back-stage and front-stage operations. • Understand service encounters, especially in situations where other people are part of the product. • Understand the nature of critical incidents and recognize their significance for customer satisfaction and dissatisfaction. • Appreciate the potential role of customers as “co-producers” of services. 3-2

3. Elements of service encounter • Service is a process • People, possession, mental stimulus and information processing • High degree of customer involvement 3-3

4. “High-contact” service “Low-contact” service 3-4

5. Levels of Customer Contactwith Service Organizations HIGH • Nursing Home • Haircut • Four Star Hotel • Good Restaurant • Management • Consulting • Airline Travel • Telephone • Banking • Retail Banking • Car Repair • Motel • Insurance • Dry Cleaning • Fast Food • Movie Theater • Cable TV • City Bus • Electronic Banking MEDIUM LOW 3-5

6. Figure 2.1 The service business as a system Customer A Service operations system Service A Physical facilities Technical core Contact personnel Service B Customer B Not visible to customer Visible to customer Direct interactions Secondary interactions 3-6

7. Figure 2.2 The service marketing system for a high-contact service Service delivery system Other contact points Advertising Service operations system Sales calls Other customers Public relations Interior & exterior facilities Billing/statements Miscellaneous mail, phone calls, faxes, etc. Technical core Random exposure to facilities/vehicles The Customer Equipment Chance encounters with service personnel Service people Other customers Word of mouth Backstage (invisible) Front stage (invisible) 3-7

8. Service Personnel sales representatives customer service staff accounting/billing staff Service Facilities and Equipment Building exteriors, parking areas, landscaping Building interiors and furnishings Vehicles Nonpersonal Communications form letters brochures, catalogs, instruction manuals advertising, signage Other People fellow customers word-of-mouth comments Table 3.1Tangible Elements and Communication Components in the Service Marketing System 3-8

9. Core and supplementary service elements: An example of an overnight parcel delivery service Advice and information Problem-solving Order-taking Reliable overnight transportation and delivery of packages Billing statements Supplies Tracing parcels Pickup Documentation 3-9

10. The Customer as Co-Producer 3-10

11. The Service Encounter • That period of time during which a customer directly interacts with the service organisation 3-11

12. The Service Encounter • Managing the ‘moments of truth’ • Critical incidents in service encounters 3-12

13. Critical Incidents in Service Encounters “…a specific encounter between customer and service provider in which the outcome has proved especially satisfying or dissatisfying for one or both parties” 3-13

14. Studying Critical Incidents in Airlines, Hotels, & Restaurants • Think of a time when, as a customer, you had a particularly satisfying (dissatisfying) interaction with an employee. • When did the incident happen? • What specific circumstances led up to this situation? • Exactly what did the employee say or do? • What resulted that made you feel the interaction was satisfying (dissatisfying)? 3-14

15. “74 and 1” Rule at Disneyland • On average, each customer has 74 service encounters per day - it takes only ONE to potentially screw up the customer’s total experience 3-15

16. BLUEPRINTING THE SERVICES OF A FLORIST THAT OFFERS MANY CHOICES Flowers&Vase, Personnel, Equipment CUSTOMER Line of Visibility Several Choices Several Choices Several Choices Select Flowers Arrange Flowers in Vase Deliver Take Order Select Vase Vase Inventory Flower Inventory Collect Payment 3-16

17. Some key critical incidents determining customer dis/satisfaction • Delivery system failures: • unavailable service • unreasonably slow service • other core service failure • Employee response to customer needs/requests: • special needs • expressed customer preference • admitted customer error • potentially disruptive others • Unprompted & unsolicited employee actions: • attention paid to customer • truly out-of-ordinary employee behavior • culturally rooted behavior • gestalt • exemplary performance under adverse condition 3-17

18. SERVICE FROM THE CUSTOMER’S VIEWPOINT c-1

19. LEARNING OBJECTIVES • AFTER FINISHING THIS PART, YOU SHOULD BE ABLE TO: • Describe the three different types of attributes consumers use to evaluate products and how they relate to service offerings. • Discuss why service characteristics like intangibility and quality control problems affect consumer evaluation processes. • Explain the purchase process for services. • Differentiate between core and supplemental service elements. • Construct a simple flowchart showing a service process from the customer’s perspective. © Prentice-Hall, 1999 C-2

20. Continuum of Product Attributes Most Goods Most Services Easy to evaluate Difficult to evaluate Chair Foods Clothing Haircut Legal services Motor Vehicle Entertainment Lawn fertilizer Computer repair Complex surgery Restaurant meals High in search qualities High in experience qualities High in credence qualities C-3 © Prentice-Hall, 1999

21. Purchase Process for Services • Prepurchase • Customers identify alternatives, weigh benefits and risks, and make purchase decision • Service Encounter • Service delivery takes place through interactions between customers and the service provider • Postpurchase • Customers evaluate service quality and their satisfaction/dissatisfaction with the service outcome C-4 © Prentice-Hall, 1999

22. Purchase Process: Consumer Activities in Selecting, Using, and Evaluating Service Awareness of Need Prepurchase Stage Information Search Evaluation of Alternative Service Suppliers Request Service from Chosen Supplier Service Encounter Stage Service Delivery Evaluation of Service Performance Postpurchase Stage Future Intentions C-5

23. Factors Affecting the Service Encounter • Service Environments • all tangible characteristics: facility, equipment, atmosphere, other customers • Service Employees • most important in most high-contact encounters; careful selection, training, and compensation important • Support Services • materials and equipment; all backstage processes C-6

24. Postpurchase Stage Met or Exceeded Not Met Repeat or Loyal Customer Complain or Switch Providers C-7

25. Service Offering: Definition “All Actions and Reactions that Customers Perceive They Have Purchased” Federal Express “...a bundle consisting of the core product plus a cluster of supplementary services” C-8

26. Core & Supplementary Services:A Car Insurance Example • Payment • of Claim Information and Advice Reducing Human and Economic Trauma When Things go Wrong Seeking Financial Security & Meeting Legal Require- ments Application for Coverage • Offer of • Settlement • (Claim) Policy Document • Advice on Police, • Legal, Medical, and • Repair Billing Statements • Documentation • of Accident & • Outcome C-9

27. Flowchart of Claim Settlement Progressive Insurance Customer Notifies Progressive of Accident Customer Meets with Claims Representative Customer Provides Accident Details Customer Receives Settlement Check Arrive at Accident Scene Collect Information and Take Photos Front Stage (on-site) Progressive Rep Records Information Front Stage (invisible) Contact Claims Representative Contact police and other insurance companies Notify claims representative of settlement 12 Check Policy Information Backstage Actions Process Claim Enter report into automated claims management system C-10