The Purpose of Service Environments

The service environment influences buyer behaviour in 3 ways

Chapter 10

Message-creating Medium: symbolic cues to communicate the distinctive nature and quality of the service experience. Attention-creating Medium: to make the servicescape stand out from other competing establishments, and to attract customers from target segments. Effect-creating Medium: colors, textures, sounds, scents and spatial design to enhance the desired service experience, and/or to heighten an appetite for certain goods, services or experiences

Planning the Service Environment

Helps the firm to create a distinctive image & positioning that is unique.

Comparison of Hotel Lobbies

The servicescape is part of the value proposition!

The Mehrabian-Russell StimulusResponse Model

Environmental Stimuli & Cognitive Processes

Dimensions of Affect: Pleasure and Arousal

Response Behaviors: Approach/ Avoidance & Cognitive Processes

Orbit Hotel and Hostel, Los Angeles Four Seasons Hotel, New York

The Mehrabian-Russell StimulusResponse Model

Simple and fundamental model of how people respond to environments

The Russell Model of Affect

Arousing Distressing Exciting

Peoples conscious and unconscious perceptions and interpretation of the environment influence how they feel in that environment Feelings, rather than perceptions or thoughts drive behavior Typical outcome variable is approach or avoidance of an environment, but other possible outcomes can be added to the model as well
Unpleasant

Pleasant

Boring

Relaxing

Sleepy

The Russell Model of Affect

Emotional responses to environments can be described along two main dimensions, pleasure and arousal. Pleasure is subjective depending on how much the individual likes or dislikes the environment Arousal quality of an environment is dependent on its information load, i.e., its degree of
Novelty (unexpected, surprising, new, familiar) and Complexity (number of elements, extent of motion or change)

Dimensions of the Service Environment

Service environments are complex and have many design elements. The main dimensions in the servicescape model includes:

Ambient Conditions
Music (e.g, fast tempo and high volume increase arousal levels) Scent (strong impact on mood, affect and evaluative responses, purchase intention and in-store behavior) Color (e.g, warm colors associated with elated mood states and arousal but also increase anxiety, cool colors reduce arousal but can elicit peacefulness and calm)

Dimensions of the Service Environment (cont)

Spatial Layout and Functionality
Layout refers to size and shape of furnishings and the ways it is arranged Functionality is the ability of those items to facilitate performance
Restaurant Patron Behavior

Impact of Music on Restaurant Diners

Fast-beat Music Environment Slow-beat Music Environment Difference between Slow and Fast-beat Environments
Absolute Difference Consumer time spent at table Spending on food 45min 56min +11min % Difference +24%

Signs, Symbols and Artifact

Explicit or implicit signals to communicate the firms image, help consumers find their way and to convey the rules of behavior

$55.12

$55.81

+$0.69

+1%

Spending on beverages Total spending

$21.62

$30.47

+$8.85

+41%

$76.74

$86.28

+$9.54

+12%

Estimated gross margin

$48.62

$55.82

+$7.20

+15%

The Effects of Scents on the Perceptions of Store Environments

Evaluation Unscented Environment Mean Ratings Scented Environment Mean Ratings Difference

The Effects of Scents on the Perceptions of Store Environments

Evaluation Unscented Environment Mean Ratings Scented Environment Mean Ratings Difference

Store Evaluation Negative/positive Outdated/modern Store Environment Unattractive/attractive Drab/colorful Boring/Stimulating 4.12 3.63 3.75 4.98 4.72 4.40 +0.86 +1.09 +0.65 Low/high quality Low/high price 4.65 3.76 5.24 4.72 +0.59 +0.96 Merchandise Outdated/up- to-date style Inadequate/adequate

4.71 3.80 4.81 5.20

5.43 4.65 5.48 4.93

+0.72 +0.85 +0.67 -0.27

Aromatherapy: The Effects of Fragrance on People

Fragrance Aromathe rapy Citrus Aromathera py Class Calming Traditional Potential Psychological Use Impact on People Soothing agent, astringent Muscle relaxant, soothing agent Emollientso othing agent Skin cleanser Calming and relaxing effect esp. for nervous people Relaxing and calming, helps create a homey and comfortable feel Helps makes people feel refreshed, joyful, comfortable Increase attention level and boosts energy Color

Common Associations and Human Responses to Colors

Degree of Warmth Warm Nature Symbol Earth Common Association and Human Responses to Color High energy and passion; can excite, stimulate, and increase arousal and blood pressures Emotions, expressions, and warmth

Orange

Red

Lavender

Herbaceo us

Calming, balancing, soothing Uplifting, balancing Energizing, stimulating

Orange

Warmest

Sunset

Jasmine

Floral

Green

Cool

Grass and Trees Sky and Ocean

Nurturing, healing and unconditional love Relaxation, serenity and loyalty

Peppermint

Minty

Blue

Coolest

Selection of Environmental Design Elements

There is a multitude of research on the perception and impact of environmental stimuli on behaviour, including:
People density, crowding Lighting Sound/noise Scents and odours Queues

Tools to Guide in Servicescape Design

Keen Observation of Customers Behavior and Responses to the service environment by management, supervisors, branch managers, and frontline staff Feedback and Ideas from Frontline Staff and Customers using a broad array of research tools ranging from suggestion boxes to focus groups and surveys. Field Experiments can be used to manipulate specific dimensions in an environment and the effects observed. Blueprinting or Service Mapping - extended to include the physical evidence in the environment.

No standard formula to designing the perfect combination of these elements.

Design from the customers perspective Design with a holistic view!

Frontline Service Personnel: Source of Customer Loyalty and Competitive Advantage

Chapter 11

Frontline is an important source of differentiation and competitive advantage. It is:

a core part of the product the service firm the brand

Managing People for Service Advantage

Frontline also drives customer loyalty, with employees playing key role in anticipating customer needs, customizing service delivery and building personalized relationships

Boundary Spanning Roles

Boundary spanners link the inside of the organization to the outside world Multiplicity of roles often results in service staff having to pursue both operational and marketing goals Consider management expectations of restaurant servers:
deliver a highly satisfying dining experience to their customers be fast and efficient at executing operational task of serving customers do selling and cross selling, e.g. We have some nice desserts to follow your main course

Role Stress in the Frontline

3 main causes of role stress:

Person vs. Role: Conflicts between what jobs require and employees own
personality and beliefs

Organization vs. Customer: Dilemma whether to follow company rules

or to satisfy customer demands

Customer vs. Customer: Conflicts between customers that demand

service staff intervention

Emotional Labor
The act of expressing socially desired emotions during service transactions Three approaches used by employees
surface acting deep acting spontaneous response

The Cycles of Failure, Mediocrity and Success

Too many managers make short-sighted assumptions about financial implications of:
Low pay Low investment (recruitment, training) High turnover human resource strategies

Performing emotional labor in response to societys or managements display rules can be stressful Good HR practice emphasizes selective recruitment, training, counseling, strategies to alleviate stress

Often costs of short-sighted policies are ignored:

Costs of constant recruiting, hiring & training Lower productivity & lower sales of new workers Costs of disruptions to a service while a job remains unfilled Loss of departing persons knowledge of business and customers Cost of dissatisfied customers

Cycle of Failure
Customer turnover
Routinized
Covert

Service Sabotage
Openness of Service Sabotage Behaviors
Overt

Normality of Service Sabotage Behaviors

Repeat emphasis on attracting new customers

Failure to develop customer loyalty

Customary-Private Service Sabotage e.g. Waiters serving smaller servings, bad beer or sour wine

Low profit margins

Customer-Public Service Sabotage e.g. Talking to guests like young kids and putting them down

High employee turnover; poor service quality No continuity in relationship for customer

Narrow design of jobs to accommodate low skill level

Use of technology to control quality Employee dissatisfaction; poor service attitude

Emphasis on rules rather than service Payment of low wages

Customer dissatisfaction

Employees become bored Employees cant respond to customer problems Minimization of training

Minimization of selection effort

Sporadic-Private Service Sabotage e.g. Chef occasionally purposefully slowing down orders
Intermittent

Sporadic-Public Service Sabotage e.g. Waiters spilling soup onto laps, gravy onto sleeves, or hot plates into someones hands

Source: Schlesinger and Heskett

Cycle of Success

Cycle of Mediocrity
Customers trade horror stories Other suppliers (if any) seen as equally poor Employees spend working life in environment of mediocrity Narrow design of jobs No incentive for cooperative relationship to obtain better service Complaints met by indifference or hostility Training emphasizes learning rules Emphasis on rules vs. pleasing customers Success = not making mistakes Service not focused on customers needs Customer loyalty Low customer turnover Repeat emphasis on customer loyalty and retention

Employee dissatisfaction (but cant easily quit)

Higher profit margins Broadened job designs

Lowered turnover, high service quality Continuity in relationship with customer Employee satisfaction, positive service attitude

Train, empower frontline personnel to control quality

Jobs are boring and repetitive; employees unresponsive Resentment at inflexibility and lack of employee initiative; complaints to employees

Good wages/benefits high job security E Promotion and pay increases based Initiative is on longevity, discouraged lack of mistakes

High customer satisfaction

Extensive training

Above average wages Intensified selection effort

Customer dissatisfaction

Source: Heskett and Schlesinger

How to Manage People for Service Advantage?

Staff performance is a function of both ability and motivation. How can we get able service employees who are motivated to productively deliver service excellence?

Hire the Right People

The old saying People are your most

1. Hire the right people 2. Enable your people 3. Motivate and energize your people

important asset is wrong. The RIGHT people are your most most important asset. Jim Collins

Recruitment
The right people are a firms most important asset: take a focused, marketing-like approach to recruitment Clarify what must be hired versus what can be taught Clarify nature of the working environment, corporate values and style, in addition to job specs Ensure candidates have/can obtain needed qualifications Evaluate candidates fit with firms culture and values Fit personalities, styles, energies to the appropriate jobs

Select And Hire the Right People: (1) Be the Preferred Employer
Create a large pool: Compete for Talent Market Share What determines a firms applicant pool?
Positive image in the community as place to work Quality of its services The firms perceived status

There is no perfect employee

Different jobs are best filled by people with different skills, styles or personalities Hire candidates that fit firms core values and culture Focus on recruiting naturally warm personalities

Select and Hire the Right People: (2) How to Identify the Best Candidates
Observe Behavior
Hire based on observed behavior, not words you hear Best predictor of future behavior is past behavior Consider group hiring sessions where candidates given group tasks

Select and Hire the Right People: (3) How to Identify the Best Candidates
Employ Multiple, Structured Interviews
Use structured interviews built around job requirements Use more than one interviewer to reduce similar to me effects

Give Applicants a Realistic Preview of the Job

Chance to have hands-on with the job Assess how the candidates respond to job realities Allow candidates to self select themselves out of the job

Personality Testing
Willingness to treat co-workers and customers with courtesy, consideration and tact Perceptiveness regarding customer needs Ability to communicate accurately and pleasantly

Train Service Employees

The Organizational Culture, Purpose and Strategy
Promote core values, get emotional commitment to strategy Get managers to teach why, what and how of job.

Factors Favoring Employee Empowerment

Firms strategy is based on competitive differentiation and on personalized, customized service Emphasis on long-term relationships vs. one-time transactions Use of complex and non-routine technologies Environment is unpredictable, contains surprises Managers are comfortable letting employees work independently for benefit of firm and customers Employees seek to deepen skills, like working with others, and are good at group processes

Interpersonal and Technical Skills

Both are necessary but neither is sufficient for optimal job performance

Product/Service Knowledge
Staffs product knowledge is a key aspect of service quality Staff need to be able to explain product features and to position products correctly

Levels of Employee Involvement

Suggestion involvement

Motivate and Energize the Frontline

Use the full range of available rewards effectively, including:

Employee recommendation
Job involvement

Jobs redesigned Employees retrained Supervisors facilitate

High involvement

Job content Feedback and recognition Goal accomplishment

Information is shared Employees skilled in teamwork, problem solving etc. Participate in decisions Profit sharing and stock ownership

The Inverted Organizational Pyramid

The Wheel of Successful HR in Service Firms
Leadership that:

Customer Base Top Mgmt Frontline Staff

Focuses the entire organization on supporting the frontline Fosters a strong service culture with passion for service and productivity

1. Hire the Right People

Be the preferred employer & compete for talent market share

3. Motivate & Energize Your People

Middle Mgmt Frontline Staff Traditional Organizational Pyramid

Legend: = Service encounters, or Moments of Truth.

Middle Mgmt & Top Mgmt Support Frontline Inverted Pyramid with a Customer & Frontline Focus

Drives values that inspire, energize and guide service providers

Utilize the full range of rewards

Service Excellence & Productivity

Intensify the selection process

2. Enable Your People

Empower Frontline Build high performance service delivery teams Extensive Training

Developing a Blueprint Some Basic Advice

Chapter 8
Identify key activities in creating and delivering the service Distinguish between front stage (what customers experience) and back stage Chart activities in sequence Show how interactions between customers and employees are supported by backstage activities and systems Establish service standards for each step Identify potential fail points Focus initially on big picture (later, can drill down for more detail in specific areas)

Designing and Managing Service Processes

Service Blueprinting: Key Components

1. Define standards for frontstage activities 2. Specify physical evidence 3. Identify principal customer actions 4. ------------line of interaction (customers and front stage personnel)------Stage

Simplified Example: Blueprinting a Hotel Visit

(extract only)

Physical Evidence

Hotel exterior, lobby, employees, key Make reservation Arrive, valet park Doorman greets, valet takes car Check-in at reception Receptionist verifies, gives key to room

Elevator, corridor, room, bellhop Go to room

Front

Line of Interaction

Customer Actions

5. Front stage actions by customer-contact personnel 6. ------------line of visibility (between front stage and backstage)-------------

Employee Actions Face-to-face

Phone Contact
Backstage
Line of Visibility

7. Backstage actions by customer contact personnel 8. Support processes involving other service personnel 9. Support processes involving IT
Where appropriate, show fail points and risk of excessive waits

Rep. records, confirms

Valet Parks Car Enter data Register guest data

Make up Room

Improving Reliability of Processes by Failure Proofing

Analysis of reasons for failure often reveals opportunities for failure proofing to reduce/eliminate risk of errors Errors include:
treatment errorshuman failures during contact with customers tangible errorsfailures in physical elements of service

Process Redesign: Principal Approaches

Eliminating non-value-adding steps Shifting to self-service Delivering direct service Bundling services Redesigning physical aspects of service processes

Fail-safe procedures include measures to prevent omission of tasks or performance of tasks

incorrectly in wrong order too slowly not needed or specified

Need fail-safe methods for both employees and customers

Customers as Co-Producers: Levels of Participation in Service Production

Low Employees and systems do all the work Medium Customer inputs required to assist provider
Provide needed information, instructions Make personal effort May share physical possessions

Self Service Technologies (SSTs)

Self-service is ultimate form of customer involvement in service production
Customers undertake specific activities using facilities or systems provided by service supplier Customers time and effort replace those of employees

High Customer works actively with provider to co-produce the service

Concept is not newself-serve supermarkets date from 1930s, ATMs and self-serve gas pumps from 1970s Today, customers face wide array of SSTs to deliver informationbased services, both core and supplementary Many companies seek to divert customers from employee contact to Internet-based self-service

Service Firms as Teachers: Well-trained Customers Perform Better

Firms must teach customers roles as coproducers of service Customers need to know how to achieve best results Education can be provided through:
Brochures Advertising Posted instructions Machine-based instructions Websites, including FAQs Service providers Fellow customers

Managing Customers as Partial Employees to Increase Productivity and Quality

1. Analyze customers present roles in the business and compare to managements ideal 2. Determine if customers know how to perform and have necessary skills 3. Motivate customers by ensuring that will be rewarded for performing well 4. Regularly appraise customers performance; if unsatisfactory, consider changing roles or termination

Employees must be well-trained to help advise, assist customers

The Problem of Customer Misbehavior Identifying and Managing Jaycustomers

What is a jaycustomer?
A customer who behaves in a thoughtless or abusive fashion, causing problems for the firm itself, employees, other customers

Six Types of Jaycustomer

Thief seeks to avoid paying for service Rule breaker ignores rules of social behavior and/or procedures for safe, efficient use of service Belligerent angrily abuses service personnel (and sometimes other customers) physically and/or emotionally Family Feuders fight with other customers in their party Vandal deliberately damages physical facilities, furnishings, and equipment Deadbeat fails to pay bills on time Can you think of others? How should firms deal with each of these problems?

Why do jaycustomers matter?

Can disrupt processes Affect service quality May spoil experience of other customers

What should a firm do about them?

Try to avoid attracting potential jaycustomers Institute preventive measures Control abusive behavior quickly Take legal action against abusers BUT firm must act in ways that dont alienate other customers

Thank You