CHAPTER 2

WHERE DOES THE CUSTOMER FIT IN A SERVICE ORGANIZATION? (FIG. 2.1)

Consumers rarely involved in manufacture of goods but often participate in service creation and delivery

Challenge for service marketers is to understand how customers interact with service operations
Flowcharting clarifies how customer involvement in service encounters varies with type of process - see Fig. 2-1: People processing (e.g., motel stay): customer is physically involved throughout entire process Possession processing (e.g., DVD repair): involvement may be limited to drop off of physical item/description of problem and subsequent pick up Mental stimulus processing (e.g., weather forecast): involvement is mental, not physical; here customer simply receives output and acts on it Information processing (e.g., health insurance): involvement is mental specify information upfront and later receive documentation of coverage

HIGH-CONTACT AND LOW-CONTACT SERVICES

High Contact Services Customers visit service facility and remain throughout service delivery Active contact between customers and service personnel Includes most people-processing services Low Contact Services Little or no physical contact with service personnel Contact usually at arms length through electronic or physical distribution channels

New technologies (e.g. Web) help reduce contact levels

LEVELS OF CUSTOMER CONTACT WITH SERVICE ORGANIZATIONS

Emphasizes encounters with service personnel
M a na ge me n t Consulti ng
G ood Re sta ur a nt Ai rl ine Tr a ve l (Econ.)

High
N ur sing H om e

H a ir Cut
4 - Sta r H ote l

Tel ephone Ba nk ing

Re ta il Ba nk i ng M ote l

Ca r Repa i r I nsur a nce

Dr y Cl ea ning
Fa st Food Movie Theater
Ca bl e TV

Subway Internet Banking Mail Based Repairs

Emphasizes encounters with equipment

Internet-based Services

Low

MANAGING SERVICE ENCOUNTERS--1

Service encounter: A period of time during which customers interact directly with a service Moments of truth: Defining points in service delivery where customers interact with employees or equipment Critical incidents: specific encounters that result in especially satisfying/dissatisfying outcomes for either customers or service employees

MANAGING SERVICE ENCOUNTERS--2

Service success often rests on performance of junior contact personnel Must train, coach, role model desired behavior Thoughtless or badly behaved customers can cause problems for service personnel (and other customers) Must educate customers, clarify what

THE PURCHASE PROCESS FOR SERVICES

Prepurchase Stage Awareness of need Information search Evaluation of alternative service suppliers Service Encounter Stage

Request service from chosen supplier Service delivery

Postpurchase Stage

Evaluation of service performance Future intentions

PERCEIVED RISKS IN PURCHASING AND USING SERVICES

Functional unsatisfactory performance outcomes Financial monetary loss, unexpected extra costs Temporal wasted time, delays lead to problems Physical personal injury, damage to possessions Psychological fears and negative emotions Social how others may think and react Sensory unwanted impacts to any of five senses

FACTORS THAT INFLUENCE CUSTOMER EXPECTATIONS OF SERVICES

Explicit & Implicit Service Promises Word-of-Mouth Past Experience

Personal Needs Desired Service Beliefs about What Is Possible

ZONE OF TOLERANCE

Perceived Service Alterations Adequate Service Situational Factors Predicted Service

Source: Adapted from Zeithaml, Parasuraman & Berry

COMPONENTS OF CUSTOMER EXPECTATIONS

Desired Service Level: wished-for level of service quality that customer believes can and should be delivered Adequate Service Level: minimum acceptable level of service

Predicted Service Level: service level that customer believes firm will actually deliver
Zone of Tolerance: range within which customers are willing to accept variations in service delivery

INTANGIBLE ATTRIBUTES, VARIABILITY, AND QUALITY CONTROL PROBLEMS MAKE SERVICES HARD TO EVALUATE
Search attributes Tangible characteristics that allow customers to evaluate a product before purchase Experience attributes Characteristics that can be experienced when actually using the service Credence attributes Characteristics that are difficult to evaluate confidently even after consumption Goods tend to be higher in search attributes, services tend to be higher in experience and credence attributes Credence attributes force customers to trust that desired benefits have been delivered

HOW PRODUCT ATTRIBUTES AFFECT EASE OF EVALUATION)

Most Goods Most Services

Clothing

Restaurant meals

Computer repair

Haircut

Legal services

High in search attributes

High in experience High in credence attributes attributes

Source: Adapted from Zeithaml

Complex surgery

Motor vehicle

Foods

Chair

Entertainment

Lawn fertilizer

Easy to evaluate

Difficult to evaluate

CUSTOMER SATISFACTION IS CENTRAL TO THE MARKETING CONCEPT

Satisfaction defined as attitude-like judgment following a service purchase or series of service interactions Customers have expectations prior to consumption, observe service performance, compare it to expectations Satisfaction judgments are based on this comparison Positive disconfirmation if better than expected Confirmation if same as expected Negative disconfirmation if worse than expected Satisfaction reflects perceived service quality, price/quality tradeoffs, personal and situational factors Research shows links between customer satisfaction and a firms financial performance

CUSTOMER DELIGHT: GOING BEYOND SATISFACTION

Research shows that delight is a function of 3 components Unexpectedly high levels of performance Arousal (e.g., surprise, excitement) Positive affect (e.g., pleasure, joy, or happiness) Is it possible for customers to be delighted by very mundane services?

Progressive Insurance has found ways to positively surprise customers with customer-friendly innovations and extraordinary customer service

A SERVICE BUSINESS IS A SYSTEM COMPRISING THREE OVERLAPPING SUBSYSTEMS

Service Operations (front stage and backstage) Where inputs are processed and service elements created. Includes facilities, equipment, and personnel Service Delivery (front stage) Where final assembly of service elements takes place and service is delivered to customers Includes customer interactions with operations and other customers Service Marketing (front stage)

Includes service delivery (as above) and all other contacts between service firm and customers

SERVICE MARKETING SYSTEM: (1) HIGH CONTACT SERVICE--E.G., HOTEL

Service Marketing System
Service Delivery System Service Operations System
Interior & Exterior Facilities Other Customers

Other Contact Points

Advertising Sales Calls Market Research Surveys Billing / Statements Miscellaneous Mail, Phone Calls, Faxes, etc. Random Exposure to Facilities / Vehicles

Technical Core

Equipment

The Customer

Service People

Backstage (invisible)

Front Stage (visible)

Other Customers

Chance Encounters with Service Personnel Word of Mouth

SERVICE MARKETING SYSTEM: (2) LOW CONTACT SERVICE--E.G., CREDIT CARD Service Marketing System
Service Delivery System Service Operations System Other Contact Points

Advertising Mail Technical Core Self Service Equipment Phone, Fax, Web site etc.
Backstage (invisible) Front Stage (visible)

The Customer

Market Research Surveys

Random Exposures Facilities, Personnel

Word of Mouth

SERVICE AS THEATER

All the worlds a stage and all the men and women merely players. They have their exits and their entrances and each man in his time plays many parts William Shakespeare As You Like It

THE DRAMATURGY OF SERVICE DELIVERY

Service dramas unfold on a stage--settings may change as performance unfolds Many service dramas are tightly scripted, others improvised Front-stage personnel are like members of a cast Like actors, employees have roles, may wear special costumes, speak required lines, behave in specific ways Support comes from a backstage production team Customers are the audiencedepending on type of performance, may be passive or active

ROLE AND SCRIPT THEORIES

Role: A set of behavior patterns learned through experience and communication Role congruence: In service encounters, employees and customers must act out defined roles for good outcomes

Script: A sequence of behavior to be followed by employees and customers during service delivery
Some scripts (e.g. teeth cleaning) are routinized, others flexible Technology change may require a revised script Managers should reexamine existing scripts to find ways to improve delivery, increase productivity, enhance experiences