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ByDr. Azizah OmarPhd (Monash, Aust) MBA (USM) BSc (Curtin, Aust)Deputy Dean Industry & Community NetworkSchool of ManagementUniversiti Sains MalaysiaPulau Pinangaziemar@usm.myProvide Top-Notch Service:Pitfalls & Successes of Service Quality

Why Services Matter?dominate U.S. and worldwide economies including Malaysia.are growing dramaticallyleads to customer retention and loyaltyleads to profitshelp manufacturing companies differentiate themselves from competitors

Standing Apart from the CompetitionA business must set itself apart from its competition. To be successful it must identify and promote itself as the best provider of attributes that are important to target customers George S. Day

Percent of U.S. Gross Domestic Product by Industry

Contribution of Services Industries to global GDP

Employability sectors in Malaysia

Services 6.17 million57.9%

Manufacturing1.94 million

18.2%Agriculture1.49 million

14.0%Construction 1.0 million 9.4%

Mining 0.05 million 0.5%

GovernmentPoliciesBusinessTrendsSocial ChangesAdvances inITGlobalizationInnovation in service products & delivery systems, stimulated by better technologyCustomers have more choices and exercise more powerSuccess hinges on:Understanding customers and competitorsViable business modelsCreation of value for customers and firmNew markets and product categoriesIncrease in demand for servicesMore intense competitionForces Transforming the Service Economy

What is Service? The New View

Service includes every interaction between any customer and anyone representing the company, including:

Customer

7The customer is . . .Anyone who receives the companys services, including:external customers (outside the organization, business customers, suppliers, partners, end consumers)

internal customers (inside the organization, e.g., other departments, fellow employees)

The Services Marketing Triangle

Stages in Consumer Decision Making and Evaluation of Services

Comparing Goods and Services

Challenges for ServicesDefining and improving qualityEnsuring the delivery of consistent qualityDesigning and testing new servicesCommunicating and maintaining a consistent imageAccommodating fluctuating demandMotivating and sustaining employee commitmentCoordinating marketing, operations, and human resource effortsSetting pricesFinding a balance between standardization versus customization

Traditional Marketing MixAll elements within the control of the firm that communicate the firms capabilities and image to customers or that influence customer satisfaction with the firms product and services: Product Price Place Promotion

Expanded Mix for Services The 7 PsProductPricePlacePromotion

PeopleAll human actors who play a part in service delivery and thus influence the buyers perceptions: namely, the firms personnel, the customer, and other customers in the service environment.Physical EvidenceThe environment in which the service is delivered and where the firm and customer interact, and any tangible components that facilitate performance or communication of the service.ProcessThe actual procedures, mechanisms, and flow of activities by which the service is deliveredthe service delivery and operating systems.Expanded Marketing Mix for Services

Gaps Model of Service Quality

not matching performance to promisesnot delivering to service standardsnot having the right service designs and standardsnot knowing what customers expectdifference between customer expectations and perceptionsThe Zone of ToleranceAdequate ServiceDesired ServiceZone ofTolerance Delights Desirables Musts

Factors That Influence Desired and Predicted Service

Customer Perceptions of Quality and Customer Satisfaction

How Customers Judge the Five Dimensions of Service Quality

Providing service as promisedDependability in handling customers service problemsPerforming services right the first timeProviding services at the promised timeMaintaining error-free recordsKeeping customers informed as to when services will be performedPrompt service to customersWillingness to help customersReadiness to respond to customers requestsRELIABILITYRESPONSIVENESSEmployees who instill confidence in customersMaking customers feel safe in their transactionsEmployees who are consistently courteousEmployees who have the knowledge to answer customer questionsASSURANCEGiving customers individual attentionEmployees who deal with customers in a caring fashionHaving the customers best interest at heartEmployees who understand the needs of their customersConvenient business hoursEMPATHYModern equipmentVisually appealing facilitiesEmployees who have a neat, professional appearanceVisually appealing materials associated with the serviceTANGIBLESSERVQUAL Attributes

Evidence of Service from theCustomers Point of View

Relationship Marketingis a philosophy of doing business, a strategic orientation, that focuses on keeping current customers and improving relationships with them

does not necessarily emphasize acquiring new customers

is usually cheaper (for the firm)keeping a current customer costs less than attracting a new one

thus, the focus is less on attraction, and more on retention and enhancement of customer relationships

The Bucket Theory of Marketing

Customer Goals of Relationship Marketing

Benefits of Relationship MarketingBenefits for Customers:Receipt of greater valueConfidence benefits:trustconfidence in providerreduced anxietySocial benefits:familiaritysocial supportpersonal relationshipsSpecial treatment benefits:special dealsprice breaks

Benefits for Firms:Economic benefits:increased revenuesreduced marketing and administrative costsregular revenue streamCustomer behavior benefits:strong word-of-mouth endorsementscustomer voluntary performancesocial benefits to other customersmentors to other customersHuman resource management benefits:easier jobs for employeessocial benefits for employeesemployee retention

The Customer Pyramid

The Customer PyramidPlatinum TierCompanys most profitable customers, typically heavy users of the product, not overly price sensitive, willing to invest in and try new offerings, and committed customers of the firmGold TierProfitability levels are not as high, perhaps because customers want price discounts that limit margins or are simply not as loyal. May be heavy users who minimize risk by working with multiple vendors.Iron TierEssential customers that provide the volume needed to utilize the firm' capacity but their spending levels, loyalty, and profitability are not substantial enough for special treatmentLead TierCustomers who are costing the firm money. They demand more attention than they are due given their spending and profitability and are sometimes problem customerscomplaining about the firm to others and tying up firm resources.

Levels of Relationship Strategies

Causes Behind Service Switching

Service Recovery Strategies

Eight Most Common Remedies Customers Seek with Serious ProblemsHave the product repaired or service fixedBe reimbursed for the hassle of having experienced a problemReceive a free product or service in the futureExplanation by the firm as to what happenedAssurance that the problem will not be repeatedA thank you for the customers businessAn apology from the firmAn opportunity for the customer to vent his or her frustrations to the firm

Service BlueprintingA tool for simultaneously depicting the service process, the points of customer contact, and the evidence of service from the customers point of view.

Service Blueprint Components

Building a Service Blueprint

Benefits of Service BlueprintingProvides a platform for innovation.Recognizes roles and interdependencies among functions, people, and organizations.Facilitates both strategic and tactical innovations.Transfers and stores innovation and service knowledge.Designs moments of truth from the customers point of view.Suggests critical points for measurement and feedback in the service process.Clarifies competitive positioning.Provides understanding of the ideal customer experience.

Common Issues in BlueprintingClearly defining the process to be blueprintedClearly defining the customer or customer segment that is the focus of the blueprintWho should draw the blueprint?Should the actual or desired service process be blueprinted?Should exceptions/recovery processes be incorporated?What is the appropriate level of detail?SymbologyWhether to include time on the blueprint

NOTES: Blueprint for Overnight Hotel Stay Service

The Critical Importance of Service EmployeesThey are the service.

They are the organization in the customers eyes.

They are the brand.

They are marketers.

Their importance is evident in:the services marketing mix (people)the service-profit chainthe services triangle

They are the service. in many cases, the contact employee is the service- we often DO NOT DISTINGUISH between the person and the firm(haircutting, child care, counseling, legal services) in these cases, the offering is the employee - other examples?

They are the organization in the customers eyes. employees represent the firm to the client may be the ONLY contact they have with the firm e.g., Dixon Pest Control everything they say and do can influence perceptions of the organization even off-duty employees can influence perceptions

They are marketers. they are walking billboards they represent the company and influence customer satisfaction they are salespersons (waiters selling dessert; AT&T operators cross-selling)

The Power of OneEvery encounter counts

Employees are the service

Every employee can make a difference

Through their actions, all employees shape the brand

Traditional Organizational ChartManagerSupervisorFront-lineEmployeeCustomersFront-lineEmployeeFront-lineEmployeeFront-lineEmployeeSupervisorFront-lineEmployeeFront-lineEmployeeFront-lineEmployeeFront-lineEmployee

Customer-Focused Organizational Chart

Human Resource Strategies for Delivering Service Quality through People

Theater as a Metaphor for Service Delivery

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 ShakespeareAs You Like It

CASE STUDY DISCUSSION

WOOING SHOPPERS: MAKING SHOPPING A JOY

(Sunday 10 January2010, TheStar, pp.4-5)