crafting the service environment. overview of the session what is the purpose of service...
TRANSCRIPT
Overview of the session
What Is the Purpose of Service Environments?
Understanding Consumer Responses to Service Environments
Dimensions of the Service Environment
Putting It All Together
Purpose of Service Environments
Helps firm to create distinctive image and unique positioning
Service environment affects buyer behavior in three ways:
Message-creating medium: Symbolic cues to communicate the distinctive nature and quality of the service experience
Attention-creating medium: Make servicescape stand out from competition and attract customers from target segments
Effect-creating medium: Use colors, textures, sounds, scents and spatial design to enhance desired service experience
Comparison of Hotel Lobbies
Four Seasons Hotel, New York Orbit Hotel and Hostel, Los Angeles
Each servicescape clearly communicates and reinforces its hotel’s respective positioning and sets service expectations as guests arrive
Physical surroundings help shape appropriate feelings and reactions in customers and employees For example: Disneyland
Servicescapes form a core part of the value proposition For example: Las Vegas, Florida-based Muvico
- Las Vegas: Repositioned itself to a somewhat more wholesome fun resort, visually striking entertainment center
- Florida-based Muvico: Builds extravagant movie theatres and offers plush amenities. “What sets you apart is how you package it..” (Muvico’s CEO, Hamid Hashemi)
The power of servicescapes is being discovered
Servicescape as Part of Value Proposition
The Mehrabian-Russell Stimulus-Response Model
Response/ Behavior:
Approach Avoidance and
Cognitive Processes
Environmental Stimuli and Cognitive
Processes
Dimensions of Affect:
Pleasure and Arousal
Feelings Are a Key Driver of Customer Responses to Service Environments
Insights from Mehrabian-Russell
Stimulus-Response Model
Simple yet fundamental model of how people respond to environments
The environment, its conscious and unconscious perceptions, and interpretation influence how people feel in that environment
Feelings, rather than perceptions/thoughts drive behavior
Typical outcome variable is “approach” or “avoidance” of an environment, but other possible outcomes can be added to model
Insights from Russell Model of Affect
Emotional responses to environments can be described along two main dimensions:
Pleasure: Direct, subjective, depending on how much individual likes or dislikes environment
Arousal: How stimulated individual feels, depends largely on information rate or load of an environment
Russell separated cognitive part of emotions from these two emotional dimensions
Advantage: simplicity, allows a direct assessment of how customers feel
Firms can set targets for affective states
Drivers of Affect
Affect can be caused by perceptions and cognitive processes of any degree of complexity
It’s the simple cognitive processes that determine how people feel in a service setting
If higher levels of cognitive processes are triggered, the interpretation of this process determines people’s feelings
The more complex a cognitive process becomes, the more powerful its potential impact on affect.
However, most service encounters are routine and simple processes can determine affect.
Behavioral Consequence of Affect
Pleasant environments result in approach, whereas unpleasant ones result in avoidance
Arousal amplifies the basic effect of pleasure on behavior
If environment is pleasant, increasing arousal can generate excitement, leading to a stronger positive consumer response
If environment is unpleasant, increasing arousal level will move customers into the “distressed” region
Feelings during service encounters are an important driver of customer loyalty
AmbientConditions
Space/Function
Signs,Symbols, and Artifacts
CognitiveEmotional
Psychological
An Integrative Framework: Bitner’s Servicescape Model
ENVIRONMENTAL DIMENSIONS
HOLISTIC ENVIRONMENT
MODERATORS
INTERNAL RESPONSES BEHAVIOR
Source: Mary J. Bitner, “Servicescapes: The Impact of Physical Surroundings on Customers and Employees,” Journal of Marketing 56 (April 1992), pp. 57-71.
Perceived Servicescape
EmployeeResponse Moderator
Customer Response Moderator
Employee Responses
Customer
Responses
CognitiveEmotional
Psychological
Approach• Affiliation• Exploration• Stay longer• SatisfactionAvoid(opposite of approach)
Approach• Attraction• Stay/Explore• Spend More $$$• SatisfactionAvoid(opposite of approach)
Social Interaction Between
Customers and Employees
An Integrative Framework: Bitner’s Servicescape Model (2)
Identifies the main dimensions in a service environment and views them holistically
Internal customer and employee responses can be categorized into cognitive, emotional, and psychological responses, which lead to overt behavioral responses towards the environment
Key to effective design is how well each individual dimension fits together with everything else
Main Dimensions in Servicescape Model
Ambient Conditions Characteristics of environment pertaining to our five senses
Spatial Layout and Functionality Spatial layout:
- Floorplan - Size and shape of furnishings, counters,
machinery,equipment, and how they are arranged Functionality: Ability of those items to facilitate performance
Signs, Symbols, and Artifacts Explicit or implicit signals to:
- Communicate firm’s image- Help consumers find their way- Convey rules of behavior
Impact of Ambient Conditions
Ambient environment is composed of hundreds of design elements and details that must work together to create desired service environment
Ambient conditions are perceived both separately and holistically, and include:
Lighting and color schemes Size and shape perceptions Sounds such as noise and music Temperature Scents
Clever design of these conditions can elicit desired behavioral responses among consumers
Impact of Music
In service settings, music can have a powerful effect on perceptions and behaviors, even if played at barely audible levels
Structural characteristics of music―such as tempo, volume, and harmony―are perceived holistically
Fast tempo music and high volume music increase arousal levels
People tend to adjust their pace, either voluntarily or involuntarily, to match tempo of music
Careful selection of music can deter wrong type of customers
Impact of Music on Restaurant
Diners Restaurant Patron Behavior
Fast-beat Music Environment
Slow-beat Music Environment
Difference between Slow- and Fast-beat Environments
Absolute Difference
% Difference
Consumer time spent at table
45min 56min +11min +24%
Spending on food
$55.12 $55.81 +$0.69 +1%
Spending on beverages
$21.62 $30.47 +$8.85 +41%
Total spending
$76.74 $86.28 +$9.54 +12%
Estimated gross margin
$48.62 $55.82 +$7.20 +15%
Source: Ronald E. Milliman (1982), “Using Background Music to Affect the Behavior of Supermarket Shoppers,” Journal Of Marketing, 56 (3): pp. 86–91
Impact of Scent
An ambient smell is one that pervades an environment May or may not be consciously perceived
by customers Not related to any particular product
Scents have distinct characteristics and can be used to solicit emotional, physiological, and behavioral responses
In service settings, research has shown that scents can have significant effect on customer perceptions, attitudes, and behaviors
Effects of Scents on Perceptions of Store Environments (1)
Evaluation Unscented Environment
Mean Ratings
Scented Environment
Mean Ratings
Difference
Store Evaluation
Negative/positive
4.65 5.24 +0.59
Outdated/modern
3.76 4.72 +0.96
Store Environment Unattractive/ attractive
4.12 4.98 +0.86
Drab/colorful 3.63 4.72 +1.09Boring/Stimulating
3.75 4.40 +0.65
Source: Eric R. Spangenberg, Ayn E. Crowley, and Pamela W. Hendersen (1996), “Improving the Store Environment: Do Olfactory Cues Affect Evaluations and Behaviors?,” Journal Of Marketing, (April): pp. 67–80.
Effects of Scents on Perceptions of Store Environments (2)
Evaluation Unscented Environment Mean Ratings
Scented Environment Mean Ratings
Difference
Merchandise
Outdated/up-to-date style
4.71 5.43 +0.72
Inadequate/adequate
3.80 4.65 +0.85
Low/high quality 4.81 5.48 +0.67
Low/high price 5.20 4.93 -0.27
Source: Eric R. Spangenberg, Ayn E. Crowley, and Pamela W. Hendersen (1996), “Improving the Store Environment: Do Olfactory Cues Affect Evaluations and Behaviors?,” Journal Of Marketing, (April): pp. 67–80
Aromatherapy: Effects of Selected Fragrances on People (Table 10.2)
Fragrance Aroma Type
Aroma-Therapy
Class
Traditional Use
Potential Psychological
Effect on People
Eucalyptus Camphor-aceous
Toning, stimulating
Deodorant, antiseptic, soothing agent
Stimulating and energizing
Lavender Herbaceous
Calming, balancing, soothing
Muscle relaxant, soothing agent, astringent
Relaxing and calming
Lemon CitrusEnergizing, uplifting
Antiseptic, soothing agent
Soothing energy levels
Black pepper Spicy
Balancing, soothing
Muscle relaxant, aphrodisiac
Balancing people’s emotions
Impact of Color
Colors can be stimulating, calming, expressive, disturbing, impressional, cultural, exuberant, symbolic
Color pervades every aspect of our lives, embellishes the ordinary, gives beauty and drama to everyday objects
Colors have a strong impact on people’s feelings
Colors can be defined into three dimensions:
Hue is the pigment of the color Value is the degree of lightness or darkness of the color Chroma refers to hue-intensity, saturation, or brilliance
Common Associations and Human Responses to Colors (Table 10.3)
Color Degree
of Warmth
Nature Symbol Common Association and Human Responses to Color
Red Warm Earth High energy and passion; can excite and stimulate
Orange Warmest Sunset Emotions, expressions,
warmth
Yellow Warm Sun Optimism, clarity, intellect,
mood-enhancing
Green Cool Growth, grass, and trees
Nurturing, healing, unconditional love
Blue Coolest Sky and ocean Relaxation, serenity, loyalty
Indigo Cool Sunset Mediation and spirituality
Violet Cool Violet flowerSpirituality, reduces stress, can create an inner feeling of calm
Impact of Signs, Symbols, and Artifacts
Guide customers clearly through process of service delivery
Customers will automatically try to draw meaning from the signs, symbols, and artifacts
Unclear signals from a servicescape can result in anxiety and uncertainty about how to proceed and obtain the desired service
For instance, signs can be used to reinforce behavioral rules (see picture on next slide)
Selection of Environmental Design Elements
Consumers perceive service environments holistically
Design with a holistic view
Servicescapes have to be seen holistically: No dimension of design can be optimized in isolation, because everything depends on everything else
Holistic characteristic of environments makes designing service environment an art
Must design from a customer’s perspective
Tools to Guide 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 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 physical evidence in the environment.
Overview of Session
Service Employees Are Crucially Important
Frontline Work Is Difficult and Stressful
Cycles of Failure, Mediocrity, and Success
Human Resources Management: How to Get It Right?
Service Leadership and Culture
Service Personnel: Source of Customer Loyalty and Competitive Advantage
Customer’s perspective: Encounter with service staff is most important aspect of a service
Firm’s perspective: Frontline is an important source of differentiation and competitive advantage. It is:
A core part of the product the service firm The brand
Frontline is an important driver of customer loyalty
Anticipating customer needs Customizing service delivery Building personalized relationships
Frontline in Low-Contact Services
Many routine transactions are now conducted without involving frontline staff, e.g.,
ATMs (Automated Teller Machines) IVR (Interactive Voice Response) systems Websites for reservations/ordering, payment, etc.
Though technology and self-service interface is becoming a key engine for service delivery, frontline employees remain crucially important
“Moments of truth” drive customer’s perception of the service firm
Boundary Spanning Roles
Boundary spanners link inside of organization to outside world
Multiplicity of roles often results in service staff having to pursue both operational and marketing goals
Consider management expectations of service staff:
Delight customers Be fast and efficient in executing operational tasks Do selling, cross selling, and up-selling Enforce pricing schedules and rate integrity
Role Stress in Frontline Employees
Three main causes of role stress:
Person versus Role: Conflicts between what jobs require and employee’s own personality and beliefs
Organizations must instill “professionalism” in frontline staff
Organization versus Client: Dilemma whether to follow company rules or to satisfy customer demands
This conflict is especially acute in organizations that are not customer oriented
Client versus Client: Conflicts between customers that demand service staff intervention
Emotional Labor
“The act of expressing socially desired emotions during service transactions” (Hochschild, The Managed Heart)
Three approaches used by employees:
Surface acting—simulate emotions they don’t actually feel Deep acting—psych themselves into experiencing desired emotion,
perhaps by imagining how customer is feeling Spontaneous response
Performing emotional labor in response to society’s or management’s display rules can be stressful
Good HR practices emphasize selective recruitment, training, counseling, and strategies to alleviate stress
Cycle of Failure (1)
Source: Schlesinger and Heskett
Customer turnover
Failure to develop customer loyalty
No continuity in relationship for
customer
Customer dissatisfaction
Employees can’t respond to customer
problems
Employees become bored
Employee dissatisfaction; poor service attitude
Repeat emphasis on attracting new customers
Low profit margins Narrow design of
jobs to accommodate low skill level
Use of technology to control quality
High employee turnover; poor service quality
Payment of low wages
Minimization of selection effort
Minimization of training
Emphasis on rules rather than service
The employee cycle of failure
Narrow job design for low skill levelsEmphasis on rules rather than serviceUse of technology to control quality
The customer cycle of failure
Managers’ short-sighted assumptions about financial implications of low pay, high turnover human resource strategies
Cycle of Failure (2)
Costs of short-sighted policies are ignored
Loss of expertise among departing employees Disruption to service from unfilled jobs Constant expense of recruiting, hiring, training Lower productivity of inexperienced new workers Loss of revenue stream from dissatisfied customers who
go elsewhere Loss of potential customers who are turned off by
negative word-of-mouth Higher costs of winning new customers to replace those
lost—more need for advertising and promotional discounts
Cycle of Failure (3)
Service Sabotage (Fig 11a)
“Openness” of Service Sabotage Behaviors
“Normality” of
Service Sabotage Behaviors
Intermittent
Customary-Private Service Sabotage
Sporadic-Private Service
Sabotage
Customer-Public Service Sabotage
Sporadic-Public Service Sabotage
e.g. Waiters serving smaller servings, bad beer or sour wine
e.g. Talking to guests like young kids and putting them down
e.g. Chef occasionally purposefully slowing down orders
e.g. Waiters spilling soup onto laps, gravy onto sleeves, or hot plates into someone’s hands
Routinized
Covert
Overt
Cycle Of Mediocrity (1)(Fig 11.5)
Good wages/benefits high job security
Other suppliers (if any) seen as equally poor
Customers trade horror stories
Service not focused
on customers’ needs
Employees spend working life
in environment of mediocrity
Narrow design of jobs
Success =
not making
mistakes
Complaints met by indifference or
hostility
Employee dissatisfaction
(but can’t easily quit) Emphasison rules
vs. pleasingcustomers
Promotion and pay
increases based on longevity,
lack of mistakes
Initiative is discouraged
Jobs are boring and repetitive; employees
unresponsive
Resentment at inflexibility and
lack of employee initiative;
complaints to employees
No incentive for
cooperative relationship
to obtain better service
Training emphasizes
learning rules
Customer dissatisfactionSource: Heskett and Schlesinger
Most commonly found in large, bureaucratic organizations
Service delivery is oriented toward
Standardized service Operational efficiencies Prevention of employee fraud and favoritism toward specific
customers
Cycle Of Mediocrity (2)
Job responsibilities narrowly and unimaginatively defined
Successful performance measured by absence of mistakes
Training focuses on learning rules and technical aspects of job—not on improving interactions with customers and co-workers
Cycle of Mediocrity (3)
Cycle of Success (1)
Low customer turnover
Customer loyalty
Continuity in relationship with
customer
High customer satisfaction
Extensive training
Employee satisfaction, positive service attitude
Repeat emphasis on customer loyalty and
retention
Higher profit
marginsBroadened job designsLowered turnover,
high service quality
Above average wages
Intensified selection effort
Train, empower frontline
personnel to control quality
Source: Heskett and Schlesinger
Longer-term view of financial performance; firm seeks to prosper by investing in people
Attractive compensation packages attract better job applicants
More focused recruitment, intensive training, and higher wages make it more likely that employees are:
Happier in their work Provide higher quality, customer-pleasing service
Cycle of Success (2)
Broadened job descriptions with empowerment practices enable frontline staff to control quality and facilitate service recovery
Regular customers more likely to remain loyal because:
Appreciate continuity in service relationships Have higher satisfaction due to higher quality
Cycle of Success (3)
How to Manage People for Service Advantage?
Hire the right people Enable these people Motivate and energize your
people
Staff performance involves both ability and motivation
How can we get able service employees who are motivated to productively deliver service excellence?
The Wheel of Successful HR in Service Firms (Fig 11.7)
Leadership that: Focuses the
entire organization on supporting the frontline
Fosters a strong service culture with passion for service and productivity
Drives values that inspires, energizes and guides service providers
1. Hire the Right People
3. Motivate and Energize Your
People
2. Enable Your People
Be the preferred employer & compete for talent market share
Intensify the selection process
Empower frontlineBuild high performance
service delivery teams Extensive training
Utilize the full range of rewards Service Excellence
& Productivity
Hire the Right People
“The old saying ‘People are your
most important asset’ is wrong.
The RIGHT people are your
most important asset.”
Jim Collins
Recruitment
The right people are a firm’s 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 candidate’s fit with firm’s culture and values
Match personalities, styles, energies to 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 firm’s applicant pool?
Positive image in the community as place to work Quality of its services The firm’s perceived status
There is no perfect employee
Different jobs are best filled by people with different skills, styles, or personalities
Hire candidates that fit firm’s core values and cultureFocus on recruiting naturally warm personalities for customer-
contact jobs
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 are given
group tasks
Conduct personality tests
Willingness to treat co-workers and customers with courtesy, consideration, and tact
Perceptiveness regarding customer needs Ability to communicate accurately and pleasantly
Select and Hire the Right People:(2) How to Identify Best Candidates
Select and Hire the Right People:(3) Identifying Best Candidates
Employ multiple, structured interviews
Use structured interviews built around job requirements Use more than one interviewer to reduce “similar to me”
biases
Give applicants a realistic preview of the job
Chance for candidates to “try on the job” Assess how candidates respond to job realities Allow candidates to self select themselves out of the job Manage new employees’ expectation of job
Service employees need to learn:
Organizational culture, purpose, and strategy Promote core values, get emotional commitment to strategy Get managers to teach “why,” “what,” and “how” of job
Interpersonal and technical skills Both are necessary but neither alone is sufficient for optimal
job performance
Product/service knowledge Staff’s product knowledge is a key aspect of service quality Staff must explain product features and position products
correctly
Train Service Employees
Is Empowerment Always Appropriate?
Empowerment is most appropriate when:
Firm’s business strategy is based on competitive differentiation and on personalized, customized service
Emphasis on extended relationships versus short-term transactions
Use of complex and nonroutine technologies
Business environment is unpredictable, consisting of 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
Control concentrates four key features at top organization,
involvement pushes them down
1. Power to influence work procedures and organizational direction (e.g., quality circles, self-managing teams)
2. Information about operating results and measures of competitive performance
3. Rewards based on organizational performance (e.g., bonuses, profit sharing, stock ownership)
4. Knowledge/skills that enable employees to understand and contribute to organizational performance
Control versus Involvement Model of Management
Suggestion involvement Employee make recommendation
through formalized programs
Job involvement Jobs redesigned Employees retrained, supervisors
reoriented to facilitate performance
High involvement Information is shared Employees skilled in teamwork,
problem solving etc. Participate in management decisions Profit sharing and stock ownership
Levels of Employee Involvement
Build High-Performance Service Delivery Teams
The Power of Teamwork in Services
Facilitate communication among team members and knowledge sharing
Higher performance targets Pressure to perform is high
Creating Successful Service Delivery Teams
Emphasis on cooperation, listening, coaching and encouraging one another
Understand how to air differences, tell hard truths, ask tough questions
Management needs to set up a structure to steer teams toward success
Motivate and Energize the Frontline
Use full range of available rewards effectively, including:
Job content
People are motivated and satisfied knowing they are doing a good job
Feedback and recognition
People derive a sense of identity and belonging to an organization from feedback and recognition
Goal accomplishment Specific, difficult but attainable and accepted goals are
strong motivators
Role of Labor Unions
Challenge is to work jointly with unions, reduce conflicts, and create a service climate
Labor unions and service excellence are sometimes seen as incompatible
Yet many of the world’s most successful service businesses are highly unionized (e.g., Southwest Airlines)
Management consultation and negotiation with union representatives are essential if employees are to accept new ideas
Service Leadership and Culture
Service culture can be defined as:
Shared perceptions of what is important Shared values and beliefs of why they are important
Charismatic/transformational leadership:
Change frontline’s values, goals to be consistent with firm Motivate staff to perform their best
Internal Marketing:
Play a vital role in maintaining and nurturing a corporate culture
Help ensure service delivery, working relationships, employee trust, respect, and loyalty