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ByDr. Azizah OmarPhd (Monash, Aust) MBA (USM) BSc (Curtin, Aust)Deputy Dean Industry & Community NetworkSchool of ManagementUniversiti Sains MalaysiaPulau [email protected] 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)