The Service Encounter

Learning Objectives

• Use the service encounter triad to describe a service firm’s delivery process.

• Discuss the role of organizational control systems for employee empowerment.

• Prepare abstract questions and write situational vignettes.

• Discuss the role of customer as coproducer.• Describe how elements of the service profit chain

lead to revenue growth and profitability.

The Service Encounter Triad

Service

Organization

Efficiencyversus

satisfaction

Efficiencyversus

autonomy

CustomerContact

Personnel Perceived control

Definitions of Culture

• Schwartz and Davis (1981) - Culture is a pattern of beliefs and expectations shared by the organization’s members.

• Mintzberg (1989) - Culture is the traditions and beliefs of an organization that distinguish it from others.

• Hoy and Miskel (1991) - Culture is shared orientations that hold the unit together and give a distinctive identity.

The Service Organization

• CultureServiceMaster (Service to the Master)Disney (Choice of language)

• EmpowermentInvest in peopleUse IT to enable personnelRecruitment and training criticalPay for performance

Organizational ControlBeliefsSystems

Tocontribute

Core values& mission

Identify corevalues

BoundarySystems

To do right Specify andenforcerules

Risks to beavoided

DiagnosticControlSystems

To achieve Build cleartargets

Criticalperformancevariables

InteractiveControlSystems

To create Encouragelearning

StrategicUncertainties

Contact Personnel

• Selection1. Abstract Questioning2. Situational Vignette3. Role Playing

• TrainingUnrealistic customer expectationsUnexpected service failure

Difficult Interactions with Customers

Unrealistic customer expectations Unexpected service failure

1. Unreasonable demands 1. Unavailable service

2. Demands against policies 2. Slow performance

3. Unacceptable treatment of 3. Unacceptable service

employees

4. Drunkenness

5. Breaking of societal norms

6. Special-needs customers

Use scripts to train for proper response

The Customer

• Expectations and AttitudesEconomizing customerEthical customerPersonalizing customerConvenience customer

• Customer as Co-Producer

Service Encounter Success Factors Customer Service Provider

Human Machine

HumanEmployee selectionInterpersonal skillsSupport technologyEngender trust

User friendlyVerificationSecurityEasy to access

MachineEasy to accessFast responseVerificationRemote monitoring

CompatibilityTrackingVerificationSecurity

Employee Perceptions of Customer Service at a Branch Bank

1

2

3

4

5

6

1 2 3 4 5 6

Employee

Customer

Terrible

Terrible

Outstanding

Outstanding

Satisfaction Mirror

Higher Customer Satisfaction

More Familiarity with Customer Needs and Ways of Meeting Them

Greater Opportunity for Recoveryfrom Errors

Higher EmployeeSatisfaction

Higher Productivity

Improved Quality of Service

MoreRepeatPurchases

Stronger Tendency to Complain about Service Errors

Lower Costs

Better Results

      

 

Is attitude emphasized?Are job previews utilized?Are customers screened?

Are employees encouraged to refer friends?

 Are referrals from the “best” employees given priority?

Is satisfactionmeasured periodically? Are measurements linked to other functions on the cycle?

Careful Employeeand Customer Selection

 (and Self-selection))

High-Quality Training

Well-DesignedSupport Systems Information Facilities

Greater Latitude to Meet

Customer’s Needs

Clear Limits on, and Expectations

of, Employees

AppropriateRewards

and FrequentRecognition

SatisfiedEmployees

EmployeeReferrals of

Potential JobCandidates

Is training for job and life? Is it an important element of quality of work life?

Do they reflect needs of the service encounter?

Are they designed to foster relationships?

Does it reflect top management “talk”? Is it enough to allow delivery of results to customers?

Do they limit the “right” risks?Are they logical to employees?

Cycle of Capability

Are they linked toservice objectives? Are they balanced between monetary and non-monetary?

 

Service Profit Chain

Internal

Operating strategy andservice delivery system

  Service concept Target market

Servicevalue

Customers

Loyalty

Productivity&

Outputquality

Servicequality

Capability

Satisfaction

Employees Satisfaction Loyalty

Revenuegrowth

External

Profitability

Customer orientation/quality emphasisAllow decision-making latitudeSelection and developmentRewards and recognitionInformation and communicationProvide support systemsFoster teamwork

Quality & productivity improvements yield higher service quality and lower cost

Attractive Value Service designed& delivered tomeet targetedcustomers’ needsSolicit customerfeedback

Lifetime valueRetentionRepeat BusinessReferrals

                    

Topics for Discussion• How does the historical image of service as servitude affect

today’s customer expectations and service employee behavior?

• What are the organizational and marketing implications of considering a customer as a “partial employee”?

• Comment on the different dynamics of one-on-one service and group service.

• How does use of a “service script” relate to service quality?• If the roles played by customers are determined by cultural

norms, how can services be exported?

Interactive Exercise

The class breaks into small groups and each group comes up with an example from each of the four organizational control systems (i.e., belief, boundary, diagnostic, and interactive)

Amy’s Ice Cream on Guadalupe

Amy’s Ice Cream

1. Describe the service organization culture at Amy’s Ice Cream.

2. What are the personality attribute of the employees who are sought by Amy’s Ice Cream?

3. Design a personnel selection procedure for Amy’s Ice Cream using abstract questioning, a situational vignette, and/or role playing.

AMY’S ICE CREAMAbstract Questions

• What was your most rewarding past experience and why?

• What are you looking for in your next job?

• What have you done in the past to irritate a customer?

• What flavor of ice cream best describes your personality?

AMY’S ICE CREAMSituational Vignette

A particular customer has the irritating habit of always showing up about two minutes before closing and staying late. Often this occurs on the night when weekly store meeting are held after closing time. This delays starting the meeting and furthermore employees are on the clock waiting for the customer to leave. What would you do?

AMY’S ICE CREAMSituational Vignette

As a new employee at a busy store, you have been routinely performing clean-up tasks (garbage removal and restroom cleaning). Company policy dictates that these are tasks to be shared. It has become clear that two employees consistently avoid these jobs in favor of more pleasant duties. How would you handle this situation?

Enterprise Rent-A-Car

1. How has Enterprise Rent-A-Car (ERAC) defined its service differently than that of the typical national car rental company?

2. What features of its business concept allow ERAC to complete effectively with the existing national rental care companies?

3. Use the service profit chain to explain the success of ERAC.