OPSM 405 Service Management

Class 2:

Introduction: Service encounters

Koç University

Zeynep Aksinzaksin@ku.edu.tr

The service system

Customer needsService organization mission, strategies,

policiesEnvironment

OperationsMarketing Human resources

Design of service package and

delivery system

Service deliverySystem

Front room:Service providers

ProcessesEquipment

Line of visibility

Back room:PersonnelProcessesEquipment

Customers and/or customer assets

EnhancedCustomers and/or customer assets

Recall: Services and service processes (Lovelock)

PEOPLE PROCESSINGPassenger transportationHeart transplantImmunizationCriminal justice system

MENTAL STIMULUS PROCESSINGEntertainmentEducationArt exhibitConcerts

POSSESSION PROCESSINGRepair and maintenanceDry cleaningHousecleaningLandscaping

INFORMATION PROCESSINGInternet servicesBankingFinancial servicesSoftware development

Inputs TANGIBLE INTANGIBLE

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Service encounters

Customer’s contacts with the service organization where her body, mind, assets, or information are processed

Service encounter or moment of truth

Any episode in which the customer comes into contact with any aspect of the organization and gets an impression of the quality of its service. (K. Albrecht)

Jan Carlzon as president of SAS

Last year each of our 10 million customers came into contact with approximately five SAS employees, and this contact lasted an average of 15 seconds each time. Thus SAS is created in the minds of our customers 50 million times a year, 15 seconds at a time. These 50 million moments of truth are the moments that ultimately determine whether SAS will succeed or fail as a company. These are the moments when we must prove to our customers that SAS is their best alternative.

What does this mean?

Service encounters: any place any time– Entering facility, asking for directions, filling a form

etc.– Watching ads, hearing people talk about the service,

etc.

Contact person/thing = organization– Rude service employee = rude organization– Employee late for visit = unreliable organization– Etc.

Going to a rock concert (Haksever et al. )

1. Music lover sees ad of a concert in newspaper2. Calls arena for price, schedule, and directions; gets information from

recording3. Calls another number to reserve ticket with credit card4. Local TV news shows rock group arrival in town5. Day of the concert she drives to arena, sees banners of the group at the

entrance6. Security personnel direct her to entranceof parking lot7. She pays for parking and parks her car8. She arrives at ticket window where she picks up her reserved ticket9. At the entrance she sees security personnel and a crowd10. She gives her ticket and goes in11. She buys a T-shirt12. She buys some beer from a concession stand13. She receives help from an usher to find her seat14. She enjoys the concert

More generally

Service encounters may be simple or complex processes

Consist of a series of episodes Occur with multiple facets of an organization May occur with other organizations associated

with service provision

Characteristics of human interaction

Service encounters are purposeful or goal oriented

Service providers are not altruistic, the encounter is work for them

Prior acquaintance is not required Encounters are limited in scope: not much time

spent on nontask issues task-related information exchange dominates Client and provider roles well defined Temporary status differential may occur

Service encounter as a social encounter

Human contact Greeting, courtesy Small talk Task related interaction Expectation of fairness

Service encounter as an economic exchange

Service organization gives up– Labor– Skill– Technology– Information

Customer sacrifices– Time– Money– Labor

Service encounter as a production process

Resources transformed into satisfaction and benefits for the customer

Customer resources may also be used

Service encounter as a contractual relationship

Customer hires service organization to perform service

Delegates some authority to service provider

Or partial employment– Service organization makes use of customer labor– Eg. Salad bar: Customer is “paid” through lower

salad/ food prices

Elements of a service encounter: customer

Minimum requirement: courtesy, respect, fairness

For people processing systems: safety, comfort, overall well-being

Asset processing systems: focus on efficiency, customer convenience, minimize time and effort spent for service by customer

Co-production: clear instructions, good equipment

Elements of a service encounter: service provider

Service provider is also human: – expects courtesy and respect, – needs to have required knowledge and training

Boundary spanners between firm and customer What is a single encounter for the customer may be one

of many for provider– Understanding customer, empathy, warmth, friendliness– Suppress own feelings

Quality control implies finding the right employees and making them happy

Elements of a service encounter: delivery system

Consists of equipment, supplies, processes, programs, procedures, rules, regulations, organizational culture

Design front office parts with customer needs in mind

Design back office parts with most efficient support of front office parts in mind

Focus on the core service

Elements of a service encounter: physical evidence

All tangible aspects of a service organization that a customer experiences: facility, forms, employee dresses, etc.

“Servicescape”: physical facility in which service is consumed

Important for people-processing services Relationship between servicescape and

customer behavior Relationship between servicescape and

employee morale and satisfaction

The service value chain

internalquality

employeesatisfaction

employeeloyalty employee

productivity

Value

customersatisfaction

customerloyalty

$ $ $ Euro$ $ $ YTL

The Value Profit Chain

Direct and strong links between:– Profit– Growth– Customer Loyalty– Customer Satisfaction– Value of goods/services to customer– Employee capability, satisfaction, loyalty and

productivity

The Value Profit Chain - Sasser

Customer Loyalty– Conventional theory is that share of market is the

primary driver of profitability– Sasser’s research found customer loyalty was more

frequently associated with high profits and rapid growth.

The Value Profit Chain - Schlesinger

Determinants of employee and customer loyalty– cycle of failure - low wages, little training, => limited

customer loyalty, high turnover– cycle of capability - share of profits, greater control,

=> highly productive employees, satisfied customers

What is the learning?

Service driven service: the link between employee satisfaction and customer satisfaction

well aligned resources: HR, IT, processes what makes boundary spanning employees happy?

resources to give good service happy customers remuneration and working conditions

Customer centric view all details matter Short encounters may determine everything