4th Sem Service Mktg

7/29/2019 4th Sem Service Mktg

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1

Defining the Essence of a Service

An act or performance offered by one party to another

An economic activity that does not result in ownership

A process that creates benefits by facilitating a desired

change in:

customers themselves

physical possessions

intangible assets


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3

Changing Structure of Employment

as Economic Development Evolves

Time, per Capita Income

Industry

Services

Agriculture

Sou rce: IMF, 1997


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4

31

36

40

48

62

24

26

28

26

19

45

38

32

26

19

0 20 40 60 80 100 120

1970

1980

1995

2001

2012

% of GDP in INDIA

Services Industry Agriculture


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Tangible Dominant

Intangible Dominant

SaltSoft Drinks

DetergentsAutomobile

Cosmetics

Fast Food

Advertising

Airlines

Management

ConsultingInsurance

Tangibility Spectrum


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Differences Between Goods & Services

Intangibility

Perishability

SimultaneousProduction

andConsumption

Heterogeneity


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Differences between Goods and Services

GOODS SERVICES RESULTING IMPLICATION

Tangible Intangible Services cannot be inventoried

Cannot readily be displayed orcommunicated

Pricing is difficult


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GOODS SERVICES RESULTING IMPLICATION

Product ion

separate from

consumpt ion

Simul taneous Customers participate in andaffect the transaction

Customers affect each other

Employees affect serviceoutcome

Decentralization may beessential

Mass production is difficult


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GOODS SERVICES RESULTINGIMPLICATION

Standardization Variabi l i ty/

Heterogeneous

Service delivery &customer satisfaction

depend on employeesaction

Service quality dependsupon many uncontrollable

factors

There is no sureknowledge that the servicedelivered matches what

was planned and promoted


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GOODS SERVICES RESULTINGIMPLICATION

Non Perishable Perishable It is difficult to synchronizesupply and demand with

services

Services cannot be returnedor resold


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Expanded Marketing Mix for Services

PRODUCT PLACE PROMOTION PRICE

Ph sical oodfeatures

Channel type Promotionblend

Flexibility

Quality level Exposure Salespeople Price level

Accessories Intermediaries Advertising Terms

Packaging Outlet location Salespromotion

Differentiation

Warranties Trans ortation Publicity AllowancesProduct lines Storage

Branding


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PEOPLE PHYSICALEVIDENCE

PROCESS

Employees Facility design Flow of activities

Customers Equipment Number of steps

Communicatingculture and values

Signage Level of customer involvement

Employee research Employee dress

Other tangibles



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People

Physical Evidence

Process


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People

Employees

Recruitment

TrainingMotivation

Rewards

Teamwork

Customers

Education

Training


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Physical Evidence

Facility Design

Equipment

Employee DressSignage

Other tang ibles

ReportsBusiness cardsStatements


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Process

Flow o f act iv i t ies

Standardized

Customized

No. of s teps

Simple

Complex

Customer Involvement


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The Services Marketing Triangle

InternalMarketing

Interactive Marketing

ExternalMarketing

Company(Management)

CustomersEmployees

enabling thepromise

delivering the promise

setting thepromise

Source: Adapted from Mary Jo Bitner, Christian Gronroos, and Philip Kotler


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18Source: Adapted from A. Parasuraman

Company

CustomersProviders

Technology

The Services Triangle &Technology


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Servicesare Different

Goods Services Resulting ImplicationsTangible Intangible Services cannot be inventoried.

Services cannot be patented.Services cannot be readily displayed or communicated.Pricing is difficult.

Standardized Hetero eneous Service delivery and customer satisfaction depend on

employee actions.Service ualit de ends on man uncontrollable factors.There is no sure knowledge that the service deliveredmatches what was planned and promoted.

Productionseparate fromconsumption

Simultaneousproduction andconsumption

Customers participate in and affect the transaction.Customers affect each other.Employees affect the service outcome.

Decentralization may be essential.Mass production is difficult.

Non erishable Perishable It is difficult to synchronize supply and demand withservices.Services cannot be returned or resold.

Source: Adapted from Valarie A. Zeithaml, A. Parasuraman, and Leonard L. Berry, Problems and Strategies in Services Marketing,

Journal of Marketing49 (Spring 1985): 33-46.


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Four Categories of Services

Employing Different Underlying Processes

People Processin g Possession Processing

Mental Stimulu s

Processing

Information Processing

(directed at intang ible assets)

e.g., airlines, hospitals,haircutting, restaurantshotels, fitness centers

e.g., freight, repair,cleaning, landscaping,

retailing, recycling

e.g., broadcasting, consulting,education, psychotherapy

e.g., accounting, banking,insurance, legal, research

TANGIBLEACTS

INTANGIBLE

ACTS

DIRECTED AT PEOPLE DIRECTED AT POSSESSIONS

What is theNature of theService Act?

Who or What is the Direct Recipient of the Service?


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How Product Attributes Affect

Ease of Evaluation

Source: Adapted from Zeithaml

Most Goods

High in searchattributes

High in experienceattributes

High in credenceattributes

Difficultto evaluate

Easyto evaluate

Mos t Services

Clothing

Chair

Mo

torvehicle

Foods

Restau

rantmeals

Law

nfertilizer

Haircut

Entertainment

Comp

uterrepair

Legalservices

Compl

exsurgery


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Consumer Decision Making

Need

Recognition

Information

SearchEvaluation Decision

Post Purchase

Evaluation


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CONSUMER DECISION-MAKI NG PROCESS IN SERVICES

INFORMATION SEARCH

Use Of Personal Sources

Perceived Risk

EVALUATION OF

ALTERNATIVES

Evoked Set

PURCHASE & CONSUMPTION

Emotion And Mood

Service Provision As Drama

Service Roles And Scripts.

Compatibility Of Customers

POST PURCHASE

EVALUATION

Innovation Diffusion

Brand Loyalty

Attribution Of Dissatisfaction

CULTURE

Values & Attitudes

Manners & Customs

Material Culture

Aesthetics

Educational & Social Institutions

Language


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INFORMATION SEARCH

Use of personal source

Goods -personal and non-personal sources are used.

Services - personal sources are used.

As mass media can convey about search qualities but cancommunicate little about experience qualities.


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INFORMATION SEARCH

Perceived risk

Compare to goods more risk would be involved in

purchase of services.

-Intangible nature

-Since services are non-standardized always more uncertaintywould accompany about the outcome each time it is purchased.

-Services not accompanied by any warranties.


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EVALUATION OF SERVICE ALTERNATIVES

Evoked Set

Evoked set of services is smaller as compared to goods.

Reasons

Retailing between goods and services

Retail outlet would display competing brands in close proximity ofgoods.

Service providers almost always offer only a single brand for sale


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EVALUATION OF SERVICE ALTERNATIVES

Evoked Set

Less number of service providers for the same services in agiven geographic area.

Difficulty to obtain adequate prepurchase informationabout services.

Customers evoked set frequently includes self-provision ofthe service.


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SERVICE PURCHASE AND CONSUMPTION

Emotion and Mood

Emotion and mood influence peoples (and therefore

customers) perceptions and evaluations of theirexperiences.

Services characterized by human interaction are strongly

dependent on the moods and emotions.

Ways in which mood can affect the behavior of service

customer


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Service Roles and Scripts

Roles are defined as combinations of social clues that guide and

direct behaviors in a given setting.

Service employees need to perform their roles according to

expectations of the customers.

One of the factors that most influences the effectiveness of role

performance is a script.


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The Compatibility of Service Customers

Customers can be incompatible for many reasons

Difference in beliefs

Values

ExperienceAbilities to pay

Appearance

Age, health etc.


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POST PURCHASE EVALUATION

Attribution of Dissatisfaction

A customer may attribute their dissatisfaction to provider and alsoto themselves (as they participate in the service process)

e.g. - Disappointed from a haircut

- Doctors diagnosis depends greatly on this

- Dry cleaners success in removing a spotdepends on the customers knowledge of its cause

(Hence consumers may complain less frequently aboutservices than about goods.)


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Innovation DiffusionThe rate of diffusion of an Innovation depends on the Consumers

Perceptions of the innovation with regard to Five Characteristics:

Relative Advantage

Compatibility

Communicability

DivisibilityComplexity

(Customers adopt innovations in services more slowly than

they adopt innovations in goods.)


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Brand LoyaltyThe degree to which consumers are committed to

particular brands of goods or services depends on a

number of factors:

-Cost of changing brands (switching cost)

-Availability of substitutes

-Perceived risk associated with the purchase

-Degree to which they obtained satisfaction in past

(Consumers are more brand loyal with services than products)


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CULTURE

The Role Of Culture In Services

Culture is learned, shared, and transmitted from one generation to

the next, and is multidimensional.

Culture would include:

Language (both verbal and non verbal)

Values and attitudesManners and customs

Material culture

Aesthetics

Education and social institutions


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Levels of Customer Contact with Service Organizations

Emphasizes encounters

with service personnel

Emphasizes encounters

with equipment

High

Low

ManagementConsulting

CarRepair

InsuranceMotel

FastFood

NursingHome

AirlineTravel(Econ.)

CableTV

TelephoneBanking

HairCut

GoodRestaurant

4-StarHotel

DryCleaning

RetailBanking

Mail Based Repairs

Internet-basedServices

Movie Theater

Internet Banking

Subway


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http://www.trendswatching.com/trendshttp://feeds.feedburner.com/Shotgunhttp://feeds.feedburner.com/Shotgunhttp://www.trendswatching.com/trends


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EXPECTED

SERVICE

PERCEIVED

SERVICE

SERVICE

DELIVERY

CUSTOMER- DRIVEN SERVICE

DESIGNS AND STANDARDS

COMPANY PERCEPTIONS OF

CONSUMER EXPECTATIONS

EXTERNAL

COMMUNICATIONS

TO CUSTOMERS

CUSTOMER GAP 5

GAP 1

GAP 3

GAP 2

GAP 4

GAPS MODEL OF SERVICE QUALITY


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Nature & Determinants Of Customer Expectations Of Service

Perceived Service

Expected Service

Zone of

Tolerance

Desired Service

Adequate Service

Explicit Service Promise

AdvertisingPersonal Selling

Contacts

Other Communications

Implicit Service Promises

Tangibles

Price

Word Of Mouth

Personal

Expert (Consumer Reports,

Publicity Consultants)

Past Experience

Predicted Service

Enduring Service Intensifiers

Derived ExpectationsPersonal Service Philosophies

Personal needs

Transitory Service Intensifier

Emergencies

Service Problems

Perceived Service Alternatives

Self Perceives Service Role

Situational Factors

Bad WeatherCatastrophe

Random Over Demand

Gap 5 (Customer Gap)

S i Q lit Di i


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Service Quality Dimensions

Reliability

Responsiveness

Assurance

Empathy

Tangibles


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Relationships

Th C t P id


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The Customer Pyramid

Getting

Satisfying

Retaining

Enhancing

Th C t P id


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The Customer Pyramid

Lead

Iron

Gold

Which segment sees high value in

our offer, spends more with us over

time, costs less to maintain, and

spreads positive word-of-mouth?

Which segment costs us in time,

effort and money, yet does not

provide the return we want?

Which segment is difficult to dobusiness with?

Platinum

Most profitablecustomers

Least profitablecustomers

R l ti hi Hi h


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Relationship Hierarchy

Lead

Iron

Gold

Which segment sees high value in

our offer, spends more with us over

time, costs less to maintain, and

spreads positive word-of-mouth?

Which segment costs us in time,

effort and money, yet does not

provide the return we want?

Which segment is difficult to dobusiness with?

Platinum

Most profitablecustomers

Least profitablecustomers

How Customers See Relational Benefits in Service


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Industries Conf idence Benefits

less risk of something going wrong, less anxiety ability to trust provider

know what to expect

get firms best service level

Social Benefits

mutual recognition, known by name

friendship, enjoyment of social aspects

Special Treatment Benef its

better prices, discounts, special deals unavailable to others

extra services

higher priority with waits, faster service

How Firms See Relational Benefits in Service


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Industries

I ncreased Revenue from the Customer

Reduced Marketing & Administrative Costs

Free Promotion through Word of Mouth

Customer Retention is employee Retention

The Customer Satisfaction


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The Customer Satisfaction

Loyalty Relationship

0

20

40

60

80

100

1 2 3 4 5

Loyalty(Rete

ntion)

Verydissatisfied Dissatisfied

Neithersatisfied

nordissatisfiedSatisfied

VerySatisfied

Satisfaction

Near Apos t le

Zone of Defect ion

Zone of Ind if ference

Zone of A f fect ion

Terrorist

Apost le

Th Wh l f L lt


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The Wheel of Loyalty

1. Bui ld aFoundat ion

for Loyalty

2. Create Loy altyBonds

3. Reduce

Churn Drivers

Customer

Loyal ty

Be selective in acquisition

Conduct churn diagnosticSegment the market

Use effective tieringof service.

Deliver qualityservice.

Deepen therelationship

Give loyaltyrewards

Build higherlevel bonds

Implement complainthandling & servicerecovery

Address key churn drivers

Increase switchingcosts

Enabled through:Frontline staff

Accountmanagers

Membershipprograms

CRM

Systems

L I FE TIME VALUE OF A CUSTOMER


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L I FE TIME VALUE OF A CUSTOMERL ife time value of a customer is a concept or calculation

that looks at customer from the point of view

of theirl i fetime revenue and prof i tabi l i tycontr ibutions to a company.

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Integrated

info. system

Vol. & frequency

rewards

Building & crossselling

Stable

Continuous

relationships

Personal

relations

Social bonds

among

customers

Customer

intimacy

Mass

customisation

Anticipationinnovation

Shared process

and equipment

Joint

investments

1. Fin.

bonds

2. Social

bonds

3.Customisati

on bonds

4.Structural

bonds

Excellent service

quality & value

LEVELS OF RETENSION STRATEGIES. 53

BUILDING BLOCKS OF SATISFACTION AND


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BUILDING BLOCKS OF SATISFACTION AND

SERVICE QUALITY

The service encounter or the moment of truth.

Interactive marketing

This is where the promises are kept or broken. Real time

marketing

It is from these service encounters that custmers build

their perceptions.

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SERVICE ENCOUNTER OR


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SERVICE ENCOUNTER OR

MOMENTS OF TRUTHFrom a customers point of view, the most vividimpression of service occurs in the service encounter, or

the moment of truth.

e.g. For a hotel customer service encounters are checking

into the hotel, being taken into the room by a bellroom,

eating a restaurant meal, requesting a wake up call,

checking out.

From the organizations point of view, each encounter thus

presents an opportunity to prove its potential as a quality

service provider and to increase customer loyalty.56


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TYPES OF SERVICE ENCOUNTERS

A service encounter occurs every time a customer

interact with the service organization:

There are three types of service encounters:-

1) REMOTE ENCOUNTER

2) PHONE

3) FACE-TO-FACE

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SOURCE OF PLEASURE AND DISPLEASURE IN SERVICEENCOUNTERS


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ENCOUNTERSCritical incidence technique is used to get customers and employees

to provide verbatim stories about satisfying and dissatisfying service

encounters they have experienced.

With this technique, customers (either internal or external) are

asked the following questions:

Think of a time when, as a customer you had a particularly

satisfying (or dissatisfying) interaction.

When did the incidence happen?

What specific circumstances led up this situation?

Exactly what did the employee (firm) say or do?

What resulted that made you feel the interaction was satisfying (or

dissatisfying)?

What could or should have been done differently?58


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ON THIS BASIS OF THOUSANDS ON SERVICE

ENCOUNTER STORIES, FOUR COMMON THEMES

1) RECOVERY (after failure)

2) ADAPTABILITY

3) SPONTANIETY

4) COPING

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ON THIS BASIS OF THOUSANDS ON SERVICE

ENCOUNTER STORIES, FOUR COMMON THEMES

RECOVERY : Employee response to service delivery system

failures

ADAPTABILITY: Employee response to customer needs andrequests

SPONTANEITY: Unprompted and unsolicited employee action

COPING: Employee response to problem customers

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SERVICE RECOVERY

Service Recovery refers to the action taken by an organization

response to a service failure.

Failure occurs for all kinds of reasons

- The service may be unavailable when promised

- It may be delivered late or too slowly

- The outcome may be incorrect or poorly executed

- Employees may be rude or uncaring

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SERVICE RECOVERYAll of these types of failures bring about negative feelings and

responses for the customers.

Left Unfixed

They can result in customers leaving

Telling other customers about their negative experiences

Even challenging the organization through customers rights

organizations or legal channels

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SERVICE RECOVERY

Research has shown that resolving customer

problems effectively has a strong impact on

Customer satisfaction

Loyalty

Bottom line performance

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SERVICE RECOVERY

It has been observed that customers who experienceservice failures, but are ultimately satisfied based on

recovery efforts by the firm, will be more loyal than those

whose problems are not resolved.

Those who complain and their problems resolved quickly

are much more likely to repurchase than are those whose

complaints were not resolved.

Those who never complain are likely least likely to

repurchase64

SERVICE RECOVERY


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An effective Service Recovery strategy can

Increase customer Satisfaction and Loyalty

Generate positive Word of Mouth

A well designed, well documented services strategy also provides

information that can be used to improve service as part of a

continuous improvement effort

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SERVICE RECOVERY

SERVICE RECOVERY


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Ineffective Service Recovery Strategies can lead to

customers who are so dissatisfied they become Terrorist,

actively pursuing opportunities to openly criticize the

company.

Repeated Service Failures without an effective Recovery

Strategy in place can aggravate even the best employees.

The costs in Employee Morale and even lost employee can

be huge.66

SERVICE RECOVERY


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THE RECOVERY PARADOX

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R P d i l


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It is expensive to fix mistakes.

Empirical Research suggests that only under the

very highest levels of customers Service

Recovery ratings will we observe increased

satisfaction and loyalty.

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Recovery Paradox is more complex

than it may seem on the surface.

It is safe to say that Doing it right the first time


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But when a failure does occur, then every effort at a

superior Recovery should be made to mitigate its negative

effects.

Failure when fully overcome

the failure is less critical, or the Recovery Effort is Clearlysuperlative,

it may be possible to observe evidence of the Recovery Paradox69

It is safe to say that Doing it right the first time

is still the best and safest strategy.

TYPES OF COMPLAINERS


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Four categories on how the customers respond to

failures have been identifies.

These categories are:

(1) Passives

(2) Voicers

(3) Irate

(4) Activist 70

TYPES OF COMPLAINERS

SWITCHING VERSUS STAYING FOLLOWING


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Ultimately, how a Service Recovery failure is handled and the

customers reaction to recovery effort can influence Future

decisions to remain loyal to the service provider or to switch to

another provider.

The more serious the failure, the more likely the customer to

switch no matter what the recovery effort.

The nature of the Customers Relationship with the firm may

also influence whether the customer stays or switches providers.

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SWITCHING VERSUS STAYING FOLLOWING

SERVICE RECOVERY

TYPES OF RELATIONSHIPS


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There are three types of relationships viz

True Relationships where the customer has had repeated

contact overtime with the same service provider.

First Time Encounter Relationship is where the customer

has had only one contact, on a transaction basis, with the provider.

Pseudo Relationship is one where the customer has

interacted many times with the same company, but with

different service provider (people) each time.72

TYPES OF RELATIONSHIPS

SERVICE RECOVERY STRATEGIES


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Fail- Safe Your Service- Do it Right the First Time

Reliability or Doing it right the first time, is the most important

dimension of service quality.

Services adopt the TQM notion ofPOKA YOKE to improve

service reliability. POKA YOKES are automatic warnings or

controls in place to ensure mistakes are not made.

It is important to create a culture of zero defections to ensure

doing it right the first time.

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Welcome and encourage complaints


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Even in a zero defect organization that aims for 100%

service quality, failures occur.

Service Recovery strategy should be such that it

welcomes and encourages complaints.

Complaints should be anticipated, encouraged and

tracked.

To track complaints customer research can be designed

specifically through satisfaction surveys, critical

incidence studies and lost customer research.74

g p

Welcome and encourage complaints contd


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Employees can be important listening posts, discovering sources of

customer dissatisfaction and service failure on the front line.

Part of encouraging complaints also involves teaching customers

how to complain.

It is best to make this process as simple as possible. Technology

has really helped customers to complain through e-mails, toll free

numbers etc.

Software applications in a number of companies allow complaints

to be analyzed, sorted, responded to and tracked automatically.75

Welcome and encourage complaints contd..

Act Q ickl


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Complaining customers want quick responses.

To take quick action the company requires

systems and procedures as well as empowered

employees.

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Act Quickly



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Take care of the problems on the front line

Employees must be trained and empowered to solve

problems as they occur

Front line employees need the skills, authority and

incentive to engage in effective recovery

Allow customers to solve their own problems.77


systems and procedures as well as empowered

employees

Treat Customers Fairly


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Customers expect to be treated fairly in terms of the

outcome they receive, the process by which the service

recovery takes place and the interpersonal treatmentthey receive.

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Treat Customers Fairly

Learn from Recovery Experience


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Problem resolution situations are source of improving

customer service.

By tracking service recovery efforts and solutions,

managers can often learn about systematic problems in

the delivery system that needs fixing.

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Learn from Recovery Experience

Learn from Lost Customers


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Formal market research to discover the reasons customershave left can assist in preventing failures in future.

Lost customer research typically involves in-depth probingof customers to determine their true reasons for leaving.

It has been observed from research that the largest

percentage of customers switching attributed to core

service failure.

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Learn from Lost Customers

SERVICE GUARANTEES


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A guarantee is particular type of recovery tool.

Guarantee is an assurance of the quality of or

length of use to be expected from product

offered for sale, often with a promise ofreimbursement.

Guarantees are relatively common formanufactured products, they have only recently

been used for services.

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SERVICE GUARANTEES contd..

Given the nature of services as intangible and

variable the question is what could be guaranteed,

and how.

Companies are finding that effective guarantees

can complement the companys recovery

strategy.82

Benefits of Service Guarantee


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Guarantees not only serve as marketing tool

but also as a means for defining, cultivating and

maintaining quality throughout the organization

A good guarantee forces the company tofocus on its customer.

In many cases Satisfaction is guaranteed, but in orderfor the guarantee to work effectively, the company must

clearly understand what satisfaction means for its

customers (what they value and expect).83

Benefits of Service Guarantee contd


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An effective guarantee sets clear standards for the

organization

It prompts the company to clearly define what it expects of

its employees and to communicate that to them.

The guarantee gives employees service oriented goals that

quickly align employee behaviors around customer

strategies.

It lets employees know exactly what the should do if the

customer complaints.84



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A good guarantee generates immediate and

relevant feedback from customers.

It provides an incentive for customers to complain and

thereby provides more representative feedback to thecompany than simply relying on the relatively few

customers who typically voice their concerns.

The guarantee communicates to the customer that they

have the right to complain.

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When the guarantee is invoked there is aninstant opportunity to recover.

By doing this customer is satisfied and helps to retain his

loyalty.

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Information generated through theguarantee can be tracked and integrated into

continuous improvement efforts.

A feedback link between the customer and service

operations decisions can be strengthened through

the guarantee.

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Studies of the impact of service guaranteessuggest that employee morale and customer

loyalty can be enhanced as result.

A guarantee generates pride among employees.

Through feedback from the guarantee, improvements canbe made in the service that benefit customers as well as

employees.

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A good guarantee forces the company to focus on its customer


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A good guarantee forces the company to focus on its customer.

An effective guarantee sets clear standards for the organization.

A good guarantee generates immediate and relevant feedback from

customers.

When the guarantee is invoked there is an instant opportunity to

recover.

Information generated through the guarantee can be tracked and

integrated into continuous improvement efforts.

Studies of the impact of service guarantees suggest that employee

morale and loyalty can be enhanced as result.89

TYPES OF GUARANTEES


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Satisfaction Versus Service Attribute Guarantees

Service guarantee can be unconditional satisfaction

guarantee or service attribute guarantee

Another type of service guarantee, combines the wide

scope of the total satisfaction guarantee with specific

performance standards.

Research suggests that this type of guarantee can

be more effective than either of the above.90

TYPES OF GUARANTEES


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External Versus Internal Guarantees

In this one part of the organization guarantees its services

to another

This is an effective way of aligning internal service

operations

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CHARACTERISTICS


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OF

EFFECTIVE GUARANTEES

Unconditional

Meaningful

Easy to Understand and Communicate

Easy to Invoke and Collect92

Service Failure


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Service Failure

Dissatisfaction/Negative

Emotions

Complaint Action No Complaint

Action

Complain to

Provider

Negative word

of mouth

Third Party

Action

Exit/Switch Stay Exit/Switch Stay

When to use (or not use) a guarantee


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A guarantee is probably not the right strategy

when:

1 Existing service quality in the company is poor

2 A guarantee does not fit the companys image

3 Service quality is truly Uncontrollable e.g. Training

Session

4 Costs of the guarantee outweigh the benefit

5 Customers perceive little risk in the service94

SERVICE DEVELOPMENT & DESIGN


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Challenges of Service Design

As services are difficult to describe and communicate.

When delivered over a long periodcomplexity increases.

As delivered by employees to customers, they are

heterogeneous.

These characteristics of services are heart of the challenge

involved in designing services. 95

SERVICE DEVELOPMENT & DESIGN


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There are 4 risks of attempting to describe services in words alone.

1 Oversimpli f ication

To say that portfolio management means buying and selling of stock

is like describing the space shuttle as Something that Flies.

2 I ncompleteness

In describing services, people (employees, managers, customers)tend to omit details or elements of the service with which they are

not familiar.

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SERVICE DEVELOPMENT & DESIGNcontd


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There are 4 risks of attempting to describe services in words alone.

3 Subjectivity

Any person describing a service inwords will be biased by personal

experiences and degree of exposure to the service.

4 Biased I nterpretation

No two people will define Responsive, Quick or Flexible inexactly the same way.

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NEW SERVICE DEVELOPMENT


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The fact that services are intangibles make it even more imperative

for a new service development system to have 4 basic characteristics.

(i) It must be objective, not subjective

(ii) It must be precise, not vague(iii) It must be fact driven, not opinion driven

(iv) It must be methodical, not philosophical

The intangibles process cannot be either defined precisely or that everyone knows what we mean.

Neither of these explanations or defenses for imprecision in

unjustifiable.

98


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If you do not activelyparticipate in creating the

uture you want, youhave no right to complain

about thefuture you get.99

TYPES OF NEW SERVICES


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Major Innovations: Are new services for the markets as yetundefined.

E.g. First TV broadcast.

Start up Businesses: consists of new services for a market that isalready served by existing products that meet the same genericneeds.

E.g. On line Banking Transactions.

New Services for the Currently Served Markets: Representattempts to offer existing customers of the organization a service not

previously available from the company.

E.g. A Health Club offering nutrition classes, Airlines offering fax

service.

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TYPES OF NEW SERVICEScontd


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Service Line Extensions: Represents augmentation of the existingservice line, such as a Restaurant adding new menu items, Airlines adding new

routes.

Service Improvements: Represents perhaps the most common type ofservice innovation.

E.g. Changes in features of the service as Extended Office hours in ICICI BANK.

Style Changes: Represent the most modest service innovations, althoughthey often are highly visible and can have a significant impact on the customersperceptions, emotions and attitudes.

E.g. Changing the color, scheme of restaurant, changing logo, painting the

aircraft.101

SERVICE REDESIGN


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There are 5 types of Service Redesign as potential ways ofincreasing customer benefits or reducing customers costs.

1 Self Service: One approach to redesign is to move the customer

into production mode rather than a passive, receiving mode.

Redesigning the service process in this way increases benefits for the

customer in terms of

Personal Control, Accessibility & Timing.

E.g. When companies offer their services via internet as in case of

internet banking. 102

SERVICE REDESIGN contd.

2 Di S i


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2 Direct Service: Means bringing the service to the customer rather thanaskinthe customer to come to provider.

E.g. Delivering the service to the customer in his or her home or workplace.

- Restaurant food and dry-cleaning delivery to the office.

- Computer distance education and training services.

3 Pre Service: This type of redesign involves streamlining or improving theactivation of the service, focussing on front end processes.

Making the front end of the service more efficient can dramatically change thecustomer experience during the actual service delivery.

E.g. Express check in at a hotel, preadmission process at a hospital, prepayment

of tolls on highways. 103

SERVICE REDESIGN contd


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4 Bundled Service: Grouping or bundling multiple

services together is another way to redesign currentofferings.

The benefit to the customer is in receiving great value,

combined with convenience than they might have received

by purchasing each service independently.

5 Physical Service: Physical redesign involves changingthe customers experience through the tangibles associated

with the service or the physical surroundings of the

service. 104

The [Starbucks] Fix Is on


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[ ] x

We have identified a third place.And I really believe that sets us apart.The third place is that place thats not

work or home.Its the placeour customers come for

refuge.Nancy Orsolini, District Manager

105

CRM and B2B


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B2B environment is a highly complex compared toB2C

On the Internet, big businesses and small competeon a more equal footing.

In other words, more and more companies need tolook to their relationship with their customers to

retain them.106

CRM and B2B contd


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When a client could make his purchase at the click

of a mouse, he naturally came to expect that his

requirement would also be fulfilled with

comparable speed and facility.

It was no longer tolerable for a response to take a

few days everything now had to happen in hours.

107

CRM and B2B contd.


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CRM leverages the power of Internet Technologies.

This helps reduce the frequency of human errors

and minimize wastage.

It has accelerated most manual business processes,

which in a traditional setup would have takenmonths to accomplish.

108

CRM and B2B contd.


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CRM and B2B contd.

Development cycles are much shorter and

customers expect to be delivered information

on demand, anytime, anywhere.

109

CRM and B2B contd.


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CRM and B2B contd.

I n the B2B environment, investing time and moneyon the few high value customers

Rather than on the many low value ones.

Customer value is based on the real cost and

profi tabi l i ty of each customer.

110

CRM and B2B contd.


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CRM and B2B contd.

I BM estimates that only 7% of the informationavailable in corporate databases is used.

This leaves 93% of the information untouched!

Companies need more eff icient tools to comb

through their data warehouses and find theinformation that wil l give them a competitive edge.

111

Customer Relationship Management tools work on

two levels Operational & Analytical


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At the front-officelevel it is called Operational CRMwhere

the customer is directly in contact with the company.

These interactions are referred to as touchpoints

Inbound when the customer accesses the company support

center or website.

Outbound when a sales representative makes a sales call or

e-mails a marketing message.

112

Customer Relationship Management tools work on



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Analytical CRMalso known as back-off ice or strategic

CRM

detects patterns from the various customer touchpoints

and provides an analysis of the data to help customer

service,

sales and marketing departments to personalize

communications with their customers.

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Customer Relationship Management


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CRM improves opportunities for

Cross Selling and Up Selling,

that is, if you like this product, how about tryingthis one or that?

114

CRM. Sales Force Automation (SFA)


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CRM virtually has its beginnings in Sales ForceAutomation.

Providing the sales force of a company withtechnology support in order to improve theefficiency of the selling process is called Sales

Force Automation.

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Organizations which can benefit from SFA

include those that have products / services that

are technically complex

have long selling cycles

involve many people in the selling process

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Key benefits of SFA solutions are

Improvement in customer service byhelping the sales force respond quickly &

accurately

Improvement in sales force productivity

Better management control and visibilityof the sales process

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Integrated CRM tools have helped service organizations greatly

improve efficiencies

By integrating the web contact center with the call center.

With the introduction of Internet banking and automated email,

many banks web contact centers received on an average, 20,000

emails every month.

Some 45 per cent of these are responded to automatically.

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CRM. Sales Force Automation (SFA)Since SFA is also aimed at improving the customer


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Since SFAis also aimed at improving the customer

experience when dealing with the organization, it is a

key part of CRM.

SFA is beneficial for Organizations that sell complex

products and services which are highly customizable.

e.g. highly-engineered products such as EPBX systems,

large computer servers, earth-moving equipment.

Some service companies that undertake large

consulting projects.

119


Such companies frequently have a long detailed


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Such companies frequently have a long, detailed

selling process.

This process does require the involvement of many

participants, both from the seller and the customer.

Often, external agencies such as subcontractors are also

required to participate in the selling process.

There is therefore a need to constantly exchange

information & collaborate during the sales process.120


Technically complex products and services also need


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large amounts of information that has to be shared.

Such information has to be maintained concurrent in

the face of many revisions that take place.

There are many options that customers can select

depending upon their needs.

e.g. if a customer was to select a diesel engine for a mining

application as compared to one that powers a generating set for

a shop, the characteristics of both will be significantly different.121



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It is difficult for such organizations to quicklyrespond to customer needs as they have to deal

with large amounts of technical information

and involve many people in the response.

Therefore, automation of such sales processes

can yield significant benefits.

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What are the benefits of implementing SFA systems?

The benefits fall under 3 main categories:

1 Improvement in customer service

Speed

Quality of Response

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2 Improvement in sales force efficiency

Salespersons can handle many complex products.

Salesperson to remain current in theirknowledge as they provide a lot of assistance andtechnical information.

New salespeople can be productive in no time.

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CRM. Sales Force Automation (SFA)3 Process improvement


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p

The third area where SFA tools can help is in thearea of management visibility and process control.

For organizations that are geographically spread inmany locations and have large sales forces, SFA

systems can deliver much needed visibility to what is

happening in the field and be better placed to handle

customer and market needs.

Early warnings and alerts are frequently provided

management information by SFA tools.

125

Components of SFA software solutions


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Opportunity Management this solution helps sales

management establish a step-by-step process.

The sales process can then be monitored and control to ensure

that it is effective.

Sales management also gets visibility to what is happening in

the field enabling the organization to respond quickly to

changing customer needs and/or competitive action.

Such tools also facilitate collaborative sellinginvolvinglarge teams. 126



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Product catalogs these are very useful fortechnical products that need lots of illustrations.

Product catalogs are kept concurrent to ensure

that the sales team and the customer have access

to the latest information.

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Needs analyzer / buying advisor this componenthelps the sales person or the customer in the buying

process by taking them to a guided, step-by-step

process.

Solutions provide interactive, what-if scenarios and

product comparisons so that the customer needs can bespecified and understood more accurately.

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Product Configurator this tool is very usefulwhen the products being sold are highly customizable.

It provides the product options that can be selected tomeet different needs.

For highly engineered products, this tool can helpimprove the technical accuracy of the quotation to the

customer and reduce the lead-time taken for

responding to the customer 129



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Pricing Engine for complex, multi-level pricing ofproducts with different business rules involving taxes

and multiple currencies, pricing engines are very

effective.

Such tools also provide for margin analysis and

commission calculations.

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Quotation and Proposal Generator for companies

that need to generate comprehensive technical and financial

quotations and proposals.

These tend to take a lot of time and effort from the sales people.

By using the automated tool, the salesperson can spend more

time on the actual customer needs rather than on elaborate (but

required) paperwork.

This is also very useful in the face of frequent changes in

product information. 131

SUCCESS IN NUTSHELL


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Hire people with a sense of humor. Quit pretending. Give yourself the freedom to be

yourself.

Train for skill. Hire for spirit & enthusiasm.

Be religious religious about hiring right people.

Do whatever it takes. Remember, there is very littletraffic in the extra mile.

Treat everyone with kindness & equal respect; younever know whom youre talking to.

132


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133


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134

Customer Service


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Let us explore the business processes that occur once

a customer has bought a product. The after salesprocess of most companies include:

Delivery and installation Registration

Warranty support & help desk

Post-warranty maintenance support

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Customer Service


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Organizations that provide an integrated salesand delivery processcan give the customer an

overall satisfactory experience which then leads

to retaining customers.

136

Customer Service


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Customer Service

In recent years, call centers have gained popularity as cost-

effective avenues for selling and servicing customers.

It has been estimated that 70 per cent of all business

transactions are executed over the phone, making this the

primary form of customer contact today.

137

Customer Service


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Call centres play a very important role in managing thecustomers relationship with the organization.

In several product companies the call center representativeis the first contact that the customer makes with the

organization and this form of customer service is

extremely important in influencing the customers view ofthe organization.

138

Customer Service


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There are several technology aids that are

used to manage large call center operations.

These include:

Automatic Call Distribution (ACD)

Interactive Voice Response Systems (IVR)Computer Telephony Integration (CTI)

139


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There is within our natureas human beings an inherent

need to sing, dance, love,laugh, mourn, tell stories

& celebrate140

SUCCESS INNUTSHELL


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Use celebrations to create memories.

Have celebrations acknowledge whatsimportant, what you value.

Let celebrations give people the

opportunity to say hello and good-bye.

Use celebrations to build relationships.

Celebrate to make the mundane fun andunusual.

If youre going to celebrate, do it right .

141

"You don't know what you can get


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142

away with until you try."

You know the expression, "it's easier toget forgiveness than permission."

Well,it's true. Good leaders don't waitfor official blessing to try things out.

They're prudent, not reckless.

"You don't know what you can get awaywith until you try. contd.


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But they also realize a fact of life in most organizations:

if you ask enough people for permission, you'll inevitably come

up against someone who believes his job is to say "no."

So the moral is, don't ask.

Less effective middle managers endorsed the sentiment, "If I

haven't explicitly been told 'yes,' I can't do it,

whereas the good ones believed, "If I haven't explicitly beentold 'no,' I can."

There's a world of difference between these two points of view


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If you have an unhappy customer onInternet , he doesnt tell his six friends,

he tells his 6000 friends.- Jeff Bezos, President amazon.com

144


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I think theres a world marketfor maybe five computers.

- Thomas Watson, IBM Chairman, 1943

145

The Difference betweend


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E-COMMERCE and E-BUSNESS

E-commerce primarily involves transactionsthat cross the firm boundaries.

E-Business primarily concerns the applicationof digital technologies to business processes

within the firm.

146

THE INTERNET AND WORLD WIDE WEB


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Most people will not stay on a site if the page and its

contents take more than 8 seconds to load.

Sometimes WORLD WIDE WEB

is referred as WORLD WIDE WAIT

147

STAGES IN THE DEVELOPMENT OFTHE INTERNET


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THE INTERNET

148

Innovation1961-1974

Institutionalization1975-1995

Commercialization1995

Unique Features of E-Commerce Technology

E-Commerce Technology Business Significance


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Dimension

Ubiquity - Internet/Web Technologyis available everywhere:

at work, at home, and elsewhere viamobile devices anytime.

The market place is extendedbeyond traditional boundaries andis removed from a temporal andgeographic location.

Marketspace is created;shopping can take place anywhere.Customer convenience is enhancedand shopping costs are reduced.

Global Reach - The technology

reaches across national boundariesaround the world.

Commerce is enabled across

cultural and national boundariesseamlessly and withoutmodification.

Marketspace includes potentiallybillions of consumers and millions

of businesses worldwide.

149

Unique Features of E-Commerce TechnologyE-Commerce TechnologyDimension

Business Significance


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Dimension

Universal Standards -There is one set of standards,namely Internet Standards.

There is one set of technical mediastandards across the globe.

Richness Video, audio andtext messages are possible.

Video, audio and text messages areintegrated into a single marketing message

and consuming experienceInteractivity Thetechnology works throughinteraction with the user.

Consumers are engaged in a dialog thatdynamically adjusts the experience to theindividual & makes the consumer a co-participant in the process of delivering

goods to the market .Information Density Thetechnology reducesinformation costs and raisesquality.

Information processing, storage &communication costs drop dramatically,while accuracy & timeliness improvegreatly. Information becomes plentiful,

cheap & accurate.

150

5 PRIMARY REVENUE MODELSRevenue Revenue source Example


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Modelp

Advertising Fees from advertisers inexchange foradvertisements

yahoo.com

Subscription Fees from subscribers inexchange for access tocontent or service

wsj.com,consumersexports.org,

sportsline.com

Transaction

Fee

Fees (commissions) for

enabling or executing atransaction

ebay.com,

e-trade.com

Sales Sales of goods,information or services

amazon.com

Affiliate Fee for business referrals mypoints com

151

eCRM


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The incremental use of Internet Technologiesto machinate key processes and leverage

business has gradually led to the integration of

eCRM forcing businesses to adapt and changeaccordingly or risk failure.

152

eCRM


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eCRM is the forging of marketing, sales &

call centerfunctions to disseminate current and

consistent information across all three functions

to build a 360-degree view of the customer

So as to offer highly personalized services and

increase customer satisfaction and market share.

153

eCRMC i ith CRM bl d


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Companies with CRM-enabled processes,

effect highly personalized communicationdirected to customers individually or by

household.

Using sophisticated technology they develop

individual profiles of customers, detect and

monitor behavior and react to customer events

in near real-time or soon after the event occurs.154


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The Perfect Answer


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The Perfect Answer

Jill and Jack buy

slacks in

black


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The Connection Proclivity


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The Connection Proclivity

in women starts early.When asked, How was school

today? a girl usually tells hermother every detail of whathappened,

while a boy might grunt, Fine.

EVEolution158


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Women dont buy brands.

They join them.

EVEolution159


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Nothing is so

contagious as

enthusiasm.Samuel Taylor Coleridge160


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Historically, smart people


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have always turned to wherethe money was.

Today, money is turning to

where the smart peopleare.162


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THE GROWTH OF B2C E-COMMERCE

300


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0

50

100

150

200

250

300

1995

1997

1999

2001

2003

2005

Years

Revenu

e

$(Billions

)

Revenue

164

$ 270 billions

THE GROWTH OF B2B E-COMMERCE

6000


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0

1000

2000

3000

4000

5000

6000

1997

1999

2001

2003

2005

Years

Revenu

e

$(Billions

)

Revenue

165

$ 5.4 trillion

THE CRITICAL IMPORTANCE OF

SERVICE EMPLOYEES


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They are the SERVICE

They are the ORGANIZATION in the customers eyes

They are the BRANDS

They are MARKETERS

166

The Service Profit Chain


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Revenue

Growth

Employee

Productivity

Employee

Retention

External

ServiceValue

Customer

satisfaction

Customer

loyalty

Profitability

Internal

ServiceQuality

Employee

Satisfaction

SUCCESS IN NUTSHELL


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Lighten up: Dont take yourself so seriously.Associate with fun people

Be the first to find humor in tense moments.

Try to make someone smile or laugh every

morning and every night.

Laugh at yourself at least once a day! 168

Service Marketing System:(1) High Contact Service-e.g., Hotel


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TheCustomer

TechnicalCore

Interior & Exterior

Facilities

Equipment

Service People

Other

Customers

Other

Customers

Advertising

Sales Calls

Market Research

SurveysBilling / Statements

Miscellaneous Mail,

Phone Calls, Faxes, etc.

Random Exposure to

Facilities / Vehicles

Chance Encounters

with Service Personnel

Word of Mouth

Service Operations System

Backstage(invisible)

Front Stage(visible)

Service Delivery System Other Contact Points

Service Marketing System

Service Marketing System:(2) Low Contact Service-e.g., Credit Card


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TechnicalCore

Mail

Self Service

Equipment

Phone, Fax,

Web site etc.

The

Customer

Service Operations System

Service Delivery System Other Contact Points

Backstage

(invisible)

Front Stage

(visible)

Advertising

Market ResearchSurveys

Random Exposures

Facilities, Personnel

Word of Mouth

Service Marketing System

Service as Theater


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All the worlds a stage andall the men and womenmerely players. They havetheir exits and their

entrances and each man inhis time plays many parts

William ShakespeareAs You L ike I t

Positioning Services in Competitive Markets

Search for Competitive Advantage in Services Requires

Differentiation and Focus


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Differentiation and Focus

Intensifying competition in service sector threatens firms with no

distinctive competence and undifferentiated offerings

Slowing market growth in mature service industries means that

only way for a firm to grow is to take share from competitors

Rather than attempting to compete in an entire market, firm must

focusefforts on those customers it can serve best

Must decide how many service offerings with what distinctive (and

desired) characteristics

Standing Apart from the Competition


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A business must set i tself apart from its competi tion.

To be successful it must identi fy and promote itself

as the best provider of attr ibutes that are important totarget customers

GEORGE S. DAY

The Boston Consulting Groups Growth-Share Matrix


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The Strategic-Planning Gap


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Ansoffs Product-MarketExpansion Grid


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Ansoffs Service-MarketExpansion Grid

SERVICE OFFERINGS


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SERVICE OFFERINGS

MARKETS

SERVED

Current

Services

Current

Markets

New

Markets

New

Services

Market

Penetration

Service

Development

DiversificationMarket

Development

Basic Focus Strategies for Services


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BREADTH OF SERVICE OFFERINGS

NUMBER

OF MARKETS

SERVED

Narrow

Many

Few

Wide

ServiceFocused

Unfocused

(Everythingfor everyone)

Market

Focused

Fully Focused(Service and

market focused)

Source: Robert Johnsto n

Service Design Involves Matching Marketing Concept withOperations Concept


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Operating Assets(Facilities/Equipment, IT Systems,People, Op. Skills, Cost Structure)

Corporate Objectivesand Resources

Service DeliveryProcess

Marketing Assets(Customer Base, Mkt. Knowledge,

Implementation Skills, Brand Reput.)

Service Marketing Concept

Benefits to customer from core/supplementary elements, style,service level, accessibility

User costs/outlays incurredPrice/other monetary costsTimeMental and physical effortNeg. sensory experiences

Service Operations Concept

Nature of processesGeographic scope of opsSchedulingFacilities design/layoutHR (numbers, skills)Leverage (partners, self-service)Task allocation: front/backstagestaff; customers as co-producers


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Understanding the Components of the

Augmented Service Product

Shostacks Molecular Model of a Total Market Entity -Passenger Airline Service


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DistributionPrice

Marketing Positioning(Weighted toward evidence) Source: Shostack

KEY

Tangible elementsIntangible elements

Service

frequency

Vehicle

Transport

Pre- andpost-flight

serviceFoodanddrink

In-flightservice

Core Products and Supplementary Services

M fi ff k f b fi


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Most firms offer customers a package of benefits:

core product (a good or a service)

supplementary services that add value to the

core

In mature industries, core products often becomecommodities

Supplementary services help to differentiate core

products and create competitive advantage by: facilitatinguse of the core service

enhancingthe value and appeal of the core

What Should Be the Core and Supplementary Elements ofOur Service Product?

How is our core product defined and what supplementaryelements currently augment this core?


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y g

What product benefits create the most value for customers?

Is our service package differentiated from the competition in waysthat are meaningful to target customers?

What are current levels of service on the core product and each ofthe supplementary elements?

Can we charge more for higher service levels on key attributes(e.g., faster response, better physical amenities, easier access, morestaff, superior caliber personnel)?

Alternatively, should we cut service levels and charge less?

Core and Supplementary Services in a Luxury Hotel(Offering Guests Much More than a Cheap Motel!)


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Reservation

ValetParking

Reception

BaggageService

Cocktail

Bar

RestaurantEntertainment/

Sports / Exercise

Telephone

Wake-upCall

Room

Service

Business

Center

Cashier

A Bed for theNight in an

Elegant PrivateRoom with a

Bathroom

What Happens, When, and in What Sequence?The Time Dimension in the Augmented Service Product


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PreVisit

Reservation

USE GUESTROOM OVERNIGHT

Parking Get car

Check in

Porter

USE ROOM

MealPay TV

Room serv ice

Phone

Check out

Time Frame of an Overnight Hotel Stay(real-time service use)

The Flower of Service:Categorizing Supplementary Services


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Core

Information

Consultation

Order-Taking

Hospitality

Payment

Billing

Exceptions

SafekeepingFacilitating elements

Enhancing elements

KEY:

Facilitating Services - Information


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Core

Customers often requi reinformation about how toobtain and use a product or

service.

They may also needreminders and documentation

Facilitating Services - Order-Taking


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188

Many goods and services

must be ordered or

Reserved in advance.

Customers need

to know what is available

and may want to securecommitment to delivery

Core

Facilitating Services - Billing


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189

How much do I owe

you?

Customers deserveclear, accurate and

intel l igible bil ls and

statements

Core

Facilitating Services - Payment


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190

Customers may pay

faster and more

cheerful ly if you make

transactions simple and

convenient for them

Core

Enhancing Services - Consultation


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191

Value can be added to

goods and services by

offer ing advice andconsultation tai lored to

each customers

needs and situation

Core

Enhancing Services - Hospitality


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Customers who invest

time and effor t in visiting

a business and using its

services deserve to betreated as welcome guests

(after al l , marketing

invited them there! )

Core

Enhancing Services - Safekeeping


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Customers prefer not to

worry about looking

after the personal

possessions that they bringwith them to a service site.

They may also want delivery

and after-sales services for

goods that they purchase

or rent

Core

Enhancing Services - Exceptions


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194

Customers appreciate

some flexibil i ty in a

business when they make

special requests.

They expect it when not

everything goes according

to plan

Core


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AL IGNING STRATEGY,

SERVI CE DESIGN, AND

STANDARDS

Provider GAP


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CompanyPerceptions of

Consumer

Expectations

ExpectedService

CUSTOMER

COMPANY

GAP 1

Part 2 Opener

Provider GAP 2


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CUSTOMER

COMPANY

GAP 2

Customer-DrivenService Designs and

Standards

CompanyPerceptions of

ConsumerExpectationsPart 3 Opener

Service Development and Design

Challenges of Service Design


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New Service Development

Types of New Services

Service Redesign

Stages in New Service Development

Service Blueprinting

Quality Function Deployment

High-Performance Service

Business Strategy Development or Review

N S i St t D l t

New Service Development Process


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Source: Booz-Allen & Hamilton, 1982; Bowers, 1985; Cooper, 1993; Khurana & Rosenthal 1997.

New Service Strategy Development

Idea Generation

Concept Development and Evaluation

Business Analysis

Service Development and Testing

Postintroduction Evaluation

Commercialization

Market Testing

Screen i deas against new service strategy

Test concept with customers and employees

Test for pr ofi tabili ty and feasibi li ty

Conduct service prototype test

Test service and other mar keting-mix elements

Front End

Planning

Implementation

Service Blueprinting


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A service blueprint is a picture or map thataccurately portrays the service system so that

the dif ferent people involved in providing it

can understand and deal with it objectively

regardless of their roles or their individual

point of view.

Service Mapping/Blueprinting

A tool for simultaneously depicting the


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201

service process, the points of customercontact, and the evidence of service from

the customers point of view.

ServiceMapping

Process

Points of Contact

Evidence

Service Blueprint Components


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202

CUSTOMER ACTIONSline of interaction

ONSTAGE CONTACT EMPLOYEE ACTIONS

line of visibility

BACKSTAGE CONTACT EMPLOYEE ACTIONS

line of internal interaction

SUPPORT PROCESSES

Service Blueprint Components


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Service Blueprinting: Key Components

1 Define standards for front stage activities


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1. Define standards for front stage activities

2. Specify physical evidence

3. Identify principal customer actions

4.------------l ine of interaction (customers and f ront stage personnel)--------

5. Front stage actions by customer-contact personnel

6.------------l ine of visibil i ty (between f ront stage and backstage)--------------

7. Backstage actions by customer contact personnel

8. Support processes involving other service personnel9. Support processes involving IT

Where appropriate, show fail points and r isk of excessive waits

Simplified Example: Blueprinting a Hotel Visit(extr act only)

Physical Hotel exterior lob by Elevator co rr ido r


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Physical

Evidence

CustomerActions

EmployeeActions

Face-to-faceFron

t

Stage

Phone

Contact

Bac

ks

tage

Makereservation

Rep.

records,

confirms

Arrive,valet park

Check-inat reception

Doorman

greets, valet

takes car

Enter

data

ValetParks Car

Make upRoom

Register

guest data

Receptionist

verifies, gives

key to room

Go to

room

Hotel exterior, lob by,

employ ees, key

Elevator, co rr ido r,

room , bel lhop

Line of

Interact ion

Line of

Visibil i ty

Express Mail Delivery Service

ICAL

ENCE

Truck

Packaging

Forms

Hand-held Computer

Uniform

Truck

Packaging

Forms

Hand-held Computer

Uniform


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Driver

Picks

Up Pkg.

DispatchDriver

AirportReceives

& Loads

Sort

Packages

Load on

Airplane

Fly to

Destination

Unload

&

Sort

LoadOn

Truck

SUPPORTPROCE

SS

CONTACTPER

SON

(BackStage)

(O

nStage)

CUSTOMERPH

YSI

EV

IDE

Customer

CallsCustomer

Gives

Package

Receive

Package

Deliver

Package

Customer

Service

Order

Fly toSort

Center

Overnight Hotel Stay

Bill

D kAL

CE


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207SUPPORTPROCESS

CONTACTPERSON

(BackStage)(OnStage)CUSTOMER

Hotel

Exterior

Parking

Cart for

Bags

Desk

Registration

Papers

Lobby

Key

Elevators

Hallways

Room

Cart for

Bags

Room

Amenities

Bath

Menu Delivery

Tray

Food

Appearance

FoodDesk

LobbyHotel

Exterior

Parking

Arrive

at

Hotel

Give Bags

to

Bellperson

Check inGo to

Room

Receive

Bags

Sleep

Shower

Call

Room

Service

Receive

FoodEat

Check out

and

Leave

Greet and

Take

Bags

Process

Registration

Deliver

Bags

Deliver

Food

Process

Check Out

Take Bags

to Room

Take

Food

Order

Registration

SystemPrepare

Food

Registration

System

PHYSICA

EVIDE

NC

Building a Service Blueprint


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Step 1

Identify the

process to

be blue-

printed.

Step 2

Identify the

customer

or

customer

segment.

Step 3

Map the

process

from the

customers

point ofview.

Step 4

Map

contact

employee

actions,

onstageand back-

stage.

Step 5

Link

customer

and contact

person

activities toneeded

support

functions.

Step 6

Add

evidence

of service

at each

customeraction

step.

Service Blueprinting Steps


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1. Identify processes

2. Isolate fail points

3. Establish a time frame

4. Analyze profitability

Application of Service Blueprints

New Service Development

concept development


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p p

market testing

Supporting a Zero Defects Culture

managing reliability identifying empowerment issues

Service Recovery Strategies

identifying service problems

conducting root cause analysis

modifying processes

Blueprints Can Be Used By:

Service Marketers Human Resources


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creating realisticcustomer expectations

service system design

promotion

OperationsManagement

rendering the service

as promised managing fail points

training systems

quality control

empowering thehuman element

job descriptions

selection criteria

appraisal systems

System Technology

providing necessary

tools:

system specifications

personal preference

databases

Degree of Interaction & Customization of Services


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CUSTOMIZATION

DEGREE

OF LABOR

INTENSITY

Standardized

Capital Intensive

Labor Intensive

Customized

Service Factory Service Shops

Professional

ServicesMass service

Source: Robert Johnsto n

Airlines

TruckingHotels

Resorts & Recreations

Hospitals

Auto repair

Other repair

services

Retailing/Warehousing

Schools

Retail aspects of

Commercial Banking

Doctors

LawyersAccountants

Architects

Creating Services as Substitutes forOwning and/or Using Goods


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Perform theWork Oneself

Hire Someone

to Do the Work

Own a Physical Good Rent the Use

of a Physical Good

Hire a taxi or limousine

Send work to secretarial service

Rent car and drive it

Rent word processor and type

Hire chauffeur to drive car

Hire typist to use word processor

Drive own car

Type on own word processor

CUSTOMERDEFINED SERVICE STANDARDS

Once marketers understand what customers expect


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p

Critical Challenge is using this knowledge to set service

quality standards and goals for the organization

Difficulty in Setting Standards to match or exceed customer

Expectations is because it requires that the

Marketing & Operations within a company work together.

( Also known as Functional I ntegration)

Factors Necessary for Appropriate Service Standards

The translation of Customer Expectations-Service Quality Standard

Degree to which tasks and behaviors performed can be

Standardized or Routinized


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Standardized or Routinized

Some managers feel that services cannot be standardized

As standardizing the tasks is perceived as being impersonal,

inadequate and not in customers best interest.

It is also inconsistent with employee empowerment- they feelcontrolled

Services are too intangible to be standardized

(This leads to vague & loose standard setting with l i ttle or nomeasurement or feedback.)


In reality many service tasks are routinespecific rules


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y y p

and standards can be fairly established and effectively

executed.

Employees may welcome how to perform actions mostefficiently :

It frees them to use their ingenuity in the more personal

& individual aspects of their jobs.


Even in Highly Customized ServicesMany aspects of


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Documents

4th Sem Service Mktg