The Service Encounter

where Service is evaluatedChapter 4

• Moment of Truth– 關鍵時刻 Jan Carlzon

• SAS CEO, Scandinavian Airlines System

– a moment in time, when the customer is• evaluating the service • forming an opinion of its quality

– An airline passenger» a series of encounters

• Searching flights, buying tickets, boarding pass, checking luggage, …

Role of Technology in the Service Encounter

Technology Technology Technology

Technology Technology

Customer Customer 

Server 

Server 

Server 

Server 

Server 

CustomerCustomer

Customer

 

D. Technology-MediatedService Encounter

E. Technology-GeneratedService Encounter

A. Technology-FreeService Encounter

B. Technology-AssistedService Encounter

C. Technology-FacilitatedService Encounter

4-3

• Technology-free service encounter– High touch service

– Customer is in physical proximity to and interact with a human service provider

• Personal care: 老人照護• Professional service: Law, Consulting, physical therapy

• Technology-assisted service encounter• Only the service provider has access to the technology

to facilitate the delivery of face-to-face service

– Dentist: full mouth x-ray exam– Airlines: check-in counter

• Technology-facilitated service encounter• Both customer and service provider have access the

same technology (co-location required)

– Professional Athlete: coach & athlete

• Technology-mediated service encounter• Both customer and service provider have access the

same technology (without co-location)

– Express package service: package tracking system• Technology-generated service encounter

• The human service provider is replaced entirely

– Customer self service– ATM, check-out counter

• Emma’s out of town business trip– Please find how many self-service for the day• Ex 4.1, p. 93

• Driving forces for self-service• Cost saving• Customization• Accuracy• Convenience• Speed

Evolution of Self-Service

Service Industry Human Contact Machine Assisted Internet Facilitated

Banking Teller ATM Online banking

Grocery Checkout clerk Self-checkout station Online order/ pickup

Airlines Ticket agent Check-in kiosk Print boarding pass

Restaurants Wait person Vending machine Online order/ delivery

Movie theater Ticket sale Kiosk ticketing Pay-for-view

Book store Information clerk Stock-availability terminal

Online shopping

Education Teacher Computer tutorial Distance learning

Gambling Poker dealer Computer poker Online poker

4-8

• Unskilled service job – is bound to be replaced by self-service technology

• Highly skilled– Healthcare

• Intellectual– Professional

• Creative– entertainment

The Service Encounter Triad

ServiceOrganization

CustomerContactPersonnel

EfficiencyVersus

Satisfaction

EfficiencyVersus

Autonomy

Service Delivery

- Culture- Empowerment- Control Systems- Supporting Technology- Performance Evaluation

- Selection- Training- Ethical Climate

- Expectations- Attitudes- Coproduction

- Perceived Control- Role of Scripts- Outcome- Failure Recovery

4-10

• Balance the need for control of three parties• create a beneficial service encounter

– Service organization• Interest in delivering as efficient as possible

– Contact personnel• Interest in control customers’ behavior

– Make their work more manageable and less stressful

– Customer• Attempt to gain control to derive the most benefit

– Encounter dominated by service organization• To be efficient, to be cost leadership

– Standardize service delivery» SOP

– Limit discretion of contact personnel» everything go “by the book”

– Limit choices for customers

• McDonald’s – Structural organization and environment– Teaching customers what not to expect

– Contact personnel dominated encounter• Service providers’ perceived expertise

– Physician– Financial advisors

• Contact personnel in an autonomous positions• Patients, sometimes, are not even considered as

“customers”

– Customer dominated encounter– Customers completely control over a limited standardized

service

• Self-serve gasoline station• Online brokerage

– 股票、債劵、基金– Efficiency: the site is easy to navigate– System availability: site does not crash– Fulfillment: order arrive quickly– Privacy: credit card is protected

The Service Encounter Triad

ServiceOrganization

CustomerContactPersonnel

EfficiencyVersus

Satisfaction

EfficiencyVersus

Autonomy

Service Delivery

- Culture- Empowerment- Control Systems- Supporting Technology- Performance Evaluation

- Selection- Training- Ethical Climate

- Expectations- Attitudes- Coproduction

- Perceived Control- Role of Scripts- Outcome- Failure Recovery

4-15

The service organization

• The service organization establishes the environment for the service encounter– Culture– Empowerment– Control system– Customer relationship management

– Culture• Shared pattern of beliefs and expectation among

organization’s members– Service Master: hospitals housekeeping provider

» Service to the Master• “to honor God in all we do”

• Choice of language to communicate value– Disney

» Show business terms used to remind employees that Disney is in the entertainment business

» Employee is “cast member”– Federal express

» “absolutely positively overnight”» Communicate by many extraordinary employee feats to

safeguard the service guarantee

• Benefit from share set of values– Contact personnel is empowered– Without traditional supervision

– Empowerment ( 賦權 )– Delegation ( 授權 )

• Trust unconditionally – to evaluate choices and – competently execute creative decision

• Inverted T organization– Contact personnel

» is trained» motivated» supplied with timely, computer-based information

Enable to manage the service encounter at the point of delivery

Organizational Control

ControlSystem

Objective EmployeeChallenge

Management Challenge

Key Issues

Belief Contribute Uncertainty about purpose

Communicate core values and mission

Identify core values

Boundary Compliance Pressure or temptation

Specify and enforce rules

Risks to be avoided

Diagnostic Achieve Lack of focus Build and support clear targets

Critical performance variables

Interactive Create Lack of opportunity or fear of risk taking

Open organizational dialogue to encourage learning

Strategic Uncertainties

4-20

– Customer relationship management• Information system to manage interaction between

customer and contact personnel– Match customers need with product offering– Remind customer of service requirement– Segment customers– Lead management

• Enable marketing departments to identify and target their best customers• Customer service• Crowd-sourcing

The Service Encounter Triad

ServiceOrganization

CustomerContactPersonnel

EfficiencyVersus

Satisfaction

EfficiencyVersus

Autonomy

Service Delivery

- Culture- Empowerment- Control Systems- Supporting Technology- Performance Evaluation

- Selection- Training- Ethical Climate

- Expectations- Attitudes- Coproduction

- Perceived Control- Role of Scripts- Outcome- Failure Recovery

4-22

Contact personnel

• Personality attributes of contact personnel– Flexibility, tolerance for ambiguity– Monitor and change behavior on the basis of

situational cue– Empathy for customers

• Selection– Useful interview techniques

– Abstract questioning• Open-ended questions

– “From your past work experience, what type of customer was most difficult for you to deal with and why?”

– Applicant’s ability to relate service situation to information, experience & knowledge

– Willingness to adapt– Take notice of details

• Discover applicant is able to learn as well as fast• Interview preparation will enable to discuss extensively• No assurance that past event experiences will transfer

to future job

– Situational vignette• 頁 114, (p.99)• Reveal applicant’s

– Instincts– Interpersonal capabilities– Common sense– Judgement– “think on their feet”

• Good communication skills IS NOT– Genuine desire to serve– Empathic nature

– Role playing• Participation in a simulated situation• Used in the final phase of recruitment• Way to observe applicants under stress• Allow more realistic responses ( 實境秀 )• Difficult to compare applicants directly

Contact personnel

• Training• Provide skills required to perform the jobs• Technical skills are in detail

– Use cash register– Enforce safety requirements

• Customer interaction skills just mentioned simple comments– To be pleasant and smile

– Unrealistic customer expectations– Expectation can not be met by the service delivery system

• Unreasonable demands: – “I want to carry all my luggage on board.”

• Abusive or hostile attitude– 韓航副總裁『堅果返航』

• Inappropriate behavior– Intoxicated

• Unanticipated demand– Special demand with medical or language difficulties

• Demands contrary to policies– 機車教授 vs 怪獸家長

– Service failure– Unable to meet customers need

• Communication burden on the contact personnel• Opportunity for innovation and flexibility in the recovery

process

– Unavailable service• “why is the ATM out of order?”

– Slow performance• “why hasn’t our plane arrived?”

– Unacceptable service• “my seat doesn’t recline.”

– Use scripts to train contact personnel• Prevent from bad situation become worse• Increase customer satisfaction• Decrease personnel’s stress and frustration

Contact personnel

• Create an ethical climate– Contact personnel’ job is • not only advance their firm• but also act appropriately for the societyServing multiple conflicting demands

Examples of Unethical BehaviorsMisrepresenting the Nature of the Service Customer Manipulation

General Honesty and Integrity

• Promising a nonsmoking room when none is available

• Using bait-and-switch tactics

• Creating a false need for service

• Misrepresenting the credentials of the service provider

• Exaggerating the benefits of a specific service offering

• Giving away a guaranteed reservation

• Performing unnecessary services

• Padding a bill with hidden charges

• Hiding damage to customer possessions

• Making it difficult to invoke a service guarantee

• Treating customers unfairly or rudely

• Being unresponsive to customer requests

• Failing to follow stated company policies

• Stealing customer credit card information

• Sharing customer information with third parties

4-33

– Management should promote• Formal control

– Enforcement of ethical codes– Punishment for ethical violation

• Informal control– Discussion of ethics– Internalization of a code of ethics, ethical climate

Service quality & job satisfaction

The Service Encounter Triad

ServiceOrganization

CustomerContactPersonnel

EfficiencyVersus

Satisfaction

EfficiencyVersus

Autonomy

Service Delivery

- Culture- Empowerment- Control Systems- Supporting Technology- Performance Evaluation

- Selection- Training- Ethical Climate

- Expectations- Attitudes- Coproduction

- Perceived Control- Role of Scripts- Outcome- Failure Recovery

4-35

The customer

• Every purchase– an important event for the customer– a routine for the service provider

• Emotional involvement– Minor• Gasoline at self-serve station• Over night stay at budget hotel

– Personal & dramatic• 婚紗攝影

The customer

• Expectation & Attitudes– Economizing customer• Maximize value for their expenditure of time, effort, &

money• Loss economizing customers is a early sign of

competitive threats

– Ethical customer• Customer feel a moral obligation to patronize socially

responsible firm• Company develop a reputation for community service

to create such loyal customer base– Ronald McDonald House program

» Affordable accommodation for family of hospitalized child

– Personalizing customer• Want interpersonal gratification

– Neighborhood family restaurant» Greet customers on a first name basis

– Convenience customer• Not interested in the shopping experience• Might be willing to pay extra for personalized, or

hassle-free service– Home delivery of grocery

– Customers attitude range between• Self-sever and• Full service to engage with service provider

The customer

• The role of script in coproduction– Customer as a partial employee• Diners in a restaurant

– Assembly their salad – Carry their meal to a table– Bus their own table

• Customer learn a set of behavior for the situation• A script defined by the social norms• 健康檢查流程

Service Encounter Success Factors

Customer Service Provider Human Machine

Human

Employee selection Interpersonal skills Support technology Engender trust

Intuitive interface Verification Security Easy to access

Machine

Easy to access Fast response Verification Remote monitoring

Compatibility Tracking Verification Security Failsafe

4-42

Create a customer service orientation

• Happy employee leads• Happy customers leads• Better service quality

• Customer perceived better service when branch employee report– More enthusiastic service emphasis– Branch manager emphasizes service as personnel

perform their roles– Active effort to retain all customer accounts• Not just those large-account holders

– The branch is staffed with sufficient, well trained tellers

      

 

Higher Customer Satisfaction

Higher Employee Satisfaction

More repeat purchases ↔ More familiarity with customer needs and ways of meeting them

Stronger tendency to complain about service errors

↔ Greater opportunity for recovery from errors

Lower costs ↔ Higher productivity

Better results ↔ Improved quality of service

Satisfaction Dualism

4-45

Service Profit Chain

4-46

• Internal quality drive employee satisfaction– USAA, a financial service company• Telephone service representative• Information system show complete customer info

– When customer give member number

• Job related training in a resemble college campus setting

• Employee satisfaction drive retention and productivity– Employee turnover is the loss of productivity– Southwest airlines high employee retention• The most profitable airlines

• Employee retention and productivity drives service value– Southwest airlines• Frequent departures• On-time arrival• Friendly employees• Very low farealthough• does not assign seats, reservation not integrated with

other airlines

• Service value drives customer satisfaction– Quality & productivity improvement yield high

service quality and lower cost

• Customer satisfaction drive customer loyalty– Xerox found• Very satisfied customers were 6 times more likely to

repurchase

• Customer loyalty drive profitability and growth– 5% increase in customer loyalty– Produce a profit increase from 25 to 85%

• Mini case – 4.1 Amy’s Ice Cream– 4.2 Enterprise Rent-A-Car