Service Marketing

The service encounters – the foundation The service encounters – the foundation of satisfaction and service qualityof satisfaction and service quality

It is the “moment of truth”It is the “moment of truth”

Occurs any time the customer interacts with Occurs any time the customer interacts with the firmthe firm

Can potentially be critical in determining Can potentially be critical in determining customer satisfaction and loyaltycustomer satisfaction and loyalty

Service encounter cascade for hotel Service encounter cascade for hotel visitvisit

Check-InCheck-InCheck-InCheck-In

Request Wake-Up CallRequest Wake-Up CallRequest Wake-Up CallRequest Wake-Up Call

CheckoutCheckoutCheckoutCheckout

Bellboy Takes to Room Bellboy Takes to Room Bellboy Takes to Room Bellboy Takes to Room

Restaurant MealRestaurant MealRestaurant MealRestaurant Meal

It is in these encounters that a customers receives a snapshot of It is in these encounters that a customers receives a snapshot of organization’s service quality each encounter contributes to the organization’s service quality each encounter contributes to the customers overall satisfaction and willingness to do business with the customers overall satisfaction and willingness to do business with the organization again.organization again.

Importance of service encountersImportance of service encounters

Any encounter can potentially be critical in determining Any encounter can potentially be critical in determining customer satisfaction and loyalty. customer satisfaction and loyalty.

e.g. repair of house appliance.e.g. repair of house appliance.

For every organization certain encounters are key to For every organization certain encounters are key to

customer satisfaction. customer satisfaction.

Types of service encounters --- Types of service encounters ---

1.1. Remote encounter [advent of internet applications]Remote encounter [advent of internet applications]

2.2. Phone encounter [tone, voice, knowledge, efficiency]Phone encounter [tone, voice, knowledge, efficiency]

3.3. Face-to-face encounterFace-to-face encounter

Sources of pleasure and displeasure in Sources of pleasure and displeasure in service encountersservice encounters

GOAL:GOAL: understanding actual events and behaviors that cause customer understanding actual events and behaviors that cause customer

dis/satisfaction in service encountersdis/satisfaction in service encounters

METHOD:METHOD: Critical Incident TechniqueCritical Incident Technique

DATA:DATA: stories from customers and employeesstories from customers and employees

OUTPUT:OUTPUT: identification of themes underlying satisfaction and dissatisfaction identification of themes underlying satisfaction and dissatisfaction

with service encounterswith service encounters

Sample Questions for Critical Incidents Sample Questions for Critical Incidents Technique StudyTechnique Study

Think of a time when, as a customer, you had a particularly Think of a time when, as a customer, you had a particularly satisfying (dissatisfying) interaction with ______________.satisfying (dissatisfying) interaction with ______________.

When did the incident happen?When did the incident happen?

What specific circumstances led up to this situation?What specific circumstances led up to this situation?

Exactly what was said and done?Exactly what was said and done?

What resulted that made you feel the interaction was satisfying What resulted that made you feel the interaction was satisfying (dissatisfying)?(dissatisfying)?

What could or should have been done differently?What could or should have been done differently?

Common Themes in CriticalCommon Themes in CriticalService Encounters ResearchService Encounters Research

Recovery Adaptability

SpontaneityCoping

employee responseto service delivery

system failures

employee responseto customer needs

and requests

employee responseto problem customers

unprompted andunsolicited employeeactions and attitudes

These four common themes have been identified as sources These four common themes have been identified as sources of customers dis/satisfaction in a memorable service experience.of customers dis/satisfaction in a memorable service experience.

Recovery – Recovery – employee response to service delivery\employee response to service delivery\system failuressystem failures

Acknowledge problemAcknowledge problem

Explain causesExplain causes

ApologizeApologize

Compensate/upgradeCompensate/upgrade

Lay out optionsLay out options

Take responsibilityTake responsibility

Ignore customerIgnore customer

Blame customerBlame customer

Leave customer to fend Leave customer to fend for him/herselffor him/herself

DowngradeDowngrade

Act as if nothing is Act as if nothing is wrongwrong

““Pass the buck”Pass the buck”

DODO DON’TDON’T

Instances of failure of the service delivery and employee is required toInstances of failure of the service delivery and employee is required toRespond in some way to consumer complaints and disappointments.Respond in some way to consumer complaints and disappointments.

Adaptability – Adaptability – employee response to customer employee response to customer needs and requestsneeds and requests

Recognize the Recognize the seriousness of the needseriousness of the need

AcknowledgeAcknowledge

AnticipateAnticipate

Attempt to accommodateAttempt to accommodate

Adjust the systemAdjust the system

Explain rules/policiesExplain rules/policies

Take responsibilityTake responsibility

IgnoreIgnore

Promise, but fail to follow Promise, but fail to follow throughthrough

Show unwillingness to tryShow unwillingness to try

Embarrass the customerEmbarrass the customer

Laugh at the customerLaugh at the customer

Avoid responsibilityAvoid responsibility

““Pass the buck”Pass the buck”

DODO DON’TDON’T

How adaptable the service delivery system is when the customer has How adaptable the service delivery system is when the customer has special needs or requests that place demand on the process.special needs or requests that place demand on the process.

Spontaneity – Spontaneity – unprompted and unsolicited unprompted and unsolicited employee actionsemployee actions

Take timeTake time

Be attentiveBe attentive

Anticipate needsAnticipate needs

ListenListen

Provide informationProvide information

Show empathyShow empathy

Exhibit impatienceExhibit impatience

IgnoreIgnore

Yell/laugh/swearYell/laugh/swear

Steal from customersSteal from customers

DiscriminateDiscriminate

DODO DON’TDON’T

(special attention, being treated like royalty, receiving something nice but (special attention, being treated like royalty, receiving something nice but not requested).not requested).

Coping - Coping - employee response to problem customersemployee response to problem customers

ListenListen

Try to accommodateTry to accommodate

ExplainExplain

Let go of the customerLet go of the customer

Take customer’s Take customer’s dissatisfaction dissatisfaction personallypersonally

Let customer’s Let customer’s dissatisfaction affect dissatisfaction affect othersothers

DODO DON’TDON’T

Behavior that is required by the employees to handle problem customer Behavior that is required by the employees to handle problem customer encounters.encounters.

The evidence of the serviceThe evidence of the service

People

Process PhysicalEvidence

Contact employees Customer him/herself Other customers

Operational flow of activities

Steps in process

Flexibility vs. standard

Technology vs. human

Tangible communication

Servicescape

Guarantees

Technology

Website

Strategies for influencing customer Strategies for influencing customer perceptionsperceptions

Measure and manage customer satisfaction Measure and manage customer satisfaction and service qualityand service quality

Aim for customer quality and satisfaction in Aim for customer quality and satisfaction in every service encounter.every service encounter.Many firms aim for “zero defects”, or 100% satisfaction in Many firms aim for “zero defects”, or 100% satisfaction in every encounter. every encounter.

clear documentation of all points of contacts between clear documentation of all points of contacts between customer and organization. customer and organization.

development and understanding of customer expectation.development and understanding of customer expectation.

Plan for effective recoveryPlan for effective recoveryneed for service process and system analysis to determine the root need for service process and system analysis to determine the root cause(s) of failure so that a redesign can ensure higher reliability. cause(s) of failure so that a redesign can ensure higher reliability.

Facilitate adaptability and flexibilityFacilitate adaptability and flexibilitythe existence of this encounter theme suggests a need to know the existence of this encounter theme suggests a need to know when and how system can be flexed, and when and how to explain when and how system can be flexed, and when and how to explain to customers why a particular request can not be granted. to customers why a particular request can not be granted.

Encourage spontaneityEncourage spontaneitythis theme appears to be somewhat random and uncontrollable, this theme appears to be somewhat random and uncontrollable, there are things that an organization can do to encourage positive there are things that an organization can do to encourage positive spontaneous behaviors and discourage negative behaviors. spontaneous behaviors and discourage negative behaviors.


Help employees cope with problem Help employees cope with problem customerscustomerscustomer isn’t always right.customer isn’t always right.

employees need appropriate coping and problem solving skills to employees need appropriate coping and problem solving skills to handle difficult customers as well as their own feelings in such handle difficult customers as well as their own feelings in such situations.situations.


Understanding Customer Understanding Customer Expectations and Perceptions Expectations and Perceptions

Through Market ResearchThrough Market Research

Chapter # 05Chapter # 05

Using Market Research to Understand Using Market Research to Understand Customer ExpectationsCustomer Expectations

Marketing research is a key vehicle for understanding Marketing research is a key vehicle for understanding customer expectations and perceptions of the service.customer expectations and perceptions of the service.

Company Perceptions of

Consumer Expectations

Company Perceptions of

Consumer Expectations

Expected Service

Expected Service

CUSTOMER

COMPANYListening

Gap

Define Problemand ResearchObjectives

DevelopServicesMeasurementStrategy

ImplementResearchProgram

Interpretand AnalyzeFindings

ReportFindings

Collectand TabulateData

STAGE 1:`

STAGE 2:

STAGE 4:

STAGE 3:

STAGE 5:

STAGE 6:

Stages in Research ProcessStages in Research Process

Research Objectives for ServicesResearch Objectives for Services

1.1. To discover customer requirements or expectations for To discover customer requirements or expectations for service.service.

2.2. To monitor and track service performance.To monitor and track service performance.3.3. To assess overall company performance compared with To assess overall company performance compared with

that of competition.that of competition.4.4. To assess gaps between customer expectations and To assess gaps between customer expectations and

perceptions.perceptions.5.5. To identify dissatisfied customers, so that service recovery To identify dissatisfied customers, so that service recovery

can be attempted.can be attempted.6.6. To gauge effectiveness of changes in service delivery.To gauge effectiveness of changes in service delivery.7.7. To appraise the service performance of individuals and To appraise the service performance of individuals and

teams for evaluation, recognition, and rewards.teams for evaluation, recognition, and rewards.8.8. To determine customer expectations for a new service.To determine customer expectations for a new service.9.9. To monitor changing customer expectations in an industry.To monitor changing customer expectations in an industry.10.10. To forecast future expectations of customersTo forecast future expectations of customers

Services research is different:Services research is different:Service research must continually monitor and track Service research must continually monitor and track service performance because performance is subject to service performance because performance is subject to human variability and heterogeneity.human variability and heterogeneity.

Services research is used to consider and monitor the Services research is used to consider and monitor the gap between customer expectations and perceptions gap between customer expectations and perceptions about the service.about the service.

Research Objectives for Services Research Objectives for Services contd….contd….

Criteria for an Effective Services Criteria for an Effective Services Research ProgramResearch Program

1.1. Includes both qualitative and quantitative research.Includes both qualitative and quantitative research.

2.2. Includes both expectations and perceptions of Includes both expectations and perceptions of customers.customers.

3.3. Balances the cost of the research and the value of Balances the cost of the research and the value of the information.the information.

4.4. Includes statistical validity when necessary.Includes statistical validity when necessary.

5.5. Measures priorities or importance of attributes.Measures priorities or importance of attributes.

6.6. Occurs with appropriate frequency.Occurs with appropriate frequency.

7.7. Includes measures of loyalty, behavioral intentions, Includes measures of loyalty, behavioral intentions, or actual behavior.or actual behavior.

1.1. Includes both qualitative and quantitative researchIncludes both qualitative and quantitative researchQualitative research Qualitative research is used to clarify problem definition and prepare ais used to clarify problem definition and prepare a

more formal empirical research. more formal empirical research.

Quantitative research Quantitative research in services is designed to describe the nature in services is designed to describe the nature

attitudes, or behaviors of customers empirically and to test specificattitudes, or behaviors of customers empirically and to test specific

hypothesis that a service marketer wants to examine. hypothesis that a service marketer wants to examine.

2.2. Includes both perceptions and expectationsIncludes both perceptions and expectationsExpectations serve as a standard or reference point for customers.Expectations serve as a standard or reference point for customers.

In evaluating service quality, customers compare their perceptions withIn evaluating service quality, customers compare their perceptions with

their expectations of encounter. their expectations of encounter.


3. Balances the cost of research and value of 3. Balances the cost of research and value of informationinformation

The costs must be traded off against the value of information to the The costs must be traded off against the value of information to the company in terms of better decision making, retained customers and company in terms of better decision making, retained customers and successful new services launches. successful new services launches.

4. Includes statistical validity when necessary4. Includes statistical validity when necessaryResearch used to track the overall service quality that will be used by Research used to track the overall service quality that will be used by organization for bonuses and salary increases.organization for bonuses and salary increases.

Not all forms of research have statistical validity, and not all forms need Not all forms of research have statistical validity, and not all forms need it. Most forms of qualitative research for example do not possess the it. Most forms of qualitative research for example do not possess the statistical validity.statistical validity.


5. Measures priorities or importance5. Measures priorities or importanceCustomers have many service requirements but not all are equally important.Customers have many service requirements but not all are equally important.

Measuring the relative importance of service dimensions and attributes helps Measuring the relative importance of service dimensions and attributes helps

managers to channel resources effectively; therefore research must document managers to channel resources effectively; therefore research must document

priorities of customers.priorities of customers.

6. Occurs with appropriate frequency6. Occurs with appropriate frequencyA single study of service provides a snapshot view of one moment in time. A single study of service provides a snapshot view of one moment in time.

Services marketing research should be an ongoing process to fully understand Services marketing research should be an ongoing process to fully understand

the markets acceptance of the company’s service.the markets acceptance of the company’s service.

7. Includes measures of loyalty and behavioral intentions7. Includes measures of loyalty and behavioral intentionsAn important trend in services research involves measuring the positive and negative An important trend in services research involves measuring the positive and negative

consequences of services quality along with overall satisfaction or service quality consequences of services quality along with overall satisfaction or service quality

scores.scores.


Common Means for Answering QuestionsCommon Means for Answering Questions

Ask customers directlyAsk customers directly mail, phone, face-to-face, online mail, phone, face-to-face, online one-on-one, in groups, formal/informalone-on-one, in groups, formal/informal

Observing customers Observing customers anthropological tools, qualitative depthanthropological tools, qualitative depth

Get information from employees and front line Get information from employees and front line service providersservice providers

Database marketing researchDatabase marketing research use customer information filesuse customer information files ““capture” behavior through data analysiscapture” behavior through data analysis

Services Research PortfolioServices Research Portfolio

Customer Complaint Solicitation

“Relationship” Surveys

Post-Transaction Surveys

Customer Focus Groups

“Mystery Shopping” of Service Providers

Employee Surveys

Identify dissatisfied customers to attempt recovery; identify most common categories of service failure for

remedial action

Obtain customer feedback while service experience is fresh; act on feedback quickly if negative patterns develop

Use as input for quantitative surveys; provide a forum for customers to suggest service-improvement ideas

Assess company’s service performance compared to competitors; identify service-improvement priorities;

track service improvement over time

Measure individual employee service behaviors for use in coaching, training, performance evaluation,

recognition and rewards; identify systemic strengths and weaknesses in service

Measure internal service quality; identify employee-perceived obstacles to improve service; track

employee morale and attitudes

Determine the reasons why customers defect

Research Objective Type of Research

Lost Customer Research

Future Expectations ResearchForecast future expectations of customers; develop

and test new service ideas

Complaint solicitation:Complaint solicitation:Good organizations take complaints seriously. Not only do the listen to theGood organizations take complaints seriously. Not only do the listen to the

complaints – they also seek complaints as communications about what can complaints – they also seek complaints as communications about what can be be

done to improve their service and their employees.done to improve their service and their employees.

Companies must solve both individual customer problem and seek overall Companies must solve both individual customer problem and seek overall

patterns to eliminate failure points.patterns to eliminate failure points.

Critical Incident studies:Critical Incident studies:Customers provide verbatim stories about satisfying and dissatisfying service Customers provide verbatim stories about satisfying and dissatisfying service

encounters. It’s a powerful and vivid tool in eliciting customer requirements.encounters. It’s a powerful and vivid tool in eliciting customer requirements.

In the conclusion, the research emerges with a list of desirable and In the conclusion, the research emerges with a list of desirable and

undesirable employee behaviors in those service encounters. undesirable employee behaviors in those service encounters.

Elements in an Effective Service Elements in an Effective Service Marketing Research ProgramMarketing Research Program

Requirements Research:Requirements Research:This type of research is very critical as it determines the types of questions This type of research is very critical as it determines the types of questions

that will be asked in surveys and ultimately improvements that will be that will be asked in surveys and ultimately improvements that will be

attempted by the firm. [structured brainstorming, examine existing research].attempted by the firm. [structured brainstorming, examine existing research].

Relationship and servqual surveys:Relationship and servqual surveys:These pose the questions about all elements in the customer’s relationship These pose the questions about all elements in the customer’s relationship

with the company.with the company.

This approach can help a company to diagnose its relationship strengths and This approach can help a company to diagnose its relationship strengths and

weaknesses.weaknesses.

It can also play an important role to identify the service aspects needing It can also play an important role to identify the service aspects needing

performance improvements.performance improvements.


Trailer calls or post transaction surveys:Trailer calls or post transaction surveys:The objective is to gauge the overall relationship with the customer. The objective is to gauge the overall relationship with the customer.

Necessarily takes customer feedback on one or all service encounters Necessarily takes customer feedback on one or all service encounters

experienced during the survey encounter. experienced during the survey encounter.

Mystery shopping:Mystery shopping:Companies mostly outsource this function and send people to service Companies mostly outsource this function and send people to service

establishments and experience service as if they are customers.establishments and experience service as if they are customers.

Mystery shopping keeps the workers on their toes. Mystery shopping keeps the workers on their toes.

Customer panels:Customer panels:These are ongoing groups of customers assembled to provide attitudes and These are ongoing groups of customers assembled to provide attitudes and

perceptions about a service overtime. These panels can represent large perceptions about a service overtime. These panels can represent large

segments of end customers. [frequent travelers, entertainment industry]segments of end customers. [frequent travelers, entertainment industry]


Lost customer research:Lost customer research:Deliberately inquiring customers for reasons of quitting/ leaving company Deliberately inquiring customers for reasons of quitting/ leaving company

service. service.

Open ended questions are encouraged.Open ended questions are encouraged.

Future expectations research:Future expectations research:This type of service research is highly recommended in service industries This type of service research is highly recommended in service industries

which are volatile and intensely competitive. [features research, lead user which are volatile and intensely competitive. [features research, lead user

Research].Research].


Documents

Service Marketing