1. Chap. 12: Researching Service Success and Failure Determining success or failure is a key focus of service performance measurement. What is firm doing right? Where is it failing? Research addresses Gap 1: Not knowing what customers expect.

2. CUSTOMER Expected Service COMPANY Company Perceptions of Consumer Expectations Gap 1

3. Researching Service Success and Failure: Gap 1 Many companies believe they know what customers should want and deliver that, rather than finding out what they do want. Companies should determine customer expectations, and then deliver to them. Research allows you to better understand expectations.

4. Service Success Difficult to Achieve? Service success is difficult because: Services are dynamic and experiential in nature. Services exist only when they are rendered. Services occur in real time.

5. Service Success Difficult to Achieve? People’s expectations change over time People change over time; new customers have different expectations. Cannot predict in advance causes of flight delays – medical emergencies, weather, equipment failure, security checks for unidentified baggage. Service is subject to variability. Service quality may change over time.

6. Service Success Difficult to Achieve? Challenge of investigating services using traditional research methodologies. Surveys capture information after the fact and cannot capture experiential nature of services. It is best to measure service performance using a combination of methods, thereby offsetting the limitations of any single method.

7. Research Methodsfor Services Observational Techniques Mystery Shopping Employee Reports Survey Methods Focus Groups Experimental Field Testing Critical Incident Technique Moments of Truth Impact Analysis

8. Observational Techniques Services are dynamic, experiential processes Survey or experimental methods are not capable of fully capturing these dynamic, experiential processes Observation offers naturalistic insights into service phenomena Direct human observation does not rely on the service participants’ recall or verbal capabilities, nor does it require their cooperation

9. Observational Techniques Trace Analysis: studying the physical environment after a service has occurred to ascertain aspects of its delivery. Receipt Analysis: review data on billing statements to uncover information about service customers. MBWA

10. Mystery Shopping Mystery shopping is an unobtrusive method of gathering data in which people pose as bona fide shoppers to observe and collect information about an organization's service performance. Improve service (hospital) – improved estimates of wait time, better explanations of medical procedures, extended hours for administrators, escorts for patients who are lost, less stressful TV programming in the waiting room.

11. Employee Reports Employee Reports: Provides view of the service performance, which neither customers nor managers possess. Survey methods: information about customers, feedback on their experience, asks “why” questions, large number of respondents, bias.

12. Application True or False? You need intuition or experience when you conduct marketing research. Marketing research can predict with 100% accuracy if a marketing strategy will be a success.

13. Focus Groups Eight to twelve customers led by a moderator Probe specific aspects of a service in depth Generate useful ideas for new services and service improvements or simply explore a service’s strengths and weaknesses.

14. Focus Groups Example: screening movies before they are released to the public. After a rough cut of the film has been created, movie is viewed by a panel of consumers that matches the demographic target. Focus group give reactions to ending of the movie, their understanding of the different aspects of the plot line. Based on focus group, movie may be revised/edited to ensure success in the marketplace

15. Experimental Field Testing Evaluate new service concepts on a small scale before committing the extensive financial resources needed to introduce them across the board. Effects of different prices on phone use on international flight.

16. Critical Incident Technique The Critical Incident Technique is a research method especially useful to study the service experiences of customers and frontline employees.

17. Critical Incident Technique Think of a time when, as a customer, you had a particularly satisfying (or dissatisfying) interaction. When did the incident happen? What specific circumstances led to this situation? Exactly what did the employee (or firm member) say or do? What resulted that made you feel the interaction was satisfying (or dissatisfying)? What could (or should) have been done differently?

18. Critical Incident Technique Stories are analyzed to determine common themes of satisfaction/dissatisfaction: recovery (after failure), adaptability, spontaneity, and coping. Benefits: (1) taken from customer’s perspective, vivid, customer’s own words (2) concrete information about how employees behave and react, therefore easy to translate into action; (3) useful if service is new and very little information exists

19. Creating a Service QualityInformation System What to Measure Use service blueprints as guides to structure questions, make direct observations, and ensure that all essential aspects of the service experience are covered What to Do with the Information Uncover problem areas Adjust service standards Decide which activities need the highest priority

20. What to Measure Is this statistically valid? Validity – does this measure what it is supposed to measure? Salespeople were paid on the basis of customers’ satisfaction scores while allowing salespeople to control the customers sampled. Naturally, salespeople sent surveys only to satisfied customers, artificially inflating the scores.

21. What to Measure 2. Measures Priorities or Importance Customers have many service requirements, but not all are equally important. Food quality, wait time, lighting, décor

22. What to Measure 3. Measuring Loyalty, Behavioral Intentions, or Behavior Saying positive things about the company, recommending company to others, etc. Saying negative things about the company, switching to another company, doing less with the company, etc.

23. Application – Role of Intuition and Experience in Research 1977 - The researcher concluded the film would fail. Watergate had made America less trusting of its institutions and, as a result, Americans in the 1970s prized realism and authenticity over science fiction. This film had the word “war” in its title; America suffering from its post-Vietnam hangover would stay away in droves.