Portfolio of Services Research Customer Complaint Solicitation/ CIStudies “ Relationship”/SERVQUAL 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 Research Forecast future expectations of customers; develop and test new service ideas
Tracking of Customer Expectations and Perceptions of Service Reliability Source : E. Sivadas, “Europeans Have a Different Take on CS [Customer Satisfaction] Programs,” Marketing News , October 26, 1998, p. 39.
Service Quality Perceptions Relative to Zones of Tolerance Retail Chain 9 8 7 6 5 4 3 2 1 0 Reliability Responsiveness Assurance Empathy Tangibles O O = Zone of Tolerance = Service Quality Perception O O O O
Importance/Performance Matrix HIGH HIGH LOW Performance Importance Attributes to Improve Attributes to Maintain High Leverage Attributes to De-emphasize Attributes to Maintain Low Leverage Low Leverage
Lifetime Value of an Average Business Customer at Telecheck International
The Customer Pyramid – Profitability Segments Most profitable customers Least profitable customers What segment spends more with us over time, costs less to maintain, spreads positive word-of-mouth? What segment costs us in time, effort and money yet does not provide the return we want? What segment is difficult to do business with? Gold Iron Lead Platinum
Relationship Development Model Customer Benefits Confidence benefits Social benefits Special treatment benefits Relationship Bonds Financial bonds Social bonds Customization bonds Structural bonds Switching Barriers Customer inertia Switching costs Core Service Provision Satisfaction Perceived service quality Perceived value Strong Customer Relationship (Loyalty) Firm Benefits Economic benefits Customer behavior benefits Human resource management benefits
service foundations built upon delivery of excellent service:
satisfaction, perceived service quality, perceived value
set up costs, search costs, learning costs, contractual costs
Levels of Relationship Strategies Excellent service and value 1. Financial bonds 2. Social bonds 4. Structural bonds 3. Customization Bonds Volume and frequency rewards Bundling and cross selling Stable pricing Social bonds among customers Personal relationships Continuous relationships Customer intimacy Mass customization Anticipation/ innovation Shared processes and equipment Joint investments Integrated information systems
Unhappy Customers’ Repurchase Intentions 82% 54% 19% 9% Complaints Resolved Quickly Complaints Resolved Complaints Not Resolved Unhappy Customers Who Don’t Complain Unhappy Customers Who Do Complain Percent of customers who will buy again after a major complaint (over $100 in losses) Source: Adapted from data reported by the Technical Assistance Research Program.
Customer Complaint Actions Following Service Failure
Causes Behind Service Switching Service Switching Behavior
Wait for appointment
Wait for service
Core Service Failure
Service Encounter Failures
Response to Service Failure
Found better service
Conflict of interest
Involuntary Switching Source : Sue Keaveney, “Customer Switching Behavior in Service Industries: An Exploratory Study,” Journal of Marketing , April, 1995, pp. 71-82.
Service Recovery Strategies Treat Customers Fairly Learn from Recovery Experiences Act Quickly Fail-safe the Service Cultivate Relationships with Customers Encourage and Track Complaints Provide Adequate Explanations Learn from Lost Customers Service Recovery Strategies
New Service Development Process Sources : Booz-Allen & Hamilton, 1982; Bowers, 1985; Cooper, 1993; Khurana & Rosenthal 1997.
Business strategy development or review
New service strategy development
Concept development and evaluation
Service development and testing
Screen ideas against new service strategy Test concept with customers and employees Test for profitability and feasibility Conduct service prototype test Test service and other marketing-mix elements Front-end Planning Implementation
New Service Strategy Matrix for Identifying Growth Opportunities Markets Offerings Existing Services New Services Current Customers New Customers Share building Diversification Market development Service development
A tool for simultaneously depicting the service process, the points of customer contact, and the evidence of service from the customer’s point of view.
Service Blueprint Process Points of contact Evidence
Service Blueprint Components Customer Actions line of interaction “ Onstage” Contact Employee Actions line of visibility “ Backstage” Contact Employee Actions line of internal interaction Support Processes
Blueprint for Express Mail Delivery Service Driver Picks Up Package Dispatch Driver Airport Receives & Loads Sort Packages Load on Airplane Fly to Destination Unload & Sort Load On Truck SUPPORT PROCESS CONTACT PERSON (Back Stage) (On Stage) CUSTOMER PHYSICAL EVIDENCE Customer Gives Package Truck Packaging Forms Hand-held Computer Uniform Truck Packaging Forms Hand-held Computer Uniform Deliver Package Customer Service Order Fly to Sort Center Line of interaction Line of visibility Line of internal interaction Customer Calls Receive Package
Blueprint for Overnight Hotel Stay Service SUPPORT PROCESS CONTACT PERSON (Back Stage) (On Stage) 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 Food Bill Desk Lobby Hotel Exterior Parking Arrive at Hotel Give Bags to Bellperson Check in Go to Room Receive Bags Sleep Shower Call Room Service Receive Food Eat 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 System Prepare Food PHYSICAL EVIDENCE Line of Interaction Line of Visibility Line of Internal Interaction Registration System
Building a Service Blueprint Step 1 Identify the process to be blue-printed Step 2 Identify the customer or customer segment Step 3 Map the process from the customer’s point of view Step 4 Map contact employee actions, onstage and back-stage, and/or technology actions Step 5 Link contact activities to needed support functions Step 6 Add evidence of service at each customer action step
AT&T’s Process Map for Measurements Source : R. E. Kordupleski, R. T. Rust, and A. J. Zaharik, “Why Improving Quality Doesn’t Improve Quality (or Whatever Happened to Marketing?),” California Management Review 35, no. 3 (Spring 1993).
AT&T’s Process Map for Measurements Reliability (40%) Easy To Use (20%) Features / Functions (40%) Knowledge (30%) Responsive (25%) Follow-Up (10%) Delivery Interval Meets Needs (30%) Does Not Break (25%) Installed When Promised (10%) No Repeat Trouble (30%) Fixed Fast (25%) Kept Informed (10%) Accuracy, No Surprise (45%) Resolve On First Call (35%) Easy To Understand (10%) Business Process Customer Need Internal Metric 30% Product 30% Sales 10% Installation 15% Repair 15% Billing % Repair Call % Calls for Help Functional Performance Test Supervisor Observations % Proposal Made on Time % Follow Up Made Average Order Interval % Repair Reports % Installed On Due Date % Repeat Reports Average Speed Of Repair % Customers Informed % Billing Inquiries % Resolved First Call % Billing Inquiries Total Quality Source: AT&T General Business Systems
Exercise for Creating Customer-Defined Service Standards
Form a group of four people
Use your school’s undergraduate or graduate program, or an approved alternative
Complete the customer-driven service standards importance chart
Establish standards for the most important and lowest-performed behaviors and actions
Be prepared to present your findings to the class
Customer-Driven Standards and Measurements Exercise Service Encounter Customer Requirements Measurements Service Quality
Figure 10.3 What Customers Expect: Getting to Actionable Steps Satisfaction Relationship Reliability Empathy Assurance Tangibles Responsiveness Price Delivers on time Returns calls quickly Knows my industry Delivers by Wednesday Returns calls in two hours Knows strengths of my competitors Requirements: Abstract Concrete Dig deeper Dig deeper Dig deeper Diagnosticity: Low High General concepts Dimensions Behaviors and actions Attributes Value Solution Provider
Figure 10.4 Process for Setting Customer-Defined Standards 2. Translate customer expectations into behaviors/actions 5. Develop feedback mechanisms Measure by audits or operating data Hard Soft Measure by transaction- based surveys 3. Select behaviors/actions for standards 6. Establish measures and target levels 7. Track measures against standards 8. Provide feedback about performance to employees 9. Update target levels and measures 1. Identify existing or desired service encounter sequence 4. Set hard or soft standards
facilitates the flow of the service delivery process
provides information (how am I to act?)
facilitates the ordering process (how does this work?)
facilitates service delivery
facilitates interaction between:
customers and employees
customers and fellow customers
sets provider apart from competition in the mind of the consumer
Figure 11.2 A Framework for Understanding Environment-User Relationships in Service Organizations Source : M. J. Bitner, “Servicescapes: The Impact of Physical Surroundings on Customers and Employees,” Journal of Marketing 56 (April 1992), 57–71.