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Services Marketing:

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Understand why every service encounter can be critical ... Understand the Gaps Model of Service Quality and how to use it to assess your organization ... – PowerPoint PPT presentation

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Title: Services Marketing:


1
  • Services Marketing
  • Best Practices in Service Excellence
  • CPMR Certification Program
  • January 14, 2009
  • Amy L. Ostrom
  • Associate Professor of Marketing
  • W. P. Carey School of Business
  • Arizona State University

2
Session Overview
  • Introduction to Services Marketing
  • Best Practices in Service Excellence
  • Achieving Service Quality
  • Designing Services from the Customers Point of
    View Service Blueprinting
  • Providing Effective Service Recovery

3
Services Are
  • Services are deeds, processes, and performances
    that are done.
  • Can be
  • Service as a product
  • Service as value-added for manufactured products
  • Customer service

4
What Does Service Mean
  • At your company?
  • As a manufacturer representative?

5
Services Are
  • Characterized by
  • Intangibility
  • Heterogeneity
  • Simultaneous Production and Consumption
  • Perishability

6
Services
  • Are all about promises
  • Involve the whole organization
  • Make people, process, and physical evidence
    important marketing mix variables (in addition to
    product, price, place, and promotion)

7
Physical Evidence
  • . . . all the tangibles related to the
    performance
  • of, and communication about, the service . . .
  • whether or not physical evidence is actually
  • indicative of quality, customers use it as such.

8
What is Your Physical Evidence Strategy?
  • What are the companys tangibles?
  • Are there missed opportunities to provide
    physical evidence of quality?
  • Does physical evidence need to be modernized or
    updated?
  • Are physical evidence decisions consistent within
    the company?

9
Best Practice 1
  • Achieving Service Quality

10
Objectives
  • Understand what service quality means and how
    customers judge and evaluate services
  • Understand why every service encounter can be
    critical
  • Learn the five dimensions of service quality
  • Apply them to yourself as a service provider
  • Understand the Gaps Model of Service Quality and
    how to use it to assess your organization

11
Achieving Service Quality Means . . .
  • Providing what your customer expects or better
    every time . . .
  • But note,
  • Customer expectations can and should be managed
  • Every individual customer is not right all of the
    time

12
Why is Delivering Service Quality So Important?
  • Every service encounter that a customer has with
    your company is an opportunity to
  • build trust
  • reinforce quality
  • build brand identity
  • increase loyalty

13
Why is Delivering Service Quality So Important?
Enhancing
Retaining
Satisfying
Getting
14
How Customers Judge Service Quality
  • Outcome Quality
  • Process Quality

15
What are the Dimensions of Service Quality?
  • RELIABILITY
  • ability to perform promised service dependably
    and accurately
  • RESPONSIVENESS
  • willingness to help customers and provide prompt
    service
  • ASSURANCE
  • employees knowledge and courtesy and their
    ability to inspire trust and confidence

16
Dimensions of SQ (contd)
  • EMPATHY
  • caring, individualized attention given to
    customers
  • TANGIBLES
  • appearance of physical facilities, equipment,
    personnel and written materials
  • Source Zeithaml, Parasuraman and Berry,
    Delivering Service Quality, The Free Press, 1990

17
SERVQUAL Attributes
RELIABILITY
EMPATHY
  • Providing service as promised
  • Dependability in handling customers service
    problems
  • Performing services right the first time
  • Maintaining error-free records
  • Giving customers individual attention
  • Employees who deal with customers in a caring
    fashion
  • Having the customers best interest at heart
  • Employees who understand the needs of their
    customers

RESPONSIVENESS
TANGIBLES
  • Keeping customers informed as to when services
    will be performed
  • Prompt service to customers
  • Willingness to help customers
  • Readiness to respond to customers requests
  • Modern equipment
  • Visually appealing facilities
  • Employees who have a neat, professional
    appearance
  • Visually appealing materials associated with the
    service

ASSURANCE
  • Employees who instill confidence in customers
  • Making customers feel safe in their transactions
  • Employees who have the knowledge to answer
    customer questions

18
Service Quality Exercise Part 1
19
Identify Service Quality Attributes for Your
Clients
Think about the service your company provides to
its customers. Brainstorm specific requirements
of customers for each of the five service quality
dimensions. Be certain the requirements reflect
the customers point of view. Which of the
dimensions do you believe is the most important?
Reliability Responsiveness Assurance Empathy
Tangibles
20
Recognize The Power of One
  • Every encounter counts
  • Employees are the service
  • Every employee can make a difference

21
Enable All Customer Touch Points to be Positive
  • 74 1 Rule

22
Service Quality Exercise Part 2
23
Service Quality Can Be Very Personal
  • How do you demonstrate
  • Reliability ?
  • Responsiveness ?
  • Assurance ?
  • Empathy ?
  • Tangibles ?

24
The Gaps Model of Service Quality
The Customer Gap
Expected Service
Perceived Service Quality
Perceived Service
25
The Gaps Model of Service Quality
Expected Service
CUSTOMER
Customer Gap
Perceived Service
External Communications to Customers
Service Delivery
COMPANY
GAP 4
GAP 3
GAP 1
Customer-Driven Service Design and Standards
GAP 2
Company Perceptions of Consumer Expectations
26
Best Practice 2
  • Designing Services from the Customers Point of
    View
  • Service Blueprinting

27
Objectives
  • Understand the challenges involved with
    communicating about and describing services
  • Learn about the components of a service blueprint
  • Gain experience using the service blueprinting
    tool via an application exercise
  • Understand how service blueprinting can be used
    to improve service processes

28
Services Are . . .
  • Processes
  • Performances
  • Experiential
  • Intangible
  • Difficult to describe in specific, concrete terms
  • Unlike manufactured products in many significant
    ways

29
Risks of Relying on Words Alone
  • Oversimplification
  • Incompleteness
  • Subjectivity
  • Interpretation

30
Service Blueprinting
  • Is one tool that helps address the challenges of
    delivering intangible processes.
  • Provides a focal point that can facilitate common
    understanding of what we offer to the
    marketplace.

31
Service Blueprinting
  • A tool for simultaneously depicting the
    service process, the points of customer contact,
    and the evidence of service from the customers
    point of view.

Process
Service Blueprinting
Points of Contact
Evidence
32
Service Blueprint Components
PHYSICAL EVIDENCE
CUSTOMER ACTIONS
ONSTAGE CONTACT EMPLOYEE ACTIONS
BACKSTAGE CONTACT EMPLOYEE ACTIONS
SUPPORT PROCESSES
33
Express Mail Delivery Service
PHYSICAL EVIDENCE
Truck Packaging Forms Hand-held Computer Uniform
Truck Packaging Forms Hand-held Computer Uniform
Customer Gives Package
Receive Package
Customer Calls
CUSTOMER
Driver Picks Up Pkg.
Deliver Package
(On Stage)
CONTACT PERSON
(Back Stage)
Customer Service Order
Airport Receives Loads
Fly to Sort Center
Dispatch Driver
Unload Sort
Load On Truck
Fly to Destination
SUPPORT PROCESS
Load on Airplane
Sort Packages
34
Overnight Hotel Stay
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
PHYSICAL EVIDENCE
Arrive at Hotel
Give Bags to Bellperson
Call Room Service
Check out and Leave
CUSTOMER
Receive Bags
Sleep Shower
Go to Room
Receive Food
Eat
Check in
Greet and Take Bags
Process Registration
Deliver Bags
Deliver Food
Process Check Out
(On Stage)
CONTACT PERSON
Take Food Order
Take Bags to Room
(Back Stage)
Prepare Food
Registration System
Registration System
SUPPORT PROCESS
35
Steps in Designing a Blueprint
  • Identify the process to be blueprinted.
  • basic business concept
  • a service within a family of services
  • a specific service component
  • Identify the customer segment that receives the
    service.
  • Map the process from the customers point of
    view.
  • Draw the line of interaction.

36
Steps in Designing a Blueprint
  • Draw the line of visibility.
  • Map the process from the customer contact
    persons point of view distinguishing visible
    (onstage) activities from invisible
    (backstage) activities.
  • Draw the line of internal interaction.
  • Link customer and contact person activities to
    needed support functions.
  • Add physical evidence.

37
For this exercise, well focus on developing
service blueprints as a tool for illustrating
service processes.
Service Blueprinting Exercise
  • You will be working in small groups to map the
    service described in the exercise handout. Refer
    to the basic Steps in Designing a Blueprint,
    the generic map, and sample blueprints to assist
    the group in this process.
  • (2) Each small group will share its blueprint (or
    highlight aspects of it) during the large group
    session that follows. As a group we will discuss
    insights on the outcomes (the blueprints
    themselves) as well as the process of developing
    them.
  • (3) We will brainstorm potential uses of
    blueprinting and conclude with a discussion of
    how to implement a blueprinting initiative.

38
Benefits of Service Blueprinting
  • Provides a common point of discussion for new
    service development or service improvement.
  • Employees can relate what I do to the service
    viewed as an integrated whole.
  • Illuminates the customers role and demonstrates
    where the customer experiences quality.
  • Promotes a conscious decision on what customers
    see and which employees should be in contact.
  • Clarifies competitive positioning by comparing
    company and competitor processes when both are
    mapped.

39
Benefits of Service Blueprinting
  • Stimulates strategic discussions by illuminating
    the elements and connections that constitute the
    service.
  • Provides a basis for identifying and assessing
    cost, revenue, and capital requirements.
  • Constitutes a rational basis for both external
    and internal marketing.
  • Assists in identifying fail points and
    opportunities for improvement.
  • Provides a customer-focused basis for developing
    metrics to track service success.
  • Provides a basis for standardizing processes
    across units.

40
General Uses for Service Blueprinting
  • Provides a common point of discussion for new
    service development or service improvement.
  • Employees can relate what I do to the service
    viewed as an integrated whole.
  • Illuminates the customers role and demonstrates
    where the customer experiences quality.
  • Promotes a conscious decision on what customers
    see and which employees should be in contact.
  • Clarifies competitive positioning by comparing
    company and competitor processes when both are
    mapped.

41
General Uses for Service Blueprinting
  • Stimulates strategic discussions by illuminating
    the elements and connections that constitute the
    service.
  • Provides a basis for identifying and assessing
    cost, revenue, and capital requirements.
  • Constitutes a rational basis for both external
    and internal marketing.
  • Assists in identifying fail points.

42
Implementing a Blueprinting Initiative
  • Define key objectives
  • What does your company want to accomplish via
    service blueprinting?

43
Implementing a Blueprinting Initiative
  • Clearly define the services and service
    components to be blueprinted
  • For each one, identify the focal customer or
    customer segment
  • Will the actual service process, the desired
    service process, or both be drawn?
  • Given the stated objectives
  • What level of detail is needed?
  • What symbology choices would enhance the
    blueprint?
  • What modifications of the tool would be
    appropriate?

44
Implementing a Blueprinting Initiative
  • All relevant parties should contribute to the
    blueprint
  • Who within your organization should be involved
    in providing input into the blueprinting process?
  • Decide the process by which blueprinting will
    take place
  • Who will elicit the blueprint information and
    prepare the blueprint?
  • How will the information be elicited from the
    relevant parties?

45
Implementing a Blueprinting Initiative
  • Decide how each blueprint session will be
    conducted
  • Explain blueprinting and its importance to
    relevant parties
  • Goal is to map typical service
  • Need to keep disagreements from impeding process
  • Be open to additional modifications that emerge
    that enhance the tool
  • Need to make sure the customer remains the focus
  • Based on input, create comprehensive blueprints
  • Get feedback on final blueprints

46
Implementing a Blueprinting Initiative
  • Decide how the blueprints that are developed will
    be used within the organization
  • How is the information contained in the
    blueprints to be used?
  • How do relevant parties get access to the
    blueprints?
  • Decide when and the process by which blueprints
    will be updated
  • Does the blueprint(s) still capture the way we do
    things?
  • Who will be in charge of updating the
    blueprint(s) over time? How will that information
    be collected?

47
Best Practice 3
  • Providing Effective Service Recovery

48
Objectives
  • Understand the nature of complaints and why
    people do and do not complain
  • Understand what customers expect when they do
    complain
  • Understand the role that people, processes, and
    communication play in preventing and responding
    to service failure
  • Understand the elements of effective service
    recovery

49
Focus on an unhappy service experienceyou had
recently as a customer.
  • What happened?
  • Did you complain?
  • How did the organization respond to your
    complaint?
  • How do you feel about the situation now? Would
    you purchase from this organization again?

50
Customer Response Following Service Failure
Service Failure
Take Action
Do Nothing
Stay with Provider
Switch Providers
Complain to Provider
Complain to Family Friends
Complain to Third Party
Switch Providers
Stay with Provider
51
The Majority of Unhappy Customers do not
Complain. Why not?
I dont know how to complain to the firm.
Its not worth the effort.
The problem was partly my fault.
They dont care about my opinion.
Your response here!
I feel uncomfortable complaining.
52
Must Find Out about Problems that Exist
  • Minimizing complaints is the wrong goal.
  • You should try to encourage complaints
    (feedback).

53
How Can You Make It Easy forCustomers to Give
You Feedback?
  • 1. Actively, not passively, seek customer
    feedback.
  • 2. Ask customers for specifics. (What could we
    have done to make this a better experience for
    you? rather than How is everything?)
  • 3. Thank customers for feedback.
  • 4. Follow-up with customers on what was done as
  • a result of their complaint.

54
  • Customers understand that things can go wrong.
  • They will evaluate you on how you handle it.

55
What Do Customers Expect When They Complain?
  • Outcome fairness
  • Procedural fairness
  • Interaction fairness

56
Making the Most of Service Recovery
  • First Phase Individual customer problems, each
    requiring a resolution
  • Second Phase Root Cause Analysis
  • Measuring service system performance
  • Making improvements in system design,
  • processes, and execution

57
Service Recovery Process
Stage 1
Stage 2
Stage 3
Stage 4
Individual Customer Employee Satisfaction
Improve Service System
Maintain Customer and Employee Loyalty
Overall Customer and Employee Satisfaction
Develop Customer and Employee Loyalty
Adapted from Stephen S. Tax and Stephen W. Brown,
Recovering and Learning from Service Failure,
Sloan Management Review, Fall 1998, pp. 75-88.
Profit
58
Failing to Recover
  • Results in
  • Lost customers
  • Dissatisfied customers, some of whom act
    aggressively against
    the organization
  • spread negative word-of-mouth
  • Leads to a downward spiral including
  • Employee aggravation
  • Decreasing employee morale
  • Decreasing quality of service over time

59
Service Recovery Lessons
  • Fail-safe the service
  • Welcome and encourage complaints
  • Act quickly
  • Treat customers fairly

60
Service Recovery Lessons
  • Learn from recovery experiences
  • Learn from lost customers
  • Prepare for service recovery
  • Systems, policies, and procedures
  • Train for and reward service recovery behavior
  • Evaluate service recovery performance

61
Summary
  • Services marketing requires consideration of
    people, process, and physical evidence.
  • Service quality means providing customers what
    they expect or better.
  • Customers judge service quality in terms of
    reliability, responsiveness, assurance, empathy,
    and tangibles.
  • Service blueprinting is a tool for designing new
    services or evaluating existing services.
  • Customers want three types of fairness (outcome,
    procedural, and interaction) when they experience
    service recovery.
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