1 MKT203 Lecture 4 Services Marketing Copyright Notice COPYRIGHT COMMONWEALTH OF AUSTRALIA Copyright Regulations 1969 WARNING This material has been reproduced and communicated to you by or on behalf of Kaplan Higher Education pursuant to Part VB of the Copyright Act 1968 (the Act). The material in this communication may be subject to copyright under the Act. Any further reproduction or communication of this material by you may be the subject of copyright protection under the Act. Do not remove this notice2 Icon Meaning Activity Take notes These are important points and you should take notes. You will be required to know this information. Individual Activity Students complete an individual task. Group Activity Students discuss/ complete activities in groups and report back to the class. Research required You will need to research this and do some reading before the next class. Important Concept You MUST understand this concept to successfully complete the subject. Seek help if you don’t understand. Practice Questions Students will complete these questions as practice for the exam. MKT203 Week 4 Managing the Service Encounter3 Learning Objective • Describe the nature of the service encounter + indicate how well benchmarked and blueprinted service processes are • List the core and supplementary services • Describe the nature of the service environment • Explain how we involve and motivate customer service employees • State the role of the customer as a co-producer • Describe dysfunctional customer relationships that need to be managed Managing the Service Encounter The nature of the service encounter: – The service encounter can be defined as ‘the dyadic interaction between a customer and service provider’. Other service marketing experts see service encounters as ‘role performances’, or more broadly as ‘a period of time during which a consumer directly interacts with a service’.4 Managing the Service Encounter Critical incidents and the service encounter – A critical incident is defined as a significant event that makes a positive or negative contribution to the judgment or evaluation of an organisation (e.g. Westpac Bank) or an activity (e.g. booking a hotel room online). It has been found that customers base their overall satisfaction of service encounters more on negative than on positive incidents.5 Managing the Service Encounter Customer Satisfaction Formula6 Managing the Service Encounter Zone of tolerance and customer delight – The zone of tolerance (ZOT) is defined as a range of expectations and an area of acceptable outcomes in service interactions. An understanding of the zone of tolerance is important, as service failures may be tolerable to the consumer if they fall within the expectations of the service provider. – Customer delight can be defined as a positive emotion derived from experience of a service that was unexpected and above the usual expectations of the ZOT. Managing the Service Encounter7 How Customers Handle Dissatisfaction • Recall a recent incident of dissatisfaction you may have experienced. In your groups, discuss what actions did you take. If you did not take any actions, what could have been suggestive action from a consumer’s point of view? How Customers Handle Dissatisfaction8 Service failure and recovery – As most services are processes that rely on interactions with customers, they are difficult to standardise, so it is possible that service delivery may fail. How well organisations deal with service failure and recovery is therefore an important part of managing the service encounter. Three major categories of service failures are failures in service systems, responses to implicit or explicit requests, and unprompted or unsolicited employee actions. Unhappy Customer Video: https://youtu.be/PU5FAMszaMs Managing the Service Encounter Service Recovery Paradox • Customers who experience a service failure, but subsequently receive excellent service recovery beyond what they expected, may ultimately be even more satisfied than they were before the failure. • Companies should plan to disappoint customers (lower expectations) so they can recover and gain stronger loyalty. Do you Agree?9 Managing the Service Encounter Benchmarking and blueprinting the service encounter (Part 1): – Behaviour of customers: The behaviours surround what techniques and evaluations are presented during customers’ procurement, consumption and evaluation of services. – Behaviours of front-office employees: These behaviours are parallel with behaviours of customers. – Behaviours of back-office employees: This part operates backstage and supports front-office workers. Managing the Service Encounter10 Benchmarking and blueprinting the service encounter (Part 2): – Support procedures part: This includes steps of services, and interactive behaviours of workers who are responsible for interior and support services. – Line of exterior interaction: This represents the interactions between customers and the company that provides the service. – Line of invisibility: This line is the division between visible and invisible activities, which means the services in front of the line are visible to customers. – Line of interior interaction: This is the division between the workers who provide services and those who support the service providers. Managing the Service Encounter Benchmarking standards used in industry11 Benchmarking standards used in industry The main steps in blueprinting a service are: • Step 1. Identify the service process that we want to draw into the service blueprint. • Step 2. Use the flowchart to show the service process from the customers’ view. • Step 3. Construct the flowchart to represent the activities of front and back offices conducted by service employees. First, draw the lines of exterior interaction and visibility, then write down the concrete process of service delivery. • Step 4. Draw the interior support activities conducted by the company and add the line of interior interaction to the service blueprint. This identifies the interior support activities, influencing customers and the front-office workers as specified by the manager. • Step 5. The service blueprint builder adds the tangible evidence seen or received from the customers through the service delivery. Managing the Service Encounter12 Managing the Service Encounter Components of an Effective Service Recovery System13 Core and supplementary services: – So far we have just examined the service encounter for a service. In reality, there are many services which are consumed at a point of interaction between the provider and the customer. – You not only consume the core service of education but also supplementary services, such as sports services, parking and IT services not necessarily related to your education (like checking your email and Facebook status). Managing the Service Encounter The service environment – An important aspect of the service encounter is the environment, or atmosphere in which the interaction between provider and customer takes place. In services marketing, this is called the servicescape. – A servicescape can be defined as the effect of the physical surroundings on the quality of the service encounter. Managing the Service Encounter14 Internal marketing orientation and service delivery – Recent research suggests that the internal marketing orientation (IMO), or the degree to which employees follow the organisation mission and strategy, is crucial for effective customer service. Managing the Service Encounter The customer as co-producer – For any service exchange to be successful there must be a degree of cooperation between the provider and consumers. Consumers may in fact be part of the production of the service, as co-producers. Managing the Service Encounter15 Customer as partial employee – Some researchers argue that consumers should be considered as partial employees, as their actions are crucial to the successful outcome of a service. This would seem to be the case for services that require a high degree of customer participation. Managing the Service Encounter Dysfunctional customer relationships – In some instances, relationships with customers may end up being uncooperative or even abusive. Causes of customer abuse have been found to be service failures; problems with servicescapes; and the psychological obstructism of customers, or difficult and disruptive customers. Managing the Service Encounter16 Extra Readings • Spreng, Richard A., Harrell, Gilbert D., and Mackoy, Robert D. (1995). “Service Recovery: Impact on Satisfaction and Intentions”. Journal of Services Marketing, 9 (1), 556-67. • Stephens, Nancy and Gwinner, Kevin P. (1998). “Why Don’t Some People Complain? A Cognitive-Emotive Process Model of Consumer Complaint Behaviour”. Journal of the Academy of Marketing Science, 26 (Summer), 172-189. • Tax, Stephen S., Brown, Stephen W., and Chandrashekaran, Murali (1998). “Customer Evaluations of Service Complaint Experiences: Implications for Relationship Marketing”. Journal of Marketing, 62 (April), 60-76. • Journal of Services Marketing, Vol 19 Iss. 5 2005. Special edition on Service recovery