Download OPSM 451 Service Operations Management

Koç University
OPSM 405 Service Management
Class 2:
Introduction: Service encounters
Zeynep Aksin
[email protected]
The service system
Customer needs
Service organization
mission, strategies,
policies
Environment
Marketing
Operations
Human resources
Design of service
package and
delivery system
Customers and/or
customer assets
Service delivery
System
Front room:
Service providers
Processes
Equipment
Line of visibility
Back room:
Personnel
Processes
Equipment
Enhanced
Customers and/or
customer assets
Recall: Services and service processes (Lovelock)
Inputs
TANGIBLE
ASSETS
CUSTOMER
PEOPLE PROCESSING
Passenger transportation
Heart transplant
Immunization
Criminal justice system
INTANGIBLE
MENTAL STIMULUS
PROCESSING
Entertainment
Education
Art exhibit
Concerts
POSSESSION
PROCESSING
INFORMATION
PROCESSING
Repair and maintenance
Dry cleaning
Housecleaning
Landscaping
Internet services
Banking
Financial services
Software development
Service encounters
Customer’s contacts with the service
organization where her body, mind, assets, or
information are processed
Service encounter or moment of truth
Any episode in which the customer comes into
contact with any aspect of the organization and
gets an impression of the quality of its service.
(K. Albrecht)
Jan Carlzon as president of SAS
Last year each of our 10 million customers came
into contact with approximately five SAS
employees, and this contact lasted an average
of 15 seconds each time. Thus SAS is created in
the minds of our customers 50 million times a
year, 15 seconds at a time. These 50 million
moments of truth are the moments that
ultimately determine whether SAS will succeed
or fail as a company. These are the moments
when we must prove to our customers that SAS
is their best alternative.
What does this mean?
 Service encounters: any place any time
– Entering facility, asking for directions, filling a form
etc.
– Watching ads, hearing people talk about the service,
etc.
 Contact person/thing = organization
– Rude service employee = rude organization
– Employee late for visit = unreliable organization
– Etc.
Going to a rock concert
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
(Haksever et al. )
Music lover sees ad of a concert in newspaper
Calls arena for price, schedule, and directions; gets information from
recording
Calls another number to reserve ticket with credit card
Local TV news shows rock group arrival in town
Day of the concert she drives to arena, sees banners of the group at the
entrance
Security personnel direct her to entranceof parking lot
She pays for parking and parks her car
She arrives at ticket window where she picks up her reserved ticket
At the entrance she sees security personnel and a crowd
She gives her ticket and goes in
She buys a T-shirt
She buys some beer from a concession stand
She receives help from an usher to find her seat
She enjoys the concert
More generally
 Service encounters may be simple or complex
processes
 Consist of a series of episodes
 Occur with multiple facets of an organization
 May occur with other organizations associated
with service provision
Characteristics of human interaction
 Service encounters are purposeful or goal
oriented
 Service providers are not altruistic, the
encounter is work for them
 Prior acquaintance is not required
 Encounters are limited in scope: not much time
spent on nontask issues
 task-related information exchange dominates
 Client and provider roles well defined
 Temporary status differential may occur
Service encounter as a social encounter





Human contact
Greeting, courtesy
Small talk
Task related interaction
Expectation of fairness
Service encounter as an economic
exchange
 Service organization gives up
– Labor
– Skill
– Technology
– Information
 Customer sacrifices
– Time
– Money
– Labor
Service encounter as a production process
 Resources transformed into satisfaction and
benefits for the customer
 Customer resources may also be used
Service encounter as a contractual
relationship
 Customer hires service organization to perform
service
 Delegates some authority to service provider
 Or partial employment
– Service organization makes use of customer labor
– Eg. Salad bar: Customer is “paid” through lower
salad/ food prices
Elements of a service encounter: customer
 Minimum requirement: courtesy, respect,
fairness
 For people processing systems: safety, comfort,
overall well-being
 Asset processing systems: focus on efficiency,
customer convenience, minimize time and effort
spent for service by customer
 Co-production: clear instructions, good
equipment
Elements of a service encounter: service
provider
 Service provider is also human:
– expects courtesy and respect,
– needs to have required knowledge and training
 Boundary spanners between firm and customer
 What is a single encounter for the customer may be one
of many for provider
– Understanding customer, empathy, warmth, friendliness
– Suppress own feelings
 Quality control implies finding the right employees and
making them happy
Elements of a service encounter: delivery
system
 Consists of equipment, supplies, processes,
programs, procedures, rules, regulations,
organizational culture
 Design front office parts with customer needs in
mind
 Design back office parts with most efficient
support of front office parts in mind
 Focus on the core service
Elements of a service encounter: physical
evidence
 All tangible aspects of a service organization
that a customer experiences: facility, forms,
employee dresses, etc.
 “Servicescape”: physical facility in which service
is consumed
 Important for people-processing services
 Relationship between servicescape and
customer behavior
 Relationship between servicescape and
employee morale and satisfaction
The service value chain
internal
quality
employee
satisfaction
employee
loyalty
customer
satisfaction
employee
productivity
Value
customer
loyalty
$ $ $ Euro
$ $ $ YTL
The Value Profit Chain
 Direct and strong links between:
–
–
–
–
–
–
Profit
Growth
Customer Loyalty
Customer Satisfaction
Value of goods/services to customer
Employee capability, satisfaction, loyalty and
productivity
The Value Profit Chain Sasser
 Customer Loyalty
– Conventional theory is that share of market is the
primary driver of profitability
– Sasser’s research found customer loyalty was more
frequently associated with high profits and rapid
growth.
The Value Profit Chain Schlesinger
 Determinants of employee and customer loyalty
– cycle of failure - low wages, little training, => limited
customer loyalty, high turnover
– cycle of capability - share of profits, greater control,
=> highly productive employees, satisfied customers
What is the learning?
 Service driven service: the link between employee
satisfaction and customer satisfaction
 well aligned resources: HR, IT, processes
 what makes boundary spanning employees happy?
 resources to give good service
 happy customers
 remuneration and working conditions
 Customer centric view
 all details matter
 Short encounters may determine everything