Services Marketing: Exam 2

Provider Gap 2

Customer-driven service design and standards vs. Company perceptions of customer expectations Can be caused by: 1. Poor Service Design 2. Absense of customer-driven standards 3. Inappropriate physical evidence and servicescape

Guarantee

General Definition: assurance of the fulfillment of a condition Business Definition: a pledge or assurance offered by a firm will perform as promised and, if not, some form of reparation will take place *Guarantee for tangible products is a warranty *No guarantee for services

Building a Blueprint

Step 1: Identify the Service Process to Be Blueprinted Step 2: Identify the Customer or Customer Segment Experience the Service Step 3: Map the Service Process from the Customer's point of view Step 4: Map Contact Employee Actions and or Technology Actions Step 5: Link Contact Activities to Needed Support Functions Step 6: Add Evidence of Service at Each Customer Action Step

Unconditional

There should be no strings attached. A guarantee should NOT sound like it was written by a legal department with lots of restrictions and limitations

Sequencing

a service should be visualized in terms of physical artifacts

Cocreative

all stakeholders should be included in the service design process

Service Recovery

an action taken by an organization in response to a service failure

The Service Recovery Paradox

an unsatisfied customer who experiences good service recovery is likely to be even more satisfied and loyal

Unconditional Satisfaction Guarantees

any aspect of the service should be to the customers liking- no limits or conditions. EX: If you are unhappy for any reason then the service is free

New Services for the Currently Served Market

attempts to offer existing customers of the organization a service not previously available from the company. EX: PetSmart offering PetHotel

Service Prototype Development and Testing

developing and testing the construction of prototypes, testing for customer acceptance

Easy to Invoke

firms should eliminate all hoops that a customer must jump through to complain. A customer should not have to go online and write about the poor service they received.

Meaningful

guaranteeing aspects of the service that are important to customers- beyond what is already expected.

Passives

least likely to take action, less likely to spread negative word of mouth. They doubt the effectiveness of complaining and don't think it will be worth the time.

Major/Radical Innovations

new services for markets as yet undefined. EX: first broadcast television service

Start-up Businesses

new services fora market already served by existing products that meet the same generic needs. EX: online banking for financial transactions, airport shuttle services that compete with limousine services

Empathic Design

observing customers and how they use the firm's products and services - which generates ideas for new innovations

Procedural Fairness

refers to the policies, rules, and timeliness of the complaint process EX: "the hotel manager said that it didn't matter to her who was at fault, she would take responsibility for the problem immediately."

Market Testing

selling a limited number of products in a limited area. This will help a company determine price, promotion, and distribution systems

Service Failure

service performance that falls below a customer's expectations in such a way that leads to customer dissatisfaction

Poor Service Design

vague, undefined service design to service positioning. Failure to connect design to positioning

Service Recovery Strategy: Fixing the Problem

-Encourage and Track Complaints -Learn from Recovery Experiences -Learn from Lost Customers

Risk of Relying on Words to Described Services:

-Oversimplification -Imcompleteness -Subjectivity -Biased Interpretation

Challenges of Service Innovation and Design

-Oversimplification: giving too basic of a description of the service -Incompleteness: not describing every aspect of the service -Subjectivity: each employee/customer describing the service will have a different opinion -Biased Interpretation: no two people are responsive in exactly the same way

To provide appropriate communication:

1. Display understanding accountability 2. Supply adequate explanations

How to "fix" the problem

1. Engage and track complaints 2. Learn from recovery experiences 3. Learn from lost customers 4. Make the service fail-safe

When to Use (or Not Use) a Guarantee

1. Existing service quality in the company is poor 2. A guarantee does not fit the company image 3. Service quality is truly uncontrollable 4. Potential exists for customers abuse of the guarantee 5. Costs of the guarantee outweigh the benefits 6. Customers perceive little risk in the service

Benefits of Service Guarantees:

1. Forces the company to focus on its customers 2. Sets clear expectations for the organization 3. Generates immediate and relevant feedback from customers 4. When the guarantee is invoked there is an instant opportunity to recover 5. Information generated through guarantee can be tracked and integrated into continuous improvements 6. For customers, the guarantee reduces their sense of risk and builds confidence

To treat customers fairly

1. Outcome fairness 2. Procedural fairness 3. Interactional fairness

4 Types of Complainers:

1. Passives 2. Voices 3. Irates 4. Activists

Benefits of Service Blueprinting

1. Provides a platform for innovation 2. Recognizes roles and interdependencies among functions, people organizations 3. Facilitates both strategic and tactial innovations 4. Transfers and stores innovation and service knowledge 5. Designs moments of truth from the customer's point of view 6. Suggests critical points for measurement and feedback in the service process 7. Clarifies competitive positioning 8. Provides understanding of the ideal customer experience

How to "fix" customers

1. Respond Quickly 2. Provide appropriate communication 3. Treat customers fairly 4. Cultivate relationships with customers

Characteristics of Effective Guarantees

1. Unconditional 2. Meaningful 3. Easy to understand 4. Easy to invoke

5 Principles of Service Design Thinking:

1. User-centered 2. Cocreative 3. Sequencing 4. Evidencing 5. Holisitic

Voicers

Actively complain to service providers. These customers should be viewed as the service provider's best friends. They give the company good input on what needs to be changed. These customers give the company a 2nd chance

Service Improvements

Changes in features of services already offered EX: extended service hours, faster execution **most common type of service innovation**

Service Offering Innovation

Not all innovations are "new" to the same degree. Can be any of the following: -Major/Radical Innovations -Start-up Businesses -New Services for the Currently Served Market -Service-line Extensions -Service Improvements -Style Changes

Service Blueprinting

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

Inappropriate Physical Evidence and Servicescape

failure to design tangibles in line with customer expectations. Servicescape design does not meet customer needs. Inadequate maintenance of servicescape.

Service Attribute Guarantees

guaranteeing particular attributes of the service that are important to customers. EX: Fed Ex guarantees package delivery by a certain time

Absence of customer-driven standards

lack of customer standards, absence of management to focus on customer, absence of formal process for setting service quality goals

Irates

likely to engage in negative word of mouth and switch providers. They are more angry with the provider and do not believe that complaining would have benefits. Likely to get on a blog and rant abut their experience.

Style Changes

modest service innovations, often highly visible and have significant effects on customer perceptions EX: redesigning a website, changing the theme of a restaurant

Steps of Implementation

once the new service concept has passed all the front-end planning hurdles, it is ready for the implementation states of the process: 1. Service Prototype Development and Testing 2. Market Testing 3. Commercialization 4. Postintroduction Evaluation

Outcome Fairness

outcome (compensation) should match the customer's level of dissatisfaction EX: the waitress agreed that there was a problem. She took the sandwiches back to the kitchen and had them replaced. We were also given a free drink."

Flexible Product Development

overlapping of steps and simultaneous development. EX: important in the technology industry because products and services are evolving quickly. Computer technology allows companies to monitor customers opinions and needs during development and change the final product right up until the day it is launched

Interactional Fairness

politeness, honesty, and care from the company and its employees EX: "The loan officer was very courteous, knowledgeable and considerate - he kept me informed about the progress of the complaint."

Service-line Extentions

represents changes to an existing service. EX: restaurant adding new menu items, airline adding new routes

User-centered

services should be experienced and designed through a customers eyes

"The Tip of The Iceburg" Diagram

shows that 50% of people who experience a problem do not complain, 45% complain to front line employees, 1-5% complain to management. One complaint represents 20-100 other customers who experienced that problem and did not complain

Holistic

the entire environment of service should be considered

Postintroduction Evaluation

the information gathered during the commercialization stage can be reviewed and changes can be \ made

Easy to Understand

the language used in guarantees should be easy to read, make it clear to customers. EX: one restaurant has the guarantee, "it's fast or it's free"

Commercialization

when the service goes live and is introduced to the marketplace. Two objectives: to build and maintain acceptance of the new service among people, to monitor all aspects of the service during introduction and through the complete service cycle. Every detail of the service should be assessed.

"Fuzzy" Front End

where the greatest weaknesses in product and service innovation occur. The front end is fuzzy because of its relative abstractness

Activists

will complain on all levels. Complaining fits with their personal norms