The Service Encounter
Learning Objectives
• Use the service encounter triad to describe a service
firm’s delivery process.
• Discuss the role of organizational control systems for
employee empowerment.
• Prepare abstract questions and write situational
vignettes.
• Discuss the role of customer as coproducer.
• Describe how elements of the service profit chain
lead to revenue growth and profitability.
The Service Encounter Triad
Service
Organization
Efficiency
versus
autonomy
Efficiency
versus
satisfaction
Contact
Personnel
Customer
Perceived
control
Definitions of Culture
• Schwartz and Davis (1981) - Culture is a
pattern of beliefs and expectations shared by
the organization’s members.
• Mintzberg (1989) - Culture is the traditions
and beliefs of an organization that distinguish
it from others.
• Hoy and Miskel (1991) - Culture is shared
orientations that hold the unit together and
give a distinctive identity.
Organization Culture
A system of shared beliefs supports organizational flexibility in
meeting the challenges of managing projects in globalized
competitive environments
Organization Culture
A system of shared beliefs supports organizational flexibility in
meeting the challenges of managing projects in globalized
competitive environments
Multicultural clientele
Cultural differences and gaining trust among
team members are major hurdles to overcome
The Service Organization
• Culture
–ServiceMaster (Service to
the Master)
–Disney (Choice of language)
The Service Organization
• Empowerment
Invest in people
Use IT to enable personnel
Recruitment and training critical
Pay for performance
• Who was the (business) ‘superstar’ in Tom Peters’
best seller “Thriving on Chaos”?
• If you think it was a Fortune 100 CEO, you are
very wrong!
– It was Paolo Azuela
WHO?
It was Mr. Paolo Azuela, a
housekeeper at the Ritz Carlton
Hotel in San Francisco.
• Mr. Azuela .. And the bellboy who picks up your
bags.. And the doorman who hails you a cab…
are authorized, on the spot – no signature from
above – to spend up to $2000 to fix any
customer problem.
There are many people with exalted
titles who cannot spend $2000
without six signatures!
Organizational Control
Beliefs
Systems
To
contribute
Boundary
Systems
To do right Specify and
enforce
rules
To achieve Build clear
targets
Risks to be
avoided
To create
Strategic
Uncertainties
Diagnostic
Control
Systems
Interactive
Control
Systems
Core values Identify core
& mission values
Encourage
learning
Critical
performance
variables
Contact Personnel
• Selection
1. Abstract Questioning
2. Situational Vignette
3. Role Playing
• Training
Unrealistic customer expectations
Unexpected service failure
Difficult Interactions with Customers
Unrealistic customer expectations
1. Unreasonable demands
2. Demands against policies
3. Unacceptable treatment of
employees
4. Drunkenness
5. Breaking of societal norms
6. Special-needs customers
Unexpected service failure
1. Unavailable service
2. Slow performance
3. Unacceptable service
Use scripts to train for proper response
The Customer
• Expectations and Attitudes
Economizing customer
Ethical customer
Personalizing customer
Convenience customer
• Customer as Co-Producer
Service Encounter Success Factors
Customer
Human
Machine
Service Provider
Human
Machine
Employee selection
Interpersonal skills
Support technology
Engender trust
Easy to access
Fast response
Verification
Remote monitoring
User friendly
Verification
Security
Easy to access
Compatibility
Tracking
Verification
Security
Employee Perceptions of Customer Service
at a Branch Bank
Outstanding
Customer
6
5
4
3
2
1
Terrible
1
Terrible
2
3
4
Employee
5
6
Outstanding
Satisfaction Mirror
More
Repeat
Purchases
Stronger Tendency
to Complain about
Service Errors
Higher Customer
Satisfaction
Lower Costs
Better Results
More Familiarity with
Customer Needs and
Ways of Meeting
Them
Greater Opportunity
for Recovery
from Errors
Higher Employee
Satisfaction
Higher Productivity
Improved Quality
of Service
Is attitude emphasized?
Are job previews utilized?
Are customers screened?
Are employees
encouraged to
refer friends?
Careful Employee
and Customer Selection
Is training for job and life?
(and Self-selection))
Are referrals from
the “best” employees
given priority?
Employee
Referrals of
Potential Job
Candidates
High-Quality
Training
Is satisfaction
measured
periodically?
Are measurements
linked to other
functions on
the cycle?
Are they linked to
service objectives?
Are they balanced
between monetary
and non-monetary?
Satisfied
Employees
Is it an important element
of quality of work life?
Cycle
of Capability
Appropriate
Rewards
and Frequent
Recognition
Well-Designed
Support Systems
 Information
 Facilities
Greater Latitude
to Meet
Customer’s Needs
Clear Limits on,
and Expectations
of, Employees
Do they limit the “right” risks?
Are they logical to employees?
Do they reflect
needs of the
service encounter?
Are they designed to
foster relationships?
Does it reflect top
management “talk”?
Is it enough to allow
delivery of results to
customers?
Service Profit Chain
Internal
External
Operating strategy and
service delivery system
Service
concept
Target market
Loyalty
Revenue
growth
Customers
Satisfaction
Employees
Capability
Productivity
&
Output
quality
Service
value
Satisfaction
Loyalty
Profitability
Service
quality
Customer orientation/quality emphasis
Allow decision-making latitude
Selection and development
Rewards and recognition
Information and communication
Provide support systems
Foster teamwork
Quality & productivity
improvements yield
higher service quality
and lower cost
Attractive Value
Service designed
& delivered to
meet targeted
customers’ needs
Solicit customer
feedback
Lifetime value
Retention
Repeat Business
Referrals
Topics for Discussion
• How does the historical image of service as servitude affect
today’s customer expectations and service employee
behavior?
• What are the organizational and marketing implications of
considering a customer as a “partial employee”?
• Comment on the different dynamics of one-on-one service
and group service.
• How does use of a “service script” relate to service
quality?
• If the roles played by customers are determined by cultural
norms, how can services be exported?
Situational Vignette
A particular customer has the irritating habit
of always showing up about two minutes
before closing and staying late. Often this
occurs on the night when weekly store
meeting are held after closing time. This
delays starting the meeting and furthermore
employees are on the clock waiting for the
customer to leave. What would you do?
Situational Vignette
As a new employee at a busy store, you have
been routinely performing clean-up tasks
(garbage removal and restroom cleaning).
Company policy dictates that these are tasks
to be shared. It has become clear that two
employees consistently avoid these jobs in
favor of more pleasant duties. How would
you handle this situation?