Services Management8- Service RecoveryDr Amit Rangnekarwww.dramitrangnekar.com

Unhappy Customers Repurchase Intentions82%54%19%9%Complaints Resolved QuicklyComplaints ResolvedComplaints Not ResolvedUnhappy Customers Who Dont Complain Unhappy Customers Who Do ComplainPercent of customers who will buy again after a major complaint (over $100 in losses)Source: Adapted from data reported by the Technical Assistance Research Program.

Customer Complaint Actions Following Service Failure

Treat Customers FairlyService Recovery Strategies

Benefits of Service GuaranteesForces company to focus on its customers Sets clear standards for the organization Helps firm understand why & where it failed Generates prompt, relevant customer feedback Opportunity to recover, satisfy and retain customerInfo generated can be integrated into improving standardsEnhanced employee morale and loyalty Customer comfort level & confidence increases

Services Management9- Aligning Service Design & StandardsDr Amit Rangnekarwww.dramitrangnekar.com

Service Development and DesignChallenges inherent in service design

Stages & unique elements of new-service development

Service blueprinting

High-performance service innovations

Types of New Servicesmajor or radical innovations

start-up businesses

new services for the currently served market

service line extensions

service improvements

style changes

New Service Development ProcessSources: Booz-Allen & Hamilton, 1982; Bowers, 1985; Cooper, 1993; Khurana & Rosenthal 1997.Business strategy development or reviewNew service strategy developmentIdea generationConcept development and evaluationBusiness analysisService development and testingPostintroduction evaluationCommercializationMarket testingScreen ideas against new service strategyTest concept with customers and employeesTest for profitability and feasibilityConduct service prototype testTest service and other marketing-mix elementsFront-end PlanningImplementation

New Service Strategy Matrix for Identifying Growth OpportunitiesMarketsOfferingsExistingServicesNewServices Current CustomersNew CustomersSharebuildingDiversificationMarketdevelopmentServicedevelopment

Service BlueprintingA tool to simultaneously depict the service process, the points of customer contact, and the evidence of service from the customers point of view

Service Blueprint ComponentsCustomer Actionsline of interactionOnstage Contact Employee Actionsline of visibilityBackstage Contact Employee Actionsline of internal interactionSupport Processes

Service Blueprint Components

Blueprint for Express Mail Delivery ServiceDriverPicks Up PackageDispatchDriverAirportReceives& LoadsSortPackagesLoad onAirplaneFly toDestinationUnload&SortLoadOnTruckSUPPORT PROCESSCONTACT PERSON(Back Stage)(On Stage)CUSTOMERPHYSICALEVIDENCECustomerGives PackageTruckPackagingFormsHand-held ComputerUniformTruckPackagingFormsHand-held ComputerUniformDeliverPackageCustomerServiceOrderFly toSortCenterLine of interactionLine of visibilityLine of internal interaction

Blueprint for Overnight Hotel Stay ServiceSUPPORT PROCESSCONTACT PERSON(Back Stage)(On Stage)CUSTOMERHotel ExteriorParkingCart for BagsDeskRegistrationPapersLobbyKeyElevatorsHallwaysRoomCart for BagsRoomAmenitiesBathMenuDeliveryTrayFoodAppearanceFoodBillDeskLobbyHotel ExteriorParkingArriveatHotelGive BagstoBellpersonCheck inGo toRoomReceiveBagsSleepShowerCallRoomServiceReceiveFoodEatCheck outandLeaveGreet andTakeBagsProcessRegistrationDeliverBagsDeliverFoodProcessCheck OutTake Bagsto RoomTakeFoodOrderRegistrationSystemPrepareFoodPHYSICALEVIDENCELine of InteractionLine of VisibilityLine of Internal Interaction

Step 1

Identify process to blue-printStep 2

Identify customer / segmentStep 3

Map process from customers point of viewStep 4

Map contact employee actions, on/ back-stage, &/or techStep 5

Link contact activities to needed support functionsStep 6

Add evidence of service at each customer action stepBuilding a Service BlueprintIn New Service Development, marketers, HR, operationsManaging reliabilityService Recovery Strategies

House of Service Quality for Village VolvoSource: J. A. Fitzsimmons and M. J. Fitzsimmons, Service Management, 3rd ed. (New York: Irwin McGraw-Hill, 2000), p. 58.

Services Management10- Customer Defined Service StandardsDr Amit Rangnekarwww.dramitrangnekar.com

Customer-Defined Service StandardsCompany-defined and customer-defined service standards.

One-time service fixes and hard and soft customer-defined standards.

Service encounter sequence in developing customer-defined standards.

Translate customer expectations into behaviors and actions that are definable, repeatable, and actionable.

Service performance indexes in implementing strategy for service delivery.

Hard Customer-Defined Standards

Soft Customer-Defined Standards

AT&Ts Process Map for MeasurementsSource: R. E. Kordupleski, R. T. Rust, and A. J. Zaharik, Why Improving Quality Doesnt Improve Quality (or Whatever Happened to Marketing?), California Management Review 35, no. 3 (Spring 1993).

Customer-Driven Standards & Measurements Exercise

SatisfactionRelationshipReliabilityEmpathyAssuranceTangiblesResponsivenessPriceDelivers on timeReturns calls quicklyKnows my industry Delivers by WednesdayReturns calls in two hoursKnows strengths of my competitors

Requirements:AbstractConcrete Dig deeper

Dig deeper

Dig deeper

Diagnosticity:LowHighGeneral conceptsDimensionsBehaviors and actionsAttributes

What Customers Expect:Getting to Actionable StepsValueSolution Provider

2. Translate customer expectations into behaviors/actions5. Develop feedback mechanismsMeasure byaudits oroperating dataHardSoftMeasure bytransaction-based surveys3. Select behaviors/actions for standards6. Establish measures and target levels

Process for Setting Customer-Defined Standards7. Track measures against standards8. Provide feedback about performance to employees9. Update target levels and measures

Importance/Performance Matrix

Services Management11- Service Delivery & PerformanceDr Amit Rangnekarwww.dramitrangnekar.com

The Service Profit ChainSource: An exhibit from J. L. Heskett, T. O. Jones, W. E. Sasser, Jr., and L. A. Schlesinger, Putting the Service-Profit Chain to Work, Harvard Business Review, March-April 1994, p. 166.

Human Resource Strategies for Delivering Service Quality through PeopleProvide needed support systemsHire the right peopleRetain the best peopleDevelop people to deliver service qualityHire for service competencies and service inclinationCompete for the best peopleMeasure and reward strong service performersTreat employees as customersInclude employees in the companys visionDevelop service-oriented internal processesProvide supportive technology and equipmentMeasure internal service qualityPromote teamworkEmpower employeesTrain for technical and interactive skillsBe the preferred employer

Services Management12- Delivering Services thro IntermediariesDr Amit Rangnekarwww.dramitrangnekar.com

Services IntermediariesFranchiseesservice outlets licensed by a principal to deliver a unique service concept it has createde.g., Jiffy Lube, Blockbuster, McDonalds

Agents and Brokersrepresentatives who distribute and sell the services of one or more service supplierse.g., travel agents, independent insurance agents

Electronic Channelsall forms of service provision through electronic meanse.g., ATMs, university video courses, TaxCut software

Benefits and Challenges in Electronic Distribution of ServicesBenefits:Consistent delivery for standardized servicesLow costCustomer convenienceWide distributionCustomer choice and ability to customizeQuick customer feedbackChallenges:Price competitionInability to customize with highly standardized servicesLack of consistency due to customer involvementChanges in consumer behaviorSecurity concernsCompetition from widening geographies

Services Management13- Pricing of ServicesDr Amit Rangnekarwww.dramitrangnekar.com

Pricing of Services3 ways that service prices are perceived differently from goods prices by customers.

Pricing of services differs from pricing of goods.

Value to customers and the role of price in value.

Strategies to price services.

Three Basic Marketing Price Structures and Challenges Associated with Their Use for ServicesChallenges: 1. Costs difficult to trace. 2. Labor is more difficult to price than materials. 3. Costs may not equal the value that customers perceive the services are worth.Challenges: 1. Small firms may charge too little to be viable. 2. Heterogeneity of services limits comparability. 3. Prices may not reflect customer value.Challenges: 1. Monetary price must be adjusted to reflect value of non-monetary costs. 2. Information on service costs not available to customers; price not a central factor.

Four Customer Definitions of Value

Value is low price.Value is everythingI want in a service.Value is the quality I get for the price I pay.Value is all that I getfor all that I give.DiscountingOdd pricingSynchro-pricingPenetration pricingPrestige pricingSkimming pricingValue pricingMarket segmentation pricingPrice framingPrice bundlingComplementary pricing Results-based pricing Service Pricing Strategies for 4 Customer Definitions of Value

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