Module 4

MBA@GIT http://www.mba.git.edu.

© Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. [email protected].



Services Marketing

Module 4Customer defined service standards and service

design and positioningAccording to VTU syllabus, Service Marketing

12 MBAMM314



ObjectivesAfter studying this Module you will be able to1. Understand hard and soft standards of

services.2. Process developing service standards.3. Assess challenges of service development4. Know new service development process.5. Learn service blueprinting, service

recovery and service positioning concepts.



Customer Response Following Service Failure

Service Failure

Do NothingTake Action

Stay with ProviderSwitch Providers

Complain to Provider

Complain to Family & Friends

Complain to Third Party

Stay with ProviderSwitch Providers



Service Recovery Strategies

Learn fromRecovery Experiences

Treat Custo

mers Fairly

Learn from

Lost Customers

Welcome and Encourage

Complaints

Fail Safe th

e Service

Act Quickly

Service Recovery Strategies



Causes Behind Service Switching

Service Switching Behavior

• High Price• Price Increases• Unfair Pricing• Deceptive Pricing

Pricing

• Location/Hours• Wait for Appointment• Wait for Service

Inconvenience

• Service Mistakes• Billing Errors• Service Catastrophe

Core Service Failure

• Uncaring• Impolite• Unresponsive• Unknowledgeable

Service Encounter Failures

• Negative Response• No Response• Reluctant Response

Response to Service Failure

• Found Better ServiceCompetition

• Cheat• Hard Sell• Unsafe• Conflict of Interest

Ethical Problems

• Customer Moved• Provider Closed

Involuntary Switching



Service Guarantees

guarantee = an assurance of the fulfillment of a condition (Webster’s Dictionary)

for products, guarantee often done in the form of a warranty

services are often not guaranteed– cannot return the service– service experience is intangible

–(so what do you guarantee?)



Characteristics of an Effective Service GuaranteeUnconditional

The guarantee should make its promise unconditionally -no strings attached.

Meaningful It should guarantee elements of the service that are

important to the customer. The payout should cover fully the customer's

dissatisfaction.Easy to Understand and Communicate

For customers - they need to understand what to expect. For employees - they need to understand what to do.

Easy to Invoke and Collect There should not be a lot of hoops or red tape in the way

of accessing or collecting on the guarantee.

Source: Christopher W.L. Hart, “The Power of Unconditional Guarantees,” Harvard Business Review, July-August, 1988, pp. 54-62.



Why a Good Guarantee Works

forces company to focus on customers

sets clear standards

generates feedback

forces company to understand why it failed

builds “marketing muscle”



Service Guarantees

Does everyone need a guarantee?

Reasons companies do NOT offer guarantees:– guarantee would be at odds with company’s

image– too many uncontrollable external variables– fears of cheating by customers– costs of the guarantee are too high



Service Guarantees

service guarantees work for companies who are already customer-focused

effective guarantees can be BIG deals - they put the company at risk in the eyes of the customer

customers should be involved in the design of service guarantees

the guarantee should be so stunning that it comes as a surprise -- a WOW!! factor

“it’s the icing on the cake, not the cake”



Risks of Relying on Words Alone to Describe Services

Oversimplification Incompleteness Subjectivity Biased Interpretation


© Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. [email protected]

Ser

vice

Dev

elop

men

t Pro

cess

Source: Booz-Allen & Hamilton, 1982; Bowers, 1985; Cooper, 1993; Khurana & Rosenthal 1997.

h Business Strategy Development or Review

h New Service Strategy Development

h Idea Generation

h Concept Development and Evaluation

h Business Analysis

h Service Development and Testing

h Postintroduction Evaluation

h Commercialization

h Market Testing

Screen ideas against new service strategy

Test concept with customers and employees

Test for profitability and feasibility

Conduct service prototype test

Test service and other marketing-mix elements

Front End Planning

Implementation



New Service Strategy Matrix for Identifying Growth Opportunities

Markets

Offerings

ExistingServices

NewServices

Current Customers New Customers

SHARE BUILDING

DIVERSIFICATION

MARKETDEVELOPMENT

SERVICEDEVELOPMENT



Service Mapping/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.

ServiceMapping

Process

Points of Contact

Evidence



Service Blueprint ComponentsCUSTOMER ACTIONS

line of interaction

“ONSTAGE” CONTACT EMPLOYEE ACTIONS

line of visibility

“BACKSTAGE” CONTACT EMPLOYEE ACTIONS

line of internal interaction

SUPPORT PROCESSES



DriverPicksUp Pkg.

DispatchDriver

AirportReceives& Loads

SortPackages

Load onAirplane

Fly toDestinati

on

Unload&

Sort

LoadOn

Truck

Express Mail Delivery ServiceSU

PPO

RT

PR

OC

ESS

CO

NTA

CT

PER

SO

N(B

ack

Sta

ge)(O

n S

tage)C

USTO

ME

RPH

YSIC

AL

EV

IDEN

CE

CustomerCalls

CustomerGives

Package

TruckPackagingFormsHand-held ComputerUniform

ReceivePackage

TruckPackagingFormsHand-held ComputerUniform

DeliverPackage

CustomerServiceOrder

Fly toSort

Center



Overnight Hotel StaySU

PPO

RT P

RO

CESS

CO

NTA

CT P

ER

SO

N

(Back

Sta

ge)(

On S

tage)

CU

STO

MER

HotelExteriorParking

Cart for Bags

DeskRegistrationPapersLobbyKey

ElevatorsHallwaysRoom

Cart for Bags

RoomAmenitiesBath

Menu DeliveryTrayFoodAppearance

Food

BillDeskLobbyHotelExteriorParking

Arriveat

Hotel

Give Bagsto

BellpersonCheck in Go to

RoomReceive

BagsSleep

Shower

CallRoom

Service

ReceiveFood

EatCheck out

andLeave

Greet andTakeBags

ProcessRegistration

DeliverBags

DeliverFood

ProcessCheck Out

Take Bagsto Room

TakeFoodOrder

RegistrationSystem

PrepareFood

RegistrationSystem

PH

YSIC

AL

EV

IDEN

CE



Building a Service Blueprint

Step 1

Identify the process to be blue-printed.

Step 1

Identify the process to be blue-printed.

Step 2

Identify the customer or customer segment.

Step 2

Identify the customer or customer segment.

Step 3

Map the process from the customer’s point of view.

Step 3

Map the process from the customer’s point of view.

Step 4

Map contact employee actions, onstage and back-stage.

Step 4

Map contact employee actions, onstage and back-stage.

Step 5

Link customerand contact person activities to needed support functions.

Step 5

Link customerand contact person activities to needed support functions.

Step 6

Add evidence of service at each customer action step.

Step 6

Add evidence of service at each customer action step.



Application of Service Blueprints

New Service Development• concept development• market testing

Supporting a “Zero Defects” Culture• managing reliability• identifying empowerment issues

Service Recovery Strategies• identifying service problems• conducting root cause analysis• modifying processes



Blueprints Can Be Used By:

Service Marketers– creating realistic customer

expectations• service system design• promotion

Operations Management– rendering the service as

promised• managing fail points• training systems• quality control

Human Resources– empowering the human element

• job descriptions• selection criteria• appraisal systems

System Technology– providing necessary tools:

• system specifications• personal preference databases



Exercise for Creating Customer-Defined Service Standards

Form a group of four peopleUse your school’s undergraduate or graduate

program, or an approved alternativeComplete the customer-driven service standards

importance chartEstablish standards for the most important and

lowest-performed behaviors and actionsBe prepared to present your findings to the class



Getting to Actionable Steps

Satisfaction ValueRelationship Solution Provider

Reliability EmpathyAssurance Tangibles Responsiveness Price

Delivers on TimeReturns Calls QuicklyKnows My Industry

Delivers by Weds 11/4Returns Calls in 2 HrsKnows Strengths of My Competitors

Requirements:

Abstract

Concrete

Dig Deeper

Dig Deeper

Dig Deeper

Diagnosticity:

Low

High

General Concepts

Dimensions

Behaviors and Actions

Attributes



Process for Setting Customer-Defined Standards 1. Identify Existing or Desired Service Encounter Sequence

2. Translate Customer Expectations Into Behaviors/Actions2. Translate Customer Expectations Into Behaviors/Actions

4. Set Hard or Soft Standards

5. Develop FeedbackMechanisms

5. Develop FeedbackMechanisms

7. Track Measures Against Standards

Measure byAudits or

Operating DataHard Soft

Measure byTransaction-

Based Surveys

3. Select Behaviors/Actions for Standards 3. Select Behaviors/Actions for Standards

6. Establish Measures and Target Levels 6. Establish Measures and Target Levels

8. Update Target Levels and Measures 8. Update Target Levels and Measures



Aligning Company Processes with Customer ExpectationsCustomer Expectations

Customer Process Blueprint

Company Process Blueprint

Company Sequential Processes

AA BB CC DD EE FF GG HH

40 DaysNew Card Mailed

Lost Card Reported

Report Lost Card Receive New Card

48 Hours



Metro cash and carry customer service