DELIVERING &

PERFORMING SERVICE
 Provider GAP 3

CUSTOMER

Service Delivery
COMPANY
GAP 3
Customer – Driven
Service Design
and Standards
 We Shall Discuss

Delivering
Service Through
Employees Role Customers Role Intermediaries & Managing
in Service in Service Electronic Demand &
Delivery Delivery Channels Capacity
EMPLOYEES’ ROLES IN
SERVICE DELIVERY
 Service Employees
• They are the service
• They are the firm in the customer’s eyes
• They are marketers
• Importance is evident in
– The Services Marketing Mix (People)
– The Services Triangle
 Service Employees

• Who are they?

– “boundary spanners”
• What are these jobs like?
– emotional labor
– many sources of potential conflict
• person/role
• organization/client
• interclient
• quality/productivity
 The Services Marketing Triangle
Company
(Management)

Internal Marketing External Marketing

Enabling the promise” “Making the promise”

Employees Customers

Interactive Marketing
“Delivering the promise”
Boundary Spanners Interact with Both Internal
and External Constituents

External Environment

Internal Environment
Sources of Conflict for Boundary-
Spanning Workers

• Person vs. Role

• Organization vs. Client

• Client vs. Client

• Quality vs. Productivity

Human Resource Strategies for Closing GAP 3
Hire for
Service
Competencies
and Service
Inclination

Hire the
Right People

Develop

Employees
Customer-

Empower
Employees

Customers

Retain the People to

oriented
Treat

Deliver
as

Best Service Service

People Delivery Quality

Provide
Needed Support
Systems

Provide
Supportive
Technology
and
Equipment
 Strategies for Delivering Service Quality
through People
• Hire the Right People
– Compete for the Best People

– Hire for Service Competencies and Service Inclination

– Be the Preferred Employer

• Develop People to Deliver Service Quality

– Train for Technical and Interactive Skills

– Empower Employees

– Promote Teamwork
 Strategies for Delivering Service Quality
through People cont…..

• Provide Needed support systems

– Measure Internal Service Quality

– Provide Supportive Technology and Equipment

– Develop Service-Oriented Internal Processes

• Retain the best People

– Include Employees in the Company’s Vision

– Treat Employees as Customers

– Measure and Reward Strong Service Performers

 Empowerment
Benefits:
 quicker responses to customer needs during service delivery
 quicker responses to dissatisfied customers during service recovery
 employees feel better about their jobs and themselves
 employees tend to interact with warmth/enthusiasm
 empowered employees are a great source of ideas
 great word-of-mouth advertising from customers
Drawbacks:
 potentially greater dollar investment in selection and training
 higher labor costs
 potentially slower or inconsistent service delivery
 may violate customers’ perceptions of fair play
 employees may “give away the store” or make bad decisions
Customers’ Roles in
Service Delivery
Levels of Customer Participation across
Different Services
 How Customers Widen the Service
Performance Gap
• Lack of understanding of their roles

• Not being willing or able to perform their

roles

• No rewards for “good performance”

• Interfering with other customers

• Incompatible market segments

 Importance of Other (“Fellow”) Customers
in Service Delivery

• Other customers can detract from satisfaction:

– disruptive behaviors
– overly demanding behaviors
– excessive crowding
– incompatible needs
• Other customers can enhance satisfaction:
– mere presence
– socialization/friendships
– roles: assistants, teachers, supporters, mentors
Customer Roles in Service
Delivery

Productive Resources

Contributors to
Quality and
Satisfaction

Competitors
 Customers as Contributors to
Service Quality and Satisfaction
• Customers can contribute to:
– their own satisfaction with the service
• by performing their role effectively
• by working with the service provider

– the quality of the service they receive

• by asking questions
• by taking responsibility for their own satisfaction
• by complaining when there is a service failure
 Customers as Competitors

• customers may “compete” with the service

provider
• “internal exchange” vs. “external exchange”
• internal/external decision often based on:
– expertise capacity
– resources capacity
– time capacity
– economic rewards
– psychic rewards
– trust
– control
 Strategies for Enhancing
Customer Participation

Effective
Define Customer
Customer Recruit, Educate,
Participation and Reward
Jobs
Customers

Manage the
Customer
Mix
 Strategies for Enhancing Customer
Participation
• Define customers’ jobs
– helping oneself
– helping others
– promoting the company

• Recruit, educate, and reward customers

– recruit the right customers
– educate and train customers to perform effectively
– reward customers for their contributions
– avoid negative outcomes of inappropriate customer participation

• Manage the customer mix

Delivering Service Through Intermediaries
and Electronic Channels

Service Distribution

Electronic Channels
 Service Provider Participants

• service principal (originator)

– creates the service concept
(like a manufacturer)

• service deliverer (intermediary)

– entity that interacts with the customer in the
execution of the service
(like a distributor/wholesaler)
 Services Intermediaries
• Franchisees
– service outlets licensed by a principal to deliver a unique service
concept it has created
• e.g., Jiffy Lube, Blockbuster, McDonald’s

• Agents and Brokers

– representatives who distribute and sell the services of one or more
service suppliers
• e.g., travel agents, independent insurance agents

• Electronic Channels
– all forms of service provision through electronic means
• e.g., ATMs, university video courses, TaxCut software
Benefits and Challenges in Electronic Distribution
of Services

Benefits:
 Consistent delivery for standardized services
 Low cost
 Customer convenience
 Wide distribution
 Customer choice and ability to customize
 Quick customer feedback
Challenges:
 Price competition
 Inability to customize with highly standardized services
 Lack of consistency due to customer involvement
 Changes in consumer behavior
 Security concerns
 Competition from widening geographies
MANAGING DEMAND
AND CAPACITY
Objectives for Managing Demand and
Capacity
• Explain:
• the underlying issue for capacity-constrained
services
• the implications of capacity constraints
• the implications of different types of demand
patterns on matching supply and demand
• Lay out strategies for matching supply and demand
through:
• shifting demand to match capacity or
• flexing capacity to meet demand
• Demonstrate the benefits and risks of yield
management strategies
 Understanding Capacity Constraints
and Demand Patterns

Capacity Constraints Demand Patterns

• Time, labor, • Charting demand

equipment and patterns
facilities • Predictable cycles
• Optimal versus • Random demand
maximal use of fluctuations
capacity • Demand patterns by
market segment
 Figure 14-3

Strategies for Shifting Demand

to Match Capacity

Demand Too High Shift Demand Demand Too Low

• Use signage to communicate • Use sales and advertising to

busy days and times increase business from current
market segments
• Offer incentives to customers
for usage during non-peak • Modify the service offering to
times appeal to new market segments
• Take care of loyal or regular • Offer discounts or price
customers first reductions
• Advertise peak usage times • Modify hours of operation
and benefits of non-peak use • Bring the service to the
• Charge full price for the customer
service--no discounts
 Strategies for Flexing Capacity
to Match Demand

Demand Too High Flex Capacity Demand Too Low

• Stretch time, labor,
facilities and equipment
• Perform maintenance
renovations
• Cross-train employees
• Schedule vacations
• Hire part-time employees
• Schedule employee training
• Request overtime work
from employees
• Lay off employees

• Rent or share facilities

• Rent or share equipment
• Subcontract or outsource
activities
 What is the Nature of Demand Relative
to Supply?
Extent of demand fluctuations over time
Extent to which
supply is Wide Narrow
constrained
Peak demand can 1 2
usually be met Electricity Insurance
without a major Natural gas Legal services
delay Telephone Banking
Hospital maternity unit Laundry and dry cleaning
Police and fire
emergencies
Peak demand 4 3
regularly exceeds Accounting and tax Services similar to those in
capacity preparation 2 but which have
Passenger transportation insufficient capacity for
Hotels and motels their base level of business
Restaurants
Theaters

Source: Christopher H. Lovelock, “Classifying Services to Gain Strategic Marketing Insights,” Journal of Marketing, 47, 3 (Summer 1983): 17.
 What is the Constraint on Capacity?

Nature of the constraint Type of service

Time Legal
Consulting
Accounting
Medical
Labor Law firm
Accounting firm
Consulting firm
Health clinic
Equipment Delivery services
Telecommunication
Utilities
Health club
Facilities Hotels
Restaurants
Hospitals
Airlines
Schools
Theaters
Churches