Chapter 7

The Service Encounter

 Learning Objectives
1. Use the service encounter triad to describe a service
firm’s delivery process.
2. Discuss the role of organizational control systems
for employee empowerment.
3. Prepare abstract questions and write situational
vignettes.
4. Discuss the role of customer as coproducer.
5. Describe how elements of the service profit chain
lead to revenue growth and profitability.

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The Service Encounter Triad

Service
Organization

Efficiency Efficiency
versus versus
autonomy satisfaction

Contact
Customer
Personnel Perceived
control

3
The Organizational Chart

4
 The Organizational Chart
Customers
CEO

Upper Management
Contact Personnel
SAS
Middle Management
Middle Management

Upper Management
Contact
CEO
Personnel
Customers
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 The Service Organization
• Culture
Values ServiceMaster (Service to the Master)

Behaviors Disney (Choice of language)

• Empowerment
Invest in people like investing in equipment

Use IT to enable personnel customer history

Recruitment and training match to firm’s CSF

Anchor performance recognition and reward

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 Definitions of Culture
• Culture is a pattern of beliefs and expectations
shared by the organization’s members. Schwartz

and Davis (1981)

• Culture is the traditions and beliefs of an

organization that distinguish it from others.
Mintzberg (1989)

• Culture is shared orientations that hold the unit

together and give a distinctive identity.
Hoy and Miskel (1991)

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 Culture
The shared beliefs and values of an
organization that guide employee
decision-making and behavior in the
firm.

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 Corporate Culture
rd
Rew e wa
a rd R
Behavior Behavior
Behavior

Behavior Behavior
Behavior Behavior
Behavior
Behavior
Behavior
Behavior Behavior
Behavior
ard Behavior Re
w wa
Re rd

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 Corporate Culture
• Values and beliefs
• Strong systems
• Weak systems
• History
• Rituals
• Symbols
• Communications
• Storytelling
• Rewards and recognition
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 Rewards That Encourage
Behavior
• Pay
• Promotion
• Recognition
• A Piece of the Action (Ownership)
• Company Information
• Freedom (Being Your Own Boss)
• Personal Growth
• Fun
• Celebrations
• "Thank You"
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 d
ar
Corporate Culture Re w

Re
wa
rd

Service
Organization

Efficiency Efficiency
versus versus
autonomy satisfaction

Contact
Customer
Personnel Perceived
control
d
ar
w

Re
Re

wa
rd
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 Empowerment
Providing contact personnel with the
training and information to make
decisions for the firm without close
supervision.

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 Organizational Control
for Employee Empowerment
Beliefs To Core values Identify core
Systems contribute & mission values

Boundary To do right Specify and Risks to be

Systems enforce avoided
rules
Diagnostic To achieve Build clear Critical
Control targets performance
Systems variables

Interactive To create Encourage Strategic

Control learning Uncertainties
Systems

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 Contact Personnel Attributes
• Flexibility
• Tolerance for Ambiguity
• Ability to Monitor and Change Behavior
on the Basis of Situation Cues
• Empathy for Customers

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 Contact Personnel
Selection
1. Abstract Questioning “From your past experience, …”

2. Situational Vignette ability to “think on their feet” in substance and delivery

3. Role Playing requires careful scripting and customer actor rehearsal

Training
1. Technical Skills
2. Unrealistic customer expectations
3. Unexpected service failure

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 Unrealistic customer
expectations
1. Unreasonable demands I want to take all my luggage on board

2. Demands against policies I have to smoke

3. Unacceptable treatment of
employees You’re an idiot

4. Drunkenness Hey, where’s my drink?

5. Breaking of societal norms I like to sunbath nude

6. Special-needs customers Why don’t you understand

English?

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 Unexpected Service Failure
1. Unavailable service Why isn’t the ATM
working?

2. Slow performance Why hasn’t our plane

arrived?

3. Unacceptable service There’s a fly in my

soup.

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 Training on Unrealistic Customer
Expectations and Unexpected
Service Failure
• A prescribed response to a any given situation
“I am very sorry, but federal safety regulations permit a
passenger only two carry-on pieces small enough to
be stored under the seat or overhead. May I check
your larger pieces all the way to your final
destination?”

• Anticipate the types of exchange they might

encounter through role playing
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 The Customer
Shopping attitudes
1. Economizing customer compares value with competition

2. Ethical customer moral obligation (Ronald McDonald House)

3. Personalizing customer know your name

4. Convenience customer pay extra for hassle free service

Customer as Co-Producer
1. What is their role?
2. How to train?
3. When to retrain?
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 Service Encounter Success
Factors
Customer Service Provider
Human Machine
Employee selection User friendly
Interpersonal skills Verification
Human Support technology Security
Engender trust Easy to access
Easy to access Compatibility
Fast response Tracking
Machine Verification Verification
Remote monitoring Security

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Employee Perceptions of Customer
Service at a Branch Bank
Outstanding 6

4
Customer

1
Terrible
1 2 3 4 5 6
Outstanding
Terrible Employee

22
  

Satisfaction Mirror
 
 
 
 
   More
Repeat More Familiarity with
Purchases Customer Needs
and Ways of
Meeting Them
Stronger
Tendency to Greater Opportunity
Complain about for Recovery
Service Errors from Errors
Higher Customer Higher Employee
Satisfaction Satisfaction

Lower Higher
Costs Productivity

Better Improved Quality

Results of Service

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 Service Profit Chain
Internal External
Operating strategy and   Service
concept Target market
service delivery system

Loyalty
 
  Customers Revenue
  Satisfaction growth
Productivity
 
& Service
  Employees Satisfaction Loyalty
  Output value
 
Capability quality
  Profitability
 
  Service
 
 
quality
 
  Customer orientation/quality emphasis Quality & productivity Attractive Value  Lifetime value
  Allow decision-making latitude Service designed Retention
improvements yield
  Selection and development & delivered to Repeat
  higher service quality
Rewards and recognition and lower cost meet targeted Business
 
  Information and communication customers’ Referrals
  Provide support systems needs
Foster teamwork Solicit customer
feedback 24
 Is attitude emphasized?
Are job previews utilized?
Are customers screened?

Careful Employee
Are employees and Customer
encouraged to Selection
refer friends? Is training for job and
 
  life?
(and Self-selection))
Are referrals from  
the “best” Employee Is it an important
High-
employees given Referrals of element of quality of
Quality
priority? Potential work life?
Training
Job
Is satisfaction Candidates
measured
Do they reflect
periodically?
 
Cycle Well-Designed
Support
needs of the
service encounter?
Are measurements
linked to other Satisfied of Systems
 Information
Employees Are they designed
functions on
the cycle?
Capability  Facilities
to foster
relationships?

Appropriate Greater Latitude

Rewards to Meet
and Frequent Customer’s Does it reflect top
Are they linked to Recognition Needs management
service objectives? “talk”?
  Clear Limits  
Are they balanced on, and Is it enough to
between monetary Expectations allow delivery of
and non-monetary? of, Employees results to
customers?
Do they limit the “right” risks?
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Are they logical to employees?
 Empowerment Control Exercise
Comes up with an example from each of the four
organizational control systems (i.e., belief,
boundary, diagnostic, and interactive) for:
1. Bank Teller 6. Automotive
Repairperson
2. Bartender
7. Restaurant Waitperson
3. Ski Lift Operator
8. Financial Planner
4. University Advisor
9. Hotel Desk Clerk
5. Company
Receptionist
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