Module 3 introduction to Services Marketing Mix.ppt

Editor's Notes

• #1: Airline: The product is the transportation of passengers from one place to another. The price is determined by the distance traveled, the time of year, and the competition. The promotion is done through advertising, travel agents, and online channels. The place is the airport. The people are the flight attendants and the pilots. The process is the way that the tickets are booked, the passengers are checked in, and the flight is operated. The physical evidence is the aircraft, the airport facilities, and the branding.
• #2: The services marketing mix is a dynamic and ever-changing set of factors. Businesses need to constantly monitor and adjust the services marketing mix to ensure that it is meeting the needs of their customers.
• #3: To address the limitations of the 4Ps for service marketing, some experts have proposed adding additional Ps to the mix. These additional Ps include: People: The people who provide the service are an important part of the service experience. For example, the customer's interaction with the waiter or waitress can make a big difference in their overall satisfaction with a restaurant. Physical evidence: The physical environment in which the service is delivered can also influence the customer's experience. For example, the atmosphere of a hotel can make a big difference in how comfortable the customer feels. Process: The process of delivering the service is also important. For example, a customer might be more likely to return to a restaurant if they have a positive experience with the ordering and payment process. Intangibility, makes it difficult for customers to evaluate the quality of services before they purchase them. Heterogeneity makes it difficult for businesses to guarantee the quality of their services. Perishability, makes it important for businesses to manage demand and ensure that they are not overbooking their services. Inseparability,  customer is involved in the production of the service, which can make it difficult for businesses to control the quality of their services. The 7Ps of services marketing provide a more comprehensive framework for businesses that offer services. By considering all of the elements of the mix, businesses can develop and implement marketing strategies that are effective in reaching their target market and achieving their marketing goals. Here are some examples of how the 7Ps of services marketing can be used to improve the customer experience: A restaurant can improve the people element of its marketing mix by hiring friendly and knowledgeable staff who are trained to provide excellent customer service. An airline can improve the process element of its marketing mix by streamlining its check-in and boarding procedures to make the journey more efficient for passengers. A bank can improve the physical evidence element of its marketing mix by creating a clean and comfortable branch environment that makes customers feel welcome.
• #4: Core Product. The core product is ‘what’ the customer is fundamentally buying. When buying a one-night stay in a hotel, the core service is accommodation and security. When paying to have a package delivered, the core service is the timely delivery of the package in perfect condition at the correct address. Thus, a core product is the central component that supplies the principal benefits, solutions, or experience that the customer is seeking. Some core products are highly intangible. Think of credit card and travel insurance products and the innovative design of their features, benefits, and pricing. Supplementary Services. Delivery of the core product is usually accompanied by a variety of other service-related activities that we collectively refer to as supplementary services. These augment the core product, both facilitating its use and enhancing its value. Core products tend to become commoditized as an industry matures and competition increases. In order to gain competitive advantage, firms often emphasize supplementary services, which can play an important role in differentiating the core product from competing services. Delivery Processes. The third component in designing a service concept concerns the processes used to deliver the core product and the supplementary services. The design of the service offering must address the following issues: How the different service components are delivered to the customer The nature of the customers’ role in those processes How long delivery lasts The prescribed level and style of service to be offered. Delivery process: This is the way in which the service is delivered to customers. It includes the physical environment, the people who deliver the service, and the procedures that are used. For example, the delivery process of a haircut might include a waiting area, a hairstylist, and a set of tools and products.
• #5: In Figure the eight clusters are displayed as petals surrounding the center of a flower. The petals are arranged in a clockwise sequence starting with “information,” according to how they are likely to be encountered by customers. In a well-designed and well-managed service product, the petals and core are fresh and well-formed. A badly designed or poorly delivered service is like a flower with missing, wilted, or discolored petals. Even if the core is perfect, the flower looks unattractive.
• #6: Services Information To obtain full value from goods or services, customers need relevant information. Information includes the following: Direction to service site Schedules/service hours Price information Terms and conditions of sale/service Advice on how to get maximum value from a service Warnings and advice on how to avoid problems Confirmation of reservations Receipts and tickets Notification of changes Summaries of account activities Traditional ways of providing information include using company websites, mobile apps, front-line employees, self-service machines, signs, printed notices, and brochures. Many business logistics companies offer shippers the opportunity to track the movements of their packages, each of which has been assigned a unique identification number. For example, Amazon provides its customers with a reference number that allows them to track the goods and know when to expect them. Order Taking Once customers are ready to buy, a key supplementary element comes into play— order taking. Order taking includes: Order entry o On-site order entry o Mail/telephone/e-mail/online/mobile app order Reservations or check-ins o Seats/tables/rooms o Vehicles or equipment rental o Professional appointment Applications o Memberships in clubs/programs o Subscription services (e.g., utilities) o Enrolment-based services (e.g., financial credit, college enrolment) Order entry can be received through sales personnel, by phone and e-mail, online, or through a variety of other sources ( Figure 4 . 8 ). Th e process of order taking should be polite, fast, and accurate so that customers do not waste time and endure unnecessary mental or physical eff ort. Reservations (including appointments and check-ins) represent a special type of order taking that entitles customers to a specifi ed unit of service. Technology can be used to make order taking and reservations easier and faster for both customers and suppliers. For example, airlines now make use of ticketless systems based on e-mail and mobile apps. Customers receive a confi rmation number when they make the reservation and need only show identifi cation (or the ticket as shown on a mobile app) at the airport to claim their seats and receive a boarding pass. Banks, insurance companies, and utilities require prospective customers to go through an application process so that they can gather relevant information and screen out those who do not meet basic enrolment criteria. Billing Billing is common to almost all services. Timely billing encourages people to make faster payment. Billing can be: Periodic statements of account activity Invoices for individual transactions Verbal statements of amount due Online or machine display of amount due for self-payment transactions. Perhaps the simplest approach is self-billing, by which the customer tallies up the amount of an order and authorizes a card payment. In such instances, billing and payment are combined into a single act, although the seller may still need to check for accuracy. Customers usually expect bills to be clear, informative, and itemized in ways that show how the total was computed. Unexplained, arcane symbols that have all the meaning of hieroglyphics on an Egyptian monument do not create a favorable impression of the service fi rm. Busy customers hate to be kept waiting for a bill to be prepared in a hotel, a restaurant, or a rental car lot. Many hotels and car rental fi rms have created express check-out options, taking customers’ credit card details in advance and documenting charges later by e-mail. However, accuracy is essential. Even though customers use the express check-outs to save time, they certainly don’t want to waste time later with corrections and refunds. An alternative express check-out procedure is used by some car rental companies. An agent meets customers as they return their cars, checks the mileage on the odometer and the fuel gauge readings, and then prints a bill on the spot using a portable wireless terminal. Payment In most cases, a bill requires the customer to take action on payment. Exceptions include bank statements and other direct debit-paid services, which show charges that will be deducted from a customer’s account. A variety of payment options exist, but customers expect them to be convenient and easy to use. They include: Self-service Insert card, cash, or token into machine. Transfer funds electronically o Mail a check o Enter a credit card number online o Use online payment systems such as PayPal, Google Wallet, or Bitcoins Direct to payee or intermediary o Cash handling or change giving o Check handling o Credit/charge/debit card handling o Coupon redemption Automatic deduction from financial deposits o Automated systems (e.g., machine-readable tickets that operate entry gates) o Pre-arranged automatic deduction for bill payment through direct debit (e.g., for bank loans and post-paid cell phone subscription plans) Self-service payment systems, for instance, require insertion of coins, banknotes, tokens, or cards in machines. As equipment breakdowns will destroy the whole purpose of such a system, good maintenance and prompt troubleshooting are essential. Most payment still takes the form of cash or credit cards. Other alternatives include vouchers, coupons, and pre-paid tickets. Electronic means such as PayPal off er a fuss-free and secure way to make payments, especially when shopping is done online.
• #7: Consultation At its simplest, consultation consists of advice from a knowledgeable service person in response to the request: “What do you suggest?” For example, you might ask your hairstylist for advice on different hairstyles and products. Effective consultation requires an understanding of each customer’s current situation before suggesting a suitable course of action. Examples of consultation include: u Customized advice u Personal counseling u Tutoring/training in service use u Management or technical consulting Counseling represents a more subtle approach to consultation because it helps customers understand their situations better and allows them to come up with their “own” solutions and action programs. This approach can be a particularly valuable supplement to services such as health treatment, where part of the challenge is to get customers to make significant lifestyle changes and live healthily. For example, diet centers like Weight Watchers use counseling to help customers change behaviors so that weight loss can be sustained after the initial diet is completed. More formalized eff orts to provide management and technical consulting for corporate customers include the “solution selling” associated with expensive industrial equipment and services. The sales engineer researches a customer’s situation and offers advice about which particular package of equipment and systems will yield the best results. Hospitality Hospitality-related services should ideally reflect pleasure at meeting new customers and greeting old ones when they return. Well-managed businesses try to ensure that their employees treat customers as guests. Courtesy and consideration for customers’ needs apply to both face-to-face encounters and telephone interactions. Hospitality elements include: u Greeting u Food and beverages u Toilets and washrooms u Waiting facilities and amenities o Lounges, waiting areas, seating o Weather protection o Magazines, entertainment, newspapers u Transport Hospitality finds its fullest expression in face-to-face encounters. In some cases, it starts (and ends) with an offer of transport to and from the service site on courtesy shuttle buses. If customers must wait outdoors before the service can be delivered, then a thoughtful service provider will offer weather protection. If customers have to wait indoors, a waiting area with seating and even entertainment (TV, newspapers, or magazines) may be provided to pass the time. Shoppers at Abercrombie & Fitch, a global clothing retailer, are given a cheerful “hello” and “thank you” when they enter and leave the store, even if they do not buy anything. The quality of the hospitality services offered by a firm plays an important role in determining customer satisfaction. This is especially true for people-processing services because one cannot easily leave the service facility until the core service has been delivered. Private hospitals often seek to enhance their appeal by providing a level of room service that might be expected in a good hotel. Safekeeping When customers are visiting a service site, they often want assistance with their personal possessions. In fact, unless certain safekeeping services are provided, some customers may not visit at all. Safekeeping includes: u Child care, pet care u Parking for vehicles, valet parking u Baggage handling u Storage space u Safe deposit boxes u Security personnel Responsible businesses pay close attention to safety and security issues for customers who are visiting the fi rm’s premises. Wells Fargo Bank mails a brochure with its bank statements that contains information about how its ATM machines can be used safely. Th e brochure also educates customers about how to protect their ATM cards and themselves from theft and personal injury. Moreover, the bank makes sure that its machines are in brightly lit, highly visible locations that are equipped with CCTV. Likewise, many services deal with sensitive information (e.g., healthcare providers and financial services). Th ese companies must ensure that their customers’ intangible financial assets and privacy are carefully safeguarded . Exceptions Exceptions involve supplementary services that fall outside the routine of normal service delivery . Astute businesses anticipate such exceptions and develop contingency plans and guidelines in advance. That way, employees will not appear helpless and surprised when customers ask for special assistance. Well-defined procedures make it easier for employees to respond promptly and effectively. There are several types of exceptions: Special requests. A customer may request services that require a departure from normal operating procedures. Common requests relate to personal needs, including care of children, dietary requirements, medical needs, religious observance, and personal disabilities. Such requests are particularly common in the travel and hospitality industries. Problem solving. Sometimes, normal service delivery (or product performance) fails to run smoothly due to accidents, delay, equipment failure, or difficulty faced by a customer while using a product. Handling of complaints/suggestions/compliments. Th is activity requires well-defined procedures. It should be easy for customers to express dissatisfaction, offer suggestions for improvement, or pass on compliments. Likewise, service providers should be able to make an appropriate response quickly (see Chapter 13 on complaint handling and service recovery). u Restitution. Many customers expect to be compensated for serious performance failures. Compensation may take the form of repairs under warranty, legal settlements, refunds, an offer of free service, or any other form of payment-in-kind. Managers need to keep an eye on the level of exception requests. Too many requests may indicate that standard procedures need revamping. For instance, if a restaurant frequently receives requests for special vegetarian meals that aren’t on the menu, it may be time to revise the menu to include at least one or two such dishes. A flexible approach to exceptions is generally a good idea because it reflects responsiveness to customer needs. On the other hand, too many exceptions may compromise safety, negatively impact other customers, and overburden employees.
• #9: It is important for service organizations to have a strong brand because it can help them attract and retain customers, as well as command a premium price for their services. Brand Identity Brand Messaging Customer Experience Brand Reputation Emotional Connection Partnerships and Collaborations
• #10: Define Your Unique Value Proposition: Create positioning statement. Develop a Compelling Brand Identity: Establish Brand Consistency: Craft a Unique Brand Story: Deliver Exceptional Customer Experiences: Leverage Social Proof and Testimonials: Engage with Your Audience: Adapt and Innovate: Branding of a service is the process of creating a unique identity for a service that distinguishes it from other similar services. It is important for service organizations to have a strong brand because it can help them attract and retain customers, as well as command a premium price for their services. Here are some of the key elements of service branding:
• #11:  Starbucks is known for its coffee and its friendly and welcoming atmosphere. The company's stores are designed to be a comfortable place to relax and socialize, and its employees are known for their positive attitude.
• #13: A service is an act or performance offered by one party to another that is essentially intangible and does not result in the ownership of anything . Kotler
• #15: Creating a service product involves designing and delivering intangible offerings that fulfill specific customer needs or solve problems. Unlike physical products, services are experiences, interactions, or performances that customers receive. A service is an act or performance offered by one party to another that is essentially intangible and does not result in the ownership of anything . Kotler Product, in the marketing context is anything which is offered to the market for exchange or consumption. For instance, credit card companies develop different cards, each of which comes with a distinct bundle of benefits and fees. Likewise, insurance companies offer different types of policies, and universities offer different degree programs composed of a mix of required and elective courses. The objective of product development is to design bundles of output that are distinct and can easily be differentiated from other products.
• #26: Penetration pricing: This pricing method involves setting prices low in order to attract customers and gain market share. The business then gradually raises prices over time as the market grows. For example, a new software company might use penetration pricing by offering its software at a discounted price in order to attract customers and gain market share. Skimming pricing: This pricing method involves setting prices high in order to generate a high profit margin. The business then lowers prices over time as the market becomes more competitive. For example, a luxury car manufacturer might use skimming pricing by setting a high price for its cars when they first launch. The manufacturer then lowers prices over time as the cars become more affordable. Dynamic pricing: This pricing method involves setting prices that vary based on factors such as demand, time of day, or location. This is often used by businesses that sell tickets or reservations. For example, an airline might use dynamic pricing by charging higher prices for flights during peak travel times. Bundle pricing: This pricing method involves selling multiple services together at a discounted price. This is often used by businesses that offer a variety of services, such as telecommunications companies or cable providers. For example, a telecommunications company might offer a bundle that includes a phone, internet, and cable service at a discounted price. For example, a cable company might offer a bundle of TV, internet, and phone services at a discounted price. Freemium pricing: This pricing method involves offering a basic version of the service for free, and then charging for premium features or add-ons. This is often used by software companies or online streaming services. For example, a software company might offer a free version of its software with limited features, and then charge for a premium version that includes additional features . Psychological pricing: This is a pricing method where the price of a service is set in a way that is designed to influence the customer's perception of the value of the service. For example, a business might price its services at $9.99 instead of $10 in order to make the prices seem more attractive to customers.
• #27: It starts with the “5 Ws” model, which offers a useful checklist for marketing communications planning: 1) Who is our target audience? 2) What do we need to communicate and achieve? 3) How should we communicate this? 4) Where should we communicate this? 5) When do the communications need to take place?
• #29: There are four main ways to define your target audience: Demographic segmentation: This involves dividing your audience by factors such as age, gender, income, education, and location. Psychographic segmentation: This involves dividing your audience by factors such as personality, lifestyle, values, and interests. Behavioral segmentation: This involves dividing your audience by factors such as purchase history, online behavior, and social media activity. Geographic segmentation: This involves dividing your audience by factors such as country, state, city, or zip code.
• #30: “AIDA,” standing for Awareness, Interest, Desire, and Action The hierarchy-of-effects model is an extension of the AIDA model and is now the most widely used framework to describe this process. It starts with a cognitive stage of awareness and knowledge followed by an affective stage that leads to liking, preference, and conviction; and, finally, a behavioral stage of buying.
• #32: There are a number of ways to resolve the intangibility characteristic of services while designing communication messages. Here are a few examples: Use visuals Use metaphors and analogies Use testimonials Use case studies Tell Stories Use guarantees and warranties Tangible Cues Use Metaphors.
• #33: Advertising strategies for overcoming intangibility
• #34: For example, a business that is trying to reach a large audience with a new service might use advertising as its primary communication tool. A business that is trying to build relationships with its customers might use personal selling or word-of-mouth marketing. And a business that is trying to create a buzz around a new service might use social media or events and experiences.
• #36: Communications Originate from Different Sources
• #40: Word-of-mouth marketing: Positive communication about a business or organization that is spread by customers and potential customers. Word of Mouth (WOM). Recommendations from other customers are generally viewed as more credible than promotional activities initiated by the fi rm and can have a powerful influence on people’s decisions to use (or avoid using) a service. Media Coverage. Although the online world is rapidly increasing in importance, coverage on traditional media cannot be neglected. Newsworthy events are often discussed first in the online world, but they reach the broader masses only after they are picked up and reported in the traditional media
• #43: There are a number of different evaluation methods that can be used, depending on the specific objectives of the campaign. Some of the most common methods include: Return on investment (ROI) Brand awareness Brand preference Customer satisfaction. Web analytics Social media analytics Here are some examples of how different evaluation methods are used in practice: A hotel might use ROI to evaluate the effectiveness of a campaign to promote its new suite of amenities. A car dealership might use brand awareness to evaluate the effectiveness of a campaign to launch a new car model. A software company might use customer satisfaction to evaluate the effectiveness of a campaign to improve the customer experience. A healthcare provider might use web analytics to evaluate the effectiveness of a campaign to increase website traffic and generate leads.
• #46: If you mention distribution, many people are likely to think of moving boxes through physical channels to distributors and retailers for sale to end users. However, in services, there is often nothing to move. Information and promotion flow: Th is refers to the distribution of information and promotion materials related to the service offer. The objective is to get the customer interested in buying the service. Negotiation flow: Th is involves reaching an agreement on the service features and configuration as well as the terms of the offer so that a purchase contract can be closed. Often, the objective is to sell the right to use a service (e.g., sell a reservation or a ticket). Product flow: Many services, especially those involving people processing or possession processing, require physical facilities for delivery. Here, distribution strategy requires the development of a network of local sites. For information processing services such as internet banking and distance learning, the product flow can be via electronic channels, employing one or more centralized sites.
• #49: Incremental sales and potential operational benefits (e.g., shifting demand from peak periods to extended opening hours).
• #50: Should a service organization deliver all aspects of its service itself, or should it involve intermediaries to take on certain parts of service delivery? In practice, many service organizations find it cost effective to outsource certain aspects of distribution. Despite increased use of telephone call centers and the internet, cruise lines and resort hotels still rely on travel agents to handle a significant portion of their customer interactions. Th ese include giving out information, taking reservations, accepting payment, and ticketing. Intermediaries are also frequently used to add reach and generate business. Own website, call center, travel agents, tour operators, online distributors, (Expedia and Priceline) The role, benefits, and costs of every intermediary have to be carefully considered when designing a fi rm’s distribution strategy. Franchising is one of the most commonly used distribution strategies in services Franchising Franchising has become a popular way to expand delivery of an effective service concept embracing all of the 7 Ps (see Chapter 1) to multiple sites. A franchisor recruits entrepreneurs who are willing to invest their time, eff ort, and equity in managing a previously developed service concept. In return, the franchisor provides training on how to operate and market the business, sells necessary supplies, and provides promotional support at a national or regional level. Local marketing activities are typically paid for by the franchisee but must adhere to copy and media guidelines prescribed by the franchisor. Intermediaries Intermediaries in service delivery are organizations or individuals that help to facilitate the delivery of a service to the end customer. They can play a variety of roles, such as: Providing information and advice to customers: For example, travel agents help customers plan their trips, and insurance agents help customers choose the right policies. Taking orders and payments: For example, ticket agents sell tickets to events, and call centers take orders for products and services. Providing customer service: For example, customer service representatives help customers resolve problems with their services. Marketing and promoting services: For example, advertising agencies create and place ads for services, and public relations firms help to generate positive publicity for services. Managing the delivery of services: For example, staffing agencies find and place employees for businesses, and logistics companies manage the transportation and storage of goods. Here are some examples of intermediaries for service deliveries: Travel agents Insurance agents Ticket agents Call centers Customer service representatives Advertising agencies Public relations firms Staffing agencies Logistics companies Sure. Intermediaries in service delivery are independent organizations that help to facilitate the delivery of services from the service provider to the customer. They can play a variety of roles, such as: Providing information and advice to customers: For example, travel agents help customers plan their trips, and insurance agents help customers choose the right policies. Taking orders and payments: For example, ticket agents sell tickets to events, and call centers take orders for products and services. Providing customer service: For example, customer service representatives help customers resolve problems with their services. Marketing and promoting services: For example, advertising agencies create and place ads for services, and public relations firms help to generate positive publicity for services. Managing the delivery of services: For example, staffing agencies find and place employees for businesses, and logistics companies manage the transportation and storage of goods. Here are some examples of intermediaries for service deliveries: Travel agents Insurance agents Ticket agents Call centers Customer service representatives Advertising agencies Public relations firms Staffing agencies Logistics companies The specific intermediaries that are used for a particular service delivery will vary depending on the type of service, the needs of the customer, and the preferences of the service provider. Here are some additional points about intermediaries in service delivery: Intermediaries can help to reduce the cost of delivering services by taking on some of the functions that would otherwise be performed by the service provider. Intermediaries can help to improve the efficiency of service delivery by streamlining the process and making it easier for customers to access the services they need. Intermediaries can help to expand the reach of services by making them available to customers who would not otherwise be able to access them.
• #51: Geographic dispersion: India is a vast country with a diverse terrain, making it difficult and expensive to distribute services to all areas. This is especially true for services that require physical presence, such as healthcare and education. Socioeconomic disparity: India has a large and growing middle class, but there is also a significant proportion of the population that lives in poverty. This can make it difficult to reach all segments of the market with the same service offering. Language barriers: India is a multilingual country, with over 100 languages spoken. This can make it difficult to communicate with customers and provide them with the service they need. Lack of infrastructure: India's infrastructure is still developing, which can make it difficult to distribute services efficiently. This is especially true for rural areas, which often lack access to roads, electricity, and telecommunications. Government regulations: India has a complex regulatory environment, which can make it difficult to comply with the rules and regulations governing service distribution. This is especially true for services that involve sensitive data, such as financial services.
• #53: Badly designed processes are likely to annoy customers because they often result in slow, frustrating, and poor-quality service delivery. Th ey also make it diffi cult for front-line employees to do their jobs well, result in low productivity, and increase the risk of service failures.
• #56: https://svg.template.creately.com/iwcfzbjq1 Blueprinting the Restaurant Experience: A Three-Act Performance Most service processes can be divided into three main steps: 1) Pre-process stage, where preliminaries occur, such as making a reservation, parking the car, getting seated, and being presented with the menu. 2) In-process stage, where the main purpose of the service encounter is accomplished, such as enjoying the food and drinks in a restaurant. 3) Post-process stage, where the activities necessary for the closing of the encounter happen, such as getting the check and paying for the dinner Here is an example of a service blueprint for a restaurant: Customer * Chooses a restaurant * Makes a reservation * Arrives at the restaurant * Is greeted by a host * Is seated at a table * Orders food from a menu * Receives food from a waiter * Eats food * Pays for food * Leaves the restaurant Frontstage * Host greets customer * Waiter takes order * Waiter delivers food * Waiter collects payment Backstage * Chef cooks food * Dishwasher washes dishes * Manager oversees operations Support processes * Restaurant has a reservation system * Restaurant has a menu * Restaurant has a payment system * Restaurant has a kitchen * Restaurant has a dining room Evidence * Restaurant has a sign * Restaurant has a menu * Restaurant has a dining room * Restaurant has a kitchen The physical evidence in this example includes the restaurant's interior, the food, and the waiter's uniform.
• #60: Service environments, also called servicescapes, relate to the style and appearance of the physical surroundings and other experiential elements encountered by customers at service delivery sites
• #63: Highly capable and motivated people are at the center of service excellence and productivity
• #64: Is a core part of the product. Often, the service employees are the most visible element of the service. They deliver the service and affect service quality greatly. Is the service firm. Front-line employees represent the service firm. From a customer’s perspective, they are the firm. Is the brand. Front-line employees and the service they provide are often a core part of the brand. The employees usually determine whether the brand promise is delivered. Affects sales. Service personnel are often critically important for generating sales, cross-sales, and up-sales. Is a key driver of customer loyalty. Front-line employees play a key role in anticipating customers’ needs, customizing the service delivery, and building personalized relationships with customers Determines productivity. Front-line employees have a great influence on the productivity of front-line operations.
• #66: The Cycle of Failure: The cycle of failure is a vicious cycle that can trap service organizations. It starts with a lack of focus on customer needs. This leads to poor service, which in turn leads to customer dissatisfaction. Customer dissatisfaction leads to lost customers, which leads to financial losses. Financial losses lead to further cuts in resources, which makes it even harder to provide good service. Here is an example of how the cycle of failure can play out in a service organization: * A restaurant starts to cut corners on food quality in order to save money. * This leads to customer complaints about the food. * Customers start to eat at other restaurants, and the restaurant loses customers. * The restaurant loses money, and it has to cut even more corners on food quality. * This cycle continues until the restaurant eventually goes out of business. The Cycle of Mediocrity: The cycle of mediocrity is a vicious cycle that can trap service organizations in a state of mediocrity. It starts with a lack of innovation. This leads to a lack of differentiation from competitors, which leads to customer indifference. Customer indifference leads to stagnant sales and profits. Stagnant sales and profits lead to a lack of investment in the organization, which makes it even harder to innovate. Here is an example of how the cycle of mediocrity can play out in a service organization: * A hotel chain fails to invest in new technology or amenities. * This makes the hotel chain less competitive than its rivals. * Customers start to choose other hotels, and the hotel chain loses customers. * The hotel chain loses money, and it has to cut costs. * This makes it even harder for the hotel chain to invest in new technology or amenities. * The cycle continues until the hotel chain eventually falls behind its competitors. It begins with a lack of focus and a failure to set clear goals. This leads to a lack of direction and a sense of drift. As the organization drifts, it becomes increasingly difficult to achieve anything significant. Here are some examples of how the Cycle of Mediocrity can play out in real-world situations: * A company that fails to define its target market can find itself trying to appeal to everyone, and therefore appealing to no one. * A company that fails to set clear goals can find itself constantly changing direction and never making any real progress. * A company that fails to measure its performance can find it difficult to identify areas where it needs to improve. The Cycle of Success: The cycle of success is a virtuous cycle that can lead to sustainable growth for service organizations. It starts with a focus on customer needs. This leads to good service, which in turn leads to customer satisfaction. Customer satisfaction leads to repeat business and positive word-of-mouth. Repeat business and positive word-of-mouth lead to increased sales and profits. Increased sales and profits lead to investment in the organization, which makes it possible to improve service even further. Here is an example of how the cycle of success can play out in a service organization: * A restaurant focuses on providing excellent customer service. * This leads to happy customers who return again and again. * The restaurant's reputation grows, and it attracts new customers. * The restaurant's sales and profits increase, and it is able to invest in new technology and amenities. * This allows the restaurant to provide even better service, which attracts even more customers. * The cycle continues, and the restaurant continues to grow and succeed.