SERVICE BLOG

Rick Caniglia has 20+ years experience in the IT world as a Federal and State Public Servant and in a number of customer service industries. Most recently he is a Business Development Consultant and also has significant holdings in various businesses that include consumer electronics, health and fitness software, and digital signage.
The resources here have been compiled using numerous texts, articles, and personal experience. This information can be copied in total or in part, however, all reproductions must reference this site address or my LinkedIn link.

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New Technologies, New Service Concepts.
12 January 2009

Necessity is the mother of invention, and as the world as a whole moves further into the services sector, many traditional product suppliers will be threatened by companies that leverage service as a model.

The web has opened a plethora of opportunities that has transformed the way that traditional mostly tangible offering companies operate. It also opens opportunity portals for companies to encroach on traditional product vendor industries.

A book is very much a tangible product. It has a shape, has mass, can be handled, opened, it’s pages can be turned; so why is the largest book seller in the world a service company? Amazon is probably the single largest book seller in the world. It is certainly the most recognisable book seller in the world – just ask any Gen X or Y’er. Amazon determined very early in its business lifecycle that to be successful, it needed to leverage new technology to offer a better service to its customers. Amazon uses the web, e-commerce, and clever software that personalises the book buying experience for its customers, to provide a service that is better than the traditional bookstore. Customers are able to select a book and read reviews by other “like minded” buyers. It is able to track previous buying histories, and by comparing this history with other buyer histories, develop an accurate buyer profile, and subsequently offer additional titles that the buyer may be interested in. This sort of buyer service could not be developed unless there were appropriate tools to enable it.

Fortunately for Amazon (and unfortunately for book stores) traditional book sellers are only now starting to develop similar service models, however I can’t help thinking …. After the horse has bolted…. It maybe that the lead that Amazon now has will be too large for other book sellers to claw back.

I’m not suggesting for a moment that the only book store in the future will be a cyber one as there are advantages in maintaining a shop front, and there will always be a market for this type of product distribution. What I suspect however is that as Mr Amazon banks another huge profit cheque into that Swiss bank account, he is not going to be too concerned about what the brick-and-mortar store down the road is doing. The real question here is if the traditional book store wants a piece of that huge profit cheque, what can it do to provide a better service that will result in more product sales.

If the trend to service marketing continues, then product suppliers will need to re-evaluate their current efforts, even if it results in a fundamental change to the business model.

Goods and Service Marketing
14 January 2009

As previously mentioned intangibility generally equals a service. Intangibility dictates that a service cannot be inventoried, and therefore fluctuations in demand for service s may be difficult to accommodate. Hotels particularly face this challenge on a cyclic basis – although a hotel has a fixed number of available rooms (the product), there are varying demands on these products between high and low seasons.

New service concepts can easily be copied by competitors. Because services are performances or actions rather than objects or products, quality may be difficult to replicate (particularly if the service is performed by a number of different employees), and consumers may have difficulty in assessing them. It is difficult to determine the cost of a “Unit of Service” because customer assessments usually vary. Unlike products that may be mass produced and hence identical, services are generally delivered by people – delivery service is rarely delivered exactly the same way. No two customers are precisely alike, and no two employers perform exactly the same. Performance, even from the same employee may/will differ on a day to day and even hour to hour basis.

A bartender may provide a similar service to two different customers, but the bar tender delivery will often be experienced differently because of the interaction variables between the bartender and the customer, and the customer and the environment. Because service quality may alter across time, customers, and employees, consistent service quality is a challenging concept. Quality depends on many variables outside service suppliers control – a service manager cannot always be sure that the service is being delivered in a manner that has been advertised.

If the service delivery is sub-contracted out, then the service organisation has even less control over the quality of service being delivered. Goods tend to be manufactured or produced, maybe stored and distributed, and finally sold or consumed. Service however cannot be produced or provided until it has been sold. Usually service is produced and consumed at the same time. If customers are present during the service production and delivery, then they might also interact with the service supplier. If other consumers of the same product are also present, then their interaction may influence the other consumer’s perceptions and influence their own expectations and experience with the service. It is impossible to accurately predict or control customer reaction to service delivery by the service provider. A lecturer is a service provider, however service delivery is almost always modified to accommodate the student recipients of this service – the consumers. No two student groups will ever be the same.

The “Real Time” nature of service dictates that mass production is impossible. Likewise service is usually not centralised because the service recipients are almost never centralised. Service delivery is usually performed directly with the individual customers. A dinner table of 4 adults will receive different service to a dinner table of 2 adults and 2 children. A drunk patron will usually receive additional attention which will adversely impact on the delivery experience of all other dinning patrons. I’ve mentioned that services are difficult to inventory, store, and save. A vacant dentist appointment cannot be reclaimed and used at a later date if a patient does not turn up. Capacity utilisation becomes an important decision. Because services cannot be returned and resold also means that there is a need for strong recovery strategies when things go wrong. The challenges for service managers revolve around understanding customer needs and expectations for service delivery whilst operating in an expansive variable environment that will affect service delivery.

Service Manager Challenges
16 January 2009

How can service quality be improved when the product is intangible?
How can new services be tested when the service is an intangible process?
How do you know that you are communicating the correct service message to your staff when there are so many elements in the service mix that are outside your control?
How do you accommodate fluctuating demand when capacity if fixed and the service is perishable?
How do you select service staff when the service is delivered in real time and is a critical part of the product itself?
How do you set Unit of Service costs when service is inextricably intertwined with customer perceptions of quality?
How can the balance between standardisation and customisation be determined to maximise organisational efficiency and customer satisfaction?
How do you protect a new service concept from competitors?
How do you market an intangible service to a customer?
How do you ensure consistent quality service when both your employees and customers themselves can affect the service outcome?

The service manager needs to constantly ask these questions and develop a fluid mechanism to capture information that will 1. Provide answers to these questions, and 2. Provide a direction on how to achieve the service standards that are expected by the business, the employees, and the customers. Future posts will identify techniques on how to answer these questions and also provide some practical advice on how to act on the responses, and how to mould your business to achieve consistent service quality.

Service Marketing Challenges
21 January 2009

Three interlinked groups need to work together to develop, promote, and deliver services. These groups are:
1. The Business (or organisation)
2. The Customer
3. The Service Providers within the business.

These three groups are interlinked by 3 defined processes:
1. Making Promises
2. Keeping Promises
3. Enabling Promises

Making Promises
When a business makes a promise to it’s customers, the business conveys what the customer can expect and how it will be delivered. Promises are marketed as sales, special promotions, and service guarantees. Businesses need to be conscious of making consistent and realistic promises as there can be a tendency to overpromise (we have all see the lifetime warranties – sound great, but difficult to deliver over a lifetime). Over promising will always jeopardise the business-customer relationship.

Keeping Promises
Promises must be kept. From a customers point of view, a business’s ability to keep a promise will be a critical point in ensuring continuing purchase relationship. If you tell a customer that you will be onsite at 2PM, don’t turn up at 4PM or not at all. Keeping a promise is a Moment of Truth when the customer interacts with the business. Moments of Truth occur every time a customer interacts with the business and it may be with any business employee (sales personnel, reception, tradesmen, delivery and logistic personnel, etc).

Enabling Promises
It’s dangerous for sales personnel to make promises that cannot be delivered by the logistic control personnel. Business employees need the skills, ability, tools, motivation, and authority to keep a promise. Promises are easy to make, but unless the correct service providers are employed or contracted, these promises may easily be broken.

Customer Service Expectations
25 January 2009

Perceived Service is the level of service that is provided by the service provider.
Adequate Service is the minimum level of service expected by the customer.
Desired Service is the ideal level of service expected by the customer.

In the real world, the goal of the service provider is to minimise the gaps in service quality between Perceived Service and Adequate Service, and between Adequate Service and Desired Service. The latter gap is known as the Zone of Tolerance because all customers know that levels of service can vary between different service suppliers, with different service providers from the same service supplier, and also at different times by different (or the same) service providers from the same service supplier.

External factors affect a customer’s tolerance zone, for example, busy customers desire short wait times. Their zone of tolerance when asked to wait for a service, of if a service is delayed will be significantly shorter. By way of example, many years ago I purchased a classic vehicle (it was actually an old bomb, but referring to it as a classic somehow gave it an air of mystique and uniqueness). On two occasions, the battery had run flat. On both occasions I called for roadside assistance – the first occasion I was in no hurry and the hour wait was no bother at all – after-all, I was at home at the time so I could put my feet up and watch the football until the mechanic arrived. The second time I was late for an appointment and my stress levels rose with every minute I needed to wait before assistance arrived. On both occasions, the service provider attended in a similar time, however, my tolerance zones were very different. The service provider, although offering the same service level both times has now altered their service offerings by utilising GPS and SMS messaging to inform their customer of expected mechanic arrival times, and if the scheduled mechanic is delayed, by despatching an alternate mechanic to complete the job.

The more important the underlying customer factor is, the narrower the tolerance zone is likely to be. In my example above, scenario 2 was significantly more important and my tolerance zone was correspondingly much narrower.

So it is obvious that customer service expectations are influenced by a number of factors that are outside the control of the service providers. This raises a number of questions that service managers need to ask:
1. What does a service marketer/manager do if customer expectations are unrealistic?
2. How does a service provider exceed customer service expectations?
3. Do customer service expectations continually escalate?
4. How does a service company stay ahead of competitors in meeting customer expectations?

The factors that influence customer expectations might be classified as Controllable and Less Controllable.

Controllable factors might include:

Explicit Service Promises, i.e.
1. Make realistic and accurate promises that reflect the actual service delivery rather than some idealised service.
2. Collect feedback on the accuracy of service promises.
3. Avoid price or advertising wars because they focus on price rather than service.
4. Formalise service promises with Service Level Agreements.

Implicit Services Promises, i.e.
1. Ensure that service tangibles reflect the type and level of service provided.
2. Ensure that price premiums can be justified by higher levels of service performance.

Less Controllable factors might include:

Enduring Service Intensifies, i.e.
1. Use market research to identify sources of derived service requirements.
2. Focus on service advertising and marketing.
3. Use market research to profile customer service expectations and use this information to design service deliveries.

Personal Needs, i.e.
1. Education campaigns on ways the service addresses customer needs.

Transitory Service Intensifiers, i.e.
1. Increase service delivery during peak to emergency times.

Perceived Service Alternatives, i.e.
1. Be aware of your service competitors and adjust your services to match or exceed theirs.

Self Perceived Service Role, i.e.
1. Customer education on their roles.

Word Of Mouth Communications, i.e.
1. Use testimonials.
2. Use incentives with existing customers to encourage their endorsement.
3. Market to influencers and opinion leaders.

Past Experience, i.e.
1. Use market research to profile customer previous experience with similar services.

Situational Factors, i.e.
1. Use SLA’s to assure customers about service recovery.

Predicted Service, i.e.
1. Inform customers when the service level they receive is higher than what would normally be expected.