Service Encounters

Consumer Behavior in Service Encounters
Slide 2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
2- 1
Where Does the Customer Fit in a Service Organization? (Fig. 2.1)
Consumers rarely involved in manufacture of goods but

often participate in service creation and delivery Challenge for service marketers is to understand how customers interact with service operations Flowcharting clarifies how customer involvement in service encounters varies with type of process - see Fig. 2-1:
People processing (e.g., motel stay): customer is physically involved
throughout entire process Possession processing (e.g., DVD repair): involvement may be limited to drop off of physical item/description of problem and subsequent pick up Mental stimulus processing (e.g., weather forecast): involvement is mental, not physical; here customer simply receives output and acts on it Information processing (e.g., health insurance): involvement is mental specify information upfront and later receive documentation of coverage
2- 2
High-Contact and Low-Contact Services

High Contact Services
Customers visit service facility and remain throughout

service delivery
Active contact between customers and service personnel Includes most people-processing services
Low Contact Services
Little or no physical contact with service personnel Contact usually at arms length through electronic or
physical distribution channels
New technologies (e.g. Web) help reduce contact levels

Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E
2- 3
Levels of Customer Contact with Service Organizations (Fig. 2.2)

Emphasizes encounters with service personnel
M a na ge me n t Consulti ng
G ood Re sta ur a nt Ai rl ine Tr a ve l (Econ.)
High
N ur sing H om e
H a ir Cut
4 - Sta r H ote l
Tel ephone Ba nk ing
Re ta il Ba nk i ng M ote l
Ca r Repa i r I nsur a nce
Dr y Cl ea ning
Fa st Food Movie Theater
Ca bl e TV
Subway Internet Banking Mail Based Repairs
Emphasizes encounters with equipment

Internet-based Services
Low
2- 4
Managing Service Encounters--1
Service encounter: A period of time during which customers

interact directly with a service
Moments of truth: Defining points in service delivery where

customers interact with employees or equipment
Critical incidents: specific encounters that result in

especially satisfying/dissatisfying outcomes for either customers or service employees
2- 5
Managing Service Encounters--2
Service success often rests on performance of junior

contact personnel
Must train, coach, role model desired behavior Thoughtless or badly behaved customers can cause
problems for service personnel (and other customers)
Must educate customers, clarify what is expected, manage

behavior
2- 6
The Purchase Process for Services

(Adapted from Fig. 2-3)
Prepurchase Stage Awareness of need Information search Evaluation of alternative service suppliers Service Encounter Stage Request service from chosen supplier Service delivery Postpurchase Stage Evaluation of service performance Future intentions
2- 7
Perceived Risks in Purchasing and Using Services (Table 2.1)

Functional unsatisfactory performance outcomes Financial monetary loss, unexpected extra costs Temporal wasted time, delays lead to problems Physical personal injury, damage to possessions Psychological fears and negative emotions Social how others may think and react
Sensory unwanted impacts to any of five senses
2- 8
Factors that Influence Customer Expectations of Services (Fig. 2.4)

Explicit & Implicit Service Promises Word-of-Mouth Past Experience
Personal Needs Desired Service Beliefs about What Is Possible
ZONE OF TOLERANCE
Perceived Service Alterations Adequate Service Situational Factors Predicted Service
Source: Adapted from Zeithaml, Parasuraman & Berry Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E
2- 9
Components of Customer Expectations
Desired Service Level: wished-for level of service quality

that customer believes can and should be delivered
Adequate Service Level: minimum acceptable level of

service
Predicted Service Level: service level that customer

believes firm will actually deliver
Zone of Tolerance: range within which customers are

willing to accept variations in service delivery
2 - 10
Intangible Attributes, Variability, and Quality Control Problems Make Services Hard to Evaluate
Search attributes Tangible characteristics that allow

customers to evaluate a product before purchase
experienced when actually using the service evaluate confidently even after consumption
Experience attributes Characteristics that can be
Credence attributes Characteristics that are difficult to

Goods tend to be higher in search attributes, services tend
to be higher in experience and credence attributes benefits have been delivered
Credence attributes force customers to trust that desired
2 - 11
How Product Attributes Affect Ease of Evaluation) (Fig. 2.5)

Most Goods Most Services
Clothing
Restaurant meals
Computer repair
Haircut
Legal services
High in search attributes
High in experience High in credence attributes attributes

Source: Adapted from Zeithaml
Complex surgery
Motor vehicle
Foods
Chair
Entertainment
Lawn fertilizer
Easy to evaluate
Difficult to evaluate
2 - 12
Customer Satisfaction is Central to the Marketing Concept
Satisfaction defined as attitude-like judgment following a

service purchase or series of service interactions
Customers have expectations prior to consumption, observe

service performance, compare it to expectations
Satisfaction judgments are based on this comparison

Positive disconfirmation if better than expected Confirmation if same as expected Negative disconfirmation if worse than expected
Satisfaction reflects perceived service quality, price/quality

tradeoffs, personal and situational factors
Research shows links between customer satisfaction and a

firms financial performance
2 - 13
Customer Delight: Going Beyond Satisfaction
Research shows that delight is a function of 3 components

Unexpectedly high levels of performance Arousal (e.g., surprise, excitement) Positive affect (e.g., pleasure, joy, or happiness)
Is it possible for customers to be delighted by very

mundane services?
Progressive Insurance has found ways to positively surprise

customers with customer-friendly innovations and extraordinary customer service
2 - 14
A Service Business is a System Comprising Three Overlapping Subsystems

Service Operations (front stage and backstage)
Where inputs are processed and service elements created. Includes facilities, equipment, and personnel
Service Delivery (front stage) Where final assembly of service elements takes place and service is delivered to customers Includes customer interactions with operations and other customers
Service Marketing (front stage)
Includes service delivery (as above) and all other contacts

between service firm and customers
2 - 15
Service Marketing System: (1) High Contact Service--e.g., Hotel (Fig. 2.7)
Service Marketing System
Service Delivery System Service Operations System
Interior & Exterior Facilities Other Customers
Other Contact Points

Advertising Sales Calls Market Research Surveys Billing / Statements Miscellaneous Mail, Phone Calls, Faxes, etc. Random Exposure to Facilities / Vehicles
Technical Core
Equipment
The Customer
Service People
Backstage (invisible)
Front Stage (visible)
Other Customers
Chance Encounters with Service Personnel Word of Mouth
2 - 16
Service Marketing System: (2) Low Contact Service--e.g., Credit Card (Fig. 2.8) Service Marketing System
Service Delivery System Service Operations System Other Contact Points
Advertising Mail Technical Core Self Service Equipment Phone, Fax, Web site etc.
Backstage (invisible) Front Stage (visible)
The Customer
Market Research Surveys

Random Exposures Facilities, Personnel
Word of Mouth
2 - 17
Service as Theater
All the worlds a stage and all the men and women merely players. They have their exits and their entrances and each man in his time plays many parts
William Shakespeare
As You Like It
2 - 18
The Dramaturgy of Service Delivery
Service dramas unfold on a stage--settings may change as

performance unfolds
Many service dramas are tightly scripted, others improvised Front-stage personnel are like members of a cast Like actors, employees have roles, may wear special
costumes, speak required lines, behave in specific ways
Support comes from a backstage production team Customers are the audiencedepending on type of
performance, may be passive or active
2 - 19
Role and Script Theories
Role:
A set of behavior patterns learned through experience and communication customers must act out defined roles for good outcomes
Role congruence: In service encounters, employees and
Script: A sequence of behavior to be followed by employees

and customers during service delivery
Some scripts (e.g. teeth cleaning) are routinized, others flexible Technology change may require a revised script Managers should reexamine existing scripts to find ways to improve
delivery, increase productivity, enhance experiences
2 - 20

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Consumer Behavior in Service Encounters

Slide 2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

Where Does the Customer Fit in a Service Organization? (Fig. 2.1)

Consumers rarely involved in manufacture of goods but

Slide 2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

High-Contact and Low-Contact Services

Customers visit service facility and remain throughout

New technologies (e.g. Web) help reduce contact levels

Levels of Customer Contact with Service Organizations (Fig. 2.2)

Tel ephone Ba nk ing

Ca r Repa i r I nsur a nce

Subway Internet Banking Mail Based Repairs

Emphasizes encounters with equipment

Services Marketing 5/E

Managing Service Encounters--1

Service encounter: A period of time during which customers

Moments of truth: Defining points in service delivery where

Critical incidents: specific encounters that result in

Slide 2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

Managing Service Encounters--2

Service success often rests on performance of junior

Must educate customers, clarify what is expected, manage

Slide 2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

The Purchase Process for Services

Slide 2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

Perceived Risks in Purchasing and Using Services (Table 2.1)

Sensory unwanted impacts to any of five senses

Slide 2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

Factors that Influence Customer Expectations of Services (Fig. 2.4)

Personal Needs Desired Service Beliefs about What Is Possible

Perceived Service Alterations Adequate Service Situational Factors Predicted Service

Components of Customer Expectations

Desired Service Level: wished-for level of service quality

Adequate Service Level: minimum acceptable level of

Predicted Service Level: service level that customer

Zone of Tolerance: range within which customers are

Slide 2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

Search attributes Tangible characteristics that allow

Experience attributes Characteristics that can be

Credence attributes Characteristics that are difficult to

Credence attributes force customers to trust that desired

Slide 2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

How Product Attributes Affect Ease of Evaluation) (Fig. 2.5)

High in search attributes

High in experience High in credence attributes attributes

Slide 2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

Customer Satisfaction is Central to the Marketing Concept

Satisfaction defined as attitude-like judgment following a

Customers have expectations prior to consumption, observe

Satisfaction judgments are based on this comparison

Satisfaction reflects perceived service quality, price/quality