Things-Service Businesses need to do

By

Prof. R.K. Gupta
BE Hons MBA FIE FIMA
Professor of Management & Consultant
Aravali Institute of Management
Jodhpur
E-mail: cityju@rediffmail.com
 

The Idea

All successful firms design a compelling product offering and manage the workforce skillfully to deliver it at an attractive price. But service firms must do even more: deal with the frustrating fact that their customers themselves can also wreak havoc on service quality and costs¹.

For example, a customer dithering at a fast-food counter slows things down for everyone else waiting in line. An architect's client struggling to clarify how a new facility will be used drags out the design process.

To tackle this challenge, Frei ¹ advises aligning four key elements of business:

*  What the service offering consists of?
*  How you fund the excellence you want to provide
*  How you manage employees to deliver quality service
*  What you do to help customers enhance--not erode—service

(Key ideas from the Harvard Business Review article By Frances X. Frei)

The Ideas in Practice

To consistently deliver service excellence, ensure that each of these four elements reinforces the others:

Service Offering

Determine how customers define "excellence" when it comes to your offering/product: Convenience/Friendliness/Flexible choices/Price? Identify what you'll do to deliver that excellence--and what you won't do.

Commerce Bank for example decided to serve customers who prized pleasant, face-to-face service and convenience. It offers evening and weekend hours, buildings with high ceilings and natural light, and

A fun contraption for redeeming loose change. Despite its relatively unattractive interest rates and narrow product range, its retail customer base has expanded dramatically

Funding for processes

Think about how you'll pay for the increased cost of the excellence you're seeking to provide through your service offering. Possibilities include:

Charging the customer: The Customers of Starbucks like and value lingering in the company's coffee-house setting. To fund this inviting atmosphere, Starbucks charges a premium for its coffee. Indian example is Cafe Coffee day

Spending now to save later: For instance, Intuit offers customer support service free of charge. It uses callers' input to improve future versions of its software, so customers will ultimately need less support. Many times upgrades are packages in price for future saving by customers.

Having customers do the work. For example, airlines' self-check-in kiosks not only reduce costs; they also enhance the service offering by liberating travelers from long lines at staffed counters and by providing convenient tools such as seat maps. Bank ATM centers are a big relaxation for customer and give them power of anywhere anytime cash access.

(Key ideas from the Harvard Business Review article By Frances X. Frei)

Employee Management

Ensure that your workforce management activities (recruiting, selection, training, job design) empower employees to deliver the excellence embodied in your service offerings.

Commerce Bank competes on extended hours and friendly service, not on low price or product variety. It knows it doesn't need straight-A students to master its limited product set, so it hires for attitude and trains for service. For instance, it uses simple recruiting criteria, such as "Does this person smile in a resting state?" And it encourages employees to recruit people they see providing great customer service in other industries. An MBA or for that matter from big tag institutions will prove better employee in service sector, I am not sure. At least I could not find collaborating evidence in my long experience. On the contrary thee may create HR problems and increase overall employee cost that is any way higher component in services sector.

Customer Management

Articulate which behaviors customers must demonstrate to get the most value from your service.

Then design your service specifically to foster those behaviors.

To get customers using the new self-check-in kiosks, airlines ensured that travelers could complete the transactions with far fewer keystrokes than check-in personnel used to need. By contrast, Retail

Stores that offer self-service checkout machines haven't made using those machines easy for shoppers. Moreover, the stores expect shoppers to shoulder responsibility for fraud prevention by weighing bags during checkout. Result? Anxious customers avoid the machines.

Getting customers to do the work (such as shopping for and buying your service online) is one way to pay for the cost of providing excellent service. But many companies' online self-service presents too many choices and asks customers to shoulder too many tasks. Result? Overwhelmed or annoyed customers avoid the self-service. To persuade customers to use your online self-service, simplify it.

For instance, Dell Computer groups its products by customer segments and displays only in-stock items on its Web site. Customers can help themselves, but they're not overwhelmed with choices.

Dell also has custom Web pages for its most valuable corporate customers that display only computer configurations preapproved by the Client Company and only prices reflecting negotiated discounts.

Some service standards Issues about  Indian Companies:

The service standards of Indian companies are third class (Source: My sample experimental research over last 5 years² (2003 to 2008) on 13 companies as a customer) revealed astonishing 77% of companies defaulting.

Mostly owing to following factors:

1. Indians traditionally are insecure and thus value tangible components more than the intangibles like processes, soft resources and employee skills. They like to invest in physical assets as much as possible with more external visibility and post-depreciation value. This is one reason for huge campuses, office blocks and well done facades leading to real estate boom. This also helps them to fleece customers more. But it makes economy costlier too.

2. Indians traditionally don't value employee skills and their self esteem. Even now, most of Indian entrepreneurs including those coming out from so called premiers Institutes are generally ordinary, arrogant and unskilled lot who treat employees as commodity and dispensable assets. In new found euphoria of old age outsourcing system that existed in India since decades ( we have been using this in 70s) they try to overuse business process outsourcing that has limited scope and a critical balance between core employees and contractual/part time  workers is needed to be maintained, but most of them fail in this. Most of service industry revolves around long term relations of employees with customers.

3. Indians treat training as an expenditure worth avoiding.

4. Indian companies invest very less on customer service as they treat customers in equal contempt. For example, they will have ill trained, fresh and inadequate number of call centre agents who are neither empowered to intervene nor able to handle the work. Enough investment is not made on software and systems to make these fully functional and adequate to process and monitor quality of solutions provided for customer needs and complaints. Complex products are launched by companies without supporting systems and software, training and mock run ups. For example computerized tickets are issued but no action or resolution of problem takes place.

5. No customer satisfaction and feedback system is in place excepting for superficial campaigns run by companies to show off. Same applies to public services like police, courts, healthcare and rural development where feedback is practically a nil and employee empowerment ad accountability is almost zero. No citizens' satisfaction survey is done for police department, judiciary and so on…. unlike in other countries for example USA.

6. Most Indian entrepreneurs let go of service process standards and start downgrading employee strength, quality and compensation once their business reaches a certain market acceptance level. They start thinking the popularity and name will carry them through forgetting that it was process standard and quality that made them popular .They start accumulating abnormal profits overlooking need for basic process standards, renovation, modernization and remaining competitive.

7. The Companies were found to be non serious in quality and warranty commitments probably due to poor awareness and greed and lax consumer laws in country.

As time passes, the employees too become lax and cynical and finally their customers too who are ready to switch on the first better opportunity.

In the customer experience experimental survey, the product and service standards were evaluated uniformly against the factors: correctness of information revealed at the time of selling, time taken, number of communications needed, adequacy of response, service attitude, adequacy of technology used for grievance handling, skill level of service engineers/call centre executives, genuine commitment and the final outcome of product and service experience.

In services sector too as the technology is generally expanding too fast, it will pay well for the service provider to shed complacency and strive for continuous service processes upgrading, customer satisfaction and product improvements while bringing down service cost through design, productivity and the  skilled, stable and committed employees ( 'DPE' factors).

(1) Acknowledgement:

A major portion of this article quotes review of an article published by HBR. (Key ideas from the Harvard Business Review article By Frances X. Frei). The full article can be accessed at HBR online.

(2) A sample survey was designed for direct experiment as a customer by the author that lasted for 5 years from 2003 to 2008 and covered 13 well known companies from Computer & hardware, retailing, internet and mail service providers, mobile handsets, digital mini cam, washing machine, courier service, credit card (banking)  and healthcare sectors (The names are being with held ). These were compared with service standards of US and European service providers

References:

Christopher Lovelock et al: Services Marketing

Valarie Zeithaml et al: Services Marketing

Journal of Services Marketing: October 2005 issue
 

Prof. R.K. Gupta
BE Hons MBA FIE FIMA
Professor of Management & Consultant
Aravali Institute of Management
Jodhpur
E-mail: cityju@rediffmail.com
 

Source: E-mail April 24, 2008

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