Archives for posts with tag: Service Industry

by Merlin Hernandez

Many entrepreneurs looking to start a small business look to the service industry because of the potential to translate a knowledge base into income without a large capital outlay as well as the ease of need identification. Services, however, pose unique challenges to marketers because the dominant factor is people not product and each interaction with the service is important to maintaining delivery levels and building the brand. Customer expectations regarding managing and maintaining service quality are critical defining factors. But regardless of the size of the business, the role of employee satisfaction in the quality of delivery can make or break the business if not given serious attention.

Employees are the face of a business and charged with the responsibility for a high level of customer satisfaction. They need to have strong buy-in to the organization to preserve its interests in service quality in order to maintain cost efficiencies and perhaps a pricing edge. High job satisfaction equates with positive representation of company interests. Tying business goals into the employee’s personal interests maintains a high level of employee engagement for sustained commitment. An employee who believes in the organization and its products builds trust and fosters customer loyalty.

Marketing a service product is challenged by the unique characteristics of services which are influenced by four basic considerations to the service marketing mix. It is important for marketers to have a grasp of these factors and see them as advantages rather than stumbling blocks. Services are intangible i.e. there is no physical deliverable that changes hands. Pricing is difficult due to the elusive nature of component costing and marketers often determine prices by comparison with other providers in a similar field. This inherently juxtaposes competitors, and throws the quality of the service more sharply into focus making price a key point of differentiation. But price is often of secondary importance to the quality of the personal interaction consumers have with service personnel.

The service product only exists within the provider/consumer relationship – it has no shelf life and cannot be inventoried. This makes the customer relationship the sole engine that drives the business. The service provider is therefore inseparable from the service itself but so is the consumer. For marketing, the fact that producer, product, and client are so closely intertwined would be an advantage to building product quality according to client need, making customer satisfaction an integral component of the service. Employees form part of the service product e.g. great food poorly served is a bad dining experience – a law office with an unprofessional assistant influences expectations about the quality of advocacy – the pest control service person who does not observe the basic courtesies ensures that his company does not receive a call back.

Each client brings a new dynamic with different expectations and satisfaction index that will not necessarily transfer to another client which makes the service heterogeneous. There may be needs that fit into the basic service offering but with some preference differentials. Furthermore each experience of the service will be different. Understanding this dimension of heterogeneity brings the opportunity to make the service unique each time, add to the quality of delivery, and appeal to a wider customer base.

Marketers need close monitoring of individual customer interests in the planning phase to maintain a high level of delivery and remain competitive. Standardization in services marketing would be necessary to establish rigorous procedures for some measure of uniformity to the customer experience and brand identity. But this needs to be done with the recognition that the heterogeneity factor would demand constant adjustments and varying of methods to accommodate changing customer tastes, customer preferences, and new trends. Employees are better able to provide the level of feedback necessary for sustained customer satisfaction.

Like many tangible goods, services can also be described as perishable since each design and delivery is unique unto itself, finite, and cannot be sold again. This provides the opportunity to market a “new” product each time the service is offered whether a CPA provides annual financial statements, a nutritionist creates a new diet plan or a consultant does the feasibility for a new venture. Customer need will define the service, with past experience feeding into innovation, modification and improvement. It does mean that the service provider often has one chance to get it right.

Employees tend to have heightened knowledge of customer preferences and are central to managing service quality and customer satisfaction. Employee engagement can be facilitated through a combination of base pay and long-term incentives which enhances an employee’s equity and is a measure of the level of ownership and satisfaction an employee experiences in a job. Training and tangible benefits and rewards like bonuses tied to the attainment of strategic objectives, skills enhancement, mentoring, and opportunities for promotions and increasing autonomy go a long way to keep morale and staff commitment high. With reduced turnover, there would be long term benefits like deeper customer relationships and a stronger feedback loop for greater service refinement and targeted delivery.

Related articles on this blog

• Strategic Staffing

Service as Commodity

Training as Strategic

 Merlin Hernandez is an entrepreneurial development and management consultant who operates mainly in the small and medium enterprise sector. For more information on this topic, please send enquiries to businesssolutions1168@gmail.com

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by Merlin Hernandez

 

Businesses depend on customer satisfaction to meet their strategic goals, and the service design matrix would be of maximum importance as long as it conforms to the needs of the market. One of the more common value creation strategies in recent times is the integration of end users, retailers, vendors, and marketing in strategic partnerships to leverage competitiveness. The strategy blurs the lines of separation among manufacturer, supplier, retailer, and customer through intensive market research, stakeholder participation, and integrative technology to develop a product more acutely suited to market needs. Tangible products then become vehicles for service provision, and service itself becomes the underlying commodity. 

This is especially true in the service industry. The service design matrix is the configuration of technology and organizational networks coming together to satisfy the needs, wants, and aspirations of customers through the quality of delivery. The nature of service delivery is, by definition, one of managing consumer expectations. The symbiotic relationship between service and consumer dictates that the service only has value if it meets the customer need for high quality delivery that satisfies its purpose. It is a relationship where service and consumer exist on a continuum and the service is only produced if it is, at the same time, consumed by the customer e.g. a restaurant meal only exists as a product at the point of consumption – it has no shelf life and cannot be shipped. The experience of the meal remains specific to the moment. 

Of great significance is the relationship between the service systems of the operation and marketing opportunities. Service organizations rely on this service design matrix to gain competitive advantage in the marketspace. Firms need to align their services with the market environment, taking competitive intensity into consideration in order to meet a delivery imperative that increasingly demands service as value-creation. Service systems form part of the value proposition in the transactional relationship between provider and client. There has to be an emphasis on weaving all elements of the service product into customer-based solutions and benefits where service becomes the common denominator of all business exchange systems and processes. 

Each time the service is rendered, it seeks to fulfill a specific range of client expectations that may not be transferable to another client. This makes customer the premier focus of the service design matrix with service delivery options that are flexible, permeable, and highly reactive i.e. characteristics of workers, operations, and innovations must be relative to the degree of customer/service contact, remain clear and self-evident for appropriate application, and is structured to react effectively to changing customer needs and worker requirements. All points in the product-service continuum are designed to dovetail into customer satisfaction 

Close proximity of business functions is another strategy that facilitates tighter control and easier coordination for quick decision-making and response to market information. Additionally, the use of communication technology like MIS systems readily synthesizes vast amounts of information to ensure that the product/service matrix is closely tethered to customer service needs – exploiting trends, product variety, speed to market, accessibility, competitive pricing, good quality etc.