Service Excellence

Ruth N. Bolton

• Publisher: Business Expert Press
• Year: 2016
• Print ISBN: 9781631573712
• eBook ISBN: 9781631573729
• Topic: Business
• Subtopic: Marketing
• Index: Business

The Customer Experience is the sensory, cognitive, emotional, social and behavioral dimensions of all activities that connect the customer and the organization over time across touch points and channels. It encompasses all activities involving the customer where the organization is the focal object, including pre-purchase activities (such as exposure to a website ad), and purchase, consumption, and engagement behaviors (blogging, sharing photos). This book analyzes the challenges of creating excellent customer experiences, including the management of technology and new media. It describes how customers co-produce and co-create their experiences, and how these activities influence business revenues and costs. The book takes a deep dive into the psychology of customers, revealing the conceptual building blocks of customer experiences and how they build relationships over time. These ideas provide a business perspective on how to manage relationships with customers to generate cash flows and profitability, including the role of pricing.

CHAPTER 1

A Service-Centered View of the Customer Experience

Business in the 21st century is exciting: every aspect of the marketplace is being transformed. Technology is giving rise to new market opportunities, organizations are shaping and responding to markets in ways that are disruptive and challenging, and customer preferences and behavior are evolving rapidly. Organizations must focus on creating customer experiences that build relationships because they face new competitive pressures in a complex and dynamic marketplace. In this environment, many business experts have adopted a service-centered view because they believe that service, rather than goods, is fundamental to marketplace exchanges. This view has an inherent focus on the customer experience and the organization’s entire relationship with the customer.¹ Services have traditionally been defined as deeds, performances, or actions.² How-ever, today’s managers often see their organizations as cocreating customer experiences that build relationships through service or solutions.

One definition of service is “applied knowledge for another party’s benefit.”³ Based on this increasingly accepted definition, all aspects of product offerings (including goods, performances, and network exchanges) create service experiences that build relationships between organizations and their customers. Consequently, service organizations are diverse, including computing and information organizations (Cisco Systems), hotels and restaurants (Darden Restaurants), professional services (Accenture), banking and financial services (Charles Schwab), entertainment services (Disney), personal services (health, fitness, and recreation centers), Internet services (Google, eBay), and not-for-profit organizations (government services, museums and zoos, health, education, philanthropic, and public policy organizations). In addition, the service domain includes manufactured goods augmented with customer service—that is, service in support of an organization’s core products, such as installation, billing, repair, and handling complaints. This book uses the word “product” to refer to all offerings—no matter where they fall on the continuum between (traditionally described) goods and services—because all offerings create service experiences that build relationships between organizations and their customers.

Research has shown that organizations with a strong market orientation are more successful.⁴ A service-centered view is consistent with a strong market orientation because the organization focuses on creating customer experiences and building relationships by serving customers better than competitors. This book focuses on a service-centered view of the customer experience for three reasons.

1. Service has a unique ability to create customer experiences that generate bonds between organizations and their customers, as well as other key stakeholders (such as employees).
2. Service creates a differential advantage for an organization because customer experiences are difficult for competitors to imitate.
3. When markets change, a service-centered view places an emphasis on how organizations must learn and innovate so that their service strategies continue to create customer experiences that yield profitable relationships.

Case Study: Marriott Takes a Service-Centered View

Marriott International, Inc., operates and franchises hotels under 19 brands, with over 4,000 properties worldwide. Its brands include The Ritz-Carlton^®, JW Marriott, Renaissance Hotels, and Gaylord Hotels. It was named one of the “World’s Most Admired Companies” by Fortune in 2015. It regularly wins awards for customer service excellence and providing an outstanding workplace—a significant advantage in a highly competitive industry. It has continued to adapt and innovate in areas such as sustainability and managing diversity. In 2014, the company reported record revenue of $13.8 billion; net income was up 20 percent to $753 million, also a record.

Eighty percent of the U.S. economy is service-based. The economies of developed countries are primarily service-based and services are increasingly dominant in the global economy. Service industries include government, transportation, communications, finance, hospitality, education, retail trade, arts organizations, computing, and information services. IBM—originally a computer manufacturer—is now a service organization that emphasizes smart services, such as business process management and analytics. In addition, customer service augments or supports virtually all organizations’ products (goods or services). Even organizations that produce so-called commodities must take orders, manufacture products that match detailed specifications, schedule deliveries, handle scrap materials, and process bills. For example, Alcoa Inc. is involved in mining, refining, smelting, fabricating, and recycling aluminum, titanium, and nickel. However, its expertise in providing business customers with products and solutions is responsible for making it one of the world’s largest lightweight metal manufacturers in 2015. Hence, many thought leaders argue that every business is a service business.

Service is also important beyond the organization. It has a profound influence on the quality of life of people everywhere, as well as the societies they live in. By pursuing improvements and innovations in service, organizations are able to design and deliver services that increase people’s well-being. Around the world, people are being lifted out of poverty by advances in health, education, and environmentally sustainable services. For example, for-profit and not-for-profit organizations seek to eliminate malaria. Major advances have been made in controlling malaria in developing nations in the past decade. Organizations have worked together to develop preventive health services, including timely diagnosis and treatment; patient education; spraying with safe; long-lasting insecticides; and distributing bed nets to protect people from mosquito bites. Service is transforming people’s lives for the better everywhere. Through service, organizations—both for-profit and not-for-profit— are helping people achieve their aspirations for personal and societal well-being.

This book takes the perspective that excellent service creates customer experiences that build relationships. It will:

• analyze the challenges of creating excellent customer experiences, including the role of technology and new media (Chapter 2);
• identify how customers participate in their services experiences, including coproduction and cocreation—and their effects on how organizations manage demand and supply (Chapter 3);
• describe the psychology of customers, how they respond to service experiences, and how customer experiences can build relationships over time (Chapter 4);
• provide a financial and business perspective on how to manage relationships with customers that generate cash flows and profitability, including the role of pricing (Chapter 5);
• suggest concepts and tools to uncover new sources of revenue from innovations and improvements to the customer experience, including the use of business analytics and metrics (Chapter 6);
• describe ways to design and manage service processes, operations, and channels to create customer experiences that build relationships, as well as how to respond to service failures (Chapter 7);
• analyze the role of people and physical evidence in creating the customer experience, as well as the need for a service culture and climate within organizations (Chapter 8); and
• consider the customer experience from a global perspective, as well as how service will create customer experiences in the future (Chapter 9).

This chapter begins by describing how excellent service creates customer experiences that build profitable relationships for the organization. In addition, it identifies some of the key challenges to creating excellent customer experiences.

The Customer Experience

What is “the customer experience”? This book uses the term to refer to the sensory, cognitive, emotional, social, and behavioral dimensions of all activities that connect the customer and the organization over time, including all touch points and channels (i.e., business-to-business [B2B], business-to-consumer [B2C], and consumer-to-consumer [C2C] interactions). This definition encompasses all activities involving the customer where the organization is the focal object, including prepurchase activities (such as exposure to an ad, browsing a website), purchase behaviors, consumption behaviors, engagement behaviors (blogging, sharing photos), and other nonpurchase activities. Figure 1.1 depicts the scope of the customer experience, which includes all the elements radiating out from the offering.

• At the center of the drawing is the organization’s service offering as it is perceived by the customer—that is, the deed, performance, or knowledge applied for the benefit of the customer. (The service may be cocreated with the customer.)
• The second ring depicts customer satisfaction—that is, the customer’s purchase and postconsumption response to the service. Her satisfaction is formed after making multiple comparisons with expectations, emotional responses, judgments of fairness, and so forth.⁵
• The customer’s engagement behaviors (i.e., nonpurchase behaviors) are depicted in the next ring; they include social responses for which the organization (or its offering) is the focal object, such as word-of-mouth interactions.
• The outer ring represents the customer experience. It encompasses all the aforementioned activities as they occur within a customer and environmental context that changes over time. Hence, the customer experience interacts with the organization’s reputation, the al...

Table of contents

• Cover
• Title
• Copyright
• Acknowledgments
• Chapter 1. A Service-Centered View of the Customer Experience
• Chapter 2. New Challenges: Technology and New Media
• Chapter 3. Customer Participation and Its Implications for Managing Demand and Supply
• Chapter 4. The Building Blocks of the Customer Experience
• Chapter 5. Managing Customer Relationships to Achieve Growth and Profitability
• Chapter 6. Customer-Focused Innovation
• Chapter 7. Service Design and Multichannel Management
• Chapter 8. Managing Partners, People, and Physical Evidence
• Chapter 9. Globalization: Learning to Tailor the Customer Experience to New Markets
• Index
• Adpage
• Backcover