Unit 3 - Delivering Services
Delivering Services
A. Role of Employees in Service Delivery
Employees are central to service delivery because services are produced and consumed simultaneously. They influence customer satisfaction directly.
1. Frontline Employees ("Service Personnel")
- Interact directly with customers.
- Represent the company’s image. Example: Bank staff, hotel reception, call center agents.
2. Employee Roles
a) Service Providers
They perform the service and ensure speed, accuracy, and quality.
b) Marketers
Their behavior creates a positive image (smile, politeness, professionalism).
c) Relationship Builders
They build trust and long-term relationships with customers.
d) Problem Solvers
Handle complaints, queries, and service failures.
3. Importance
- Reduce service variability
- Increase satisfaction
- Support brand promise
- Create memorable customer experience
B. Role of Customers in Service Delivery
Customers participate actively in service creation.
Customer Roles
1. Co-producers of Service
- Provide information (in banks, hospitals, salons).
- Follow the process (filling forms, giving documents).
2. Quality Contributors
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The service quality depends on customer cooperation. Example: A patient must follow instructions for proper diagnosis.
3. Competitors
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Customers sometimes perform services themselves (self-service kiosks, ATMs).
4. Resource Providers
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Customers bring their own effort, time, and information.
Service Process – Blueprinting
A. Service Process
It is the sequence of steps involved in delivering a service.
A good process should be:
- Simple
- Efficient
- Customer-friendly
- Consistent
Examples:
- Restaurant order → preparation → serving
- Bank account opening → verification → activation
B. Service Blueprinting
A service blueprint is a visual map of the entire service process.
Elements of a Service Blueprint
- Customer Actions
- Front-stage (Visible) Activities – what employees do in front of the customer
- Back-stage Activities – support activities not visible
- Support Processes
- Physical Evidence – items the customer sees at each step
Benefits
- Identifies service gaps
- Improves efficiency
- Helps train employees
- Ensures consistency
Physical Evidence in Services
Physical evidence refers to the tangible aspects of a service that help customers judge its quality.
Types of Physical Evidence
1. Facility Exterior
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Building design, parking, signage, landscaping.
2. Facility Interior
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Layout, cleanliness, lighting, air conditioning, furniture.
3. Other Tangibles
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Brochures, uniforms, statements, receipts, menu cards, websites, apps.
Importance
- Builds trust
- Reduces uncertainty
- Enhances customer experience
Pricing of Services
Pricing services is more difficult than goods due to intangibility, variability, and perishability.
A. Pricing Considerations
- Cost of providing service
- Demand level
- Competition pricing
- Service quality and positioning
- Customer price sensitivity
- Time factor (peak/off-peak pricing)
- Perceived value (how much value customers think they get)
B. Pricing Strategies
1. Cost-based Pricing
- Price = Cost + Profit margin
- Used in hospitals, salons, banks.
2. Value-based Pricing
- Price depends on value perceived by customers. Example: premium hotels, branded education programs.
3. Competition-based Pricing
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Pricing based on competitors. Example: telecom, airlines.
4. Differential / Dynamic Pricing
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Different prices based on demand. Example: hotel rooms, flight tickets.
5. Relationship Pricing
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Discounts for loyal customers. Example: reward programs.
6. Bundle Pricing
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Combining multiple services in a package. Example: telecom plans (data + calls + OTT).
7. Penetration Pricing
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Low price initially to attract customers.
8. Price Skimming
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High price during launch, then gradually reducing.
Managing the Service Promise
A service promise is what the company commits to customers through communication and branding.
A. Role of Marketing Communication Tools
1. Advertising
- Builds awareness and creates expectations.
- Must match actual service delivery.
- Example: "24x7 customer support" ads.
2. Personal Selling
- Salespeople explain the service, handle objections, and build trust.
- Very important in banking, insurance, education.
3. Sales Promotion
- Discounts, free trials, coupons, referral programs.
- Helps attract customers quickly.
4. Publicity
- Unpaid form of promotion through media coverage.
- Example: news articles, reviews.
5. Public Relations (PR)
- Managing image and goodwill.
- Press releases, CSR activities, events.
Service Performance
Service performance refers to the actual output and quality of the service delivered.
Key Elements of Service Performance
1. Service Quality
Measured by:
- Reliability
- Responsiveness
- Assurance
- Empathy
- Tangibles (SERVQUAL model)
2. Consistency
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Doing the service the same way every time.
3. Productivity
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Efficient use of time, people, and resources.
4. Customer Satisfaction
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Positive experience → loyalty, retention, positive word-of-mouth.
5. Service Recovery
- Handling complaints and failures effectively.
- Apology, compensation, re-performance.
Conclusion
Delivering high-quality service depends on employees, customers, process design, physical evidence, appropriate pricing, communication, and performance management. A company that manages all these elements can create superior customer experiences and competitive advantage.
Evaluating Success of Service Offering
To understand whether a service is performing well, businesses must evaluate service quality, how complaints are handled, how failures are recovered, and whether guarantees are delivered. The major framework used here is the GAP Model of Service Quality.
Service Quality and Its Measurement
What is Service Quality?
Service quality means how well a service meets or exceeds customer expectations.
Unlike products, services are intangible, so quality is judged mainly by customer experience.
Dimensions of Service Quality (SERVQUAL Model)
| Dimension | Meaning | Example |
|---|---|---|
| Reliability | Consistency & accuracy of service | Bank always credits amount on time |
| Responsiveness | Willingness to help customers | Quick response to queries |
| Assurance | Employee knowledge, trust & confidence | Doctor clearly explains treatment |
| Empathy | Personalized, caring attitude | Staff remembers customer preferences |
| Tangibles | Physical appearance of facilities | Clean hotel room, neat uniform |
Methods of Measuring Service Quality
- SERVQUAL Survey – Measures gap between customer expectations and perceptions.
- Customer Satisfaction Surveys – Online feedback forms, NPS (Net Promoter Score).
- Mystery Shopping – Observers pretend as customers and evaluate service.
- Service Audits – Internal assessments of processes and standards.
- Customer Complaints Analysis – What customers complain about signals quality issues.
Complaint Handling
Complaints are valuable information, not a problem. A good system improves customer retention.
Effective Complaint Handling Process
- Listen patiently
- Acknowledge the problem
- Apologize sincerely
- Investigate the issue
- Provide a fair solution
- Follow-up with the customer
Why Complaint Handling Matters
- Prevents negative word-of-mouth
- Builds customer trust
- Helps identify service gaps
- Shows commitment to customer care
Recovery Management
Service recovery means actions taken when service fails.
Service Recovery Strategies
- Apology + Explanation
- Quick Response
- Compensation (refunds, discounts, free service)
- Employee Empowerment (allow staff to solve problems on the spot)
- Follow-up to ensure satisfaction
The Service Recovery Paradox
Sometimes customers become more loyal after a problem is solved effectively than if no problem occurred.
Service Guarantees
A service guarantee is a promise that the service will meet certain standards.
Types of Service Guarantees
- Unconditional Guarantee – “No questions asked refund.”
- Specific Guarantee – Guarantee for particular service aspects (delivery time, accuracy).
- Implicit Guarantee – Signals of quality (brand image, reputation).
- Explicit Warranty – Written assurance of service performance.
Benefits of Service Guarantees
- Builds customer confidence
- Encourages employees to maintain standards
- Reduces customer risk
- Forces organization to improve processes
The GAP Model of Service Quality (Parasuraman, Zeithaml & Berry)
The GAP Model identifies why services fail to meet customer expectations.
GAP 1: Knowledge Gap
Difference between customer expectations and management’s understanding of those expectations.
Reason: Poor research, lack of communication with customers.
GAP 2: Design & Standards Gap
Difference between management perception and service quality specifications.
Reason: Poor service design, lack of standard procedures.
GAP 3: Delivery Gap
Difference between service standards and actual service delivery.
Reason: Poor employee performance, inadequate training, lack of resources.
GAP 4: Communication Gap
Difference between service delivery and advertising/promises.
Reason: Overpromising in ads, unrealistic commitments.
GAP 5: Customer Gap (Most Important)
Difference between customer expectations and customer perceptions.
This gap summarizes overall service quality.
Conclusion
Evaluating the success of a service offering requires:
- Measuring service quality through structured tools
- Handling complaints professionally
- Recovering failures effectively
- Using service guarantees to build trust
- And understanding gaps using the GAP Model
These tools help organizations maintain customer satisfaction, loyalty, and long-term success.