Service Encounter Essay

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service encounters from your own perspective as a customer and as a services marketing manager. Part one will consist of examination of an organization that provided the worst service of any organization ever encountered by recognizing the concepts of service marketing from the appropriate chapters of the prescribed text, and Part two will be comprised of an account of an organization doing an excellent overall job by applying services marketing concepts recognized.

Bad Service Organization

AT&T undoubtedly has provided the worst service ever encountered by the writer of this work. The company advertised a bundled package that included a home phone and broadband internet service along with mobile phone service. The company failed to inform the customer that the area in which they resided did not have Broadband service and sold the customer the bundled package at a set price. When the customer received the mobile telephone, the customer soon realized that the phone was not activated and learned upon contacting AT&T that the customer would have to place a $400.00 deposit in order to activate the phone. The customer wondered how then that they had been sold a bundled package for $80.00 per month that in reality included nothing more than home phone service. Added to these facts, the company required the customer to remain with a two-year contract and when the customer requested dialup internet service this amount was added to the customer's billing resulting in a $95.00 per month bill for nothing more than a home phone and dialup internet service. In addition to the problems already stated, the customer resides in a rural area and the phone lines on a regular basis were out or may as well have been out due to water in the lines.

Defining Service & Service Quality

In order to examine the service of an organization it is first critical to understand what service means. Services are reported to be "deeds, processes, and performances." (Frei, 2008, p.5) The work of Frei (2008) states that there are four areas that there are four things a service business must get right. The first of these four is stated to be "The Offering" as the challenge of service-business management "begins with design. A service business is such that cannot remain in business long "if the offering itself is fatally flawed. It must effectively meet the needs and desires of an attractive group of customers." (Frei, 2008, p.4) Stated secondly, is the "funding mechanism" and specifically stated is that excellence "comes at a cost, and the cost must ultimately be covered. With a tangible product, a company's mechanism for funding superior performance is usually relatively simple: the price tag." (Frei, 2008, p.4)

(1) The Offering -- Which services attributes does the firm target for excellence and which ones does it compromise in order to achieve excellence in other areas? How do the service attributes match up with customer priorities?

(2) The Funding Mechanism -- Are customers paying as palatably as possible and can operational benefits be realized from service features? Are there longer-term benefits to current service features? Are customers happily choosing to perform work or just trying to avoid more-miserable alternatives?

(3) The Employee Management System -- What makes employees reasonably able to produce excellent and what makes them reasonably motivated to produce evidence? Are jobs designed in a realistic manner given the selection, training and motivation challenges?

(4) The Customer Management System -- Which customers are being incorporated into the business operations? What is their job design? What has been done to ensure they have the skills to do the job? What has been done to ensure they want to do the job? How will gaps in performance be managed? (Frei, 2008, p.5)

It is related that only customers "who forfeit the extra cash can avail themselves of the premium offering. In a service business, developing a way to fund excellence can be more complicated. Many times, pricing is not transaction-based but involves the bundling of various elements of value or entails some kind of subscription, such as a monthly fee. In these cases, buyers can extract uneven amounts of value for their money. Indeed, even nonbuyers may derive value in certain service environments." (Frei, 2008, p.4) It may be that the buyer manages to "extract uneven amounts of value for their money. Indeed, even nonbuyers may derive value in certain service environments. For example, a shopper might spend time learning from a knowledgeable salesperson, only to leave the store empty-handed.

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" (Frei, 2008, p.4)

Therefore, in the service environment it is necessary that management give consideration to "how excellence will be paid for. There must be a funding mechanism in place to allow the company to outshine competitors in the attributes it has chosen." (Frei, 2008, p.4) The funding mechanism is reported to take four basic forms:

(1) charge the customer in a palatable way;

(2) create a win-win between operational savings and value-added services;

(3) spend now to save later; and (4) have the customer do the work. (Frei, 2008, p.5)

It is reported that the traditional approach to funding something of value "is simply to have the customer pay for it, but often it is possible to make the form that payment takes less objectionable to customers. For example, it is reported that a "large part of Starbuck's appeal is that a customer can linger almost indefinitely in a coffeehouse setting. It's unthinkable that Starbucks would place meters next to its overstuffed chairs, a better way to fund the atmosphere is to charge more for the coffee." (Frei, 2008, p.5)

In regards to the creation of a win-win between operational savings and value-added services it is stated that smart management teams "discover ways to enhance the customer experience even while spending less. Many of these innovations provide only a temporary competitive advantage, as they are quickly recognized and copied. Some are surprisingly durable however." (Frei, 2008, p.5) The example stated is the "immediate-response service provided by Progressive Casualty Insurance. When someone insured by Progressive is involved in an auto accident, the company immediately sends out a van to assist that person and to assess the damage on the spot -- often arriving on the scene before the police or tow trucks. Customers love this level of responsiveness and give the company high marks for service." (Frei, 2008, p.5)

The question remains whether customer would in the future pay more for insurance premiums however, it is stated that this is not likely since people are "pathologically price sensitive about car insurance and almost never select anything but the rock-bottom quote. The key to Progressive's ability to fund this service is the cost savings it ultimately yields. Normally insurance providers are subject to fraud, with criminals making claims for accidents that were staged or never happened. Because of these and other types of disputed claims, ?rms also incur high legal fees -- which, combined with the other costs of fraud, add up to some $15 out of every $100 in insurance premiums across the industry." (Frei, 2008, p.6) It is reported that Progressive has seen costs in both categories fall and that sending a company representative to the scene has in reality paid for itself.

In regards to spending now and saving later it is stated that it is "possible, if somewhat painful to make operational investments that will pay off eventually by reducing customers' need for auxiliary service in the future." (Frei, 2008, p.6) Stated as an example is the decision of Intuit to provide free customer support, "in defiance of the software industry norm." (Frei, 2008, p.6) It is costly to staff call centers due to the "combination of technical knowledge and sociability required to field inquiries effectively." (Frei, 2008, p.6) Customers are stated to be uneven in their need for information technology and this results in the obvious conclusion that customers should be charged for support. (Frei, 2008, p.6) In regards to having the customer do the work it is stated that another type of funding mechanism for enhanced service "puts the cost back in the customer's court, but in the form of labor." (Frei, 2008, p.6)

What Could AT&T Have Done Different?

AT&T should most certainly provide its employees with more training on marketing of bundled services and furthermore, the company should make provisions for changes in contracts for customers who have erroneously, at the behest of employees of AT&T, purchased a bundled service that has services in the bundle unavailable in the area or region of the customer. Finally, AT&T should carefully examine its bundled packages marketing offerings and how these are marketed to ensure that customers are not targeted for bundled service advertising in areas that do not have all of the services available included in the bundles.

Part Two -- Good Service Organization

While it has not always been the case, HughesNet Satellite Internet Service provider has provided excellent customer service in recent.....

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