Added: Malynda Akers - Date: 09.12.2021 03:40 - Views: 31134 - Clicks: 9445
Many of the management tools and techniques used in service businesses were deed to tackle the challenges of product companies. After years of extensive research and analysis, she offers an approach for crafting a profitable service business based on four critical elements: the de of the offering, employee management, customer management, and the funding mechanism. A close look at successful service businesses—Wal-Mart, Commerce Bank, the Cleveland Clinic, and others—reveals that effective integration of the four elements is Need some servicing.
Incumbents can fend off attacks from highly focused upstarts by becoming multifocused—that is, by pursuing multiple niches through optimized service models rather than trying to cover the entire waterfront with one model. Shared services within a firm functions such as HR and finance can help, since they will enable it to generate economies of scale and experience across models. All successful firms must de a compelling offering and manage the workforce to deliver it at an attractive price.
But service firms must do even more: deal with the frustrating fact that their customers can wreak havoc on service quality and costs. For example, a customer dithering at a fast-food counter slows things down for everyone else waiting in line. Get these elements pulling together, and none of them can pull your business apart—as service stars like Wal-Mart, Commerce Need some servicing, and Cleveland Clinic have discovered firsthand. To consistently deliver service excellence, ensure that each of these four elements reinforces the others:. Flexible choices?
Commerce Bank 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.
Possibilities include:. Ensure that your workforce management activities recruiting, selection, training, job de 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.
Articulate which behaviors customers must demonstrate to get the most value from your service. Then de your service specifically to foster those behaviors.Here's How Much it Costs to Run a Range Rover Evoque (12 Month Update)
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. Moreover, the stores expect shoppers to shoulder responsibility for fraud prevention by weighing bags during checkout. Anxious customers avoid the machines. But many of the management tools and techniques that service managers use were deed to tackle the challenges of product companies.
Are these sufficient, or do we need new ones?
Let me submit that some new tools are necessary. To be sure, neither job is easy to do well; enormous amounts of management attention and academic research have been devoted to these challenges. But delivering a service entails something else as well: the management of customers, who are not simply consumers of the service but can also be integral to its production.
Any of these four elements—the offering or its funding mechanism, the employee management system or the customer management system—can be the undoing of a service business. This is amply demonstrated by my analysis of service companies that have struggled over the past decade. The appropriate de of any one of them depends upon the other three. When we look at service businesses that have grown and prospered—companies like Wal-Mart in retail, Commerce Bank in banking, and the Cleveland Clinic in health care—it is their effective integration of the elements that stands out more than the cleverness of any element in isolation.
Developed as a core teaching module at Harvard Business School, this approach recognizes the differences between service businesses and product businesses. Students in my course learn to think about those differences and their implications for management practice. Above all, they learn that to build a great service business, managers must get the core elements of service de pulling together or else risk pulling the business apart. The challenge of service-business management begins with de. It must effectively meet the needs and desires of an attractive group of customers.
In thinking about the de of a service, however, managers must undergo Need some servicing important shift in perspective: Whereas product deers focus on the characteristics buyers will value, service deers do better to focus on the experiences customers want to have. For example, customers may attribute convenience or friendly interaction to your service brand. Your management team must be absolutely clear about which attributes of service the business will compete on. Strategy is often defined as what a business chooses not to do. Similarly, service excellence can be defined as what a business chooses not to do well.
If this sounds odd, it should. Rarely do we advise that the path to excellence is through inferior performance. Instead, my research has shown, they perform Need some servicing at some things in order to excel at others. This can be considered a hard-coded trade-off. Think about the company that can afford to stay open for longer hours because it charges more than the competition.
This business is excelling on convenience and has relatively inferior performance on price. The price dimension fuels the service dimension. To create a successful service offering, managers need to determine which attributes to target for excellence and which to target for inferior performance. These choices should be heavily informed by the needs of customers.
Managers should discover the relative importance customers place on attributes and then match the investment in excellence with those priorities. At Wal-Mart, for example, ambience and sales help are least valued by its customers, low prices and wide selection are most valued, and several other attributes rank at points in between.
Collis and Michael G. The fact that it takes a drubbing from competitors on things its customers care less about drives its overall performance. The phenomenon, of course, has a circular aspect. It is important therefore to identify customer segments in terms of attribute preferences—or as some marketers prefer, in terms of customer needs. Identifying what might be called customer operating segments is not the same exercise as traditional psychographic segmentation. Rather than stressing differences that enable increasingly targeted and potent messaging, this type of segmentation aims to find populations of customers who share a notion of what constitutes excellent service.
Look, for example, at the fit achieved by Commerce Bank, which has been able to grow its retail customer base dramatically even though its rates are among the worst in its markets and it has made limited acquisitions. Commerce Bank focuses on the set of customers who care about the experience of visiting a physical branch. These customers come in all shapes and sizes—from young, first-time banking clients to time-strapped urban professionals to elderly retirees.
Commerce has added to its branch ambience with interior elements both lovely high ceilings and natural light and fun an amusing contraption for redeeming loose change. I like to tell managers that they are choosing between excellence paired with inferior performance on one hand and mediocrity across all dimensions on the other.
When managers understand that inferior performance in one dimension fuels superior performance in another, the de of excellent service is not far behind. All managers, and even most customers, agree that there is no such thing as a free lunch.
Excellence comes at a cost, and the cost must ultimately be covered. Only the 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. For Need some servicing, a shopper might spend time learning from a knowledgeable salesperson, only to leave the store empty-handed. In a service business, therefore, management must give careful thought 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. Two are ways of having the customer pay, and two cover the cost of excellence with operational savings. The classic 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.
Commerce Bank is open late and on weekends—earning it high marks on extended hours—and it pays for that service by giving a half percentage point less in interest on deposits. Could it fund the extra labor hours by charging for evening and weekend visits? Perhaps, but a slightly lower interest rate is more palatable.
Management in any setting would do well to creatively consider what feels fair to its customers. Often, the least creative solution is to charge more for the particular service feature you are funding. Very clever management teams discover ways to enhance the customer experience even while spending less finding, in other words, that there can be such a thing as Need some servicing free lunch. Many of these innovations provide only a temporary competitive advantage, as they are quickly recognized and copied.
Some are surprisingly durable, however. An example 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.
But in anticipation of such a need someday, would they pay more in insurance premiums? Unfortunately, no. People are pathologically price sensitive about car insurance and almost never select anything but the rock-bottom quote. Normally insurance providers are subject to fraud, with criminals making claims for accidents that were staged or never happened. Since deploying its vans, Progressive has seen costs in both plummet. Sending a company representative to the scene pays for itself.
Progressive offers another customer convenience that many competitors have Need some servicing far shied away from: giving quotes from other providers alongside its own when a potential buyer inquires about the cost of insurance. If indeed its quote is spot-on, then allowing a competitor to insure the customer at a lower rate is doubly effective: It frees Progressive from a money-losing proposition while burdening its competitor with the unprofitable. Thus a level of service that looks downright altruistic to the customer actually benefits the company.
This is an example of leveraging operations into a value-added service. How can your management team find win-win solutions of its own? When I pose this question to managers, their impulse is to imagine what new value could be created for customers and then to ponder how that could be funded through cost savings.
A good first place to look? Anywhere that time is a large component of cost. Removing time is often fruitful, since it can directly improve service even as it cuts costs. Call centers are expensive to staff because of the combination of technical knowledge and sociability required to field inquiries effectively. For most software makers this adds up to the obvious conclusion that customers should be charged for support.
Intuit founder Scott Cook sees the Need some servicing differently. Those needy calls, he believes, are a useful form of input to continued product development—the engine of future revenues—and that justifies an even greater expense outlay. Intuit has its higher salaried product-development people, not solely customer service people, fielding calls so that subsequent versions of its offerings will be informed by direct knowledge of what users are trying to accomplish and how they are being frustrated.
Offering self-service, from pump-your-own gas to self-managed brokerage s, is a well-established way to keep costs low.
If the goal is service excellence, though, you must create a situation in which the customer will prefer the do-it-yourself capability over a readily available full-service alternative.Need some servicing
email: [email protected] - phone:(473) 800-6885 x 7365
Definition of 'service'