Service Operations

Question 1

“Everybody is in service” quote

Answer 1

Levitt:

“There are not such thing as service industries. There are only industries whose service components are greater or less than that of other industries. Everybody is in service”

Question 2

8 Fundamentals of a service proposition:

Answer 2

Intangible
Heterogenous
Simultaneous - They are produced as they're consumed
Perishable - Cannot be inventoried
Direct Contact
Inalienable
Imitable
Subjective

Question 3

Service Dominant Logic

Answer 3

Vargo & Lusch (1994)

• Service is the fundamental basis of exchange
• Operant resources are the fundamental source of competitive advantage
• Goods are a distribution mechanism for service provision
• The customer is always a co-creator of value
• An enterprise cannot deliver value, but only offer value propositions
• Value is phenomenologically determined byt he beneficiary.

[View a product as the outcome it results in, so a car as the journey rather than the car itself, this encourages a sharing economy, can focus on this aspect of the service dominant logic]

Question 4

Service delivery Triangle

Answer 4

Triangle between:

Organisation
          -
Employees
          -
Customers

• Organisation has direct and indirect control over employees, whilst the service encounter occurs between employees and customers.

Question 5

SMS Model

Answer 5

Normann’s ‘service management systems’

DIAGRAM IN NOTES

Question 6

Managing customer demand

Answer 6

• Booking appointments
• Adjusting prices
• Queuing

Question 7

Queueing times model

Answer 7

𝐸(𝑊𝑞) ≈ 𝜌/(1−𝜌) x (𝑐𝑎^2 + c𝑠^2)/2u

𝜌 = Utilisation
𝑐𝑎 = Coefficient of variation in arrival rate
c𝑠 = Coefficient of variation in service times

Question 8

Service profit chain

Answer 8

Heskitt (1994)

Employee Satisfaction –> Customer Satisfaction –> Customer Loyalty –> Profit Growth

Question 9

Customer Value equation

Answer 9

Value =
(results for the customer) + (Process Quality) /
(Price to the customer) + (Cost of acquiring service)

Question 10

Loyalty effect

Answer 10

• It costs more to acquire a new customer than to retain an old one
• Increasing customer retention by 5% can increase profits by 25%

Question 11

Service Failure

Answer 11

• A dissatisfied customer will tell 10-20 people, whilst a customer who has a problem resolved will tell 5 people
• Passives: Will not take action
• Voicers: Will complain to service providers
• Activists: Will actively complain
• Terrorists: Will go to extreme lengths to attract attention to their complaints

Question 12

Service Recovery

Answer 12

“Actions taken by an organisation in response to a service failure”

• Turning failure into delight can actually improve customer perceptions and result in positive WOM, any service failure is an opportunity to solve a problem.

Question 13

Lean Services

Answer 13

• Reduce the time in which value is not being added (Eg: unemployed resources, queues)
• Match demand to resources.
• Match tasks to an employee’s skill level

Question 14

Experience Economy

Answer 14

Pine & Gilmore

Creating memorable experiences is a key factor in differentiating a service operation, and they have the most effect when the customer actively participates.