Introduction to customer serviceChapter 1

© Hudson & Hudson. Customer Service for Hospitality & Tourism

Topics Covered

o Customer service definedo A history of customer service o The role of customer service

• Unique characteristics of services• Services marketing triangle• The services marketing mix

o Customer service in the tourism and hospitality sector

‘At Your Service Spotlight’: Walt Disney – a legacy of customer

serviceDisneyland is a work of love. We didn’t go into Disneyland just with the idea of making money’.

o Walt’s personal philosophy (values, morals, religious beliefs, creative goals, innate psychographic awareness)

o Excellence more crucial than profits

o Disney’s commitment to its customers - focus on the guest experience rather than traditional business efficiencies

o ‘Imagineering’ o ‘what ifs’ o positive alternative to saying ‘no’

o ‘Guestology’o novel approach to staff training o internal languageo ‘wow’ moments  

 

Customer service

…the practice of delivering products and services to both internal and external customers via the efforts of employees or through the provision of an appropriate servicescape.

o Services and service culture

o Interaction between employees and customers

o Physical infrastructure

History of customer service

o 1800s Craftsman economy

o Business owners also frontline employees

o Customized orders

o 20th century mass production

o Less individualized service

o Post WWII demand: Power of suppliers surpasses that of consumers

o 1970s: Western manufacturers compete with Asia

o 1990sL Suppliers more selective

o Present day: Shift to service economy

Why the decline in customer service?

o Companies wrongly believe they are providing service excellence

o Organizations don’t understand the significance of customer service

o Companies don’t know how to deliver consistent, high quality customer service on an on-going basis

The customer service perception gap

Snapshot: Customer service at the Augusta Masters‘In the race for excellence, there is no finishing line’.

Many key features of professional golf tournaments introduced in Augusta

o Patrons

• Sight lines, bleachers, observation stands, closed circuit TV

• Lunch food, refreshment stands

• Picnicking grounds, plenty of lavatories

o Tournament played over four days

o Media

• First tournament on nationwide radio

• Cups, bags ‘invisible’ to cameras

• On-course scoreboard network

• Roped galleries

Role of customer service

Models to assist in services marketing and management decisions at the strategic and implementation levels:

o Four unique characteristics of services

o The services marketing triangle

o The marketing mix for services

Unique characteristics of services

Characteristic Description

1) Intangibility

Service products cannot be tasted, felt, seen, heard, or smelled. Prior to boarding a plane, airline passengers have nothing but an airline ticket and a promise of safe delivery to their destination. To reduce uncertainty caused by service intangibility, buyers look for tangible evidence that will provide information and confidence about the service.

2) Inseparability

For many services, the product cannot be created or delivered without the customer’s presence. The food in a restaurant may be outstanding, but if the server has a poor attitude or provides inattentive service, customers will not enjoy the overall restaurant experience. In the same way, other customers can affect the experience in service settings.

3) Heterogeneity

Service delivery quality depends on who provides the services. The same person can deliver differing levels of service, displaying a marked difference in tolerance and friendliness as the day wears on. Lack of consistency is a major factor in customer dissatisfaction.

4) Perishability

Services cannot be stored. Empty airline seats, hotel rooms, daily ski passes, restaurant covers—all these services cannot be sold the next day. If services are to maximize revenue, they must manage capacity and demand since they cannot carry forward unsold inventory.

The services marketing triangle

Company

Internal Marketing Enabling Promises

External Marketing Making Promises

Service Providers Customers Interactive Marketing

Keeping Promises

Expanded Marketing Mix for Services

Product Place Promotion Price

1) Physical good features 1) Channel type 1) Promotion blend 1) Flexibility

2) Quality level 2) Exposure 2) Salespeople 2) Price level

3) Accessories 3) Intermediaries - Number 3) Terms

4) Packaging 4) Outlet locations - Selection 4) Differentiation

5) Warranties 5) Transportation - Training 5) Discounts

6) Product lines 6) Storage - Incentives 6) Allowances

7) Branding 7) Managing channels 3) Advertising

- Targets

- Media types

- Types of ads

- Copy thrust

4) Sales promotion

- Publicity

Additional 3 ‘P’s of Services Marketing

Product Place Promotion Price

1) Physical good features 1) Channel type 1) Promotion blend 1) Flexibility

2) Quality level 2) Exposure 2) Salespeople 2) Price level

3) Accessories 3) Intermediaries - Number 3) Terms

4) Packaging 4) Outlet locations - Selection 4) Differentiation

5) Warranties 5) Transportation - Training 5) Discounts

6) Product lines 6) Storage - Incentives 6) Allowances

7) Branding 7) Managing channels 3) Advertising

- Targets

- Media types

- Types of ads

- Copy thrust

4) Sales promotion

- Publicity

Tourism and hospitality market

….activities of persons travelling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes not related to the exercise of an activity remunerated from within the place visited (UNWTO)

o Demand for a wide range of travel and hospitality products

o Total market now serviced by the world’s largest industry

• International arrivals: 50 million in 1950 to 935 million in 2010 (UNWTO, 2011).

 

Western markets

o Mature hospitality and tourism markets

• Severe competition

• Low product differentiation

• Limited promotional cost

• Customer service increasingly important as market differentiator

o Actual customer satisfaction

• Heightened customer expectations

• Lagging satisfaction rates for tourism and hospitality

 

 

Customer service eliteRank Brand Industry Staff Service Total

Score Change 2009 (%)

Recommend (%)

Repurchase (%)

1 L.L. Bean Online/Catalog Retail A+ A+ 1055.95 10.71 58 59

2 USAA Insurance A+ A+ 1042.76 1.48 78 84 3 Apple Computers & Electronics A+ A+ 1016.55 9.92 66 58 4 Four Season Hotel &Resort Hotel A+ A+ 1000.9 3.65 55 41 5 Publix Super Market Supermarket A+ A+ 992.02 2.64 72 66 6 Nordstrom Department Store Retail A A 974.71 7.26 60 53 7 Lexus Automotive A+ A+ 966.44 -5.52 58 38 8 The Ritz-Carlton Hotel A+ A+ 950.74 2.73 54 39 9 Barnes & Noble Big Box Retail B+ A- 944.32 NA 51 50 10 Ace Hardware Home Improvement Retail A A 939.69 -0.05 37 29 11 Amazon.com Online/Catalog Retail A+ A+ 933.55 -5.67 61 57 12 Wegmans Food Markets Supermarket A A+ 923.85 NA 78 62 13 Starbucks Restaurant A- A- 923.77 2.24 40 41 14 Amica Mutual Insurance Insurance A+ A+ 920.8 1.01 61 67 15 Charles Schwab Brokerage A- B+ 918.68 -1.69 47 NA 16 Jaguar Automotive A+ A+ 916.34 -6.07 48 27 17 WestJet Airline B+ B+ 909.6 NA 56 47 18 American Express Credit Card B+ B- 900.46 -0.69 44 NA 19 Enterprise Rent-A-Car Rental Car B B 900.02 -0.83 36 34 20 Branch Banking & Trust Banking B+ B- 895.91 2.97 40 37 21 Panera Bread Restaurant B+ B+ 892.45 NA 45 40 22 True Value Home Improvement Retail A- A 879.02 0.41 26 22 23 Dell Computers & Electronics B+ A- 872.64 5.74 44 47 24 Southwest Airlines Airline B B+ 871.84 1.52 50 40 25 Fairmont Hotels & Resorts Hotel A+ A+ 871.65 1.16 51 32

Customer service superstars 1) The Ritz-Carlton Hotels and Resorts

Luxury hotel; renowned for its personalized service and famous (and generous) employee empowerment policy; has its own Leadership Centre often used by other companies for development and training; motto, ‘We are Ladies and Gentlemen Serving Ladies and Gentlemen’ has impact internally and externally.

2) Harrah’s Entertainment

Gaming/Entertainment; CEO is co-author of the service profit chain; uses leading edge database system to do ‘surgical marketing’; belief that business should be grown by investing heavily to focus the firm on the customer rather than investing on the tangible assets of the firm only.

3) The Walt Disney Company

Entertainment; in addition to its reputation as the provider of family entertainment and fun, Disney is known for many customer-focused approaches such as ‘guestology’ and the ‘imagineers.’

4) Four Seasons

Luxury hotel; embodies a true ‘home away from home’ experience with exceptional personal service; ranked number two in recent Business Week survey of best customer service.

5) Club Med

Resorts; the carefree, all-inclusive holiday package company, in search of the ‘alchemy of happiness,’ has been able to make necessary adjustments along with demographics of customer base.

4) Southwest Airlines

Airline; innovation of the ‘low cost’ carrier—has continually run contrary to most of the airline industry through its customer-service culture; considers itself a ‘customer service business which just happens to provide transportation.’

4) Singapore Airlines

Airline; at the premium end of the market, Singapore Airlines has consistently outperformed its competitors throughout its three-and-a-half decade long history. It has sustained its competitive advantage by effectively implementing a dual strategy: differentiation through service excellence and innovation, together with simultaneous cost leadership.

Asian markets

Knowing our guests and their preferences helps us to understand their needs, and in turn, we are able to anticipate their requests before they even ask for assistance - The Ritz-Carlton director of sales and marketing

o High levels of service in tourism and hospitality

o Customer satisfaction study in Singapore

o Satisfaction index across eight economic sectors, 102 organizations.

o Top five spots: The Ritz-Carlton, Singapore Airlines, Swissotel The Stamford, Shangri-La and Grand Hyatt

 

‘There’s no second chance for a first impression’

o Five-star hotels, beach, restaurants, shopping malls, golf course

o African-themed: Jungle foliage, calls, scents

o 40 % repeat customers

o Attention to detail

• Cocktails at check-in

• Televisions on guest’s language channel

• Staff track personal preferences

• Complementary drinks and fruit

o Investments in staff training

o Well-compensated, career opportunities

Case Study: Baobab Resort