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Services: Chapter12: The Intangible Product Chapter Opener p. 358 p. 359 LEARNING OBJECTIVES Describe how the marketing of services differs from the marketing of products. Discuss the four gaps in the Service Gaps Model. Examine the five service quality dimensions. Explain the zone of tolerance concept. Identify three service recovery strategies. Recall from Chapter 11 that the life cycle for some products and services is relatively steep. In that chapter, we talked about how much faster DVDs diffused compared with VCRs. In a similar sense, televisions diffused somewhat slowly, until they eventually reached the maturity stage. Personal computers have moved along this life cycle much more quickly and now appear in approximately as many homes as do televisions. But what do these product life cycles have to do with this chapter on services? Plenty, if you are involved in the manufacture or sale of those personal computers. As anyone who has ever confronted the blue screen of death or an incomprehensible error message usually on the last page of the paper you were writingcan attest, technical difficulties are terribly frustrating. Perhaps even more frustrating are the hours invested on the telephone, trying to reach a customer service representative, who may or may not be able to help. Even in this challenging situation, 90 percent of Apple customers report they are very satisfied with its customer service. Part of the reason for this high satisfaction may stem from the product itself; because Apple is less subject to viruses than PCs, consumers may not need customer service as often. More likely though, it results from Apple's efforts to assist Mac, iPod, iPad, and iPhone owners. On purchasing a new Apple, customers may also sign up for One-to-One service for $99. In return, they may make appointments for individual assistance with an Apple representative, as many times as they wish, over the course of the following year. Even without buying this upgrade, Apple owners can visit the Apple site and make an appointment with a technician or Genius in a local Apple store. If an Apple fan has no store nearby, he or she can look for help online, whether through Apple's own problem solutions or on discussion groups that cover a range of potential problems. Despite its customer service success, Apple still disappoints about 10 percent of its customers. Its research shows that most customer service failures occur because of confusion about product warranties. In the fine print, customers can discover that water damage or abuse voids any product warranty. Not a lot of water, and not an absurd amount of abuse, but any of either. An iPod might stop working because just a drop of water, falling from the headphones, travels down the cord and enters into the jack. This situation infuriates customers, many of whom treat their Apple products with great care. And it is damaging to a company's reputation to sell a product that is considered among the best but not support it with the absolutely best service. p. 360 Yet despite these concerns, Apple's customer service remains significantly better than that of virtually any other computer company, for which approximately 25 percent of customers express dissatisfaction. In this prime area, service, Apple can separate itself from the competition without having to make technological advancements. The new iPad may create excitement and media buzz, yet the introduction of a new product is not the only way to attract customers to a company. Services, even as simple as treating the customer as a valued member of the Apple team, can have a remarkable effect too. 1 Whereas a serviceAny intangible offering that involves a deed, performance, or effort that cannot be physically possessed; intangible customer benefits that are produced by people or machines and cannot be separated from the producer. is any intangible offering that involves a deed, performance, or effort that cannot be physically possessed,2 customer serviceSpecifically refers to human or mechanical activities firms undertake to help satisfy their customers' needs and wants. specifically refers to human or mechanical activities firms undertake to help satisfy their customers' needs and wants. By providing good customer service, firms add value to their products or services. Exhibit 12.1 illustrates the continuum from a pure service to a pure product. Most offerings, like those of Apple, lie somewhere in the middle and include some service and some product. Even those firms that are engaged primarily in selling a product, like an apparel store, typically view service as a method to maintain a sustainable competitive advantage. This chapter moves on to take an inclusive view of services as anything from pure service businesses to a business that uses service as a differentiating tool to help it sell physical products. EXHIBIT 12.1 The ServiceProduct Continuum Economies of developed countries like the United States have become increasingly dependent on services. Services account for 76 percent of the U.S. gross domestic product (GDP), a much higher percentage than they did 50, 20, or even 10 years ago. In turn, the current list of Fortune 500 companies contains more service companies and fewer manufacturers than in previous decades. 3 This dependence and the growth of service-oriented economies in developed countries have emerged for several reasons. p. 361 First, it is generally less expensive for firms to manufacture their products in less developed countries. Even if the goods are finished in the United States, some of their components likely were produced elsewhere. In turn, the proportion of service production to goods production in the United States, and other similar economies, has steadily increased over time. As the population ages, the need for health care professionals increases. Second, people place a high value on convenience and leisure. For instance, household maintenance activities, which many people performed themselves in the past, have become more popular and quite specialized. Food preparation, lawn maintenance, house cleaning, pet grooming, laundry and dry cleaning, hair care, and automobile maintenance are all often performed by specialists. Third, as the world has become more complicated, people are demanding more specialized services everything from plumbers to personal trainers, from massage therapists to tax preparation specialists, from lawyers to travel and leisure specialists and even health care providers. The aging population in particular has increased the need for health care specialists, including doctors, nurses, and caregivers in assisted living facilities and nursing homes, and many of those consumers want their specialists to provide personalized, dedicated services. Services Marketing Differs from Product Marketing Describe how the marketing of services differs from the marketing of products. The marketing of services differs from product marketing in respect to four fundamental characteristics of services: Services are intangible, inseparable, variable, and perishable. 4 (See Exhibit 12.2.) This section examines these differences and discusses how they affect marketing strategies. EXHIBIT 12.2 Core Differences between Services and Goods Intangible As the title of this chapter implies, the most fundamental difference between a product and a service is that services are intangibleA characteristic of a service; it cannot be touched, tasted, or seen like a pure product can.they cannot be touched, tasted, or seen like a pure product can. When you get a physical examination, you see and hear the doctor, but the service itself is intangible. This intangibility can prove highly challenging to marketers. For instance, it makes it difficult to convey the benefits of servicestry describing whether the experience of visiting your dentist was good or bad and why. Service providers (e.g., physicians, dentists) therefore offer cues to help their customers experience and perceive their service more positively, such as a waiting room stocked with television sets, beverages, and comfortable chairs to create an atmosphere that appeals to the target market. p. 362 A service cannot be shown directly to potential customers and that also makes it difficult to promote. Marketers must therefore creatively employ symbols and images to promote and sell services, like Six Flags does in using its advertising to evoke images of happy families and friends enjoying a roller-coaster ride. Professional medical services provide appropriate images of personnel doing their jobs in white coats surrounded by high-tech equipment. Educational institutions promote the quality of their services by touting their famous faculty and alumni, as well as their accreditations. They also often use images of happy students sitting spellbound in front of a fascinating professor or going on to lucrative careers of their own. Since it is difficult to show a service, marketers like Six Flags evoke images in its advertising of happy families and friends enjoying a ride at one of its amusement parks. Because of the intangibility of services, the images that marketers use must reinforce the benefit or value that a service provides. Professional service providers, such as doctors, lawyers, accountants, and consultants, depend heavily on consumers' perceptions of their integrity and trustworthiness. Yet the promotional campaigns some of these professionals use have been criticized by their peers and consumer welfare groups. Ethical and Societal Dilemma 12.1 discusses the tensions created when service providers use marketing tactics to attract clients to their service but still attempt to maintain a perception of integrity and trustworthiness. Inseparable Production and Consumption Unlike a pair of jeans that may have been made six months prior to purchase halfway around the world, services are produced and consumed at the same time; that is, the service and its consumption areinseparableA characteristic of a service: it is produced and consumed at the same time; that is, service and consumption are inseparable.. When getting a haircut, the customer not only is present but also may participate in the service process. Furthermore, the interaction with the service provider may have an important impact on the customer's perception of the service outcome. If the hair stylist appears to be having fun while cutting hair, it may positively impact the experience. Because the service is inseparable from its consumption, customers rarely have the opportunity to try the service before they purchase it. And after the service has been performed, it can't be returned. Imagine telling your hair stylist that you want to have the hair around your ears trimmed as a test before doing the entire head. Because the purchase risk in these scenarios can be relatively high, service firms sometimes provide extended warranties and 100 percent satisfaction guarantees. 5 The Choice Hotels chain, for instance, states: We guarantee total guest satisfaction at Comfort Inn, Comfort Suites, Quality, Sleep Inn, Clarion and MainStay Suites hotels. If you are not satisfied with your accommodations or our service, please advise the front desk of a problem right away.6 Variable The more humans are needed to provide a service, the more likely there is to be variabilityA characteristic of a service: its quality may vary because it is provided by humans. in the service's quality. A hair stylist may give bad haircuts in the morning because he or she went out the night before. Yet that stylist still may offer a better service than the undertrained stylist working in the next station over. A restaurant, which offers a mixture of services and products, generally can control its food quality but not the variability in food preparation or delivery. If a consumer has a problem with a product, it can be replaced, redone, destroyed, or, if it is already in the supply chain, recalled. In many cases, the problem can even be fixed before the product gets into consumers' hands. But an inferior service can't be recalled; by the time the firm recognizes a problem, the damage has been done. p. 363 Ethical and Societal Dilemma 12.1 Who Are You Going to Call? At one time, lawyers in many states were prohibited from advertising their services because many believed that marketing by lawyers would undermine the integrity of the profession. Over time, the laws were repealed. But in the face of the advertising that has ensued, many are questioning whether the marketing tactics of some lawyers have gone too far. The term ambulance chaser usually is used derogatorily to refer to lawyers who solicit clients when they are stressed or their ability to make rational decisions is limited, such as just after a car accident. The term was coined when some personal injury lawyers literally followed ambulances and offered legal services to the injured parties. Critics of lawyers who market their services point to the aggressive advertising and promotional programs these attorneys use, which often prey on potential clients' vulnerabilities after they have been injured or in some way negatively impacted by the actions of others. The lawyers who market themselves this way claim they are providing a valuable service to society. To respond to the need for ethical guidance, many professional associations offer guidelines and example cases to help members determine which types of advertisements might be considered unethical by peers and other interested parties. For example, the American Bar Association (ABA) has drafted a set of rules that its members must abide by when creating their advertising. It also offers a variety of resources to help lawyers determine what kinds of advertising are appropriate. Among those resources, the ABA offers a website dedicated to Information on Professionalism and Ethics in Lawyer Advertising, with court rulings about advertising and links to state-specific lawyer association advertising rules. 7 For example, one of the rules that ABA-certified lawyers are expected to follow bans any use of pop-up ads or the use of actors when advertising law services.8 For practicing lawyers and other professionals, the ethical dilemma remains: how to balance their need to gain clients through marketing with their need to retain an image of professionalism and integrity. Can marketing be used to communicate the benefits of legal services without preying on the vulnerabilities of consumers? Marketers also can use the variable nature of services to their advantage. A micromarketing segmentation strategy can customize a service to meet customers' needs exactly (see Chapter 8). Geek Housecalls has a micromarketing segmentation strategy and will come to your home or office to repair or service your PCsetting up a network, cleaning your hard drive, or even tutoring you on the operation of a particular program. Clients are matched with their very own personal geek on the basis of their needs, which allows for a fully personalized service offering. Computer crashing? Network down? Call Geek Housecalls. In an alternative approach, some service providers tackle the variability issue by replacing people with machines. For simple transactions like getting cash, using an ATM is usually quicker and more convenient and less variablethan waiting in line for a bank teller. Many retailers have installed kiosks with broadband Internet access in their stores. In addition to offering customers the opportunity to order merchandise not available in the store, kiosks can provide routine customer service, freeing employees to deal with more demanding customer requests and problems and reducing service variability. For example, customers can use kiosks to locate merchandise in the store and determine whether specific products, brands, and sizes are available. Kiosks can also be used to automate existing store services, such as gift registry management, rain checks, film drop-off, credit applications, and preordering service for bakeries and delicatessens. p. 364 Since services are perishable, service providers like ski areas offer less expensive tickets at night to stimulate demand. Perishable Services are perishableA characteristic of a service: it cannot be stored for use in the future. in that they cannot be stored for use in the future. You can't stockpile your membership at Gold's Gym like you could a sixpack of V-8 juice, for instance. The perishability of services provides both challenges and opportunities to marketers in terms of the critical task of matching demand and supply. As long as the demand for and the supply of the service match closely, there is no problem, but unfortunately, this perfect matching rarely occurs. A ski area, for instance, can be open as long as there is snow, even at night, but demand peaks on weekends and holidays, so ski areas often offer less expensive tickets during off-peak periods to stimulate demand. Airlines, cruise ships, movie theaters, and restaurants confront similar challenges and attack them in similar ways. CHECK YOURSELF 1. 2. What are the four marketing elements that distinguish services from products? Why can't we separate firms into just service or just product sellers? Providing Great Service: The Gaps Model Discuss the four gaps in the Service Gaps Model. Certainly, providing great service is not easy, and it requires a diligent effort to analyze the service process piece by piece in order to improve it. We now examine what is known as the Gaps Model,which is designed to highlight those areas where customers believe they are getting less or poorer service than they should (the gaps) and how these gaps can be closed. Customers have certain expectations about how a service should be delivered. When the delivery of that service fails to meet those expectations, a service gapResults when a service fails to meet the expectations that customers have about how it should be delivered. results. The Gaps Model (Exhibit 12.3) is designed to encourage the systematic examination of all aspects of the service delivery process and prescribe the steps needed to develop an optimal service strategy.9 p. 365 EXHIBIT 12.3 Gaps Model for Improving Service Sources: Michael Levy and Barton Weitz, Retailing Management, 8th ed. (Burr Ridge, IL: McGraw-Hill, 2012). Adapted from Valarie Zeithaml, A. Parasuraman, and Leonard Berry, Delivering Quality Customer Service (New York: The Free Press, 1990) and Valarie Zeithaml, Leonard Berry, and A. Parasuraman, Communication and Control Processes in the Delivery of Service Quality, Journal of Marketing 52, no. 2 (April 1988), pp. 3548. As Exhibit 12.3 shows, there are four service gaps: 1. The knowledge gapA type of service gap; reflects the difference between customers' expectations and the firm's perception of those expectations. reflects the difference between customers' expectations and the firm's perception of those customer expectations. Firms can close this gap by matching customer expectations with actual service through research. 2. The standards gapA type of service gap; pertains to the difference between the firm's perceptions of customers' expectations and the service standards it sets. pertains to the difference between the firm's perceptions of customers' expectations and the service standards it sets. By setting appropriate service standards and measuring service performance, firms can attempt to close this gap. 3. The delivery gapA type of service gap; the difference between the firm's service standards and the actual service it provides to customers. is the difference between the firm's service standards and the actual service it provides to customers. This gap can be closed by getting employees to meet or exceed service standards.10 4. The communication gapA type of service gap; refers to the difference between the actual service provided to customers and the service that the firm's promotion program promises. refers to the difference between the actual service provided to customers and the service that the firm's promotion program promises. If firms are more realistic about the services they can provide and at the same time manage customer expectations effectively, they generally can close this gap. As we discuss the four gaps subsequently, we will apply them to the experience that Marcia Kessler had with a motel in Maine. She saw an ad for a package weekend that quoted a very reasonable daily rate and listed the free amenities available at Paradise Motel: free babysitting services, a piano bar with a nightly singer, a free Continental breakfast, a heated swimming pool, and newly decorated rooms. When she booked the room, Marcia discovered that the price advertised was not available during the weekend, and a three-day minimum stay was required. After checking in with a very unpleasant person at the front desk, Marcia and her husband found that their room appeared circa 1950 and had not been cleaned. When she complained, all she got was attitude from the assistant manager. Resigned to the fact that they were slated to spend the weekend, she decided to go for a swim. Unfortunately, the water was heated by Booth Bay and stood at around 50 degrees. No one was using the babysitting services because there were few young children at the resort. It turned out the piano bar singer was the second cousin of the owner, and he couldn't carry a tune, let alone play the piano very well. The Continental breakfast must have come all the way from the Continent, because everything was stale and tasteless. Marcia couldn't wait to get home. What service gaps did Marcia experience while on vacation at the Paradise Motel in Maine? p. 366 The Knowledge Gap: Understanding Customer Expectations An important early step in providing good service is knowing what the customer wants. It doesn't pay to invest in services that don't improve customer satisfaction. 11 To reduce the knowledge gap, firms must understand the customers' expectations. To understand those expectations, firms undertake customer research and increase the interaction and communication between managers and employees. Customers' expectations are based on their knowledge and experiences.12 Marcia's expectations were that her room at the motel in Maine would be ready when she got there, the swimming pool would be heated, the singer would be able to sing, and the breakfast would be fresh. If the resort never understood her expectations, it is unlikely it would ever be able to meet them. Expectations vary according to the type of service. Marcia's expectations might have been higher, for instance, if she were staying at a Ritz-Carlton rather than the Paradise Motel. At the Ritz, she might expect employees to know her by name, be aware of her dietary preferences, and have placed fresh fruit of her choice and fresh-cut flowers in her room before she arrived. At the Paradise Motel, she expected easy check-in/check-out, easy access to a major highway, a clean room with a comfortable bed, and a TV, at a bare minimum. People's expectations also vary depending on the situation. If she had been traveling on business, the Paradise Motel might have been fine (had the room at least been clean and modern), but if she were celebrating her 10th wedding anniversary, she probably would prefer the Ritz. Thus, the service provider needs to not only know and understand the expectations of the customers in its target market but also have some idea of the occasions of service usage. To help ensure that JetBlue understands customers' expectations, it surveys at least 35 customers from every flight it operates.13 The airline brings together top executives to discuss what customers are saying and how it should respond. Based on customer feedback, it has changed the way it deals with customers faced with delays and cancellations. It also knows which planes have problems with the entertainment system and which airports have the rudest staffs (New York's JFK is first, followed closely by Boston's Logan airport).14 p. 367 Examine the five service quality dimensions. Evaluating Service Quality Using Well-Established Marketing Metrics To meet or exceed customers' expectations, marketers must determine what those expectations are. Yet because of the intangibility of any service, the service qualityCustomers' perceptions of how well a service meets or exceeds their expectations., or customers' perceptions of how well a service meets or exceeds their expectations, often is difficult for customers to evaluate let alone express. 15Customers generally use five distinct service dimensions to determine overall service quality: reliability, responsiveness, assurance, empathy, and tangibles (Exhibit 12.4). Adding Value 12.1 describes how the Broadmoor Hotel maintains its five-star rating by focusing on these five service characteristics. EXHIBIT 12.4 Building Blocks of Service Quality If you were to apply the five service dimensions to your own decision-making process when you select a collegewhich provides the service of educationyou might find results like those in Exhibit 12.5. EXHIBIT 12.5 Collegiate Service Dimensions If your expectations include an individualized experience at a state-of-the-art institution, perhaps University B is a better alternative for you. But if you are relying heavily on academic performance and career placement from your university experience, then University A might be a better choice in terms of the five service dimensions. If a strong culture and tradition are important to you, University A offers this type of environment. What your expectations are has a lot to do with your perception of how your university falls within these service dimensions. p. 369 Marketing research (see Chapter 9) provides a means to better understand consumers' service expectations and their perceptions of service quality. This research can be extensive and expensive, or it can be integrated into a firm's everyday interactions with customers. Today, most service firms have developed voice-of-customer programs and employ ongoing marketing research to assess how well they are meeting their customers' expectations. A systematic voice-of-customer (VOC) programAn ongoing marketing research system that collects customer inputs and integrates them into managerial decisions.collects customer inputs and integrates them into managerial decisions. p. 368 Adding Value 12.1 The Broadmoor Manages Service Quality for Five-Star Rating Established in 1891 as a gambling casino and transformed into a grand resort in 1918, the Broadmoor, in Colorado Springs, Colorado, is one of the world's premier resorts. 16 It has received a record 50 consecutive years of five-star ratings from the Forbes Travel Guide. Perry Goodbar, former vice president of marketing for the Broadmoor, emphasizes, It's the people who truly make this place special. Exceptional service quality begins with exceptional people. Some aspects of its service quality are as follows: Reliability Every new Broadmoor employee, before ever encountering a customer, attends a two-and-a-half-day orientation session and receives an employee handbook. Making and keeping promises to customers is a central part of this orientation. Employees are trained always to give an estimated time for service, whether it be room service, laundry service, or simply how long it will take to be seated at one of the resort's restaurants. When an employee makes a promise, he or she keeps that promise. Employees are trained to never guess if they don't know the answer to a question. Inaccurate information only frustrates customers. When an employee is unable to answer a question accurately, he or she immediately contacts someone who can. Assurance The Broadmoor conveys trust by empowering its employees. An example of an employee empowerment policy is the service recovery program. If a guest problem arises, employees are given discretionary resources to rectify the problem or present the customer with something special to help mollify them. For example, if a meal is delivered and there's a mistake in the order or how it was prepared, a waiter can offer the guest a free item such as a dessert or, if the service was well below expectations, simply take care of the bill. Managers then review expenses to understand the nature of the problem and help prevent it from occurring again. Tangibles One of the greatest challenges for the Broadmoor in recent years has been updating rooms built in the early part of the twentieth century to meet the needs of twenty-first century visitors. To accomplish this, it spent $200 million between 1992 and 2002 in improvements, renovating rooms, and adding a new outdoor pool complex. Empathy One approach used to demonstrate empathy is personalizing communications. Employees are instructed to always address a guest by name, if possible. To accomplish this, employees are trained to listen and observe carefully to determine a guest's name. Subtle sources for this information include convention name tags, luggage ID tags, credit cards, or checks. In addition, all phones within the Broadmoor display a guest's room number and name on a screen. Responsiveness Every employee is instructed to follow the HEART model of taking care of problems. First, employees must Hear what a guest has to say. Second, they must Empathize with them and then Apologize for the situation. Third, they must Respond to the guest's needs by Taking action and following up. The Broadmoor in Colorado Springs, Colorado is known for exceptional service quality. Explain the zone of tolerance concept. An important marketing metric to evaluate how well firms perform on the five service quality dimensions (Exhibit 12.4) is the zone of toleranceThe area between customers' expectations regarding their desired service and the minimum level of acceptable servicethat is, the difference between what the customer really wants and what he or she will accept before going elsewhere., which refers to the area between customers' expectations regarding their desired service and the minimum level of acceptable servicethat is, the difference between what the customer really wants and what he or she will accept before going elsewhere. 17 To define the zone of tolerance, firms ask a series of questions about each service quality dimension that relates to: The desired and expected level of service for each dimension, from low to high. Customers' perceptions of how well the focal service performs and how well a competitive service performs, from low to high. The importance of each service quality dimension. Exhibit 12.6 illustrates the results of such an analysis for Lou's Local Diner, a family-owned restaurant. The rankings on the left are based on a nine-point scale, on which 1 is low and 9 is high. The length of each box illustrates the zone of tolerance for each service quality dimension. For instance, according to the length of the reliability box, customers expect a fairly high level of reliability (top of the box) and will also accept only a fairly high level of reliability (bottom of the box). On the other end of the scale, customers expect a high level of assurance (top of the box) but will accept a fairly low level (bottom of the box). This difference is to be expected, because the customers also were asked to assign an importance score to the five service quality dimensions so that the total equals 100 percent (see bottom of Exhibit 12.6). Looking at the average importance score, we conclude that reliability is relatively important to these customers, but assurance is not. So customers have a fairly narrow zone of tolerance for service dimensions that are fairly important to them and a wider range of tolerance for those service dimensions that are less important. Also note that Lou's Local Diner always rates higher than its primary competitor, Well-Known National Chain, on each dimension. EXHIBIT 12.6 Customers' Evaluation of Service Quality p. 370 Further note that Well-Known National Chain scores below the zone of tolerance on the tangibles dimension, meaning that customers are not willing to accept the way the restaurant looks and smells. Lou's Local Diner, in contrast, performs above the zone of tolerance on the responsiveness dimension maybe even too well. Lou's may wish to conduct further research to verify which responsiveness aspects it is performing so well, and then consider toning those aspects down. For example, being responsive to customers' desires to have a diner that serves breakfast 24 hours a day can be expensive and may not add any further value to Lou's Diner, because customers would accept more limited times. Lou's Local Diner always rates higher than its primary competitor, Well-Known National Chain, on each service quality dimension. A very straightforward and inexpensive method of collecting consumers' perceptions of service quality is to gather them at the time of the sale. Service providers can ask customers how they liked the service though customers often are reticent to provide negative feedback directly to the person who provided the serviceor distribute a simple questionnaire. Starbucks customers can rate their experience by visiting the Web survey at the bottom of its receipts. Using this method, a complaining customer does not have to make the complaint directly to the barista who may have caused the problem, but Starbucks still gets almost instantaneous feedback. Regardless of how information is collected, companies must take care not to lose it, which can happen if there is no effective mechanism for filtering it up to the key decision makers. Furthermore, in some cases, customers cannot effectively evaluate the service until several days or weeks later. Automobile dealers, for instance, often call their customers a week after they perform a service like an oil change to assess their service quality.18 Another excellent method for assessing customers' expectations is making effective use of customer complaint behavior. Even if complaints are handled effectively to solve customers' problems, the essence of the complaint is too often lost on managers. For instance, an airline simply established a policy that said customer service reps could not discuss any issues involving fees to travel agents. So when a customer called to complain about the policy, the representative just shut her down. 19 Even firms with the best formal research mechanisms in place must put managers on the front lines occasionally to interact directly with the customers. Unless the managers who make the service quality decisions know what their service providers are facing on a day-to-day basis, and unless they can talk directly to the customers with whom those service providers interact, any customer service program they create will not be as good as it could be. The Standards Gap: Setting Service Standards Getting back to the Paradise Motel in Maine, suppose it set out to determine its customers' service expectations and gained a pretty good idea of them. Its work is still far from over; the next step is to set its service standards and develop systems to meet customers' service expectations. How can make it sure that every room is cleaned by 2:00 p.m., or that the breakfast is checked for freshness and quality every day? The employees must be thoroughly trained not only to complete their specific tasks but also to know how to treat guests, and the manager needs to set an example of high service standards, which will permeate throughout the organization. Service providers, like this housekeeper at a hotel, generally want to do a good job, but they need to be trained to know exactly what a good job entails. Achieving Service Goals through Training To consistently deliver service that meets customers' expectations, firms must set specific, measurable goals. To help ensure that quality, the employees should be involved in the goal setting. For instance, for the Paradise Motel, the most efficient process would be to start cleaning rooms at 8:00 a.m. and finish by 5:00 p.m. But many guests want to sleep late, and new arrivals want to get into their room as soon as they arrive, often before 5:00. So a customeroriented standard would mandate that the rooms get cleaned between 10:00 a.m. and 2:00 p.m. p. 371 Service providers generally want to do a good job, as long as they know what is expected of them. 20Motel employees should be shown, for instance, exactly how managers expect them to clean a room and what specific tasks they are responsible for performing. In general, more employees will buy into a qualityoriented process if they are involved in setting the goals. For instance, suppose an employee of the motel refuses to clean the glass cups in the rooms because she believes that disposable plastic cups are more ecological and hygienic. If management listens to her and makes the change, it should make the employee all the more committed to the other tasks involved in cleaning rooms. For frontline service employees, pleasant interactions with customers do not always come naturally. Although people can be taught specific tasks related to their jobs, it is simply not enough to tell employees to be nice or do what customers want. A quality goal should be specific: Greet every customer/guest you encounter with Good morning/afternoon/evening, Sir or Miss. Try to greet customers by name. In extreme cases, such training becomes even more crucial. From long ticket lines to cancelled flights to lost baggage to safety concerns, customer service incidents are on the rise in the airline industry. Faced with these mounting complaints, some airlines are attempting to implement better employee training geared toward identifying and defusing potentially explosive situations. Commitment to Service Quality Service providers take their cues from management. If managers strive for excellent service, treat their customers well, and demand the same attitudes from everyone in the organization, it is likely employees will do the same. p. 633 The home improvement center Home Depot is working hard to keep up with its rival Lowes. 21 Top managers, including the CEO, spend time in the stores to understand what its customers want, and it realizes they want professionals and salespeople who actually know how to fix and build things. So the company focuses on hiring people with those skills. Zappos, the online shoe and apparel retailer now owned by Amazon, achieves high service goals by utilizing training methods considered extreme by other retailers, and by having a strong commitment to service quality by its management team. It is able to deliver high service quality in part because it empowers its employees to satisfy customers no matter what it takes. (See Superior Service 12.1.) The Delivery Gap: Delivering Service Quality The delivery gap is where the rubber meets the road, where the customer directly interacts with the service provider. Even if there are adequate standards in place, the employees are well-trained, and management is committed to meeting or exceeding customers' service expectations, there can still be a delivery gap. Marcia experienced several delivery gaps at the Paradise Motel: the unclean room, the assistant manager's attitude, the unheated swimming pool, the poor piano bar singer, and the stale food. While some of these issues may have been avoided, it is also possible that the motel had a power outage resulting in the unheated swimming pool, the piano bar singer may have been ill, and the food was stale because of a missed delivery. Even if there are no other gaps, a delivery gap always results in a service failure. Home Depot CEO Frank Blake learned from spending time in stores that his customers want professionals and salespeople that know how to fix and build things. p. 372 Superior Service 12.1 Zappos Pays $2000 to Quit Imagine a company where employees are offered $2000 to quit and only 2 or 3 percent accept, where staff is encouraged to tweet during office hours, and where customer service trumps costcutting so completely that a call center employee provides contact information for late-night pizza delivery in the caller's hometown even though the company sells shoes. Now imagine a business deal worth $850 million in which the acquirer, online retail giant Amazon, enthusiastically agrees to keep the leadership and staff of its new holding and to protect and maintain the company's corporate culture.22 This isn't fantasy; it's Zappos, a Las Vegasbased company that got its start in 1999 selling shoes online. Over time, the company expanded its category offerings but, most significantly, aligned itself with core values that stress extraordinary customer service. When Amazon founder and CEO Jeff Bezos saw Zappos's customer-centric business approach, he extended a partnership opportunity that both organizations feel will generate growth. Zappos's determination to instill the value of customer satisfaction in employees begins with the interview process. Applicants undergo separate interviews for experience and fit within the company culture. During training, which can last as long as five weeks, all new employees are required to work in the call center. New hires who feel this work is beneath them are paid for their time and shown the door. At no time during training are call center employees given a script, a time limit for calls, or a quota. Rather they are encouraged to make the customer happy, even if satisfaction requires a four-hour phone call or a bouquet of flowers. Like Amazon, Zappos employs processes that enhance customer loyalty, even if those processes aren't the most cost effective for the company. Customers are encouraged to order multiple products, for example, so they can touch, feel, and try on prospective purchases. Returned items ship free for up to a year. Both the call center and the warehouse operate 24/7. Items are shipped faster and sooner than the Zappos website indicates, giving customers the sense of speedy service. To add even more value for customers, Zappos also operates a couture site, a discounter site, and outlet stores. Making one company stand out from the crowd requires legendary customer service and perhaps, according to the Zappos core value list, a little weirdness. Zappos employees will do almost anything to satisfy a customer. Delivery gaps can be reduced when employees are empowered to act in the customers' and the firm's best interests and supported in their efforts so they can do their jobs effectively. 23 Technology can also be employed to reduce delivery gaps. (See Exhibit 12.7.) p. 373 EXHIBIT 12.7 Methods to Reduce Delivery Gaps Empowering Service Providers In this context, empowermentIn context of service delivery, means allowing employees to make decisions about how service is provided to customers. means allowing employees to make decisions about how service gets provided to customers. When frontline employees are authorized to make decisions to help their customers, service quality generally improves. Empowerment becomes more important when the service is more individualized. Nordstrom provides an overall objectivesatisfy customer needsand then encourages employees to do whatever is necessary to achieve the objective. For example, a Nordstrom shoe sales associate decided to break up two pairs of shoes, one a size 10 and the other a size 10, to sell to a hard-to-fit customer. Although the other two shoes were unsalable and therefore made for an unprofitable sale, the customer purchased 5 other pairs that day and became a loyal Nordstrom customer as a result. Empowering service providers with only a rule like Use your best judgment (as Nordstrom does) might cause chaos. At Nordstrom, department managers avoid abuses by coaching and training sales people to understand what Use your best judgment means. Providing Support and Incentives A service provider's job can often be difficult, especially when customers are unpleasant or less than reasonable. But the service provider cannot be rude or offensive just because the customer is. The old clich, Service with a smile, remains the best approach. To ensure that service is delivered properly, management needs to support the service provider in several ways. First, managers and coworkers should provide emotional supportConcern for others' well-being and support of their decisions in a job setting. to service providers by demonstrating a concern for their well-being and standing behind their decisions. Because it can be very disconcerting when a waiter is abused by a customer who believes her food was improperly prepared, for instance, restaurant managers must be supportive and help the employee get through his emotional reaction to the berating experienced. 24 Such support can extend to empowering the waiter to rectify the situation by giving the customer new food and a free dessert, in which case the manager must understand the waiter's decision, not punish him for giving away too much. Second, service providers require instrumental supportProviding the equipment or systems needed to perform a task in a job setting.the systems and equipmentto deliver the service properly. Many retailers provide state-of-the-art instrumental support for their service providers. In-store kiosks help sales associates provide more detailed and complete product information and enable them to make sales of merchandise that either is not carried in the store or is temporarily out of stock. Third, the support that managers provide must be consistent and coherent throughout the organization. Patients expect physicians to provide great patient care using state-of-the-art procedures and medications, but because they are tied to managed-care systems (health maintenance organizations or HMOs), many doctors must squeeze more people into their office hours and prescribe less optimal, less expensive, courses of treatment. These conflicting goals can be so frustrating and emotionally draining on physicians and other health care providers that some have found work outside of medicine. Fourth, a key part of any customer service program is providing rewards to employees for excellent service. Numerous firms have developed a service reputation by ensuring that their employees recognize the value the firm places on customer service. Travelocity, for example, features employees who champion the customer service experience in a weekly e-mail. Believing that engaged employees are the key to customer satisfaction, it works to create an atmosphere that reinforces the commitment to customers by encouraging employees to nominate colleagues who exemplify its commitment to customers. Through constant feedback about who is serving the customer best, as well as smaller events such as monthly lunches with the CEO for selected employees, Travelocity creates a business environment that recognizes and rewards customer service. 25 The results for Travelocity include a wealth of awards, such as a top ranking on the Customer Online Respect Survey and a designation as the World's Leading Travel Internet Site for ten consecutive years.26 p. 374 At Hustler Hollywood, customers can get merchandise information or order products not carried in the store. Use of Technology Technology has become an increasingly important facilitator of the delivery of services. Using technology to facilitate service delivery can provide many benefits, such as access to a wider variety of services, a greater degree of control by the customer over the services, and the ability to obtain information. Management also benefits from the increased efficiency in service processes through reduced servicing costs and, in some cases, can develop a competitive advantage over less serviceoriented competitors.27 As noted previously, electronic kiosks and other technologies can reduce the variability of providing a service. In addition to kiosks, self-checkout machines can help close the delivery gap. There are more than 100,000 self-checkout machines in use today, and they are multiplying in grocery and discount stores.28 Walmart, Kroger, Home Depot, Best Buy, Costco, and IKEA already use them. Even libraries nationwide are installing self-checkout machines for books. Self-checkouts reduce the delivery gap because they appeal to those shoppers who want to move on quickly and believe they can zip through their check-outs faster by using the machines. One reason customers think self-checkout is faster is that they are active when using it, unlike waiting for a cashier, which leaves customers with nothing to do and may make it seem as though time is dragging. In actuality, self-checkout does save between 15 seconds and 15 minutes, depending on the size of an order. Which store has better customer service: the one with self-checkout (left), or the store offering a face-toface interaction with the customer? It depends on who you ask. p. 375 Technological advances that help close the delivery gap are expanding. Salons and cosmetics counters use kiosks to show customers how they would look with different beauty products and various hair colors. Stores enable customers to scan price tags and then have a kiosk recommend complementary items. Touchscreen terminals at tables in Chuck E. Cheese let customers order food and play games, from the comfort of their own table.29 The technological delivery of services can cause problems though. Some customers either do not embrace the idea of replacing a human with a machine for business interactions or have problems using the technology. In other cases, the technology may not perform adequately, such as self-checkout scanners that fail to scan all merchandise or ATMs that run out of money or are out of order. The Communications Gap: Communicating the Service Promise Poor communication between marketers and their customers can result in a mismatch between an ad campaign's or a salesperson's promises and the service the firm can actually offer. Although firms have difficulty controlling service quality because it can vary from day to day and provider to provider, they do have control over how they communicate their service package to their customers. If a firm promises more than it can deliver, customers' expectations won't be met. An advertisement may lure a customer into a service situation once, but if the service doesn't deliver on the promise, the customer will never return. Dissatisfied customers also are likely to tell others about the underperforming service, using word of mouth or, increasingly, the Internet, which has become an important channel for dissatisfied customers to vent their frustrations. The communications gap can be reduced by managing customer expectations and by promising only what you can deliver, or possibly even a little less.30 Suppose you need an operation, and the surgeon explains, You'll be out of the hospital in five days and back to your normal routine in a month. You have the surgery and feel well enough to leave the hospital three days later. Two weeks after that, you're playing tennis again. Clearly, you will tend to think your surgeon is a genius. However, regardless of the operation's success, if you had to stay in the hospital for 10 days and it took you two months to recover, you would undoubtedly be upset. A relatively easy way to manage customer expectations is to coordinate how the expectation is created and the way the service is provided. Expectations typically are created through promotions, advertising, or personal selling. Delivery is another function altogether. If a salesperson promises a client that an order can be delivered in one day, and that delivery actually takes a week, the client will be disappointed. However, if the salesperson coordinates the order with those responsible for the service delivery, the client's expectations likely will be met. Customer expectations can be managed when the service is delivered. Recorded messages tell customers who have phoned a company with a query how many minutes they will have to wait before the next operator is available. Business-to-business sellers automatically inform online customers of any items that are out of stock. Whether online or in a store, retailers can warn their customers to shop early during a sale because supplies of the sale item are limited. People are generally reasonable when they are warned that some aspect of the service may be below standard. They just don't like surprises! CHECK YOURSELF Explain the four service gaps identified by the Gaps Model. List at least two ways to overcome each of the four service gaps. 1. 2. Service Recovery p. 376 Identify three service recovery strategies. p. 634 Despite a firm's best efforts, sometimes service providers fail to meet customer expectations. When this happens, the best course of action is to attempt to make amends with the customer and learn from the experience. Of course, it is best to avoid a service failure altogether, but when it does occur, the firm has a unique opportunity to demonstrate its customer commitment. 31 Effective service recovery efforts can significantly increase customer satisfaction, purchase intentions, and positive word of mouth, although customers' postrecovery satisfaction levels usually fall lower than their satisfaction level prior to the service failure.32 Power of the Internet 12.1 articulates how the Internet has provided customers with an enormous stage to air their dissatisfaction with a product or service. No longer are dissatisfied customers able to vent their frustrations only to a few friendsnow it may be to millions! Service providers beware: if there is a problem, it must be rectified immediately. The Paradise Motel in Maine could have made amends with Marcia Kessler after its service failures if it had taken some relatively simple, immediate steps: The assistant manager could have apologized for his bad behavior and quickly upgraded her to a suite and/or given her a free night's lodging for a future stay. The motel could also have given her a free lunch or dinner to make up for the bad breakfast. Alternatively, the assistant manager could have asked Marcia how he could resolve the situation and worked with her to come up with an equitable solution. None of these actions would have cost the motel much money. Yet by using the customer lifetime value approach described in Chapter 9, the motel would have realized that by not taking action, it lost Marcia, who over the next few years could have been responsible for several thousand dollars in sales, as a customer forever. Furthermore, Marcia is likely to spread negative word of mouth about the motel to her friends and family because of its failure to recover. Quite simply, effective service recovery entails (1) listening to the customer, (2) providing a fair solution, and (3) resolving the problem quickly.36 Power of the Internet 12.1 David versus Goliath: Service Providers Beware Thanks to the Internet, customer service may go viral. According to the old adage, customers having a good experience tell one person, while those having a bad experience tell four, now with blogs, Twitter, YouTube, and similar sites, millions of people learn about service problems in a matter of hours. United Airlines learned this lesson the hard way. A member of the band Sons of Maxwell watched from a plane window as baggage handlers tossed luggage with little regard for the value or fragility of the instruments in the cargo.33 Musician Dave Carroll complained immediately to flight attendants, but to no avail. After arriving at his destination, Carroll discovered his $3,500 acoustic guitar was broken. He made it through his performances using alternative guitars and then, on his return flight a week later, complained again about the damaged instrument. Over the next weeks and months, he contacted the airline repeatedly about the problem while also shelling out $1,200 to get his guitar fixed. When Carroll did finally hear from the airline regarding compensation, he was informed that his claim was denied because he hadn't filed it appropriately. His response was a triad of original songs and videos posted to the Internet. The first tune, called United Breaks Guitars, suggests that flying a different airline or driving would have been preferable to flying United. The video scored five million hits in a matter of weeks. 34 A month later, the band released another song that poked fun at one of United's customer service employees and the airline's policies for handling baggage complaints. The third tune acknowledges United's attempts to improve and cautions that customers will choose other carriers if improvements aren't forthcoming. Bloggers weren't uniformly impressed by the music, but many responded with their own horror stories of United's customer service, creating a public relations maelstrom for the airline. United responded with an admission of guilt on Twitter, a $3000 donation to a musical charity, and an ad campaign indicating they took complaints about luggage handling seriously. The company also saw an opportunity to turn a single customer service problem into a training opportunity: With Carroll's permission, they use the video to improve passenger service worldwide.35 A well-run company needs a management plan that minimizes the risk of service failures as well as a defined response to customer service problems that go viral. With today's instant communication technology, what could United have done differently to squelch this public relations nightmare? United Airlines broke musician Dave Carroll's guitar. So, he posted a triad of original songs and videos on the Internet, creating a public relations nightmare for the airline. p. 377 Listening to the Customer Firms often don't find out about service failures until a customer complains. Whether the firm has a formal complaint department or the complaint is offered directly to the service provider, the customer must have the opportunity to air the complaint completely, and the firm must listen carefully to what he or she is saying. Customers can become very emotional about a service failure, whether the failure is serious (a botched surgical operation) or minor (the wrong change at a restaurant). In many cases, the customer may just want to be heard, and the service provider should give the customer all the time he or she needs to get it out. The very process of describing a perceived wrong to a sympathetic listener is therapeutic in and of itself. Service providers therefore should welcome the opportunity to be that sympathetic ear, listen carefully, and appear (and actually be) anxious to rectify the situation to ensure it doesn't happen again. 37 Finding a Fair Solution Most people realize that mistakes happen. But when they happen, customers want to be treated fairly, whether that means distributive or procedural fairness.38 Their perception of what fair means is based on their previous experience with other firms, how they have seen other customers treated, material they have read, and stories recounted by their friends. Distributive Fairness Distributive fairnessPertains to a customer's perception of the benefits he or she received compared with the costs (inconvenience or loss) that resulted from a service failure. pertains to a customer's perception of the benefits he or she received compared with the costs (inconvenience or loss). Customers want to be compensated a fair amount for a perceived loss that resulted from a service failure. If, for instance, a person arrives at the airport gate and finds her flight is overbooked, she may believe that taking the next flight that day and receiving a travel voucher is adequate compensation for the inconvenience. But if no flights are available until the next day, the traveler may require additional compensation, such as overnight accommodations, meals, and a round-trip ticket to be used at a later date.39 The key to distributive fairness, of course, is listening carefully to the customer. One customer, traveling on vacation, may be satisfied with a travel voucher, whereas another may need to get to the destination on time because of a business appointment. Regardless of how the problem is solved, customers typically want tangible restitutionin this case, to get to their destinationnot just an apology. If providing tangible restitution isn't possible, the next best thing is to assure the customer that steps are being taken to prevent the failure from recurring. A mother approached Buck Rogers, who was the general manager of the Daytona Cubs minor league baseball team, to inform him that a rowdy patron near her and her young child had been swearing constantly during the game. Rogers immediately offered to change her seat, but the mother did not find this offer sufficient because she believed she could probably hear the swearing fan from anywhere in the ballpark. The woman indicated she would never come back. Trying to find an acceptable solution and not lose the fan, Rogers offered her a free admission to another game and told her that when she returned, her son could throw out the first pitch. The end result of this quick thinking: The woman and her son returned many times.40 p. 378 Procedural Fairness With regard to complaints, procedural fairnessRefers to the customer's perception of the fairness of the process used to resolve complaints about service. refers to the perceived fairness of the process used to resolve them. Customers want efficient complaint procedures over whose outcomes they have some influence. Customers tend to believe they have been treated fairly if the service providers follow specific company guidelines. Nevertheless, rigid adherence to rules can have deleterious effects. Have you ever returned an item to a store, even a very inexpensive item, that needed a manager's approval? The process can take several minutes and irritate everyone in the check-out line. Furthermore, most managers' cursory inspection of the item or the situation would not catch a fraudulent return. In a case like this, the procedure the company uses to handle a return probably overshadows any potential positive outcomes. Therefore, as we noted previously, service providers should be empowered with some procedural flexibility to solve customer complaints. Flexibility entails discretion. Consider the local convenience store that sells both cigarettes and alcohol. The store owner has implemented a policy that everyone who appears to be under 30 years of age who attempts to purchase these items must show valid identification. If the store clerks comply, the customers accept it as part of the purchasing protocol and perceive it as fair for everyone. If a customer looks over 30 years of age, however, but the store clerk asks for identification, this can create a service failure. A no questions asked return policy has been offered as a customer service by many retailers for years. But because of its high cost as a result of customers abusing the policy, many retailers have modified their return policy.41 Some large retailers, for instance, now limit their returns to 90 days, since this is considered a reasonable amount of time for customers to return an item. Others will only grant a store credit based on the lowest selling price for the item if the customer doesn't have a receipt. In addition, for some consumer electronics products that have been opened, customers must pay a 15 percent restocking fee. Resolving Problems Quickly The longer it takes to resolve a service failure, the more irritated the customer will become and the more people he or she is likely to tell about the problem. To resolve service failures quickly, firms need clear policies, adequate training for their employees, and empowered employees. Health insurance companies, for instance, have made a concerted effort in recent years to avoid service failures that occur because customers' insurance claims have not been handled quickly or to the customers' satisfaction. USAA, a member-owned financial services organization that caters to members of the military and their families, employs telephone representatives who work directly with action agents within the organization to resolve customer complaints and identify service failures quickly. Its efforts have paid off; USAA has a high annual customer renewal rate and owns and manages more than $125 billion in assets for 7.2 million members.42 1. 2. CHECK YOURSELF Why is service recovery so important to companies? What can companies do to recover from a service failure? Summing Up Describe how the marketing of services differs from the marketing of products. Unlike products, services are intangible, inseparable, variable, and perishable. They cannot be seen or touched, which makes it difficult to describe their benefits or promote them. Service providers therefore enhance service delivery with tangible attributes, like a nice atmosphere or price benefits. Services get produced and consumed at the same time, so marketers must work quickly, and they are more variable than products, though service providers attempt to reduce this variability as much as possible. Finally, because consumers cannot stockpile perishable services, marketers often provide incentives to stagger demand. Discuss the four gaps in the Service Gaps Model. The knowledge gap reflects the difference between customers' expectations and the firm's perception of those customer expectations. Firms need to match customer expectations with actual service through research. The standards gap is the difference between the firm's perceptions of customers' expectations and the service standards it sets. Appropriate service standards and measurements of service performance help close this gap. The delivery gap is the difference between the firm's service standards and the actual service it provides to customers. Closing this gap requires adequate training and empowerment of employees. The communication gap refers to the difference between the actual service provided to customers and the service that the firm's promotion program promises. Firms close the communications gap by managing customer expectations and promising only what they can deliver. Examine the five service quality dimensions. First, reliability refers to whether the provider consistently provides an expected level of service. Second, responsiveness means that the provider notes consumers' desires and requests and then addresses them. Third, assurance reflects the service provider's own confidence in its abilities. Fourth, empathy entails the provider's recognition and understanding of consumer needs. Finally, tangibles are the elements that go along with the service, such as the magazines in a doctor's waiting room. Explain the zone of tolerance concept. The area between customers' desired service and the minimum level of service they will accept is the zone of tolerance. It is the difference between what the customer really wants and what he or she will accept before going elsewhere. Firms can assess their customers' zone of tolerance by determining the desired and expected level of service for each service dimension, their perceptions of how well the focal service performs and how well a competitive service performs, and the importance of each service quality dimension. Identify three service recovery strategies. In a best-case scenario, the service never fails. But some failures are inevitable and require the firm to make amends to the customer by (1) listening carefully and letting the customer air his or her complaint, (2) finding a fair solution to the problem that compensates the customer for the failure and follows procedures the customer believes are fair, and (3) resolving the problem quickly. Key Terms communication gapA type of service gap; refers to the difference between the actual service provided to customers and the service that the firm's promotion program promises. customer serviceSpecifically refers to human or mechanical activities firms undertake to help satisfy their customers' needs and wants. delivery gapA type of service gap; the difference between the firm's service standards and the actual service it provides to customers. distributive fairnessPertains to a customer's perception of the benefits he or she received compared with the costs (inconvenience or loss) that resulted from a service failure. emotional supportConcern for others' well-being and support of their decisions in a job setting. empowermentIn context of service delivery, means allowing employees to make decisions about how service is provided to customers. inseparableA characteristic of a service: it is produced and consumed at the same time; that is, service and consumption are inseparable. instrumental supportProviding the equipment or systems needed to perform a task in a job setting. intangibleA characteristic of a service; it cannot be touched, tasted, or seen like a pure product can. knowledge gapA type of service gap; reflects the difference between customers' expectations and the firm's perception of those expectations. perishableA characteristic of a service: it cannot be stored for use in the future. procedural fairnessRefers to the customer's perception of the fairness of the process used to resolve complaints about service. serviceAny intangible offering that involves a deed, performance, or effort that cannot be physically possessed; intangible customer benefits that are produced by people or machines and cannot be separated from the producer. service gapResults when a service fails to meet the expectations that customers have about how it should be delivered. service qualityCustomers' perceptions of how well a service meets or exceeds their expectations. standards gapA type of service gap; pertains to the difference between the firm's perceptions of customers' expectations and the service standards it sets. variabilityA characteristic of a service: its quality may vary because it is provided by humans. voice-of-customer (VOC) programAn ongoing marketing research system that collects customer inputs and integrates them into managerial decisions. zone of tolerance The area between customers' expectations regarding their desired service and the minimum level of acceptable servicethat is, the difference between what the customer really wants and what he or she will accept before going elsewhere. ... 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