IDENTIFYING AND CLASSIFYING SUPPLEMENTARY SERVICES - Principles of service marketing management

The more we examine different types of core services, the more we find that most of them have many supplementary services in common.

Supplementary Services in Service Marketing Examples

Although core products may differ widely, certain supplementary elements like information, billing, and reservations or order taking keep recurring. There are dozens of different supplementary services,

supplementary services,

supplementary services,

but almost all of them can be classified into one of the following eight clusters. We have listed them as either facilitating supplementary services, which aid in the use of the core product or are required for service delivery, or enhancing supplementary services, which add extra value for customers.

>Facilitating Services > Enhancing Services
> Information > Consultation
> Order Taking > Hospitality
> Billing > Safekeeping
> Payment > Exceptions

Flower of Service in Service Marketing

These eight clusters are displayed as petals surrounding the center of a flower which we call the Flower of Service. We've shown them clockwise in the sequence in which they are often likely to be encountered by customers (although this sequence may vary for instance, payment may have to be made before service is delivered rather than afterwards). In a well-run service organization, the petals and core are fresh and attractive.

But a badly designed or poorly executed service is like a flower with missing, wilted, or discolored petals. Even if the core is perfect, the overall flower is unattractive. Think about your own experiences as a customer. When you were dissatisfied with a particular purchase, was it the core that was at fault or was there a problem with one or more of the supplementary service petals? Not every core product is surrounded by supplementary elements from all eight clusters. As we'll see, the nature of the product helps to determine which supplementary services must be offered and which might be added to enhance the value of the core service.

Information

To obtain full value from any service experience, customers need relevant information New customers and prospects are especially information hungry. Customer needs may include directions to the physical location where the product is sold (or details of how to order it by telephone or Web site), service hours, prices, and usage instructions. Further information, sometimes required by law, could include conditions of sale and use, warnings, reminders, and notification of changes.

Finally, customers may want documentation of what has already taken place, such as confirmation of reservations, receipts and tickets, and monthly summaries of account activity. Companies should make sure the information they provide is both timely and accurate; if it's not, customers may be annoyed or inconvenienced. Traditional ways of providing information to customers include using front-line employees (who are not always as well informed as customers might like), printed notices, brochures, and instruction books.

Other media include videotapes or software-driven tutorials, touch screen video displays, and menu-driven recorded telephone messages. The most significant recent innovation has been corporate use of Web sites. Companies use the Internet for a wide range of useful applications including the provision of information about train and airline schedules, hotel availability and reservations, the location of specific retail outlets such as restaurants and stores, and service descriptions and prices.

Many business logistics companies offer shippers the opportunity to track the movements of their packages each of which has been assigned a unique identification number.

Applications

  • Membership in clubs or programs
  • Subscription services (e.g., utilities)
  • Prerequisite-based services (e.g., financial credit, college enrollment)

Order Entry

  • On-site order fulfillment
  • Mail/telephone order placement
  • E-mail/Web site order placement

Reservations and Check-in

  • Seats
  • Tables
  • Rooms
  • Vehicles or equipment rental
  • Professional appointments
  • Admission to restricted facilities (e.g., museums, aquariums)

Order Taking

Once customers are ready to buy, companies must have effective supplementary service processes in place to handle applications, orders, and reservations. The process of order taking should be polite, fast, and accurate so that customers do not waste time and endure unnecessary mental or physical effort. Banks, insurance companies, and utilities require prospective customers to go through an application process designed to gather relevant information and to screen out those who do not meet basic enrollment criteria (like a bad credit record or serious health problems).

Universities also require prospective students to apply for admission. Reservations (including appointments and check-in) represent a special type of order taking that entitles customers to a defined unit of service at a specific time and location for example, an airline seat, a restaurant table, a hotel room, time with a qualified professional, or admission to a facility such as a theater or sports arena. Ticket less systems, based upon telephone or online reservations, provides enormous cost savings for airlines.

There is no travel agent commission since customers book directly, and the administrative effort is drastically reduced. A paper ticket at an airline may be handled 15 times while an electronic ticket requires just one step. But some customers are not comfortable with the paperless process.

Billing

Billing is common to almost all services (unless the service is provided free of charge). Inaccurate, illegible, or incomplete bills risk disappointing customers who may, up to that point, have been quite satisfied with their experience. Such failures add insult to injury if the customer is already dissatisfied. Billing procedures range from verbal statements to a machine-displayed price, and from handwritten invoices to elaborate monthly statements of account activity and fees.

Due to recent technological advances, many forms of billing are computerized to capitalize on the potential for productivity improvements. But computerized billing can sometimes cause service failures, as when an innocent customer tries futilely to contest an inaccurate bill and is met by an escalating sequence of ever-larger bills (compounded interest and penalty charges) accompanied by increasingly threatening, computer-generated letters.

Customers usually expect bills to be clear and informative, and itemized in ways that make it clear how the total was computed. Unexplained or confusing charges do not create a favorable impression of the supplier. Nor does fuzzy printing or illegible handwriting. Laser printers, with their ability to switch fonts and typefaces, to box and to highlight, can produce statements that are not only more legible but also organize information in more useful ways.

Marketing research can help companies design user-friendly bills by identifying what information customers want and how they would like it to be organized. Sometimes billing information can even be used to provide extra value to customers. For example, American Express built its Corporate Card business by offering companies detailed documentation of the spending patterns of individual employees and departments on travel and entertainment. Its Corporate Purchasing Card is particularly useful

Billing

for firms making purchases through the Internet, allowing senior management to establish spending limits, designate preferred vendors, and track expenses (Figure). Intelligent thinking about customer needs led AmEx to realize that well-organized billing information and control of spending were valuable to its business customers, beyond just the basic requirement of knowing how much to pay.

Busy customers hate to be kept waiting for a bill. Some service providers offer express checkout options, taking customers' credit card details in advance and documenting charges later by mail. Many hotels push bills under guests' doors on the morning of departure showing charges to date; others offer customers the option of previewing their bills before checkout on the TV monitors in their rooms. Some car rental companies use an alternative express checkout procedure.

An agent meets customers as they return their cars, checks the odometer and fuel gauge readings, and then prints a bill on the spot using a portable wireless terminal. Accuracy is essential with all of these billing methods. Since customers use the express checkouts to save time, they certainly don't want to waste time later seeking corrections and refunds.

Payment

In most cases, a bill requires the customer to take action on payment. Bank statements are an exception, since they detail charges that have already been deducted from the customer's account. Increasingly, customers expect ease and convenience of payment, including credit, wherever they make their purchases.

A variety of options exists to facilitate customer bill paying (Table). Self-service payment systems, for instance, require customers to insert coins, banknotes, tokens, or cards in machines. But equipment breakdowns destroy the whole purpose of such a system, so good maintenance and speedy trouble-shooting are essential. Much payment still takes place through hand-to-hand transfers of cash and checks, but credit and debit cards are growing in importance as more and more establishments accept them.

Other alternatives include tokens, vouchers, coupons, or prepaid tickets. Firms benefit from prompt payment, since it reduces the amount of accounts receivable. To ensure that people actually pay what they owe, some services employ control systems, such as ticket collection before entering a movie theater or boarding a train. However, inspectors and security officers must be trained to combine politeness with firmness in performing their jobs, so that honest customers do not feel harassed

self-service

  • Exact change in machine Examples of Payment
  • Cash in machine with change returned Elements
  • Insert prepayment card
  • Insert credit/charge/debit card
  • Insert token
  • Electronic funds transfer
  • Mail a check
  • Enter credit card number online

Direct to payee or intermediary

  • Cash handling and change giving
  • Check handling
  • Credit/charge/debit card handling
  • Coupon redemption
  • Tokens, vouchers, etc.

Automatic deduction from financial deposits (e.g., bank charges) Control and verification

  • Automated systems (e.g., machine-readable tickets that operate entry gates)
  • Human systems (e.g., toll collectors, ticket inspectors)
  • Advice
  • Auditing
  • Personal counseling
  • Tutoring/training in product usage
  • Management or technical consulting

Consultation

Consultation is an enhancing supplementary service that involves a dialog to identify customer requirements and develop a personalized solution. provides examples of several supplementary services in the consultation category. At its simplest, consultation consists of immediate advice from a knowledgeable service person in response to the request:

"What do you suggest?" (For example, you might ask the person who cuts your hair for advice on different hairstyles and products.) Effective consultation requires an understanding of each customer's current situation before suggesting a suitable course of action. Good customer records can be a great help in this respect, particularly if relevant data can be retrieved easily from a remote terminal.

Counseling represents a more subtle approach to consultation. It involves helping customers better understand their situations so that they can come up with their "own" solutions and action programs. This approach can be a particularly valuable supplement to services such as health treatment.

Part of the challenge in this situation is to get customers to take a long-term view of their personal situation and to adopt more healthful behaviors, which often involve some initial sacrifice. Diet centers like Weight Watchers use counseling to help customers change their behaviors so that weight loss can be sustained after the initial diet is completed.

Finally, there are more formalized efforts to provide management and technical consulting for corporate customers, such as the "solution selling" associated with marketing expensive industrial equipment and services.

The sales engineer researches the business customer's situation and then offers objective advice about what particular package of equipment and systems will yield the best results. Some consulting services are offered free of charge in the hope of making a sale. In other instances the service is "unbundled" and customers are expected to pay for it.

Hospitality

Hospitality-related services should ideally reflect pleasure at meeting new customers and greeting old ones when they return. Companies like Wal-Mart take this concept quite literally, designating a specific employee in each store to welcome customers as they enter. Well-managed businesses try to ensure that their employees treat customers as guests. Courtesy and consideration for customers' needs apply to both face-to-face encounters and telephone interactions.

Hospitality finds its full expression in face-to-face encounters. In some cases, it starts with an offer of transport to and from the service site, as with courtesy shuttle buses. If customers must wait outdoors before the service can be delivered, then a thoughtful service provider will offer weather protection.

If the wait occurs indoors, then guests should have access to a waiting area with seating and entertainment (TV, newspapers, or magazines) to pass the time. Recruiting employees who are naturally warm, welcoming, and considerate for customer-contact jobs also helps to create a hospitable atmosphere.

Greeting
Food and beverages
Toilets and washrooms
Waiting facilities and amenities

  • Lounges, waiting areas, seating
  • Weather protection
  • Magazines, entertainment, newspapers

Transport
Security

The quality of a firm's hospitality services can increase or decrease satisfaction with the core product. This is especially true for people-processing services where customers cannot easily leave the service facility. Private hospitals often seek to enhance their hospitality by providing the level of room service including meals that might be expected in a good hotel.
Some air transportation companies (like Singapore Airlines) differentiate themselves from their competitors with better meals and more attentive cabin crew.

While in-flight hospitality is important, an airline journey also includes passengers' pre- and post-flight experiences. Air travelers have come to expect departure lounges, but British Airways (BA) came up with the novel idea of an arrivals lounge for its terminals at London's Heathrow and Gatwick airports to serve passengers arriving early in the morning after a long, overnight flight from the Americas, Asia, Africa, and Australia.

The airline allows holders of first- and business-class tickets or a BA Executive Club gold card (awarded to the airline's most frequent flyers) to use a special lounge where they can take a shower, change, have breakfast, and make phone calls or send faxes before continuing to their final destination. The arrivals lounge provided such a significant competitive advantage for British Airways that other airlines felt obliged to copy it.

Safekeeping

While visiting a service site, customers often want assistance with their personal possessions. In fact, unless certain safekeeping services are provided (like safe and convenient parking for their cars), some customers may not come at all. The list of potential on-site safekeeping services is long. It includes: provision of coatrooms; luggage transport, handling, and storage; safekeeping of valuables; and even child and pet care Additional safekeeping services are directed at physical products that customers buy or rent. They include packaging, pick-up and delivery, assembly, installation, leaning, and inspection. Sometimes there's a charge for these services.

Caring for possessions customers bring with them

  • Childcare
  • Pet care
  • Parking facilities for vehicles
  • Valet parking
  • Coatrooms
  • Luggage handling
  • Storage space
  • Safe deposit boxes
  • Security personnel

Caring for goods purchased (or rented) by customers

  • Packaging
  • Pick-up
  • Transportation
  • Delivery
  • Installation
  • Inspection and diagnosis
  • Cleaning
  • Refueling
  • Preventive maintenance
  • Repairs and renovation
  • Upgrade

Exceptions

Exceptions involve supplementary services that fall outside the routine of normal service delivery . Astute businesses anticipate exceptions and develop contingency plans and guidelines in advance. That way, employees will not appear helpless and surprised when customers ask for special assistance. Well-defined procedures make it easier for employees to respond promptly and effectively.

There are several different types of exceptions:

  1. Special requests.There are many circumstances when a customer may request service that requires a departure from normal operating procedures. Advance requests often relate to personal needs, including childcare, dietary requirements, medical needs, religious observances, and personal disabilities. Such special requests are common in the travel and hospitality industries.
  2. Problem solving.Situations arise when normal service delivery (or product performance) fails to run smoothly as a result of accidents, delays, equipment failures, or customers experiencing difficulty in using the product.
  3. Handling of complaints /suggestions /compliments. This activity requires well-defined procedures. It should be easy for customers to express dissatisfaction, offer suggestions for improvement, or pass on compliments, and service providers should be able to make an appropriate response quickly.
  4. Restitution. Many customers expect to be compensated for serious performance failures. Compensation may take the form of repairs under warranty, legal settlements, refunds, an offer of free service, or other forms of payment-in-kind.

A flexible approach to exceptions is generally a good idea because it reflects responsiveness to customer needs. On the other hand, too many exceptions may compromise safety, negatively impact other customers, and overburden employees. Managers need to keep an eye on the level of exception requests.

Large numbers of exceptions may indicate a need to reexamine standard service procedures. For instance, if a restaurant constantly receives requests for special vegetarian meals when there are none on the menu, then it may be time to revise the menu to include at least one meatless dish.

Special requests in advance of service delivery

  • Children's needs
  • Dietary requirements
  • Medical or disability needs
  • Religious observances
  • Deviations from standard operating procedures

Handling special communications

  • Complaints
  • Compliments
  • Suggestions

Problem solving

  • Warranties and guarantees against product malfunction
  • Resolving difficulties that arise from using the product
  • Resolving difficulties caused by accidents, service failures, and problems with staff or other customers
  • Assisting customers who have suffered an accident or medical emergency Restitution
  • Refunds
  • Compensation in kind for unsatisfactory goods and services
  • Free repair of defective goods

Managerial Implications of the Flower of Service

The eight categories of supplementary services that form the Flower of Service provide many options for enhancing the core service product. Most supplementary services do (or should) represent responses to customer needs. As noted earlier, some are facilitating Services like information and reservations that enable customers to use the core product more effectively.

Others are "extras" that enhance the core or even reduce its no financial costs (for example, meals, magazines, and entertainment are hospitality elements that help pass the time). Some elements—notably billing and payment are imposed by the service provider. But even if not actively desired by the customer, they still form part of the overall service experience.

Any badly handled element may negatively affect customers' perceptions of service quality. The "information" and "consultation" petals emphasize the need for education as well as promotion in communicating with service customers.

A key insight from the Flower of Service concept is that different types of core products often share use of similar supplementary elements. As a result, customers may make comparisons across unrelated industries. For instance, "If my stockbroker can give me clear documentation of my account activity, why can't the department store where I shop?" Or "If my favorite airline can take reservations accurately, why can't the French restaurant up the street?" Questions like these suggest that managers should be studying businesses outside their own industries in a search for "best-in-class" performers on specific supplementary services.

Not every core product will be surrounded by a large number of supplementary services from all eight petals. People-processing services tend to be the most demanding in terms of supplementary elements like hospitality, since they involve close (and often extended) interactions with customers. When customers do not visit the service factory, the need for hospitality may be limited to simple courtesies in letters and telecommunications.

Possession-processing services sometimes place heavy demands on safekeeping elements, but there may be no need for this particular petal in information-processing services where customers and suppliers deal entirely at arm's length. However, financial services that are provided electronically are an exception to this. Companies must ensure that their customers' intangible financial assets are carefully safeguarded in transactions that occur via phone or the Web.

Companies in the business-to-business sector face many decisions concerning what types of supplementary services to offer. A study of Japanese, American, and European firms found that most simply added layer upon layer of services to their core offerings without knowing what customers really valued.5 Managers surveyed in the study indicated that they did not understand which services should be offered to customers as a standard package accompanying the core, and which should be offered as options for an extra charge.

There are no simple rules governing decisions about core products and supplementary services. But managers should continually review their firms' product offerings to make sure they are in line with both market practice and customer needs. A study of plastic surgeons' offices and procedures suggests that poor performance on supplementary services notably, unwanted information and inhospitable waiting areas creates unfavorable initial impressions that may lead patients to cancel surgery or even change doctors (see the box titled "Cosmetic Surgeons' Offices Disappoint Patients").

Customer needs and expectations often vary by segment. Consider the example of Asia Brown Bovary (ABB), a supplier of power plant equipment and maintenance services to utilities companies. ABB's Power Transformers business realized that not all customers needed or wanted the same levels of maintenance service; some utilities prefer to handle maintenance in-house, using their own employees and equipment.

Instead of simply supplying a comprehensive maintenance service to all of its customers, ABB now offers different levels of service and prices as part of a negotiated service agreement. It no longer requires customers to have ABB service all aspects of their transformers. Instead, they can choose the combination of supplementary services that they prefer.

Tables through can be used to identify value-added ways to augment existing core products and design new offerings. The lists provided in these eight tables do not claim to be all encompassing, since some products may require specialized supplementary elements. A company's marketing strategy helps to determine which supplementary services should be included.

A strategy of adding benefits to increase customers’ perceptions of quality will probably require more supplementary services (and also a higher level of performance on all such elements) than a strategy of competing on low prices. In general, a firm that competes on a low-cost, no-frills basis will require fewer supplementary elements than one that is marketing an expensive, high-value-added product. And firms that offer different grades of service like first class, business class, and economy class in an airline differentiate them by adding extra supplementary services to a common core for each upgrade in service.

Regardless of which supplementary services a firm decides to offer, the elements in each petal should receive the care and attention needed to consistently meet defined service standards. That way the resulting Flower of Service will always have a fresh and appealing appearance rather than looking wilted or disfigured by neglect.

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