QUESTION
Company :
Commonwealth Bank in Australia
Write a report that addresses the following:
1. Present this service organisation as a blueprint.
2. What is the service organisation’s front stage and back stage functions?
3. What are the “moments of truth” for this service organisation?
4. Show the determinants of satisfaction/dissatisfaction for this service organisation. Use relevant
theories to also discuss service quality measurement (and quality gaps) in this organisation.
5. Devise a service-recovery strategy plan for the service organisation to deal with various critical
incidents.
SOLUTION
1. Present this service organization as a blueprint.
Commonwealth bank of Australia is a service organization as it renders financial services to its client. To put the point forward, financial services being provided by Commonwealth Bank of Australia have all the characteristics (Intangibility, Inseparability, Heterogeneity, Perishability) that make this bank an excellent example of service organization. Its vision is to be Australia’s finest financial services organization through excelling in customer service (March 2006).
Service firms utilize combination of organizational structure and marketing strategy to cultivate a brand image. According to BenteLowendahl, service organizations often loosely organize their leadership and management structure based on familiarity with certain kind of tasks and clients.
Through its commitment to excellent customer service, the bank has penetrated more than 45% population of Australia. It has the largest distribution network and market leading portfolios among the financial institutions of Australia. Bank has individuals as well as corporate as its customers.
Core services of the bank are to provide core-banking services along with various other financial services such as financial planning, risk management, insurance and merchant services. Besides core services bank also provides augmented services such as financial research, facility of online banking.
The bank is a vertically integrated business aligning product development and service delivery with market segments. This organization structure was adopted after restructuring in 2001. The four business divisions (Retail Banking Services, Premium Financial Services, Investment and Insurance Services, Institutional and Business Services) are created along with the lines of customer groups. The structure indicates focus on customer, which is essential for any service organization.
Commonwealth Bank has created a organizational culture where customer is treated with priority. Such culture is necessary for service organizations as customer is the center of the success of such organization. As any other financial service provider, the bank strives hard to create value that reflects trust, honesty and integrity. The blueprint of the organization is as under:
2. What is the service organization’s front stage and back stage functions?
Service organization can become successful only when it has the appropriate brand image in its customer’s mind. Service organizations are divided into two parts, front stage and back stage. Front stage is utilized to communicate with the customers. Employees working at front stage may not be knowledgeable about the intricacies of the “how” services are rendered but they are well versed with “what” services are rendered.
Front Stage Functions: Service organizations focus on interactions between the customer and the provider. These interactions are part of front stage functions. Front stage employees are considered pivotal for the successful service delivery. An empowered employee can improvise or innovate to satisfy a customer who is making and unusual request or complaint. The front stage functions are a bit demanding, as the employees have to manage the customers as well as organization management. For example, when some customer wants to enjoy lending services, the customer service representative interacts with customer to complete front stage functions. These functions may include collecting customer details, informing about the process, getting relevant documents and forms.
Back stage functions: There are various activities that precede the front stage functions to complete the service delivery. These activities that are invisible to customers are called back stage function. Employees engaged in back stage functions are not involved with customers directly. Now a day the use of technology has increased drastically in back stage functions. Technology is used to avoid manual errors and to increase operations efficiency because there is not any customer interaction involved and standardization is expected in these functions. For example, during the lending operations, customers are not aware of credit analysis functions that are used in appraisal of loan proposal. This analysis can be completed withthe help of computer modeling to improve efficiency. This is an example of use of technology in back stage functions. Even if customers are not knowledgeable about back stage functions, they, or lack of them substantially determines customer experience.
This distinction provides a dilemma to service organization about whether some function should be exposed to customers or should be kept hidden. Now a day, many a front stage functions are also sent to back stage under the practice of self-service. But one should remember that front stage and back stage combined forms the service system. There may be a moment of truth when the service quality becomes apparent to consumer but that quality is always enabled by combination of both types of functions.
3. What are the “moments of truth” for this service organization?
A moment of truth is defined as an instance when the customer and the organization come into each other’s contact in such a manner that leaves a lasting impression on the customer. Moment of truth determines the customer perception of a brand. It is very important for the relationship between customer and the organization. For Commonwealth Bank some of the following instances can be classified as moment of truth.
- Every interaction of customer with the bank constitutes as moment of truth. Customer may contact bank personnel or access services online.
- Customer can utilize banking services or other financial services provided by the organization. Service deliveries for all the instances are also part of moment of truth.
- Commonwealth Bank has created divisions based on customer segmentations that help the employees to cater customer needs more effectively.
According to Jan Carlzon, there are good moments of truth and bad moments of truth. For any service organization, the aim should be to create every moment of truth as good. Commonwealth Bank of Australia is not an exception in this regard. Bank has created its vision and mission with customers as its center of focus. It aims to provide quality service in each interaction with its customer.
4. Show the determinants of satisfaction/dissatisfaction for this service organization. Use relevant theories to also discuss service quality measurement (and quality gaps) in this organization.
Customer satisfaction is most important parameter for any service organization. Commonwealth Bank of Australia renders financial services to its clients. The determinants of satisfaction/ dissatisfaction for such organization can be as following.
Market Share: Commonwealth Bank is in the business of providing financial services. Its market share can be considered as a fair indicator for the customer satisfaction regarding the services rendered.
Repeat Business/ Customer Retention: Some of the clients access the bank for one time services such as Fixed Deposit, Trade Finance transaction etc. If the client comes back again to enjoy the same service, it indicates the satisfaction received in first time.
Customer Complaints/ Feedback: Customer complaints can be used for measurement of customer dissatisfaction with the services being provided.
Quality of any service can be measured using five parameters- reliability, responsiveness, assurance, empathy and tangibles. Gap model of service quality indicates five different quality gaps associated with the service. These are given as under:
p Gap between Commonwealth Bank’s Management Perception and Customer’s expectation.
p Gap between management perception and quality specifications.
p Gap between quality specifications and service delivery by the bank.
p Gap Between service delivered and communication to the Customers.
p Gap between Customer’s expectations and customer’s perception of service.
Commonwealth Bank focuses on four key parameters as a strategy to provide quality service to its customers. These parameters are Customer Service, Business Banking, Technology & Operational Excellence and Trust & team spirit. All four of these help the organization in improving service quality and in reducing the quality gaps.
Managing the Quality Gap: Commonwealth Bank of Australia aims to deliver high quality wealth management services to its customers. Its marketing department utilizes market research practices to reduce the quality gap between customer’s expectations and bank’s perception. As this is a financial institution, central bank or government provides many quality specifications. Bank uses operational excellence to reduce the gap between quality specifications and service delivery. Service recovery strategy is used for reducing gap between services delivered and the communication to the customers. All these parameters combined provide the customer with a quality service that helps in reducing gap between his expectations and perception.
5. Devise a service-recovery strategy plan for the service organization to deal with various critical incidents.
Service recovery follows service failure. Service failure indicates an incident when services rendered did not meet the customer expectations hence customer satisfaction was not achieved. Service recovery has been accounted for customer satisfaction, word of mouth publicity and organization performance. A well-formed service recovery strategy also helps the organization in “getting the work done correctly” at first time itself and hence achieve customer satisfaction. Service recovery strategy plan encompasses various strategies that can be utilized to solve the specific issues.
There are three major ways in which service recovery can be achieved- employee recovery, process recovery and customer recovery. These three methods are devised based on the departments that focus organization employees (Management), processes (Operations) and customers (Marketing) respectively after service failure. To prepare an apprehensive strategy plan for service recovery all these methods is to be considered.
Customer Recovery: Customer recovery strategy focuses on reestablishing customer satisfaction once service failure occurs. Here one important factor to remember is that companies may recover after one failure, but it is very difficult to recover after multiple failures.
Process Recovery: This strategy dictates to learn from the mistakes. It is more important to improve the processes than recovering individual customer. The strategy involves collecting data about service failure and analyzing it for process improvements.
Employee Recovery: It is one of the most important strategies that focus on front-end employees who can help customers to recover from negative feelings that may arise due to service failure.
Combing the three methods a strategic plan with following suggestions can be devised.
1) Complaints should be considered as gifts and service failure an opportunity to create customer satisfaction.
2) Organization should focus more on customer retention than customer acquisition.
3) Frequency Relevancy Analysis of Complaints can be utilized to improve process through operations management.
4) Organization should support its employees who are dealing with complaining customers. Such practice helps employees to fend off stress and negativity and achieve customer satisfaction.
5) Organization should treat its employees fairly because customer attitude is linked with employee attitude. If employees believe that they are being treated fairly, they tend to generate higher customer satisfaction with their behavior.
Service recovery strategy should focus on long term. Therefore practices of TQM, process improvements and internal service recovery should be employed by the organization rather any quick fix solution.
Reference List:
Kotler Philip and Keller Kevin. (2008). Marketing Management 13th ed. NJ: Prentice Hall.
Lovelock Christopher and Wright Lauren. (2001). Principles of Service Marketing and Management 2nd ed. NJ: Prentice Hall.
Management Study Guide. (n.d.). Services Marketing – Moment of Truth. [online] Available at: <http://www.managementstudyguide.com/moment-of-truth-services-marketing.htm> [Accessed on 17 May 2012].
Michel Stefan, Bowen David and Johnston Robert. (n.d.). Service Recovery Management: Closing the Gap between Best Practices and Actual Practices. [online] Available at: <http://www.dienstleistungsmarketing.ch/documents/MichelBowenJohnston_ServRecMgt_Reformated.pdf> [Accessed on 17 May 2012].
Mudie Peter and Pirrie Angela. (2006). Services Marketing Management 3rd ed. Burlington: Elsevier Ltd.
Taylor Jr, Joe. (n.d.). Marketing Strategies & Organization Structures for Service Firms. [online] Small Business. Available at: <http://smallbusiness.chron.com/marketing-strategies-organization-structures-service-firms-3410.html> [Accessed on 17 May 2012].
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