This case ‘an incident in the babies’ room’ covers many of the topics in Services Marketing. Twinkle Toes is a typical long-day care Centre that has been recently taken over by Maria Sanchez. To reduce costs, Maria hires inexperienced staff, but a complaining customer draws her attention to the ramifications of her decision and other problems facing the business.
Marketers may not be able to fully understand the concerns of parents leaving their children in day care facilities (if they are not parents themselves). So, it may be up to the instructor to convey the complications and apprehension involved with the provision of this service.
Evaluate Maria’s response to the incident involving Pamela’s baby.
Maria’s response to the incident was entirely appropriate, and an excellent example of effective service recovery. She exhibited the action necessary to keep Pamela as a customer while also making sure that she understood the reasons for the problem occurring to rectify.
- Maria acted quickly – both in placating Pamela and by immediately investigating the source of the problem. As a follow up, Maria will also need to quickly inform Pamela of the actions that are to be taken following her complaint so that the behavior is not repeated.
- Maria apologized, but was not defensive. She explained that she had only recently taken over the business, and even gave good reasons why Pamela should give her another chance – for the benefit of Pamela’s children.
- Maria showed she understood the problem from Pamela’s point of view. She stated this behavior was unacceptable to her and she would immediately investigate.
- Maria did not argue with Pamela, nor did she try to convince Pamela that the incident was in her imagination. Maria claimed understanding of the situation and asked for another chance.
In Pamela’s eyes, what dimension of service quality is being compromised by the incident?
Pamela would probably argue that the service quality dimension of reliability was being compromised. Reliability focuses on dependable and accurate performance of a service, which has clearly been violated here on a continual basis (this is the third time this has happened) by mixing the bottle teat with that of other children.
Dimensions of Service Quality
Looking the other dimensions of service quality:
- Tangibles (physical elements) – was not a problem
- Responsiveness (helpfulness) – Maria responded well to the complaint and was helpful
- Assurance (courtesy, credibility, security) – there may be an argument that security was violated if Pamela felt that there was a chance her child would be hurt by mixing the teat.
- Empathy (understanding) – Maria clearly showed that she both understood the problem and Pamela’s frustration.
Discuss the importance of retaining valued staff in high-contact services such as childcare.
It is important to note here that staff in high-contact services such as childcare provide the core service, and front-line staff are responsible for delivering the core service as promised. Customer satisfaction and service quality are directly influenced by service employees, and so retaining valued staff should be a priority.
In childcare, maturity and experience are some important qualities of service staff, and as the case shows can have a direct effect on profitability. Pamela threatened to take her three children out of Twinkle Toes and would probably have discouraged many more parents from using Twinkle Toes if Maria had not done such a good job at recovering the service defect.
Nancy can be described as a boundary spanning employee as she is in contact with the parents and children. Nancy is clearly experiencing role conflict. She is expected to satisfy the goals of the company and cater to the needs of the parents and children, which can often be conflicting.
For example, Twinkle Toes places demands on Nancy to not only supervise children, but also the junior staff. When parents drop off their children in the morning, they come to Nancy and take up her time explaining specific needs for each child.
Then in those situations where a regular employee does not turn up to work, Nancy is also expected to train and supervise inexperienced casual staff.
If Pamela decided to withdraw her three children from Twinkle Toes, what would be the annual loss in revenues?
Pamela has three children in Twinkle Toes who are there full time. To calculate annual revenue loss:
$190/week/child x 3 children x 52 weeks in a year = $29,640.
This is a substantial potential loss in revenue especially considering that Twinkle Toes does not have a waiting list, and this revenue would not be immediately replaced. This is also only an annual figure. To calculate the lifetime loss of revenue, this would have to be extrapolated for the three children according to their age and how much longer they will be in day care.
Also, consider the loss caused by negative word of mouth – which is extremely important in experience services like childcare where customer testimonials and word of mouth advertising is used to evaluate service quality before purchase.
a) How might the principles of the service-profit chain apply to this case?
The principal of the service-profit chain is relating profitability, customer loyalty and customer satisfaction back to satisfied, creative and loyal employees.
In this case, it means Maria will have to focus on retaining and satisfying employees like Nancy, so that they can provide the high level of childcare needed to satisfy parents, which in turn leads to greater profitability.
Ways to Ensure Internal Service Quality
To ensure internal quality, Maria will need to focus on:
- Workplace and job design issues to minimise employee emotional labour and role conflict
- Selecting the right staff, with ongoing training and development
- Recognising and rewarding outstanding employees
- Providing her employees with the tools necessary to effectively and efficiently serve the customers.
b) Discuss the notion that profit is a two-sided coin.
The second part of this case question challenges the marketer to think about human resource implications for business profitability. The Service Profit Chain facilitates thinking about profitability from two perspectives:
- Optimizing revenues by attracting and keeping customers willing to pay the prices for the services offered.
- Containing costs that enable the business to function at a profit and enable re-investment in maintaining or improving service quality.
Marketers typically focus on gaining customers to increase sales. Operations typically focus on containing costs to increase efficiency.
The case illustrates an operations orientation which seeks to reduce staff costs by employing younger, less qualified staff. This increases supervisory burdens on senior staff, as well as stress levels, and increases the chances for service failures.
In the short term, this approach may increase profit. In the longer term, it can result in a deterioration in service quality, leading to customer dissatisfaction and turnover. Staff turnover may also increase.
This in turn impacts on revenues (and operating costs, as loyal staff are more efficient to employ, and loyal customers are more operationally efficient to serve than the same number of new customers according to the service profit chain concept). The revenue impact has a flow-on effect on profit.
So, quality and efficiency are two sides of the same coin when it comes to making profit. Both need to be managed in a balanced way that does not detract from the other to both meet target customer expectations and financial imperatives of running a business.
What advice would you give Maria about staff selection and training?
Maria should make selecting and training staff a high priority. This is the essence of her business and provides the reason for customers to come back. Maria should forgo the short-term payroll benefits of hiring inexperienced staff, and concentrate on obtaining and retaining highly qualified, experienced employees.
- Selection – as the job requires employees to interact heavily with customers, individuals should be selected with not only childcare skills, but also appropriate personal characteristics such as appearance, manner and personality. Maria does not want to select people who would be better suited to backstage activities where they have no customer contact.
- Training – staff need constant development and training in both technical skills necessary to perform the job efficiently, and interpersonal skills needed to perform the job effectively. Part of the ability of staff to perform well is good job design, so Maria will also have to address this issue.
It was highlighted in the case when Nancy said that washing the teats was Tina’s task, and since Tina was away, it fell to whoever replaced her. Tasks such as these should be routinely undertaken and communicated throughout, and not left to an individual who may be away one day.