Characteristics of Services and their Implications for the Tourism Labor Force

Characteristics:

 - Sale, production and consumption take place (almost) simultaneously

 - No central provision, inspection, stockpiling or warehousing

 - No sampling, demonstrating, testing

 - No tangible product bought by the customer

 - No sharing, passing on or giving away of product/experience

 - Almost always human contacts involved

 - No quality control without monitoring

 - No replacement of faulty product

 - Standardisation either not at all or almost completely

Reminder: Characteristics of Tourism Labor Force:
- young (first job)
- high level of fluctuation
- many entries from other industries ("Quereinsteiger")
- high percentage of women

 Implications:

 1. Customers perception of service quality directly linked to performance of front-line staff

 2. Manager have to be responsive to staff instead of being responsible

 3. Quality measured by customers satisfaction, not quantitative output

 4. Union power / "Dienst nach Vorschrift" of staff increases

 5. Need for adaptive, decentralized, downsized organisation structure

 --> "THE MOMENT OF TRUTH"

 Carlzon (CEO of SAS 1981-1993): "THE MOMENT OF TRUTH"

THE CARLZON PHILOSOPHY

In 1981 Scandinavian Airlines System, SAS as it is known in the industry, was struggling with a severe downturn in business and an accumulated two year deficit of $ 30 (Skr 150) million after 17 consecutive profitable years. The worldwide recession had cut deeply into the airline industry and the multinational board of directors of SAS was understandably concerned. The new SAS boss, Jan Carlzon, believed that SAS had become an "Introverted" organization which had lost its fix on the customers' needs. He felt that management had been putting almost all its attention on the mundane aspects of flying airplanes and not enough on the quality of the customers' experience.

In contrast to the conservative and stately Scandinavian tradition, he wanted to change the airline from a technical and production oriented company to a market focused company, by making all personnel obsessively aware of customer service. He believed he could force attitudinal and structural changes in SAS that would bring the delivery system into harmony with their customers' needs. This, he reasoned, would get the market to recognize a significant difference between SAS and all other airline choices.

A service company, he argued, needed a different approach to the customer from that of other manufacturers. SAS, he pointed out, is not the airline, or head office, or an overhaul station, it's the contact between one customer in the market and one SAS employee in the front line. He demonstrated this by an idea which he called "the moment of truth," an episode in which a customer comes into contact with any aspect of the company, however remote, and thereby has an opportunity to form an impression. "SAS," he declared, "had 50,000 moments of truth out in the market every day."

The marketing concept was new to SAS. The international airline had been shaped by a strong heritage of engineering. The former president, Knut Hagrup, an aeronautical engineer, was reputed once to have said to an executive, "I know all about airplanes. I have good people on finance. I don't know anything about marketing."

Executives had regarded the buying of even larger and faster airplanes as their most important responsibility. Said Carlzon; "We used to think our biggest assets were aircraft, overhaul stations and technical resources. But we have only one real asset, and that is a satisfied customer prepared to come back to SAS and pay for our costs once more. That's why the assets in our balance sheet should show the number of satisfied customers who flew SAS during the year, and not the number of airplanes which are not worth one single cent as long as there is no second-hand market in the world for used aircraft, and nobody wants to pay for a flight in those airplanes. So it's really fooling the banks to use these as the assets."

(The Economist)

 BOOK:

http://www.amazon.com/exec/obidos/ASIN/0060915803/002-1708814-7521652