The role of self-service technology within service retailing - Essay Example

? Self-service technologies (SSTs The role of self-service technology within service retailing 2 September Executive Summary SSTs have a large role to play in the airline sector, because it can improve operational efficiency, competitiveness, and customer service. This paper aims to explore the definitions, characteristics, advantages, disadvantages, and current trends of SST for airliners. Findings showed that SSTs can enhance organisational competitiveness, (internal and external) customer satisfaction and customer commitment, lessen operational costs, and improve staff and organisational productivity. The main disadvantages of SSTs are they cannot be fully operated due to existing regulatory challenges and issues, as well as airport processes, and their breakdowns can reduce customer satisfaction. Marketers should advance SSTs more aggressively by defining SST interfaces and their goals through a concrete SST strategy. Airliners should develop marketing strategies for their SSTs that revolve around delivering higher customer value, by boosting awareness for SST in diverse means and locations, where they can educate consumers about their uses and benefits. Airliners should also regularly assess internal and external customer satisfaction with SST through a mixed survey and in-depth interview approach, where antecedents and consequences of SST are examined and tested. These studies should help further align SSTs with the firm's strategic goals and objectives, where both internal and external customer satisfaction are met. Table of contents Executive summary 2 Introduction 4 Definitions 4 Characteristics of SST 5 Key drivers of SST 5 Key features of SST 6 Role to Retailers 6 Why is SST a growing phenomenon? 6 Why are retailers and consumers adopting SST? 7 Consumer’s perspective 7 Retailers’ perspective 7 Why are some retailers and consumers not adopting SST? 7 Consumer’s perspective 7 Retailers’ perspective 7 Key factors for a successful implementation of SST 8 SST and airline industry 8 Personal views 8 Advantages and Disadvantages of SST 9 Advantages of SST 9 Disadvantages of SST 10 Current Trends 11 Different types of SST out there? 11 Airline industry and adoption of trends 12 Personal views 12 Conclusion 12 Main points 12 Current and future marketing strategy 12 Bibliography 14 Appendices 15 Appendix 1: Conceptual model of SST Trial 15 Appendix 2: Different Forms of SST Interfaces 16 Introduction Advancements in technology and the increasing demand to cut costs have been some of the several factors that have driven the development of self-service technologies (SSTs) in service industries. SSTs refer to “technological interfaces that enable customers to produce a service independent of direct service employee involvement” (Meuter et al. 2000, 50). Some examples of SSTs are interactive voice response systems, online shopping, and kiosks that help consumers gather information and make buying decisions. Studies have shown that SSTs has its promises, as well as its weaknesses, which marketers should be aware of and respond to (Karp 2008; Meuter et al. 2000). SSTs have a large role to play in the airline sector, because they can improve operational efficiency, competitiveness, and customer service and satisfaction (Karp 2008; Meuter et al. 2000). This paper aims to explore the definitions, characteristics, advantages, disadvantages, and current trends of SST for airliners. Definitions SST is “defined as a technological interface that allows customers to produce and consume services without direct assistance from employees” (Meuter et al., 2000 cited in Curran and Meuter 2007, 283). This definition demonstrates that SST is primarily a service interaction that precludes human interaction. Cunningham, Young, and Gerlach (2008), nevertheless, included technologies that significantly decrease the “involvement” of service representatives (p.719). They believe that SSTs should also include technologies that have some form of human interface. The key terms used in defining SSTs are “technology” and “production and consumption of services without direct assistance from employees” (Meuter et al., 2000 cited in Curran and Meuter 2007, 283). First, SST is a technological tool that aims to serve retailer and consumer needs. On the one hand, SST seeks to help retailers streamline operational costs by reducing labour costs. On the other hand, SST should also correspond to consumers’ technological readiness, so that they can easily use and benefit from SSTs (Yen 2005, 643). Second, SST strives to be customer-centric. Through SSTs, customers are already doing part of the job the retailers, so marketers should also consider consumers’ ease of use and access (Karp 2008, 62-63) and enjoyment (Curran and Meuter 2007) of these services. Characteristics of SST Key drivers of SST The key drivers of SST are personal customer characteristics and technology characteristics. SITA, a major provider of IT business solutions and communications services to the air transportation industry, conducted its 2008 Passenger Self-Service Survey on six international airports (Karp 2008). Findings showed that consumers use SST because of ease of use and access. Online booking, for instance, should be an easy process that organises booking steps in a systematic manner. SSTs should also be accessible from consumers’ viewpoint, so that they can feel the convenience of these services. Meuter et al. (2005) highlighted the importance of consumer readiness as a mediating variable for consumer trial of SSTs. For them, the factors of role clarity, motivation, and ability will impact why customers try SSTs in the first place. See Appendix 1 for their conceptual model. Technological characteristics also impact SST. Retailers use SST because they believe it can provide operational efficiencies that can drive competitiveness (Bitner, Ostrom, and Meuter 2002). If SSTs can replace numerous employee functions, such as booking and checking in, for instance, this will make the jobs of employees easier, and customers can also benefit from faster and varied self-service options. Moreover, firms should be clear on what they want their SSTs to attain. Bitner, Ostrom, and Meuter (2002) determined that one of the main causes of poor SSTs is that firms are not clear with their goals in adopting SSTs. See Appendix 2 for different forms of SST interfaces. These researchers stressed the value of defining SSTs’ goals for the company level and other accompanying goals, so that a definitive SST strategy can be generated. Cunningham, Young, and Gerlach (2008) studied customer perceptions of SST and findings showed that SST services should be conceptualised and delivered according to consumer needs and preferences. Key features of SST The key features of SST are their utility, social acceptance, and enjoyment level, based on Curran and Meuter’s (2007) study. Utility pertains to the perception that SSTs can make the “encounter easier or better in some way for the consumer” (Curran and Meuter 2007, 285). Social acceptance is also important for SST, where social acceptance “relates to the approval or disapproval of others when the consumer decides to adopt and use products and services” (Curran and Meuter 2007, 285). The higher the social acceptance for SSTs, the more people will be encouraged to try and adopt them. Finally, SSTs offer an underlying consumer outcome of “enjoyment.” Eighmey and McCord (1998) stressed that “enjoyment” is a primary driver in consumer patronage of Internet usage (cited in Curran and Meuter 2007, 285). Role to Retailers Why is SST a growing phenomenon? SST is a growing phenomenon, because it has drivers and characteristics that make it appealing to both retailers and consumers. This section discusses why retailers and consumers are adopting or not adopting SSTs. Why are retailers and consumers adopting SST? Consumers’ perspective From the consumers’ perspective, SSTs, such as online booking, provide ease of use and saves them time (Karp 2008, 62). For instance, instead of going to airliner booths physically, consumers can just go online to compare ticket prices and make book tickets using their credit cards. SSTs are also preferred when they save money and energy (Cunningham, Young, and Gerlach 2008). For instance, online booking helps customers shop for the lowest prices more easily than calling each airliner individually. Retailers’ perspective Retailers are adopting SST because it offers numerous benefits to them, particularly operational efficiency, customer satisfaction, employee satisfaction, and marketing strategy. These reasons will be better explored in the advantages section of this paper. Why are some retailers and consumers not adopting SST? Consumers’ perspective Some customers are not adopting SST, because of certain limitations on their part. The 2008 Passenger Self-Service Survey shows that some customers do not use online booking, because they do not have credit cards, or access to the Internet, or both (Karp 2008, 63). Retailers’ perspective Some airliners believe that not all airline processes can be entirely automated, and so SST cannot fully be applied. Qantas’ direct sales general manager John Lonergan stated that automating check-in can be quite difficult for the company’s “legacy model,” particularly when passengers change or cancel before their flights (Driscoll 2011, 38). At the same time, self-service check-ins cannot be applied to international flights, because airliners also connect with partner carriers (Driscoll 2011, 38). Key factors for a successful implementation of SST Scholars and industry reports have different arguments on the key factors of successful implementation of SST, since their studies have different goals and conclusions. Karp (2008) highlighted that social acceptance is critical to successful SST implementation, since customer readiness is a favourable mediating factor for SST trial, said Meuter et al. (2005). Yen (2005) investigated the crucial attributes for “consumer satisfaction with Internet-based self-service technology (ISST)” (641). Findings showed that the following attributes are crucial to customer satisfaction with ISST, which is fundamental too to SST’s successful implementation: “efficiency, ease of use, performance, perceived control and convenience” (Yen 2005, 641). SST and airline industry The airline industry has had its ups and downs in applying SSTs. Early pioneers such as Boeing failed to launch SST with its “Connexion broadband solution” (Arnoult 2008, 52). The company discontinued the program in 2006, due to high costs and low customer take-up (Arnoult 2008, 52). From 2008 onwards, however, there has been increasing movement of carriers to provide broadband and Wi-Fi access (Arnoult 2008, 52). The airline industry displays a trend toward SSTs, because more consumers are demanding it and have had favourable past SST experiences (Yen 2005, 641). Personal views The airline industry will continue to develop SST that will improve its services and enhance customer satisfaction. Marketers, however, have to align internal and external customer concerns and goals too. There is a dearth in literature when it comes to employee views of SST, which is troubling, because SST should also be designed with the welfare and goals of employees in mind, so that they would not see SST as a threat to job security. Advantages and Disadvantages of SST Advantages of SST 1) SSTs can enhance operational efficiency. From retailers’ perspective, operational efficiency is a major advantage of SST deployment. The most prominent reason for firms introducing SSTs is potential cost savings. Customer service applications help firms reduce labour costs, since technology solutions either automate service encounters or substitute for personal interactions. SSTs can decrease operational costs by reducing the number of employees required to deliver usual service encounters, such as booking and providing information online (Cunningham, Young, and Gerlach 2008, 720). Managers then see a strong financial advantage of promoting SST-based customer service interactions. 2) SSTs can improve customer service and customer satisfaction. Some customers prefer and are beginning to favour SST, because it serves them better. For instance, according to the 2008 Passenger Self-Service Survey, 82.8% use kiosk check-ins, while 91.5% employ web check-ins, because it is easier to use for them (Karp 2008, 65). SSTs that work enable consumers to use services when and how they please. Customers can select mobile or Internet booking, for instance, whichever is best aligned with their needs and situations. If passengers are located in places with poor Internet connection, they can use their cellular phones to book their flights. Variety of options empowers consumers to select services in the means they prefer (Bitner, Ostrom, and MaMeuter 2002, 98). SSTs can also save time, energy and costs, which will help increase customer satisfaction (Meuter et al. 2005). For example, online booking is a much better alternative than going to airliner offices to book tickets. With lower costs and faster services offered by SSTs, customers will be more satisfied and they will also become more committed to the company. 3) SSTs can be an attractive marketing tool that can develop organisational competitiveness. SST can change how marketing is conceived and delivered (Meuter et al. 2005, 61). Airline online booking web pages now have discount and other promotions on the same page. This means that airliners can cross-sell, even as consumers are still considering their options. At the same time, airliners can also persuade consumers to book through these online promotions. In addition, since technology is used for SSTs, they can be data-gathering points for airliners. Airliners, for instance, are inviting passengers to enrol or register online to save their personal information and booking data. This information can help airline marketers gather and analyse consumer insights. Furthermore, as a marketing tool, SSTs can enhance competitiveness. Airliners that can differentiate their services effectively and efficiently through SSTs can enhance their competitiveness too. 4) SSTs can enhance staff and organisational productivity. SSTs can ramp up employee productivity, because staff can be relegated to value-enhancing services, such as cross-selling and other more value-adding services. Employees no longer have to deal with repetitive and usually boring transactions and they can be freer to respond to more complex consumer needs and issues. Disadvantages of SST 1) SST cannot be fully operated, because of regulatory issues and requirements. Many governments require for advance passenger data and documentation checks and due to terrorist and security concerns, such manual checks have become more widespread and mandatory (Driscoll 2011, 39). The Air Transport Association (IATA) understands that regulatory hurdles constrain the use and expansion of SST applications: “We are looking at data harmonisation to assist airlines, but it's a long way off yet” (Driscoll 2011, 39). 2) SST breakdowns can impair service delivery. One of the primary disadvantages of SST is that it is like any other technology- it can suffer from breakdowns (Karp 2008, 62). Airliners cannot entirely depend on self-service kiosks and online booking, for instance, because there are times that these technologies fail too, which can result to delays in delivering services and earning income (Karp 2008, 62). 3) SSTs cannot fully eradicate some of the airport processes that demand physical checking. SSTs cannot completely remove some airport processes that need physical checking, such as verifying VISAs and checking baggage. For example, domestic travellers use self-serve check-in more regularly than international travellers, because the latter commonly have more bags to check in (Karp 2008, 66). Current Trends Different types of SST out there? Three of the main SSTs are online booking, self-service kiosks, and IVR. Online booking and IVR are already staple forms of services for many airliners. In addition, airlines are significantly “migrating check-in to more cost-effective self-service platforms” (Driscoll 2011, 38). Wi-Fi is also seen as a way of entertaining customers and as a value add-on. JetBlue offered free for its transcontinental flights (Arnoult 2008, 52). The company called it BetaBlue and it enables passengers to access Yahoo! Mail (without attachments) and Messenger using their laptops and BlackBerry PDAs (Arnoult 2008, 52). Airline industry and adoption of trends RFID cards One of the latest trends in SSTs is the development of RFID cards. Qantas just deployed the “next-generation solution” at Perth and Sydney airports for domestic passengers (Driscoll 2011, 38). Frequent flyers can use their RFID-enabled loyalty card, which can automatically check them in at kiosks and serve as a boarding pass (Driscoll 2011, 38). Passengers can also “self-tag a bag with their own permanent chip-enabled bag tag” (Driscoll 2011, 38). Personal views It is amazing to discover how much SST has improved for the past five years, especially since social acceptance and consumer readiness have also developed. Nevertheless, airliners still have to grapple with regulatory requirements and concerns that require manual checking. These manual processes can affect the future expansion of SST applications. Conclusion Main points The primary advantages of SSTs to the airline industry are they can augment organisational competitiveness, because they can increase operational efficiency, marketers can use SST as a marketing tool and advantage; furthermore, SSTs can boost customer satisfaction and improve staff productivity. The main disadvantages of SSTs are they cannot be fully operated due to existing regulatory challenges and issues, as well as airport processes, and their breakdowns can reduce customer satisfaction. Current and future marketing strategy Airliners should develop marketing strategies for their SSTs that revolve around delivering higher customer value, by increasing awareness for SST in diverse means and locations and educating consumers about their benefits. Marketers should also invest in enhancing consumer readiness to improve SST usage (Meuter et al. 2005, 62) and design SST interfaces that provide the following benefits of “efficiency, ease of use, performance, perceived control and convenience” (Yen 2005, 641). Airliners should also regularly measure internal and external customer satisfaction with SST. This can be done with mixing survey and in-depth interview approaches, where antecedents and consequences of SST are examined and tested. These studies will guarantee constant evaluation and improvement of SST and further align SST with the firm's strategic goals and objectives, which should include target outputs of organisational competitiveness through balancing internal and external customer satisfaction. Bibliography Arnoult, Sandra. “When Self-Service is Better Service.” Air Transport World 45, no. 3 (2008): 48-52. Bitner, Mary J., Ostrom, Amy L., and Matthew L. Meuter. “Implementing Successful Self-Service Technologies.” Academy of Management Executive 16, no. 4 (2002): 96-108. Cunningham, Lawrence F., Young, Clifford E., and James H. Gerlach. “Consumer Views of Self-Service Technologies.” Service Industries Journal 28, no. 6 (2008): 719-732. Curran, James M. and Matthew L. Meuter. “Encouraging Existing Customers To Switch To Self-Service Technologies: Put A Little Fun In Their Lives.” Journal of Marketing Theory & Practice 15, no. 4 (2007): 283-298. Driscoll, Louise. “Check-Out For Check-In?” Airline Business 27, no. 1 (2011): 38-39. Karp, Aaron. “2008 Passenger Self-Service Survey.” Air Transport World 45, no. 10 (2008): 61-66. Meuter, Matthew L., Bitner, Mary J., Ostrom, Amy L. and Stephen W. Brown. “Choosing Among Alternative Service Delivery Modes: An Investigation of Customer Trial of Self-Service Technologies.” Journal of Marketing 69, no. 2 (2005): 61-83. Meuter, Matthew L., Ostrom, Amy L., Roundtree, Robert I.,and Mary Jo Bitner. “Self-Service Technologies: Understanding Customer Satisfaction with Technology-Based Service Encounters.” Journal of Marketing 64, no. 3 (2000): 50-64. Yen, Hsiuju Rebecca. “An Attribute-Based Model of Quality Satisfaction for Internet Self-Service Technology.” Service Industries Journal 25, no. 5 (2005): 641-659. Appendices Appendix 1: Conceptual Model of SST Trial Source: Meuter et al. (2005, 63) Appendix 2: Different Forms of SST Interfaces Source: Bitner, Ostrom, and Meuter (2002, p.99) Read More