More than a decade after the deregulation of the leading service industries, consumers are accustomed to service providers competing on price. Now consumers demand increasingly higher levels of service quality. For service companies, staying competitive in the new market environment means not only offering products at reasonable prices but also tailoring these products to meet individual customers’ needs.1
Some companies have moved quickly to take advantage of this market shift.2 Delta Dental Plan of Massachusetts, a health insurance provider, and MBNA, a credit card provider, have both used quality service delivery to transform mediocre businesses into industry leaders. Merrill Lynch, a brokerage house, and IKEA, a Sweden-based retailer active in many parts of the United States, have relied on quality-oriented service strategies to turn their companies into high-performing, competitive organizations. All four companies have redesigned their work practices to leverage information among different products and provide customers with quick, customized, price-competitive service offers. The companies have trained and empowered employees directly involved in service delivery to undertake a broad range of tasks. They have given priority to minimizing labor turnover on the theory that employees with long tenure better understand both a firm’s customers and its internal work processes and so are better able to meet individual client’s needs.
Yet these companies are the exception. Most service-sector firms have been... To read the complete article, login or sign-up using the form below.
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