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 Learning Objectives
At the end of this chapteri the students should be able to:
. understand the role of customers in service delivery and co-creation of service
experiences;
. differentiate and learn the concept of self-service technology and customer
participation in the delivery of service;and
. identify the different strategies involving customers to increase satisfaction,
quality, value, and productivity.

Reality Bites

Dampo is a restaurant complex made popular because of the unique way on

how the restaurants in the area serve their customers.This complex usually incudes
a wet and dry market, rows of restaurants, parking spaces, and other amenities.
Diners are instructed to proceed to the market and buy or shop the fresh produce
that they intend to eat. Usually, the wet market vendors sell freshly caught seafoods,
including shrimps, crabs, oysters, fish, and others. Meat, poultry, and vegetables are
also available. Once done with the market,the restaurant crew will offer to cook the
goods that were bought from the market for a fee. Customers can choose how they
want the food to be cooked.This experience would guarantee that the produce
bought from the market will be immediately prepared and served to the customers.
This concept started with the simple wet market to the cook of the cafeteria
practice until it has evolved into high-end restaurants offering prized seafood catch.
Based on this case, what were the roles played by an organization and by
customers?What led to the success of this type of business model?What are the
strategies that can be applied to further increase customer satisfaction and service
value? ls it possible that this can be applied in other businesses? How?

110 Quality Service Management in Tourism and Hospitality

Content
Customerts Role in Value Co-creation
Customer involvement in service innovation provides benefits for firms through
the co-creation of value. For example, value co-creation (e.g., meet customers' needs
and help customers to get more value) is critical for enhancing firm value, and it also
provides competitive advantages (Wu, Lin, &Yu, 2019).

Customers, although unaware, play important roles in value co-creation and

service delivery. Authors and scholars have different ways of defining value co-
creation.yolue co-ueation is loosely defined as a collaboration between an organization
and its customers to deliver or create the service that would be acceptable to the
latter.The joint undertaking is expected to create new ideas, to improve products,
and to better services.The whole process of service delivery is still managed by the
organization, but the customer plays an important part in realizing the result.
When customeri feel empowered, with passion and a sense of ownership of
the offering, they are willing to contribute extensively for the benefit of the firm and
the broader service system. Further: engaged customers impact other stakeholders'
willingness to engage with the focal firm and thereby offer a valuable channel to new
customer and stakeholder relationsh ips fl aakkola & Alexande r, 70 I 4\.
The customers' role in the co-creation of value should not be frowned
uPon or viewed as an opportunity for organizations to take advantage in terms of
reducing costs of operation. Customers role is viewed as partnership wherein the i

insights relayed by the clients become valuable inputs in improving the services. !
i
;,
Further, in the creation of value, both customers and service organizations develop
I
a collaborative relationship which creates benefit for both. Co-creation of value is I

i
a two-way road where expectations and objectives from two parties may not be i
I

on the same direction.The expectations from either the customers and the service ii
i

organizations can be in contrast. But this could lead to a development of a process ,i

that is mutually beneficial. Similar to a highway, the direction that the customer wants rl

is to get the type of service he/she prefers and the organization profits by satisfying
the clients' requirements and needs. lt is very important that value co-creation
should be sourced from both sides of stakeholders. lnputs should be derived from
all stakeholders in order to create a service acceptable to all.
The following are the three major roles played by customers in service co-
creation and delivery: customers as extended employees;customers as proponents
to quality of service; and customers as competitors.

Chapter 8 | Co-creation of Quality Service 111

 I. Customers os Extended Employees

Among service-oriented organ izations, customers are signifi cant part

of the organization's ability to deliver service. Oftentimes, customers are
participants in the production process of services by means of contributing
time, effort, and even resources. Fruit farm resorts allow their clients to
pick and collect farm products they want within the premises and have
these appraised, packed, and billed upon checkout. ln this way customers
are able to get their choice produce, and the farms need not provide staff
to attend to every customer's needs.
The inputs of clients can alter the organization's productivity through
the quality and quantity of products created.The sales of fruit farm resorts
will depend on the customers actions while picking fruits. Some would
take their time, enjoy, and thoroughly choose which fruits to take. Others
would be very efficient and choose only those that they consider as the
best fruit on that day. Still, some would only be picking those that they can
easily gather.The resort will contend itself as to what the customers can
gather during the day.
Since customers' involvement in the production process affects
the quality and quantity of production, there are different points of view
emanating from this method. First, some experts believe that this could
be a cause of uncertainty wherein the demands, attitudes, and actions
of customers may affect productivity. ln order to maximize efficiency in
production,customers need notget involved in activities that do not require
their participation. On the contrary the second point of view believes
that if customers are treated as "part employees" of the organization and
their roles are designed to maximize their contribution, then services can
be rendered more efficiently.When customers are properly guided and

11 2 Quality Service Management in Tourism and Hospitality

 oriented on the tasl<s, they tend to perform their part productively and
effectively.

Many organizations are shifting to this style of service delivery not

only to increase productivity, but due to cost benefit as well. However-, if
customers do not see any clear benefit from being part of coproducing
the service, they will likely resist or do not participate in the process.
Customers os Proponents to Quotity of Service
some customers may not be aware of the impacts of their contribution
to the creation of service.The primary objective of customers is to have
their needs met by the service organization. lf the customer participation
has been effectively designed, then it is likely that the needs of the
customers will be met and the benefits would be attained.These services
would be realized based on the satisfaction and expected results required
by customers no less. ln essence, the customers share in delivering their
own satisfaction and value for services.

often, customers' reactions to service delivery, including raising

questions on the process, complaining during service failures, and owning
accountability to achieve satisfaction, can contribute in the delivery of
quality service.
3. Customers os Competitors

This role of service customers suggests that customers can be the

competitors of the service organizations. lf the customers realize that
they can perform the required service whether partially or entirely then
the service provider may not be needed at all. ln this way, the customer
performs the tasks on his/her own and lets go of the service provider.

Chapter 8 | Co-creation of Quality Service 113

 ln cases concerning organizations as customers, they may decide to
hire outsourced services and to develop or create an in-house team to
perform required tasks. For example, a hotel may decide to end their
partnership with a catering organization and to form a team of chefs to
prepare the food requirements of the establishment.

ln cases where organizations decide to produce a service by itself,

they should consider several factors such as: expertise and capacity of
the firm to perform tasks efficiently;availability of resources within reach;
ability to produce the service on a timely manner; financial costs of
producing the service; psychological rewards (satisfaction, enioyment, and
contentment);and ability to control the process and outcome.

Self-service Technology (SST)

Self-service technology is an innovation in providing service outPuts created
exclusively by customers without interaction or engagement with the employees of
service organizations.

Selfservice technology is defined as "technological interfaces that enable

customers to produce a service independent of direct service employee involvement"
(Meuter, Ostrom, Roundtree, & Bitner, 2000; Considine & Cormican, 2016). Self-
service technology (SST) adoption has been cited by businesses as a critical element
in controlling costs and improving customer experience (Considine & Cormican,
20 I 6).

Through the introduction of

technology-based self-service channels,
customers have become "active
participants" rather than a "passive
audience" in service delivery (Prahalad
& Ramaswamy,2000) as cited by Scherer,
Wi.inderlich &Wangenheim (20 I 5). Both
business practice and research highlight
the benefits of technology-based self-
service channels, such as an increased
operational performance and reduced
costs (e.g., Ba et al., 2010; Kumar &
Telang, 2012; Schultze & Orlikowski
2004;Scherer et al., 2015).

11 4 Quality Service Management in Tourism and Hospitality

 ln the hospitarity and tourism
industry, the advancement
onset of lndustrial Revolution of technorogy and the
4'0 have made self-service technotogies
Different organizations from the proriferate.
different sectors of the tourism
the advantages of these advances, industry saw
inciuaing savings o, inu costs
of operations, growth on sares, increased and efficiencies
advantage.The foilowing
.uraor-", satisfaction, and competitive
is a partiar rist of some of
,"rf_r".ri." technorogies:
the
l. Automated teller machines of
banks
2. Automated and interactive voice
response phone systems
3. Airline reservation and check_in
4. Airport reception and information
kiosks
5. Automated and ontine gambling
or betting machines
6. Food ordering and delivery
7. Hotel reservation, check-in, and
checkout
8. Electronic blood pressure machines
9. Smart watches and gadgets
monitoring health conditions
t0. Self-scanning (price scanner)
at groceries and retait stores
il. lnternet banking
t2. Package and money transfer
tracking
t3. Online shopping
t4. Online training and education
t5. Online applications f,-

.{
{
:
The use of SST became popular
due to some reasons. organizations
that when they transfer from berieve
manuar service to technorogy-based
could save more from personat process, they
service. rf communi."a"J pr"perry
method would most tikely succeed. to customers, the
Some organizations use SSTs
customer demand' crients in order to meet
tend to rook for irforr.tion,
lnternet' onrine purchases, ,"rri."r, and products via
deriveries,lnd transaction, ,r"
because of the convenience u"ry popurar nowadays
and ease of doing urrin"rr.
have online access can be o.grnizations that do not
considered at a disadvantage against its
competitors.

Chapter 8 | Co-creation of
euality Service 11S
 Advantages and Disadvantages of Using SSTs

Figure 8. l. Advantages and Disadvantages of SST

Service organizations must understand that customers do not automatically

accePt or embrace changes in procedures of doing business even when these are
considered as upgrades or for better transactions. Further: the benefits that SSTs
provide should be felt by both the organizations and customers. Different kinds of
customers have different skills of adapting to changes and even receptiveness to new
technology.When implementing SSTs, organizations should consider the following
advantages and disadvantages when introducing it. The most common advantages
are as follows:

I . Convenience. lf the organizations can provide access to their services at the

most convenient time, location, or way, there is a guarantee that this will
be well-recei'ied. Convenience may include ease of use, faster transactions,
24-hour service, and presence in strategic areas. Customers will enjoy
access to SSTs where they have the ability to pay bills anytime of the day
and through simple use of cellphones from anywhere in the country.

2. Control.Customers prefer organizations that could provide them options

where they can easily make decisions, monitor the progress of their
transactions (forwarding organizations provide global positioning system
or GPS tracking), or personalize the service offered (banks, hotels,
and restaurants readily provide the usual preferences of their regular
customers).

116 Quality Service Management in Tourism and Hospitality

 3. Less Cost. Customers are not just looking for cheaper prices, but also value
for m6ney. lf an organization can provide customers with the same quality
of service at a lower cost, the organization would most likely be the
choice. At present conditions, most customers are looking for possible
transactions that can provide them with alternatives that could minimize
costs and yield better returns.
4. Efficiency. Many customers who have availed of SST-aided transactions will
agree that it is faster to transact business because of the accurac), of data
and uniform process undertaken do not vary from time to time. Also,
users get detailed information and complete transactions faster than they
could through face-to-face encounters or telephone contact (Wirtz &
Lovelock, 2018).
on the other hand, SSTs have disadvantages as well, which are as follows:

l. Mochine FailurelBreokdown. Since services are mostly assisted by machines, it is

not remote that something might happen along the way. lt may be frustraring
for customers when, as least expected, the machine breaks down resulting in
becoming offline, not properly dispensing goods, access is rejected, or simply
is not issuing receipts. Since expectation of convenience is high among these
SSTs, failures to deliver may often result in frustration more than those in
normal process.

2. Poor Desrgn/Not User-friendly. Machines are sometimes difficultto use. Sometimes,

the process is complicated, elaborate, and fixed (no flexible alternative), and it
takes several tries to get the transaction or registration process completed.ln
these scenarios, customers would prefer personal transactions with company
rePresentatives.

Chapter 8 | Co-creation of Quality Service 117

 3. Most of the time, only the options that are included in the
Limited Options.
menu page can be transacted successfully. Personal needs'or customized
'requirements cannot be accommodated and processed. Questions beyond the
usual procedures cannot be processed outright. Personal touch of service is
eliminated.
SST may be unsuccessful when customers see that they do not benefit
from it, nor customers feel that the ability to use the system is futile.Worst,
customers tend to shy away from SST that do not properly inform them how
to use the system. According to the study conducted by lda (2017),the service
users'activity in a value creation affects customers'value of the service.The
activity and attitude of individuals related to performance of an extra-role
in service interaction are less favorable than the required in-role behavior.
Further;the level of involvement influences the customers' mandatory behavior
and volunteer behavior when working on a co-creation value.

The demand for support is also important when considering investment in

SST because if demand is low, the most cost-effective option is to continue with the
traditional support representatives (Considine & Cormican, 2016).
Management should ensure that each customer segment is addressed
appropriately. That is, managers should pay close attention to what type of tasks
different customer segments are willing to perform by themselves (i.e., via self-
service, see Campbell et al., 201 l; Scherer et al., 2015).

It is important for managers to understand how customers experience their

relationship with a provider through a variety of channels and over time. Rather
than optimizing individual service channels in terms of service quality or service
productivity, service providers should concentrate on a more holistic view of a
customer's service experience in a multichannel setting and the unique value-
in-context customers can derive from each channel over the duration of their
relationship with the firm (Scherer et a1.,.2015).

Guest lnvolvement' ond Customer Porticipotion

The design and scope of customer participation in delivering the service affect
the organization's productivity, the quality of service it renders, level of customer
satisfaction, and competitiveness against its rivals. Hence, the oblective of customer
participation is to enhance the organization's productivity and increase the level of
customer satisfaction and encourage efficient use of the system by customers.
ln a study conducted by Shamim and Ghazali (2014), customer return on
investment, service excellence, aesthetic value, and playfulness are few of the
important factors in retailing which can significantly develop customers' participation
'l 'l
$ Quality Service Management in Tourism and Hospitality
 and citizenship behavior toward
value co-creation. social inftuence
compliance, internarization, in the form of
and identification ."n ,ignin.rnaly
in further shaping customer pray moderating rores
value co_creation behavior.

Determine the RoIe of the

Customer
Service-oriented organizations
should identif the tevel of
customers during the formuration participation
of strategies. Different types of services of
require different levels of customer may
participation. purchase
only require minimal participation of food or groceries
iro, clients; whereas, purchase of airline may
or hotel booking may ask for inputs ticket
about customers, profire and
some cases' Sreater preferences. rn
ParticiPation in co-creating the service is
reduction programs, online needed such as weight
education, ot. .orp"aency
training.

decide on the extent of customer

., ,"r"ri.tL1?jions participation on the delivery
customerp,..i.i;;::'['*',f"[?J::,f;ilff
the level of participation shourd :,:il;i"H".ffi *.:U::
be based on the irpra on
customers' lf increased participation both organizations and
is required by customers
and to amplify service outcomes,
to enhance their revel
,o.*jf,f"ion then organizations must take
this
After the rever. of participation
organization may outrine the
of customer has been determined,
tasks and rores of the customers. the
The most common task performed
by .rr,oru^ is to provide
or resources formerly performed information
by employees. With th
of customers, employees are
point, customers perform ,"#" l:H:,,:TTiolT:
eased out from tasks in

rorother.rr.or!rr.rheset"rrcr,uppl:til;:T'r:?fi t:r:ll"r;:JSITITfJ:*:
tasks in the o

others who are not yet familiar ii

with the system. New clubhouse li
members who are il

j
Chapter 8 | Co-creation of
euality Service 11g
I
I

i
 unfamiliar with the policies and procedures are oriented by seasoned members to
make them feel welcome. Customers of theme parks help each other by sharing
how best to enjoy the different attractions and amenities of the park. ln doing
these, customers are somehow helping the company heighten the level of customer
satisfaction and loyalty.

Customers also perform promotional activities for organizations. The

recommendations or good reviews shared by some customers to their fellow
customers are ways of putting customers as promoters or salespeople for the
company. Some customers either lookfor referrals orword-of-mouth endorsements
in deciding which restaurant, catering group, or events management organization to
choose.

Find, lnform, ond Reword the Rrght Customers

After the tasks of customers have been defined, the organization can start
enabling the role.The customers would be considered as partial employees of the
organization, and at some point, the organization must come up with strategies to
make their efforts worthwhile.

First, the organization must be able to attract the right customers to fill the
roles.These roles to be performed by customers should be clearly communicated
by the organization through promotions and marketing.

Second, customers need to be informed or educated so that they perform

their roles properly. Educating the customers can be in different ways, including
orientation programs, information collaterals, interactive demo materials, and
sharing of feedbacks from employees and other customers. With proper learning,
the customers can have a better appreciation of the company, understand what is
expected of them, and learn the skills and knowledge necessary to interact with
fellow clients of the organization.
And finally, customers would perform tasks effectively and activeb/ if they are
rewarded for their efforts. When customers feel that they are appreciated and their
efforts are reciprocated, they would be valuable assets of the organization. Rewards
for customers may come in different forms, such as better access and control in the
Process, rebates and monetary rewards, ease and speed of transaction, product or
material rewards, and recognition or citations.

Manoge the Customer Segments

Service organizations cater to different market segments.These segments have
different types of needs and characters.These differences may either complement or
contradict each other which would lead to customer dissatisfaction. Supermarkets
'l pQ Quality Service Management inTourism and Hospitality
 t-i]
E:
,t:
tl
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FJ
E,i
,t .i
and groceries answer to shoppers of different types;some are buying for personal ti
riS
a-

consumption;others are for families;and some for groups or establishments. With iiH
!t+
these, checkout counters are provided for small quantity shoppers, separate from tiE
the bulk buyers to avoid long queues for both types of customers and avoid long
waiting time for express shoppers.This situation is related to the concept known as
compatibility management.Compotibility management is the process of managing the
encounters or interactions and space requirements of severa.l market segments in /
order to maintain customer satisfaction and avoid customer flight.

,...}

Hffii i
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There are several strategies suggested to manage multiple segments catered

to by an organization. An organization can target particular groups of customers
by positioning itself and segmenting the particular group of customers. Another
strategy is to group together compatible market segments in order to avoid conflict
with each other. Some hotels target corporate functions and business people events
in one place and separate the areas for functions that include banquets or parties.
Some organizations may opt to impose proper customer decorum such as dress
code or code of conducts to minimize customer dissent. Lastly, organizations may
deploy employees that are trained to observe customer interactions and anticipate
potential conflicts.The employees may take the role of catalysts to foster pleasant
encounters among different types of customers.
Note: Not one strategy may apply to all types of customers.The success of each
would depend on how the customers would be able to appreciate the value of the
services rendered to them. Hospitality organizations are free to choose the styles
that would cater the most to their clients. At times, customers dictate what would

Chapter 8 | Co-creation of Quality Service 121

 most likely be the best way to provide service to them. Essentially, organizations
and customers woultl meet at the point where both would benefit.ln some cases,
each would need to compromise. As service providers, organizations need to be
sensitive to customers' needs, and in return, these organizations would most likely
reap the reward when customers are satisfied.

Discussion Questions
l. Discuss the general importance of customers in the successful creation and
delivery of service experiences.
2. Why might customer actions and attitudes cause the service performance gap
' to occur?
3. Discuss the customer's role as a productive resource for the organization.
4. Discuss the cust,omer's role as a contributor to service quality and satisfaction.

5. Discuss the customer's role as a potential competitor.

Experiential Exerci ses

How are utilities paid nowadays? lf you have not experienced paying utility
bills yet, go with your parents and observe how payments are transacted nbwadays.
lnterview your parents as well on how they pay bills l0 or t5 years ago. ls there
any difference in the process? Which do you think is more convenient? Which
involves more action from the payee? What do you think are the advantages and
disadvantages of each?

122 Quality Service Management in Tourism and Hospitality