Sensitizing the Service Providers to Sector Specialties: Studies in Tourism and Banking

Babu P George* Purva G. Hegde Desai** Maria Aradhana*** *Lecturer, Government College, Quepem, Goa, India. **Lecturer, Carmel College, Nuvem, Goa, India. ***Lecturer, Pondicherry University, India. Abstract: The article makes a case for the identification of sector specialties through continuous research. It highlights the variations in customer characteristics and needs, across the two sectors, banking and hospitality sector. Research conducted by the authors reveals that within service industries, which are often grouped together as having similar traits, there exist idiosyncrasies, specific to the sector and the period of time. The authors maintain that sensitizing the service providers and the frontline employees in particular to the sector specialties can lead to happier service encounters. The payoffs will be in terms of customers and employee satisfaction that translate into improved margins. Key Words: Sector Specialties, Customer characteristics in tourism and banking, India. Service Marketing: Standardization or Specialization? Historically, lessons in service marketing began with the familiar topic of differentiating between the products and services. Academicians, then, moved on to the issues of identifying the next milestones of service business or the distinctions between the services themselves. Pine and Gilmore (1998) opine that experiences have emerged as a next step in the progression of economic value. They maintain that experiences are distinct economic offerings, as different from services, as services are from goods. They have identified four landmarks in the evolution of economic offerings. Agrarian commodities gave way to industrial goods, then services emerged and now the quest, they said, was for creating experiences. Davis (1999) speaks of four categories within services; namely service factories, service stores, service shops, and service complexes. Service providers with highly routinized nature of services, such as Fast-food restaurants or car rental

firms are called service factories, whereas those performing a broader range of services like banks or hotels are named service stores. Delivery of personalized vocational or professional services like beauty salon or a lawyer would be regarded as service shop and larger conglomerates like hospitals are referred as service complexes. The present paper appreciates the subtlety of such academic classifications, but attempts to maintain that identifying individual industry traits may be of more practical relevance to the firms in the service sector, rather then categorizing and looking for generic prescriptions. Cognition of the incongruity among the industries may help to identify certain sector specific characteristics, leading to better appreciation of divergent customer demands. Even among the sectors sharing similar classifications, such as banks and hotels, there appears to be great variance in customer behaviors and employee response patterns. This awareness may help to orchestrate more sustainable customer relationships translating into improved margins. The Scope This paper attempts to outline the differences in customer characteristics and demands, along with employee responses across the two service industries, viz. banks and hotels. The authors have conducted a survey-based research on the theme of customer complaints in these two industries. The literature review coupled with field interviews and collections of critical incidents of complaints were used to generate hypotheses. The present paper describes certain findings based on the comparative evaluation of field interviews across sectors, against the backdrop of the complaint literature. The Sector Structures and Potential Amidst the turbulence of nationalization and subsequent liberalization, Indian banks have proved their mettle by striking a balance between social responsibilities and prudent Balance Sheets. Capital Adequacy Norms have ensured adequate cushions, credits to industry has been growing at around 25% a year, shedding the inertia and non performing assets are less than 3% of total loans (Business World, July 2005). The road of reforms has been cautiously crafted to suit the expected economic growth and Indian banks seem ready to take on the foreign competition. As compared to the banking sector, tourism received lesser attention of the Governing bodies after Indian independence. It was left as a State subject and thus, grew in a rather fragmented manner. From 15000 tourists in the year 1950, slowly, it reached an impressive figure

of 2.64 million in the year 2000 (Raj et al., 2005). Its claim to fame was the lucrative foreign exchange it earned (It was the second largest foreign exchange earner in the year 2003), for a nation thirsty for funds. It provided employment opportunities for growing People, especially in smaller states like Goa, which almost lived off tourism, with the tourists in a year outnumbering the local population. Despite the significance of the sectors to the economy, a striking similarity between the two could be outlined, regarding the untapped potentials. The largest Indian bank, State Bank of India had assets of just $ 91 billion as against $ 1285 billion of Mizuho Financial Group ranked 1st in the world. Indian banks could be, thus, regarded as pigmies as compared to the giant sized foreign banks with global presence. Indias bank loan to GDP ratio of 37% was far lower as compared to other developing economies like China with a ratio of 136% (Business Today, July, 2005). Same was the state of the tourism sector. Despite exquisite sites and the best monuments, India still ranked 43rd in the world. Budgetary allocation was merely 1% of GDP as compared to the global 7% and tourist paid higher taxes in India, despite our tradition of atithi devo bhav (Raj et al., 2005). The bed requirement in a tourism dominated state like Goa in the year 2006 is estimated at 39000, as against the capacity of approx. 31000 in 2001 (Jiwarajka, 2003). For both sectors, aggressive marketing and sustainable growth seemed to be the need of the hour, for improving capacity utilization. The firms could attain this by demonstrating a commitment for total customer satisfaction. The efforts could pay rich dividends in the form of customer loyalty and positive word of mouth. However, it would also require accurate discernment of customer needs and desires. An insight into the customer characteristics could provide clues to the frontline personnel to fulfill their expectations. The present paper delves into such intricacies, which may help to fine tune the service delivery in these sectors. The Content Analyses of the Research Findings The authors conducted In-depth interviews of fifteen managers each, of different hotels and bank branches in Goa. Around thirty critical complaint incidents from each sector were also collected. The content analyses of the above, with reference to the literature, revealed the following characteristics of the customers: 1. Andreasen and Manning (1990) have identified vulnerable customers as those who are at a disadvantage in exchange relationships, where that disadvantage is attributable to

characteristics that are largely not controllable by them, at the time of the transaction. Their definition included children, the elderly, the uneducated, the structurally poor, the physically handicapped, ethnic and racial minorities and those with language problems. Tourists as customers would largely fit into this category of vulnerable customers having language differences coupled with cultural and social variations, whereas, the customers in the banking sector have better understanding and more control over the interactions and transactions. As such, the role of frontline personnel in building trust and confidence through soothing interactions is more emphasized in the tourism sector. (See Appendix 1, (a)). The customers in the banking sector could settle for courteous, attentive and quick service. 2. Vulnerability of the tourists led to a greater dependence of the potential customers on the Word of Mouth. The potential tourists from other places relied on the first hand information gathered from fellow tourists, after they were back at the place of domicile. Hence, the exponential effect of the Word of Mouth, either positive or negative, on the image of the whole industry, may be much larger in tourism than the banking sector. Tourists may hold the failed firm to be representative of the place or the industry and the repercussions of failed encounters may be disproportionately harsh. For example, if one taxi owner cheated the tourists, they may label taxi drivers of the place, in general, as cheaters. Each player in the tourism sector has, therefore, a much larger responsibility in dealing with the tourists, of protecting the corporate image. In comparison, failed encounters in banks are more likely to malign a particular branch or bank and not the whole sector. 3. In most service sectors, the positive confirmations of the expectations over a period would lead to customer satisfaction (Erevelles and Leavitt, 1992) and may develop loyalty to the service provider. The authors observed that the customers in the banking industry badly wanted quick and reliable service at the routine transactions (See Appendix 2) rather than the exotic offers for new products such as investment consultancies. The expectations of the tourists, in contrast, escalated with every trip, seeking certain novelties in each repeat purchase. Predominance of novelty seeking behavior is often observed among the tourists. Hence, the need for constant innovations may be a critical requirement for gaining customer loyalty in the tourism sector. 4. As researched by Smith et al. (1999), in case of the restaurant business, service delivery may be more important to the customers than the outcomes. The process failure may lead to more

dissatisfaction than the outcome failures. In specific terms, visit to one more place at the destination may not be so important as a courteous escort at other spots, providing due guidance and care at the places visited. In the banking industry, however, the customers regarded outcomes as significant as the process, since money was the essential component of service delivery and the slightest lethargy resulting in any monetary contingencies would not be tolerated. 5. With the hope of having the winning edge in customer satisfaction, the firms in the hospitality sector invest heavily in interactive software packages like CRM (Customer Relationship Management). The technology does provide information on customer preferences. However, the incremental margins would depend on the effective translation of this information into Customer Experience Management (Thusy and Morris, 2005). Thus, while a bank can earn immediate returns on investment on installation of ATMs at the branches, the tourism sector may need to design subtle yet attractive service improvements, to justify the investment in technology. 6. The seasonal nature of the tourism industry often resulted in a large proportion of floating and casual employees, who had little loyalty to the firm. Employees who feel "trapped" and disgruntled about an organization may well express themselves through poor customer service or, even bad-mouthing the organization to customers (Grisaffe and Information, 2000). The phenomenon manifests itself very often, during peak seasons in the hospitality industry. Comparatively, the banks are able to train and retain their workforce more effectively due to more stability and lesser employee turnover. 7. The scope for market segmentation seems limited in the banking sector, which has to balance multiple objectives. Chasing better margins and bigger interest spreads seems to contrast with some of the Govt. imposed norms like Priority Sector loans or crop loans at low interest rates. Should they strive for profitability and chase wealthy landlords or should they spend time with the villager who needs help filling up banking forms? These are some of the questions for which they are still groping for an answer. (Hegde Desai, 2003). The leveraging is often a tightrope walk with no clear focus to employees (See Appendix 1, (b)), who must serve the poor and the rich, alike. The hospitality sector, however, often has a clear perspective about their preferred and not-so-welcome segments. Many hotels favored domestic tourists and others had a penchant for serving foreigners (See Appendix 1, (c)). The distinction between the

mass and the class categories was glaringly apparent in the hospitality sector. Conclusions and Managerial Implications Both the sectors, the banking and the hospitality sector, are currently on the verge of mergers, for attaining expansion and better global presence. Interstate alliances among tour operators are growing, as also the mergers in the banking sector. In this environment, the comprehension of the sector traits can have favorable implications on the areas of customer relationship management and the preceding human resource management. The awareness can sensitize the managers and the frontline personnel about the customer desires and result in improved service encounters. It would result in a win-win situation by creating a sense of satisfaction among the employees as well as customers. We emphasize that memorable experience for the customers can be created only with a continuous search and re-search into the customer psyche in each sector, rather than placing reliance on generic exploration and mass marketing strategies. This could lead to a sustainable growth of the sectors and could channelize the resources into the most expedient areas. Unearthing the sector nuances could help the firms to think global and act local, in order to tap their potentials in the global village. It could help project the brand image of India as an inviting destination for the investors and the tourists alike. Appendix 1: Excerpts from Interviews (a) Instances of Vulnerability of Customers in Tourism: Some guests are ill, and due to the new place and unfamiliar surroundings, are insecure. They demand to be taken to a doctor immediately, even though it may be in the dead of the night. Likewise, some guests are nervous wrecks they get so excited if what they want is not done immediately, that the hotel staff has to give them a lot of assurance to cool them down. Ms. Alita told of an old lady who wanted her railway ticket to be confirmed. Though the staff was trying hard to contact the railway authorities over the phone, it was almost impossible, as the phone was constantly engaged. In the meantime, the guest got so anxious that she said to book her ticket by plane. The staff member asked her to wait for some time and if it wasnt really possible to get the confirmation, she promised her that she would get her a plane ticket. The lady was on pins and thorns and wouldnt sit still. After some time, on a last try, the staff member managed to get her the confirmation of her ticket and the guest was relieved and happy.

(b) An Instance of Lack of focus for the Employees in the Banking: In Goa, the Government introduced a social security scheme where the old, the disabled are disbursed a monthly sum of Rs.500/- through banks. The Customers complained that the bank branches are hesitant to open such accounts, which would only operate for withdrawal of the sum and would be in no position to either maintain minimum balance or pay the fine. (c) An Instance of Segmentation in the Hospitality Sector It is a policy of the hotel that they dont accept foreigners unless they are recommended by someone known to the hotel. Once a foreigner turned round and told the manager, Mr. Dias that he had no right to tell him to go away. Mr. Dias showed him the board that said, Rights of admission reserved. The rates of the hotel are such that foreigners would not appreciate them, feels Mr. Dias. According to him, the foreigners usually bring trouble. If they are robbed at the beach, the hotel is targeted. Usually the foreigners are used to Indians bowing down to them, but here that is not done. They are simply told, We are not catering to you. The charters bring in the lower category of tourists who hardly pay around Rs.200/- for their stay with breakfast and dinner. According to Mr. Dias, the backpackers are the worst customers who pay the least but demand the maximum because they have come to a thirdworld country. Therefore they have a policy not to cater to them. Appendix 2: Routine Complaints in Banking 1. Keshav had been the customer of a bank branch for many years. He went to the branch with his wife to open a recurring deposit account in her name. The clerk who usually did the work was absent and another clerk of another department was asked to open the account. Being busy, she asked customer to wait and started the work of opening the account only after ten minutes. After twenty minutes when his work was still not done, Mr. Keshav entered the branch manager's cabin quite disturbed and complained that it was bad to ask the customer to keep waiting. 2. Mr. Naik, a wealthy businessman, had an overdraft account with a bank branch. The conduct of the account had been quite satisfactory. One day he asked for an increase in the overdraft limit by one lakh rupees. He said he would furnish the necessary security and asked the officer in charge what documents would be needed. The officer briefed him about the necessary documents. After two days, Mr. Naik went to the branch with the documents and asked the manager to sanction the additional limit. The manager found that he needed one more

document, which wasn't mentioned to Mr. Naik by the officer. He requested Mr. Naik to produce the document before he could sanction the additional overdraft limit. Mr. Naik looked upset and said that he wanted the limit sanctioned on the same day. References 1. Andreasen, Alan R.and Jean Manning (1990), The Dissatisfaction and Complaining Behavior of Vulnerable Customers, Journal of Consumer Satisfaction, Dissatisfaction & Complaining Behavior, 1990, Vol. 3, 12-20. 2. Davis, Tim R. V. (1999), Different Service Firms, Different Core Competencies, Business Horizons, September-October, 1999, 23-33. 3. Erevelles, Sunil and Clark Leavitt (1992), A Comparison of Current Models of Consumer Satisfaction/Dissatisfaction, Journal of Consumer Satisfaction, Dissatisfaction & Complaining Behavior, 1992, Vol. 5, 4-114. 4. Doug Grisaffe, Walker Information, (2000), Putting Customer Satisfaction in its place: Broader Organizational Research Perspectives versus Measurement Myopia, Journal of Consumer Satisfaction, Dissatisfaction and Complaining Behavior, volume 13, 2000, 1-16. 5. Hegde Desai Purva G. (2003), Faulty HR and Banking Chaos, Indian Management, September 2003, Vol. 42, Issue 9, 46-48 6. Jiwarajka, Sushil (2003), Infrastructure Needs for Goa Tourism, Publication of Goa Tourism Meet, October 6-8, 2003 organized by the Goa Chamber of Commerce and Industry, in association with Govt. of Goa, FICCI western region and Travel and Tourism Association of Goa. 7. Pine and Gilmore (1998), Welcome to the Experience Economy, Harvard Business Review, July-August 1998, 97-105. 8. Raj, Aparna, Parul Parihar and Santosh K. Upadhyay (2005), Indian Tourism: Issues, Challenges and Outlook, in Advancements in Tourism Theory and Practice, Perspectives from India, edited by B. P. George and Sampad Kumar Swain, 2005, 92-113. 9. Smith, Amy K., Ruth N. Bolton and Janet Wagner (1999), A Model of Customer Satisfaction with Service Encounters Involving Failure and Recovery, Journal of Marketing Research, August 1999, Vol. XXXVI, 356-372. 10. The Banking Survey, Business Today, July 4th 2005, 26-38. 11. Thusy, Alexandra and Langdon Morris (2005), From CRM to Experience Management, Indian Management, January 2005, Vol.44, Issue1, 46-50.