Now let's move to the next characteristic which is called intangibility. This refers to the fact that customers can't touch service products before, during, or after their purchase for goods. For example, for a car. What are the things you can do before you make the decision of purchase? You can even go and take the car out for a day and drive around and feel the car entirely and then decide whether you really like this car or not and decide whether you're going to buy it or not. But for services, it's not the case. And therefore, customers tend to be very, very nervous about their purchase decisions. Think about it. When you go to a doctor's office, for the healthcare services? How much do you really know about how good the doctor is? We probably know little bit about through the word of mouth. Or we don't really know until we experience it. And think about hotels. Let's say you want to have your family vacation in Hawaii which a thousand miles away for me. How would you know how good the services will be at the hotel? Yes you can see some pictures on the website and you can read some customer comments but that doesn't really give the whole picture about the hotel service. So, what can happen so that person don't have to suffer from this uncertainty? So there are marketing challenges associated with intangibility. Again I [INAUDIBLE] two of them. One is preempting demand through assurance. And the other one is managing word-of-mouth. Preempting demands through assurance can be done in many ways, but I will introduce one way that is being commonly used in the service industry. It is something called 100% satisfaction guarantee. >> So, the business is guaranteeing to customers, what are they guaranteeing? Not like a particular amount of time it's going to take for services. They are guaranteeing satisfaction. Wow, satisfaction. Satisfaction is something very subjective and only you as a customer know whether you are satisfied or not. And look how much of that they are guaranteeing. They are guaranteeing your satisfaction 100%. Not 99% or 99.9%. And therefore if you say, I'm not 100% satisfied. They have to give you your money back. This is something feasible? Yes, because there are companies that are actually practicing this, or have been practicing this for a long time. Once I was an assistant general manager of a hotel brand called the Hampton Inn. So you can see that I have done various jobs before I became a professor. So, Hampton Inn offers 100% satisfaction guarantee. So how does it work? I sometimes used to work at the front desk as well. So a customer approaches the front desk in order to check out. And the first thing the front desk person should say to the customer is, of course, good morning. So we say good morning, and the next thing we should always say is that, are you 100% satisfied? And if the customer shows any sign of hesitation or says no, then the next thing we should say immediately is we are very sorry. We apologize, and we give them money back. If they paid with a check, we give them the check back. If they paid with a credit card, we'll give the credit card in a slip. If they paid with cash, we give them money back. Wow, amazing, isn't it? So, does it work? It certainly does work. This 100% satisfcation guarantee program was actually recommended by a group of professors at Harvard Business School. And they have said that yes as a result of doing this, there will be some abusers. Some customers will abuse. But in return there's so many customers who will. Come to you just because of this. If you think about it, when the brand came to the economy scale market, there were already many other brands that had established themselves very well, and the economy scale market of the industry was already pretty saturated. So, what could [INAUDIBLE] do in order to penetrate to the market and gain their market share? And the professors have recommended this will certainly help them get there, and indeed it worked. As a customer, there's nothing to lose. Nothing to lose. And therefore they will come and try. And as a front-desk person, I have experienced the case where customer did hesitate, so I tried to give their money back. And they said no, no, no, no, I do not want money back. I just wanted to let you know where you could improve even further. And therefore as a result, Hampton Inn got lots of customer feedback for improvement. And those customers who gave the feedback felt a little bit of ownership with the brand. That's how the satisfaction grew and grew. It was a very successful program. In the meantime let's think about it from the employee's perspective. If you are for example a housekeeper, would you like to work for a hotel that does guarantee customer satisfaction 100%? That means that if you make a slight mistake, which is never intended, I don't know. As you finish the cleaning the room and leave the room, let's say your hair fell. What would happen? The person who checks into the room and discovers the hair. And the person could totally evoke this 100% satisfaction guarantee for that piece of hair. So you as the housekeeper and you as the executive housekeeper has to be perfect. Otherwise it will cost the hotel a one night's hotel room. So it sounds pretty stressful, doesn't it? But in reality, it creates totally opposite effect. I talk to my housekeepers and I ask them, isn't it too hard? And they said, no, I would rather work for a hotel that offers 100% satisfaction guarantee. Meaning? Pursues perfection than working for another type of hotel. And I said, why? And they said, indeed they get lots of phone calls from other brand hotels because they know our housekeepers are good. And they say, but I still don't go the other hotel because I would rather enjoy this pride of working for this hotel that pursues perfection and I am that good as well. I would rather have that pride than getting paid a few more cents an hour. So if you want to learn more about it, there are some very well written papers on 100% satisfaction guarantee, read it, but it is a very successful program. Now let's talk about the next challenge. The next challenge is managing word-of-mouth. So, since customers are not sure about what they're getting because services are intangible, they tend to rely a lot on word-of-mouth. And therefore, you know as service managers you have to really make sure the right words of mouth aren't going around in the marketplace. These days with the increasing power of the social media, service managers have a lot of work to do. They have to really actively manage this word-of-mouth on this social media as well.
