Name the five types of customer-introduced variability and discuss options that
ID: 395265 • Letter: N
Question
Name the five types of customer-introduced variability and discuss options that let companies offer a high level of accommodation at low cost or reduced variability without damaging the service experience. Provide your rationale and at least one source. Name the five types of customer-introduced variability and discuss options that let companies offer a high level of accommodation at low cost or reduced variability without damaging the service experience. Provide your rationale and at least one source.Explanation / Answer
According to AMA, the five types of customer introduced variability include:
Arrival variability depends on the service ordered by the customers at convenient times which cannot be foreseen like ordering the same food menu at the same time. The request variability depends on the various requirements of the customer like the alterations and changes in insurance policies according to requirements. Capability variability depends on the task performing capacity of the customers like using an app to order products and services. Effort variability depends on the customer’s role in service delivery like telling the cab driver about a landmark place to pick them up. Subjective preference variability depends on the customer opinions about the service quality of a company.
Companies react to the above customer introduced variability’s in two primary ways wither by accommodating variability or reducing variability. Take the example of insurance companies. They have a fixed insurance policy to cater to different segments of the customers. Regarding the arrival variability, the insurance agent fixes an appointment with the customers to finalize the customer requirements and suggest a suitable policy like health insurance, accident insurance, life insurance, term insurance, money back policy, pension policy and others. When a customer wants variations (request variability), the insurance company offers riders to add the variations to the insurance policy. This makes the insurance company flexible to the customer’s requirements. Capability variability is about educating customers about the various ways to reach the insurance company to pay a premium or get other services. Effort variability is the involvement of the customer in the insurance policy premium payment throughout the insurance period. Finally, the subjective preference variability is about the positive feedback of the customer about the insurance company based on the quality services offered by the company at the insurance point or online. Most of the insurance companies adopt the accommodation strategy by putting employees responsible for compensating the customer variations. Hence the insurance agents or executives learn about their customers and make changes or persuade the customers in such a way that do not affect their own compensation. The above are some of the options taken by insurance companies to accommodate customer introduced variability without damaging service experience.
The impact of a reduction strategy attracts the price conscious customers willing to forego service for a price like choosing a low-cost airline at the risk of low service. Companies competing on low prices adopt the reduction strategy to cut costs and at the same time maintain service quality by task automation, hiring low-cost labor, creating complementary demand, targeting specific customers and establishing self-service. The above are some of the options taken by low-cost airline companies to adjust for customer introduced variability without compromising on quality service. Hence it can be summarized that adopting accommodation or reduction strategy to adjust for customer variability’s depends on the companies and their target customers.
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