According to Asian Development Bank (ADB) Report (2002:73) states that ‘LOLC was established in March 1980 as a joint venture leasing company between International Finance Corporation, Orient Leasing Company of Japan (Orix), National Development Bank of Sri Lanka, Bank of Ceylon, and Development Finance Corporation of Ceylon.’

 

The ADB Report (2002:74) states that ‘All leases financed under the Fourth Development Finance Loan Project were implemented on time, within the estimated costs, and completed successfully.’ This shows that from the beginning itself LOLC was focused on the primary goal of providing leasing facilities to customers.

 

前景，使命及價值---VISION, MISSION AND VALUES
 

PRODUCT
 

According to Lovelock and Wright (2002:14) the product of a service providing institution would be the “core product and the bundle of supplementary service elements surrounding it, with benefits desired by customers and how well competing products performing”.

 

PRODUCT PORTFOLIO

 

Source: Authors’ work based on LOLC Corporate Website (2010)

 

CORE SERVICE

 

LOLC according to LOLC Corporate Website (2010) is committed to being “the most preferred financial solutions provider”. Therefore, LOLC’s core product is the provision of high-quality leasing services to customers.

 

LOLC provides

 

According to LOLC Corporate Website (2010) the finance lease product range includes “Structured Leases, Residual Value Leases, Insurance Factored Leases, Tax Based Leases, and Lease Packages offered jointly with vehicle vendors”.

 

According to LOLC Corporate Website (2010) “Ijarah (Islamic leasing) is available for Un-registered vehicles, Plant, Equipment, Machinery and Property”.

 

SUPPLEMENTARY SERVICE ELEMENTS

 

Supplementary services according to Lovelock Website (2010:86) “augment the core product by facilitating its use and enhancing its value and appeal”. The authors have decided to employ the ‘Flower of Service’ concept which better analyses the supplementary services provided by LOLC (Lovelock Website, 2010).

 

Key

 

Facilitating elements

 

Enhancing elements

 

Source: Lovelock Website (2010:88)

 

‘Flower of Service’ concept applied to LOLC

 

Core Service

 

Leasing

 

PETAL – FACILITATING SERVICES

 

Information

 

Company web site provides vital information on directions to service factories, conditions of service etc.

 

Order taking

 

Must be done through written applications where LOLC will either accept or decline.

 

Billing

 

Customers receive periodic and verbal statements of amount due.

 

Payment

 

Customers may mail a cheque or pay in cash.

 

PETAL – ENHANCING SERVICES

 

Consultation

 

Before the customer is sure to begin the leasing process advisory services are provided.

 

Hospitality

 

LOLC branches have good washing facilities, waiting rooms and newspapers to read during waiting times.

 

Safekeeping

 

LOLC branches have good parking arrangements and security personnel.

 

Exceptions

 

Operates a complaints, compliments and suggestions system

 

Source: Authors’ work based on the information received from the interview

 

LOLC has a wide range of supplementary services and as a result can better satisfy and retain customers.

 

SERVICE DESIGN AND SERVICE BLUEPRINT

 

According to Lovelock and Wright (2002:153) service design is “a complex task that requires an understanding of how the core and supplementary services are combined to create a product offering that meets the needs of target customers”.

 

According to Johannes Schott (2009) a service blueprint “describes a service in enough detail to implement and maintain it carefully.”

 

SERVICE BLUEPRINT FOR LOLC

 

PHYSICAL EVIDENCE

 

CUSTOMER ACTIONS LINE OF INTERACTION

 

ONSTAGE/VISIBLE CONTACT EMPLOYEE ACTIONS LINE OF VISIBILITY

 

PARKING FACILITY

 

LOBBY

 

RECEPTIONIST

 

EMPLOYEES

 

WAITING ROOMS

 

PAPERWORK

 

WASHROOM FACILITY

 

EMPLOYEES

 

PARKING FACILITY

 

WEBSITE

 

BACKSTAGE/INVISIBLE CONTACT EMPLOYEE ACTIONS LINE OF INTERNAL INTERACTION

 

SUPPORT PROCESSES

 

Source: Authors’ work based on Lovelock and Wright (2002)

 

COMPETITORS

 

Source: Author’s work

 

LOLC has competitors including companies dedicated to leasing and banks that operate a leasing section. This indicates that customers may be demanding and prefer to interact with service providers with superior supplementary services. LOLC by maintaining quick service provision than banks, posses a competitive advantage.

 

PRICE
 

There are many differences and difficulties when it comes to pricing a service than when product pricing since services cannot be owned and due to the complexity in stating exactly what the service contains (Lovelock and Wright, 2002:169).

 

USER OUTLAYS

 

There exist both financial and non-financial outlays when it comes to pricing any service. According to Lovelock and Wright (2002:173) financial outlays are “all monetary expenditures incurred by customers in purchasing and consuming a service” and non-financial outlays include “the time expenditures, physical and mental effort, and unwanted sensory expenses associated with searching for, buying and using a service”.

 

FINANCIAL OUTLAYS

 

Source: Authors’ work

 

NON-FINANCIAL OUTLAYS

 

Waiting time incurred during application process. LOLC maintains a ‘within the day’ policy.

 

The leasing process is confusing but LOLC executives explain the process clearly

 

The waiting rooms are cold and noisy due to telephone conversations. However, LOLC maintains a pleasant environment

 

Slight discomfort felt if requesting services during busy times of the day

 

Source: Authors’ work

 

In the leasing sector customers prefer to be loyal to organisations that are efficient and have less non-financial outlays even if the service has higher monetary costs.

 

PRICING STRATEGY

 

LOLC reaches a definite price only after taking into account the value of the item, company profitability, interest rates; risk undertaken, customer capacity, repayment period and competitive knowledge. All factors are considered in order to benefit both customer and service provider.

 

PAYMANTS REQUIRED

 

Source: Authors’ work

 

According to Lovelock and Wright (2002:188) “it’s essential that the monetary price charged reflect the knowledge of the service provider’s fixed and variable costs, competitor’s pricing policies and the value of the service to the customer”. Therefore LOLC must use market research techniques to observe the market in which it operates, its competitors and the company itself so as to better price the service.

 

PLACE

When providing services it is possible to use either physical or electronic means. According to Lovelock & Wright (2002) this can be better termed as marketspace & marketplace.

 

Marketspace is “a virtual location in cyberspace, made possible by telephone/Internet linkages, where customers & suppliers conduct business electronically” (Lovelock & Wright, 2002:243).

 

Marketplace is “a physical location where suppliers and customers meet to do business” (Lovelock & Wright, 2002:243).

 

LOLC belongs to the category of a marketplace operating in multiple sites i.e. at different branches. There is high customer interaction. In most branches there’s a large parking area for customers and employees. Most branches are turnoffs from the main road and the LOLC logo is easily visible to passers-by and customers. Receptionists help to direct customers to a particular desk, and answer any telephone queries via LOLC hotline.

 

E-mails or questions through the net are answered within a day. Customers intent on obtaining a lease usually visit the particular branch closest to them where they converse with experienced executives, to explain their exact needs. The executives themselves are required to visit the customer to double check the information given. Further investigation is done through third parties.

 

This double checking mechanism ensures that LOLC and their customers get the best out of the deal. All these measures emphasis on frequent contact between the customer and LOLC personnel until the deal is finalized. This process is however constantly revised to make it less tedious.

 

PROMOTION
 

“The promotion element of services marketing mix forms a vital role in helping communicate the positioning of the service to customers...it can also add tangibility and help the customer make a better evaluation of the service offer.” (Payne, 1993: 150)

 

Types of promotion:

 

Public Relations

 

Personal Selling

 

Advertising

 

PROMOTION

 

Direct mail

 

Sales Promotion

 

Word of mouth

 

Source Authors own work

 

Through the years LOLC has done a wide range of promotion using newspaper & television advertisements. It now has a reputation of being an efficient and reliable organisation and therefore less promotion is required. LOLC rely on positive word of mouth (WOM) to gain customers. Since customers provide private information, existing customers tend to be loyal and return to LOLC. Customers by nature spread good WOM if satisfied by services. Of course if they are unsatisfied then negative WOM may spread.

 

Under LOLC Care many community service projects are carried out, which can be found in the LOLC corporate website. This plays an important part in attracting customers who prefer to interact with organisations that are socially responsible.

 

In addition, articles appear in newspapers on a regular basis on all LOLC related topics. For instance the recent takeover by LOLC of the Connaisance Group brought LOLC to the limelight.

 

Since rates change regularly, no leaflets are printed but it would be useful to have one outlining all the services and procedures of LOLC. Internal promotion in the form of cross-selling is done. A customer obtaining a lease to buy a car will be directed to a leasing executive who will carry out the tasks required, and then the executive introduces the customer to the LOLC insurance department. This gains revenue for LOLC and customer convenience increases as all related services are obtained in one service factory.

 

LOLC’s unique selling point has been its efficiency, customer loyalty and the fact that many services are available in one site. This has led to positive WOM which is LOLC’s main promotion tool that helps retain and attract customers.

 

PEOPLE
 

Service staffs are crucially important
 

Almost anyone can recount a horror story about a dreadful service experience, and most of the time it’s a result of the actions of the service personnel (Lovelock and Wirtz, 2005:309). Therefore it’s essential for any service provision to use appropriate staff. The fact that there isn’t any time lapse between the production and the consumption of the service, all contribute to the essential need of highly trained and properly managed staff.

 

Human resource management: how to get it right
 

Leadership that:

 

*focuses the entire organization on the front line to support the front line

 

*fosters a strong service culture with passion for service and productivity

 

*drives value that inspire, energize and guide service providers

 

3. Motivate and energize your

 

People:

 

*Use the full range of rewards:

 

-pay

 

-bonus

 

-job content

 

-feedback & recognition

 

-goal/accomplishment

 

Hire the

 

Right people:

 

*Be the preferred employer and compete for talent market share:

 

*Intensify selection process to hire the right people for the organization and the given job

 

Service Excellence and

 

Productivity

 

2. Enable your people:

 

*Build high performance service delivery teams:

 

-ideal cross functional, customer centric structure

 

-develop team structures and skills that work

 

*empower the front line

 

*extensive training on:

 

-organizational culture, purpose and strategy

 

-interpersonal and technical skills

 

-product/service knowledge

 

Figure**.* Wheel of successful HR in service firms

 

Source: Lovelock & Wirtz (2005:337)

 

With reference with the above given diagram and the information collected by the authors from LOLC it was found that:

 

1. Hire the right people:

 

*LOLC had built its reputation as a preferred employer because of its high profitability and quality services.

 

*LOLC engages in various techniques to ensure that they select the best candidate for the job by:

 

-conducting various personality test

 

-conducting multiple, structured interviews

 

-giving applicants a realistic preview of the job

 

2. Enable your people:

 

*LOLC provides extensive high quality training for their personnel on a regular basis like leadership, customer relationship training.

 

*LOLC also empowers its workers by letting them take part in decision making process and allowing them to make their suggestions on various company related policies.

 

3. Motivation:

 

According to a personal source, LOLC provides high pay to its employees because of their lofty profits. Also recognition is given to the front line workers when they’ve done a good job. Employee feedback is provided once a month to evaluate the efficiency of the workers.

 

LOLC is target oriented, therefore its HR department evaluates the performance of the workers twice a year on cost, mistakes committed, efficiency…grade points are awarded to the employees and on this basis a hefty bonus is given

 

Communication between the front and back office staff:
 

Front line
 

Middle management
 

TOP management
 

Customer
 

Feedback, complaints, suggestions by conferences, telephone, E-mail, face to face…

 

Within the organization: Orders, instruction, goals to achieve, Rules…

 

With Customer: Information on service, Knowledge, helps to clear doubts….

 

Figure:

 

Source: Author’s work based on Lovelock &Wirtz (2005:334)

 

Its important to have good communication inorder to build good relations within the organization and outside.LOLC has

 

生產效率及品質---PRODUCTIVITY AND QUALITY
 

Lovelock and Wirtz (2005:405) stated that “Productivity-working faster and more efficiently in order to reduce costs-has been a managerial imperative since 1970s.”And service quality used to depend on the quality of the staff, training, HRM…but now it’s linked with customer satisfaction.

 

Broadly defined, the task of value enhancements requires quality-improvement programs to deliver and continuously enhance the benefits desired by customers. At the same time, productivity-improvement efforts must seek to reduce the associated costs.

 

MarketingCustomer service, quality and marketing

 

Customer service levels should be determined by research-based measurement of customer needs and competitors’ performance and must recognize needs of different market segments

 

Quality must be determined from the perspective of the customer based on regular research and monitoring

 

Quality
 

Customer Service
 

The total quality concept should influence both the process elements (eg: managing moments of truth in the customer encounter)

 

Figure: *.**

 

Source: Payne (1993: 215)

 

Service quality gaps:
 

Customer Needs and Expectations

 

The knowledge Gap

 

Management definition of these needs

 

The Internal communication Gap

 

The Standard Gap

 

Translation into design/delivery specs

 

The Delivery Gap

 

Advertising and sales promotion

 

Execution of design/delivery specs

 

The Interpretations Gap

 

The Perceptions Gap

 

Customer interpretation of communications

 

Customer perceptions of product execution

 

The Service Gap

 

Customer experience relative to expectation

 

Figure: *.**

 

Source: Lovelock and Wirtz (2005:412)

 

Improving Service quality:

 

Figure: *.** Service blueprinting for getting a lease

 

Source: Payne (1993:228)

 

The blueprint is a valuable tool in helping visualize the service process; it sets standards for improvement of service quality and helps in solving problems.

 

LOLC’s plan to improve productivity and quality in the year 2010:

 

The following table illustrates LOLC’s quality gaps and some recovery methods:

 

Knowledge Gap

 

Standard Gap

 

Delivery Gap

 

Internal Communication Gap

 

Other criteria

 

Understand customer expectations by research

 

Standardize repetitive work tasks

 

Clarify employee roles

 

Dividing organization into different sections(finance, insurance)

 

Reduce the amount of documentation.(save time)

 

Complaint analysis

 

Provide constant training for both front and back office staff

 

Select the person with the right abilities for the job

 

Most communication is by computers

 

Be vigilant and keep an eye on competitors(helps improve product)

 

Increase interactions between managers & customers

 

Ensures that employees understand their goals(acquired by good communication)

 

Provide technical training

 

Regular conferences are held to give feedback to workers and help solve problems

 

Use various software to solve problems

 

Improve communication between front and back office staff

 

Evaluation of the workers twice a year

 

Develop reward system i.e. bonuses

 

Ensure team-work, make the workers a close knit bunch

 

Well-trained customer care staff to help customers in getting relevant details

 

Provide feedback to the workers on a weekly basis

 

Empower managers by letting them take part in decision making

 

Provide bonus every 8 months to workers based on efficiency

 

Source: Authors’ work based on Lovelock and Wirtz (2005:414) and the information received from the interview

 

Conclusion:

 

According to Lovelock and Wirtz (2005:430) “Enhancing Service quality and improving service productivity are often two sides of the same coin, offering powerful potential to improve value for both customers and the firm. A key challenge for any service business is to deliver satisfactory outcomes to its customers in ways that are cost-effective for the company”. In short, value, productivity and quality are all important to ensure profitability and survival of the firm.