THE

SERVICE
INDUSTRY
John, Francesca, Taylor, Tiandra, Tameka

WELCOME TO KING
BURGER

OVERVIEW
Service Overview
Hair Salon Overview
Research Motivations
Variables

Data Analysis

SERVICE INDUSTRY
OVERVIEW
Service industry
makes up 83% of the
U.S. economy
$11.2 Trillion in
revenue
2011 Post-Recession
Era

Source: Bureau of Labor Statistics

http://data.bls.gov/cgi-bin/surveymost?ce

HAIR SALON
INDUSTRY
Fast-growing, high-volume industry
The US hair care service industry includes about 80,000
establishments
76,000 beauty salons
4,000 barber shops

Highly competitive
Industry
Trends

Hair care industry - $20 billion in annual revenue

THE BIG PICTURE

Drivers of consumer relationships based on
attitudes and motivations
Influence of consumer behaviors on service
relationships
Company growth
Profitability growth
Consumer Loyalty

THE PROBLEM
In order to thrive in a service industry, providers must
establish a relationship with their clients. In
establishing these relationships, service providers need
to understand different factors that may influence the
outcomes of various service relationships.

CORRELATION TABLE
Mean

Std.
Dev

1 Likelihood to Complain 4.909

1.715

2 Bad Experience

5.170

1.487

0.213

3 Openness

4.716

1.888

0.413 -0.108

4 Importance of Haircut 4.188

1.940

0.421 0.337 0.266

Likelihood to
5 Recommend

3.182

1.954

0.014 -0.413 0.507 0.017

6 Frequency of haircut

3.295

1.741

0.113 0.147 0.056 0.534 0.065

7 Truthful

4.909

1.849

0.582 -0.039 0.818 0.344 0.441 0.089

8 Social Closeness

0.023

1.003

-0.106 -0.315 0.370 -0.097 0.601 -0.006 0.251

Likelihood to Remain
9 Loyal

3.903

2.064

0.001 -0.318 0.543 0.016 0.848 -0.013 0.458 0.610

10 Gender

-0.591 0.809

10

11

12

1.The importance of
haircuts x Likelihood to
complain.

2.Social Closeness x
Likelihood to Recommend.

1
1

3.Gender x Likelihood to
Remain Loyal

1
1
1
1
1

0.020 -0.073 0.134 -0.100 0.235 -0.007 0.089 0.104 0.173

INFLUENCE LIKELIHOOD TO COMPLAIN

H10: The importance of haircuts will have no
effect on influencing the clients likelihood to
complain

BACKGROUND RESEARCH

H10: The importance of haircuts

will have no effect on influencing
the clients likelihood to complain

Importance of taking client complaints seriously

-Bovea, 2005

Utilize feedback to improve services offered

Questions that lead to understanding a clients
motives
-Manager, Jade Salon
Lack of interest in experience or service leads to
lack of feedback or complaints
-Bovea, 2005

ALTERNATIVE HYPOTHESIS
LIKELIHOOD TO COMPPLAIN

H1a: The importance of

haircuts will have a
positive
effect
on
influencing
on
the
clients likelihood to
complain.
IMPORTANCE OF HAIRCUT

H10: The importance of haircuts will have no effect on

influencing the clients likelihood to complain

DATA ANALYSIS

H1a: The importance of haircuts will have a positive effect

on influencing on the clients likelihood to complain.
STRONGLY
AGREE

Descriptive
StatisticsImportance

6
5
4
3

importance of haircut

complain

LIKERT
SCALE

Likelihood to
Complain

Mean

4.14

4.91

Standard Deviation

1.96

1.70

Sample Variance

3.84

2.91

Range

6.00

6.00

Correlation

1
STRONGLY
DISAGREE

of Cut

10

15

20

25

# OF
RESPONDENTS

30

35

40

45

Importance
of Cut

50

Likelihood to
Complain

0.3970

COMPARISON OF TWO PROPORTIONS

Haircut is not
Important

Haircut is Important
Not complain

16%

Complain

Respondents: 89

84%

50%

50%

Respondents: 90

STANDARD ERROR: ((0.843*0.157)/89 + (0.5*0.5)/90)) = 0.065

Zcalc = (0.843 0.5)/0.065

HYPOTHESIS: = |5.246|H
>1.96

o Reject

CONCEPTUAL CHART

H10: The importance of haircuts will have no

effect on influencing the clients likelihood to
complain

REGRESSIONS

H1a: The importance of haircuts will have a

positive effect on influencing on the clients
likelihood to complain.

Regression Statistics
Multiple R

0.513

R Square

0.263

Adjusted R Square

0.246

Standard Error

1.480

Observations

179

Intercept
Importance of Haircut
Bad Experience
Importance x Bad experience
Openness

COEFFICIENTS
0.611
0.202
0.490
-0.061
0.453

STANDARD
ERROR
0.888
0.225
0.152
0.039
0.068

T-STAT
0.688
0.895
3.226
-1.549
6.704

P-VALUE
0.492
0.372
0.001
0.123
0.000

MANAGERIAL
IMPLICATIONS
Ensure there is a open dialogue between
service-provider and client
Evaluate personality characteristics during
the hiring process
Create strong, professional relationships by
being open that will lead to trust

MANAGERIAL
IMPLICATIONS
Address negative client experiences upfront
Service-provider must take complaints as
learning experiences
Use complaints for further employee training
and business development
Use to create improved business practices

INFLUENCE OF LIKELIHOOD TO
RECCOMEND
H20: The client-service provider relationship
will have no effect on the clients likelihood to
recommend.

BACKGROUND RESEARCH
H20: The client-service provider relationship will have no effect on the clients likelihood to recommend.
H2a: A close client-provider relationship will have a positive effect on the clients likelihood to recommend.

Word of mouth is more profitable than advertising

-Kwona, Choh and Parka, 2009

Recommendations account for a large portion of

company growth -Unclesa, 2009
Google and Yelp account for a large amount of foot
traffic Manager, Jade Salon

LIKELIHOOD TO
RECOMMEND

ALTERNATIVE HYPOTHESIS

CLOSE CLIENT-PROVIDER
RELATIONSHIP

H2a: A close clientprovider relationship will

have a positive effect on
the clients likelihood to
recommend.

H20: The client-service provider relationship will have no effect

on the clients likelihood to recommend.

DATA ANALYSIS
60

56
49

50

# OF RESPONDENTS

H2a: A close client-provider relationship will have a positive

effect on the clients likelihood to recommend.

If Close

40

if Distant

Descriptive
Statistics All

Total

37

30

26
23

20

16

15
11

10

18

Distan
t

Mean

3.19

4.64

2.35

Standard
Deviation

1.95

1.49

1.66

Sample
Variance

3.78

2.23

2.76

14
11
4
4

LIKELIHOOD TO RECOMMEND
LIKERT
SCALE

20

18

Close

2
6

Correlation
Social
Closeness

7
0

Likelihood to
Recommend

0.6128

COMPARISON OF TWO MEANS

CLOSE

DISTANT

93

86

MEAN

4.636

2.345

STANDARD
DEVIATION

1.495

1.662

# OF RESPONDENTS

STANDARD ERROR: (1.495)2/93 + (1.662)2/86 = 0.2370

Zcalc = (4.636 2.345)/ 0.2370

HYPOTHESIS: = |9.668| H
>1.96

o Reject

CONCEPTUAL CHART

H20: The client-service provider relationship will have

no effect on the clients likelihood to recommend.

REGRESSIONS

H2a: A close client-provider relationship will have a

positive effect on the clients likelihood to
recommend.

Regression Statistics
Multiple R

0.728

R Square

0.529

Adjusted R Square

0.518

Standard Error

1.350

Observations

Intercept
Frequency of Haircut
Truthful
Social Closeness
Truthful & Social Closeness

179
COEFFICENTS
1.200
0.016
0.357
-0.486
0.304

STANDARD ERROR
0.341
0.059
0.057
0.303
0.057

T-STAT
3.520
0.266
6.236
-1.608
5.301

P-VALUE
0.001
0.791
0.000
0.110
0.000

MANAGERIAL
IMPLICATIONS
Continue to delight the client
Consistent, positive experience

Build client relationships to increase the

likelihood of the client telling the truth
Build organic recommendations

GENDER SEGMENTATION & LOYALTY

H30: Gender will have no effect on client
loyalty.

H30: Gender will have no effect on client

loyalty.

BACKGROUND RESEARCH
Male clients tend to be more loyal than female
clients
-MeIlnyk, Osselaer, Bijmolt 2009

Males are more simple, focus on the outcome

-Manager, Jade Salon

ALTERNATIVE HYPOTHESIS

LIKELIHOOD OF LOYALTY

H3a: Female clients are

less likely to be loyal
than
their
male
counterparts.
Female

Male

H30: Gender will have no effect on client loyalty.

DATA ANALYSIS

H3a: Female clients are less likely to be loyal than

their male counterparts.

Descriptive Statistics
Male

Femal
e

Mean

3.93

4.62

3.75

Standard
Deviation

2.06

2.18

1.99

Sample
Variance

4.23

4.74

3.96

Correlation
Likelihood to
Remain Loyal
Gender

0.1610

GENDER VS. LOYALTY

Loyal
# OF RESPONDENTS

All

Not Loyal

84

58

13
24

LIKERT AND NOMINAL SCALES

Fe male

Male

COMPARISON OF TWO PROPORTIONS

41%

LOYAL

65%

35%

LOYAL

NOT LOYAL

59%

NOT LOYAL

STANDARD ERROR: ((0.649*0.351)/37 + (0.408*0.592)/142)) = .089

zcalc = (0.649 0.408)/.089

HYPOTHESIS TEST: = |2.709| >1.96 Ho Reject

CONCEPTUAL CHART

REGRESSIONS

H30: Gender will have no effect on client loyalty.

H3a: Female clients are less likely to be loyal
than their male counterparts.

Regression Statistics
Multiple R

0.638

R Square

0.408

Adjusted R Square

0.394

Standard Error

1.600

Observations

179

Intercept

Gender
Honesty
Satisfaction of
Haircut
Openness

COEFFICENTS

STANDARD
ERROR

T STAT

P-VALUE

0.449
0.256
0.463

0.388
0.149
0.118

1.157
1.717
3.932

0.249
0.088
0.000

0.362
0.156

0.102
0.116

3.535
1.354

0.001
0.177

MANAGERIAL
IMPLICATIONS
Men skew towards being more loyal
Greater satisfaction, more loyalty

Understand the importance of being truthful

with clients
Openness+ Honesty= HUGE IMPACT
Satisfying vs. Optimizing

RECCOMENDATIONS
The Hiring Process
Employee Training
Life After Service

THE HIRING PROCESS

You can teach technique you cannot teach personality
-Jade Gonzalez, Manager at Jade Salon

Developing strategies for hiring

Hiring practices based upon
Employees fit with culture
Employees fit with values

Front-End employees are the brand

ambassadors

EMPLOYEE TRAINING
Internal Company-specific
Internal training
Internal policies
Employee engagement

External Industry-specific
Emerging trends
Industry innovations

LIFE AFTER SERVICE

Client engagement
Active, online engagement
Make appointments before leaving
Give specialized feedback

CONCLUSIONS

QUESTIONS