Managing the service delivery process

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Managing the service delivery process

• Module 8
• Chapter 8
• Selected Reading
• 8.1 8.2

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Lecture Overview

• The impact of the characteristics of services on
  channel strategy, design and management
• Planning the service delivery process
• Alternative methods of service delivery
• factors that impact on service delivery
• Selecting a service location
• Alternative channels for services

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• The role of physical evidence in service delivery
• The timing of service delivery
• The role of IT in service delivery
• What roles will people play in the service
  delivery?
• Service productivity
• traditional approaches
• customer driven approaches
• Managing changes to the service delivery system

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The four unique characteristics of services
impact on channel strategy, design and management

• Refer to reading 8.1 by Rosenbloom

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Intangibility

• If a pure service, then there is no physical
  product
• so, what does that mean??
• no physical ownership
• no title
• no physical handling or transportation
• so, what can the firm do??
• tangibilise the service
• signage, symbols, physical evidence
  (servicescape) etc.

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Inseparability

• simultaneous production and consumption
• service employee is the product
• so, what does that mean???
• usually a direct channel
• less likely to use intermediaries
• so, what can the firm do???
• provide place utility
• locational convenience
• e.g. access, parking
• single v multi site
• e.g. franchising

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• provide time utility
• hours of operation
• waiting time
• if the customer enters the factory
• importance of physical evidence
• Servicescape
• facilities, location, decor
• contact personnel
• appearance, manner

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Customer involvement

• need to determine extent of involvement
• if high, consider how to facilitate greater
  involvement
• who controls the service encounter?
• customers are partial employees
• roles and scripts
• need to manage the customer portfolio
• temporal and spatial separation

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Variability

• service quality varies across encounters
• so, what can the firm do???
• scripts and roles
• standardise formats - i.e. franchising
• set service delivery standards
• degree of customisation required
• if customised, how can the process be sped up?

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Perishability

• service cannot be inventoried
• so, what can the firm do???
• manage demand
• off-peak and peak strategies
• inventory by reservations and queuing
• self-service formats
• utilise excess capacity
• achieve optimal capacity

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Planning and configuring the service delivery
system

• Refer to figure 8.2, p. 225
• What is the sequence of activities?
• flowchart the customers experience
• where and when should each step take place?
• what are the potential problems, bottlenecks and
  moments of truth?

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Issues to consider..

• What is the method of service delivery?
• what level of contact is required?
• Should we use intermediaries for all or some
  steps in the process?
• What is the nature of the process?
• batches, individual service, self-service
• How will we manage demand?
• reservations, queuing
• What is the role of the physical evidence?

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Three methods of service delivery

• 1. Customer goes to the service firm
• location is very important
• convenience
• single site v multi-site
• cost, access
• physical evidence is very important

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• 2. Service firm goes to the customer
• location is less important
• proximity may be an issue

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• 3. Arms length transactions
• location is irrelevant
• need to be able to access communications networks
• most usually still require some face to face
  interaction

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Five factors that impact on service delivery
method

• the nature of the service
• process type, level of contact
• customers needs and preferences
• desire for involvement
• need for locational convenience
• the firms positioning strategy
• level of contact/personalisation desired

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• costs
• which is the most cost-effective option from the
  firms and the customers point of view?
• travel, facilities, vehicles
• operational requirements
• facilities, equipment, technology

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Where will the firm locate?

• inseparability problem
• time and place utility
• does the customer need to travel to the service
  factory?
• single or multi-site?

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Selecting a service location

• refer to reading 8.2
• What selection factors need to be considered?
• trading area
• size, growth rate, demographics
• visibility and accessibility
• parking, transport
• pedestrian and vehicular traffic

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• competition and affinities
• service clusters
• cost
• availability and lease terms

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To what extent can the firm outsource service
elements?

• Do all tasks need to be performed by the service
  firm? OR
• Could the firm use intermediaries for some
  elements?

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What alternative service channels could we
consider?

• Direct channel
• no intermediaries
• Service intermediaries
• agents, brokers, retailers
• Electronic channels

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Direct channels

• What are the benefits?
• allows greater control over service performance,
  service delivery and the service encounter
• allows customisation and social bonds
• allows direct feedback from customers

• What are the limitations?
• cost
• market coverage

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Service intermediaries

• What are the benefits?
• greater specialisation
• can be more efficient and cost-effective
• economies of scale
• provides locational convenience
• access an established clientele

• What are the limitations?
• loss of control over quality of service,
  performance, delivery and the service encounter

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Electronic channels

• What are the benefits?
• better quality control
• cost-effective service delivery
• greater convenience
• cover wide geographic area
• customer choice of service form
• suits information processing and mental stimulus
  processing

• What are the limitations?
• technological breakdown
• low control of electronic environment
• security
• lack of customisation
• relies on customer knowing what to do
• inability to build a social relationship

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What role will the physical evidence play?

• How will the servicescape be used to facilitate
  effective and efficient service delivery?

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The role of physical evidence (the servicescape)

• refer to figure 8.1, p. 220
• provides environmental stimuli
• ambience
• temperature, noise, colour, music, smells
• space
• design, layout, furnishings
• signs, symbols, artefacts

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• impacts on customer and employees thoughts and
  feelings
• cognitive - beliefs and thoughts
• emotional - moods, feelings, affective
• psychological - discomfort or ease etc.

or
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• influences customers and employees behavioural
  responses
• customers responses
• approach
• stay, explore, interact, transact, return
• avoid
• leave, dont return

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• employees responses
• productivity
• job satisfaction
• service quality
• commitment (turnover)

I feel so happy!
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So then, the servicescape ..

• provides a cue to quality
• influences customers expectations
• sets the tone for service delivery
• creates a mood or atmosphere
• may add value - enhance the experience
• may strengthen the firms positioning strategy
• can facilitate (or hinder) service delivery

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The timing of service delivery

• time utility - accessibility
• What influences hours/days of operation?
• customer needs for time utility
• legislation
• desire to utilise excess capacity
• employees willingness to working unsocial hours
• availability of automated self-service facilities

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What role can technology play in facilitating
service delivery?

• speed-up process
• reduce complexity
• reduce variability
• reduce divergence
• improve reliability and responsiveness
• more accurate and reliable

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What roles will people play?

• People include
• contact people
• customer
• other customers
• how can we facilitate customer involvement?
• how can we increase our productivity, while
  maintaining adequate levels of service
  personalisation?

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What is productivity?

• output relative to input
• input - labour, capital, equipment etc
• output - service outcome and service process
• need to focus on outcomes as well as outputs
• that is, quality and quantity

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Traditional approaches to improving service
productivity

• control costs at each step
• match productive capacity to average demand to
  avoid excess capacity
• automate where possible
• provide support resources for efficient and
  effective performance
• train employees
• install expert systems

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The trade off..

• Improving productivity sometimes means that
  customers do not receive personalised service
• Need to gain a balance between high tech and high
  touch
• Customers dont want to talk to machines when
  they have a problem.

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Customer driven approaches to improving
productivity

• Educating customers to avoid peak times
• reducing fluctuations in demand
• Increasing customer involvement
• partial employee (self-service)
• roles and scripts
• reducing contact (arms length)
• Ask customers to use intermediaries for support
  services

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Managing changes to the service delivery system

• need to develop customer trust
• understand customers usage behaviours and
  expectations
• pre-test new equipment, procedures or policies
• inform and educate customers
• encourage trial
• monitor performance and seek improvements

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Summary

• The impact of the characteristics of services on
  channel strategy, design and management
• Planning the service delivery process
• Alternative methods of service delivery
• factors that impact on service delivery
• Selecting a service location
• Alternative channels for services

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• The role of physical evidence in service delivery
• The timing of service delivery
• The role of IT in service delivery
• What roles will people play in the service
  delivery?
• Service productivity
• Traditional approaches
• Customer driven approaches
• Managing changes to the service delivery system

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Tutorial

• Case 13 Stockbroking in Cyberspace, p. 517
• Review questions
• 1, 6 12