Designing and Managing

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Chapter 8 Designing and Managing Service
Processes
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Core and Supplementary Services at Luxury Hotel
(Offering Much More than Cheap Motel!)
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What Happens, When, in What Sequence? Time
Dimension in Augmented Product (Fig 3.3)
Reservation
internet
Parking
Get car
Check out
Check in
Internet
Internet
Use room
USE GUESTROOM OVERNIGHT
Porter
Pay TV
Meal
Room service
Time Frame of An Overnight Hotel Stay (Real-time
service use)
Before Visit
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Simple Flowchart for Delivery of a
People-Processing Service (Fig 3.4)
People Processing Stay at Motel
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Simple Flowchart for Delivery of a
Possession-Processing Service (Fig 3.4)
Possession Processing Repair a DVD Player
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Simple Flowchart for Delivery of Mental
Stimulus-Processing Service (Fig 3.4)
Mental Stimulus Processing Weather Forecast
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Weather Forecasting Is a Service Directed at
Customers Minds (Fig 3.5)
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Simple Flowchart for Delivery of An
Information-Processing Service (Fig 3.4)
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The Flower of Service (Fig 3.6)
Information
Consultation
Payment
Core
Order Taking
Billing
Hospitality
Exceptions
Safekeeping
KEY
Facilitating elements
Enhancing elements
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The Flower of Service Facilitating
ServicesInformation

• Customers often require information about how to
  obtain and use a product or service.
• Examples of elements
• Directions to service site
• Schedule/service hours
• Prices
• Conditions of sale
• Usage instructions

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The Flower of ServiceFacilitating
ServicesOrder Taking

• Customers need to know what is available and may
  want to secure commitment to delivery. The
  process should be fast and smooth.
• Examples of elements
• Applications
• Order entry
• Reservations and check-in

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The Flower of ServiceFacilitating
ServicesBilling

• How much do I owe you?
• Bills should be clear,
• Accurate, and intelligible.
• Examples of elements
• Periodic statements of
• account activity
• Machine display of amount
• due

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The Flower of ServiceFacilitating
ServicesPayment

• Customers may pay faster
• and more cheerfully if you
• make transactions simple
• and convenient for them.
• Examples of elements
• Self service payment
• Direct to payee or intermediary
• Automatic deduction

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The Flower of ServiceEnhancing
ServicesConsultation

• Value can be added to goods and services by
  offering advice and consultation tailored to
• each customers needs and situation.
• Examples of elements
• Customized advice
• Personal counseling
• Management consulting

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The Flower of ServiceEnhancing
ServicesHospitality

• Customers who invest time and effort in visiting
  a business and using its services deserve to be
• treated as welcome guests
• after all, marketing invited them!
• Examples of elements
• Greeting
• Waiting facilities and amenities
• Food and beverages
• Toilets and washrooms
• Security

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The Flower of ServiceEnhancing
ServicesSafekeeping

• Customers prefer not to worry about looking after
  the personal possessions that they bring with
  them to a service site.
• Examples of elements
• Looking after possessions
• customers bring with them
• Caring for goods purchased
• (or rented) by customers

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The Flower of ServiceEnhancing
ServicesExceptions

• Customers appreciate some
• flexibility when they make special requests and
  expect responsiveness when things dont go
  according to plan.
• Examples of elements
• Special requests in advance
• Complaints or compliments
• Problem solving
• Restitution

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Developing a Blueprint

• Identify key activities in creating and
  delivering service
• Define big picture before drilling down to
  obtain a higher level of detail
• Distinguish between front stage and backstage
• Clarify interactions between customers and staff,
  and support by backstage activities and systems
• Identify potential fail points take preventive
  measures prepare contingency
• Develop standards for execution of each activity
  times for task completion, maximum wait times,
  and scripts to guide interactions between
  employees and customers

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Key Components of a Service Blueprint

• 1. Define standards for front-stage activities
• 2. Specify physical evidence
• 3. Identify principal customer actions
• 4. Line of interaction (customers and front-stage
  personnel)
• 5. Front-stage actions by customer-contact
  personnel
• 6. Line of visibility (between front stage and
  backstage)
• 7. Backstage actions by customer contact
  personnel
• 8. Support processes involving other service
  personnel
• 9. Support processes involving IT

• Identify fail points and risks of excessive
  waits
• Set service standards and do failure-proofing

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Blueprinting the Restaurant Experience Act 1
(Fig 8.1)
Timeline
Act 1
Service Standards and Scripts
W
W

W
Make Reservation
Valet Parking
Coat Room
Physical Evidence
Line of interaction
Front - Stage
Greet customer, take car keys
Greet, take coat, coat checks
Accept reservation
Contact person (visible actions)
Line of visibility
Check availability, insert booking
Hang coat with visible check numbers
Contact person (invisible actions)
Take car to parking lot
Back - Stage
Line of internal physical interaction
Maintain reservation system
Maintain (or rent) facilities
Maintain facilities/ equipment
Support Processes
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Blueprinting the Restaurant Experience A Three
Act Performance

• Act 1 Prologue and Introductory Scenes
• Act 2 Delivery of Core Product
• Cocktails, seating, order food and wine, wine
  service
• Potential fail points Menu information complete?
  Menu intelligible? Everything on the menu
  actually available?
• Mistakes in transmitting information a common
  cause of quality failuree.g. bad handwriting
  poor verbal communication
• Customers may not only evaluate quality of food
  and drink, but how promptly it is served, serving
  staff attitudes, or style of service
• Act 3 The Drama Concludes
• Remaining actions should move quickly and
  smoothly, with no surprises at the end
• Customer expectations Accurate, intelligible and
  prompt bill, payment handled politely, guest are
  thanked for their patronage

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Setting Service Standards

• Service providers should design standards for
  each step sufficiently high to satisfy and even
  delight customers
• Standards may include time parameters, script for
  a technically correct performance, and
  prescriptions for appropriate style and demeanor
• Must be expressed in ways that permit objective
  measurement
• First impression is important as it affects
  customers evaluations of quality during later
  stages of service delivery
• Customer perceptions of service experiences tend
  to be cumulative
• For low-contact service, a single failure
  committed front stage is relatively more serious
  than in high-contact service
• Viewed more seriously because there are fewer
  subsequent opportunities to create a favorable
  impression

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Improving Reliability of Processes by Failure
Proofing

• Errors include
• Treatment errorshuman failures during contact
  with customer
• e.g., lack of courteous or professional behavior,
  failure to acknowledge, listen to, or react
  appropriately to the customer
• Tangible errorsfailures in physical elements of
  service
• e.g., noise pollution, improper standards for
  cleaning of facilities and uniforms, equipment
  breakdown
• Goal of fail-safe procedures is to prevent errors
  such as
• Performing tasks incorrectly, in the wrong order,
  too slowly
• Doing work that wasnt requested in the first
  place

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Redesigning Service Processes
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Mitchell T. Rabkin MD, formerly president of
Bostons Beth Israel Hospital
Why Redesign?
Institutions are like steel beamsthey tend to
rust. What was once smooth and shiny and nice
tends to become rusty.
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Why Redesign?

• Revitalizes process that has become outdated
• Changes in external environment make existing
  practices obsolete and require redesign of
  underlying processes
• Creation of brand-new processes to stay relevant
• Rusting occurs internally
• Natural deterioration of internal processes
  creeping bureaucracy evolution of spurious,
  unofficial standards
• Symptoms
• Extensive information exchange
• Data redundancy
• High ratio of checking or control activities to
  value-adding
• activities, increased exception processing
• Customer complaints about inconvenient and
  unnecessary procedures

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Process Redesign Approaches and
Potential Benefits

• Eliminating non-value-adding steps
• Streamline front-end and back-end processes of
  services with goal of focusing on
  benefit-producing part of service encounter
• Eliminate non-value-adding steps
• Improve efficiency
• More customized service
• Differentiate company
• Delivering direct service
• Bring service to customers instead of bringing
  customers to provider
• Improve convenience for customers
• Productivity can be improved if companies can
  eliminate expensive
• retail locations
• Increase customer base

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Process Redesign Approaches and Potential
Benefits

• Shifting to self-service
• Increase in productivity and service quality
• Lower costs and perhaps prices
• Enhance technology reputation
• Greater convenience
• Bundling services
• Involves grouping multiple services into one
  offer, focusing on a well-defined customer group
• Often has a better fit to the needs of target
  segment
• Increase productivity
• Add value for customers through lower transaction
  costs
• Customize service
• Increase per capita service use

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Process Redesign Approaches and Potential
Benefits

• Redesigning physical aspects of service processes
• Focus on tangible elements of service process
  include changes to facilities and equipment to
  improve service experience
• Increase convenience
• Enhance the satisfaction and productivity of
  front-line staff
• Cultivate interest in customers
• Differentiate company

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The Customer as Co-Producer
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Levels of Customer Participation

• Customer Participation
• Actions and resources supplied by customers
  during service production
• and/or delivery
• Includes mental, physical, and even emotional
  inputs
• Three Levels
• LowEmployees and systems do all the work
• Often involves standardized service
• MediumCustomer inputs required to assist
  provider
• Provide needed information and instructions
• Make some personal effort share physical
  possessions
• HighCustomer works actively with provider to
  co-produce the service
• Service cannot be created without customers
  active participation
• Customer can jeopardize quality of service
  outcome (e.g., weight loss, marriage counseling)

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Self-Service Technologies (SSTs)

• Ultimate form of customer involvement
• Customers undertake specific activities using
  facilities or systems provided by service
  supplier
• Customers time and effort replace those of
  employees
• e.g. Internet-based services, ATMs, self-service
  gasoline pumps
• Information-based services lend selves
  particularly well to SSTs
• Used in both supplementary services and delivery
  of core product
• e.g. eBayno human auctioneer needed between
  sellers and buyers

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Psychological Factors in Customer Co-Production

• Economic rationale of self-service
• Productivity gains and cost savings result when
  customers take over work previously performed by
  employees
• Lower prices, reflecting lower costs, induce
  customer to use SSTs
• SSTs present both advantages and disadvantages
• Benefits Time and cost savings, flexibility,
  convenience of location, greater control over
  service delivery, and a higher perceived level of
  customization
• Disadvantages Anxiety and stress experienced by
  customers who are uncomfortable with using them

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What Aspects of SSTs Please or Annoy Customers?

• People love SSTs when
• SST machines are conveniently located and
  accessible 24/7often as close as nearest
  computer!
• Obtaining detailed information and completing
  transactions can be done faster than through
  face-to-face or telephone contact
• People in awe of what technology can do for them
  when it works well
• People hate SSTs when
• SSTs failsystem is down, PIN numbers not
  accepted, etc
• They mess upforgetting passwords, failing to
  provide information as requested, simply hitting
  wrong buttons
• Key weakness of SSTs Too few incorporate service
  recovery systems
• Customers still forced to make telephone calls or
  personal visits
• Blame service provider for not providing more
  user-friendly system

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HSBC The worlds local bank
Source Courtesy HSBC
Global site brought to customers local computer
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Putting SSTs to Test by Asking a Few Simple
Questions

• Does the SST work reliably?
• Firms must ensure that SSTs are dependable and
  user-friendly
• Is the SST better than interpersonal
  alternatives?
• Customers will stick to conventional methods if
  SST doesnt create benefits for them
• If it fails, what systems are in place to
  recover?
• Always provide systems, structures, and
  technologies that will enable prompt service
  recovery when things go wrong

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Dysfunctional Customer Behavior Disrupts Service
Process
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Addressing the Challenge of Jaycustomers

• Jaycustomer A customer who behaves in a
  thoughtless or abusive fashion, causing problems
  for the firm, its employees, and other customers
• Divergent views on jaycustomers
• The customer is king and can do no wrong.
• Marketplace is overpopulated with nasty people
  who cannot be trusted to behave in ways that
  self-respecting services firms should expect and
  require
• Insight Theres truth in both perspectives
• No organization wants an ongoing relationship
  with an abusive customer

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Six Types of Jaycustomers

• The Thief
• The Rulebreaker
• The Belligerent
• The Deadbeat
• Family Feuders
• Vandals