Chapter 8: Designing and Managing Service Processes

Chapter 8: Designing and Managing Service Processes

Core and Supplementary Services at Luxury Hotel (Offering Much More than Cheap Motel!)

ReservationValet

Parking

Reception

Baggage

ServiceCocktail

Bar

Restaurant

Entertainment/ Sports/ Exercise

Internet

Wake-up

Call

Room

Service

Business

Center

Cashier

A Bed for the Night in an

Elegant Private Room with a

Bathroom

What Happens, When, in What Sequence? Time Dimension in Augmented Product (Fig 3.3)

Before Visit

Reservation

internet

Parking Get car

Check in

Porter

Use room

MealPay TV

Room service

Internet

Check out

Time Frame of An Overnight Hotel Stay

(Real-time service use)

USE GUESTROOM OVERNIGHT

Internet

Simple Flowchart for Delivery of a People-Processing Service (Fig 3.4)

Park Car Check InSpend

Night in Room

Breakfast

Check Out

Breakfast

Prepared

Maid Makes up

Room

People Processing – Stay at Motel

Simple Flowchart for Delivery of a Possession-Processing Service (Fig 3.4)

Possession Processing – Repair a DVD Player

Travel to Store

Technician Examines Player,

Diagnoses Problem

Leave Store

Return, Pick up Player and Pay

Technician Repairs Player

(Later) Play DVDs at Home

Simple Flowchart for Delivery of Mental Stimulus-Processing Service (Fig 3.4)

Mental Stimulus Processing – Weather Forecast

Turn on TV, Select Channel

View Presentation of Weather

Forecast

TV Weatherperson Prepares Local

Forecast

Confirm Plans for Picnic

Meteorologists Input Data to Models and

Creates Forecast from Output

Collect Weather Data

Weather Forecasting Is a Service Directed at Customers’ Minds (Fig 3.5)

Simple Flowchart for Delivery of An Information-Processing Service (Fig 3.4)

Information Processing – Health Insurance

Learn about

Options

Select Plan, Complete

Forms

Pay

Customer Information Entered in Database

Printed Policy

Documents Arrive

Insurance Coverage Begins

University and Insurance Company Agree on Terms of

Coverage

The Flower of Service (Fig

3.6)

Core

Information

Consultation

Order Taking

Hospitality

Payment

Billing

Exceptions

Safekeeping

Facilitating elements Enhancing elements

KEY:

The Flower of Service: Facilitating Services—Information

Core

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

The Flower of Service:Facilitating Services—Order Taking

Core

Customers need to know what is available and may want to secure commitment to delivery. The process should be fast and smooth.


Applications

Order entry

Reservations and check-in

The Flower of Service:Facilitating Services—Billing

Core

“How much do I owe you?”

Bills should be clear,

Accurate, and intelligible.


Periodic statements of

account activity

Machine display of amount due

The Flower of Service:Facilitating Services—Payment

Core

Customers may pay faster

and more cheerfully if you

make transactions simple

and convenient for them.


Self service payment

Direct to payee or intermediary

Automatic deduction

Core

The Flower of Service:Enhancing Services—Consultation

Value can be added to goods and services by offering advice and consultation tailored to

each customer’s needs and situation.


Customized advice

Personal counseling

Management consulting

The Flower of Service:Enhancing Services—Hospitality

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!


Greeting

Waiting facilities and amenities

Food and beverages

Toilets and washrooms

Security

Core

Core

The Flower of Service:Enhancing Services—Safekeeping

Customers prefer not to worry about looking after the personal possessions that they bring with them to a service site.


Looking after possessions

customers bring with them

Caring for goods purchased

(or rented) by customers

Core

The Flower of Service:Enhancing Services—Exceptions

Customers appreciate some

flexibility when they make special requests and expect responsiveness when things don’t go according to plan.


Special requests in advance

Complaints or compliments

Problem solving

Restitution

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

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

Blueprinting the Restaurant Experience: Act 1 (Fig 8.1)

Make Reservatio

n

Coat Room

Valet Parking

Accept reservati

on

Greet customer, take car

keys

Greet, take coat,

coat checks

Check availability,

insert booking

Take car to

parking lot

Hang coat with visible

check numbers

Maintain reservati

on system

Maintain (or rent) facilities

Maintain facilities/ equipme

nt

Line of interaction

Line of visibility

Line of internal physical

interaction

Contact person (visible actions)

Contact person

(invisible actions)

Fro

nt

-

Sta

ge

Back -

Sta

ge

…

Timeline Act 1

Physical Evidence

Service Standards and

Scripts

Support Processes

WW WW WW

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 failure—e.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

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 customer’s 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

Improving Reliability of Processes by Failure Proofing

Errors include:

Treatment errors—human 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 errors—failures 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 wasn’t requested in the first place

Redesigning Service Processes

Mitchell T. Rabkin MD,

formerly president of

Boston’s Beth Israel Hospital

Why Redesign?

“Institutions are like steel beams—they tend to rust. What was once smooth and shiny and nice

tends to become rusty.”

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

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

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

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

The Customer as Co-Producer

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

Low—Employees and systems do all the work- Often involves standardized service

Medium—Customer inputs required to assist provider- Provide needed information and instructions

- Make some personal effort; share physical possessions

High—Customer works actively with provider to co-produce the service- Service cannot be created without customer’s active participation

- Customer can jeopardize quality of service outcome (e.g., weight loss, marriage counseling)

Self-Service Technologies (SSTs) Ultimate form of customer involvement

Customers undertake specific activities using facilities or systems provided by service supplier

Customer’s 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 SSTsUsed in both supplementary services and delivery of core

product○ e.g. eBay—no human auctioneer needed between sellers and buyers

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

What Aspects of SSTs Please or Annoy Customers? People love SSTs when…

SST machines are conveniently located and accessible 24/7—often 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 fail—system is down, PIN numbers not accepted, etc They mess up—forgetting 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

HSBC: “The world’s local bank”

Source: Courtesy HSBC

Global site brought to customer’s local computer

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 doesn’t 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

Dysfunctional Customer Behavior Disrupts Service

Process

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: There’s truth in both perspectives

No organization wants an ongoing relationship with an abusive customer

Six Types of Jaycustomers:

The Thief

The Rulebreaker

The Belligerent

The Deadbeat

Family Feuders

Vandals