4.

Service Process
Design and Strategy

OBJECTIVE
Importance and Nature of Services
Service Strategy: Focus & Advantage
Service-System Design Matrix
Service Blueprinting
Service Fail-safing
Design of a Service System
Characteristics of a Well-Designed Service
Delivery System

What are services?

Services are operations with:
-

Intangible outputs that ordinarily cannot be inventoried

Close customer contact
Short lead times
High labor costs relative to capital costs
Subjectively determined quality

Some facts about services?

Enormous diversity
Technical training

important due to significant

computers, automation and

dependence on
technology
Service workers well paid relative to manufacturing
Need better planning, controlling, and management
to stay competitive

IMPORTANCE OF SERVICES
Contributions to GDP by Services, Manufacturing,

Agriculture?
GDP figures for developing and developed
countries?

The Nature of Services

Wide variations in the service requirements of
customers

Services are idiosyncratic

Difference between quality of work and quality of
service

Most services contain a mix of tangible and intangible

attributes

Nature of Service ,* *>

Effective management of services requires an

understanding of marketing and personnel, as
well as operations

Services often take the form of cycles of

encounters involving face-to-face, phone,
electromechanical, and/or
mail
Internet,
interactions

The Customer Centric View

A philosophical view that
suggests the organization
exists to serve the
customer, and the
systems and the
employees exist to
facilitate the process of
service.

The
Systems

The Service
Strategy

The
Customer

The
People

Service Strategy: Performance

Priorities
Treatment of the customer
Speed and convenience of service delivery
Price
Variety
Quality of the tangible goods
Unique skills that constitute the service offering

Service-System Design Matrix

Degree of customer/server contact
High

Buffered
core ( none )

Permeable

Reactive

system ( some'

system ( much )

Low

f Face-to-face\

^ customization/
z
/'Face-to-faceYv.
/

Sales
Opportunity

\ loose specs /

I Facc-to-face\ \
tight specs

/Internet

&

on -site

Production
Efficiency

Phone
Contact

ailcontacKchnol

Low

High
10

Service Design?
Is concerned with the development of service concept to

meet specific customer needs. It also includes designing

a system through which service concept can be

delivered.

11

Principles of Service Design

Know your customer

Determine which of the customer ' s need will be

satisfied

Develop a service strategy, and position the service for

competitive advantage

Simultaneous design using Concurrent engineering

Design service processes from customer ' s and

employee ' s prospective
12

Principles of Service Design

Single service provider to avoid wrong doing due to
miscommunication

Design back room operations to support front room

operations

Incorporate data collection in design process

Determine the extent of customer contact and
participation

Build flexibility & robustness in the system

Design employee and customer loyalty in the system
Continuous improvement
13

Service Design Issues

Facility Location (based upon proximity to customers)
Facility Layout (depends on presence of customer at the
location)
Product and Process Design (Covers both the intangible
and tangible aspects of the service offering)
Scheduling (how the workers are assigned to the
service)
Quality Control (focus on customer needs)
Demand/Capacity Planning (depends on the type of
service and the urgency of matching supply to demand)

14

Service Design Issues

Customer Contact Level (physical presence & length of

time)
Automation (the substitution of technology for people)
Front Line Personnel Discretion (flexibility of the service
employee)
Worker Skills (depend on service strategy and concept,
customer contact level and industrialization level)
Sales Opportunities (coincide with high customer contact
and employee discretion)
Standardization of Service (level of uniformity provided in
the service)
Customer Participation (substituting consumer labor for
provider labor)
15

Service Mapping / Blueprinting

A tool for simultaneously depicting the service process, the
points of customer contact, and the evidence of service
from the customer ' s point of view.
Process

Service

Mapping

Points of Contact
Evidence

A map or flowchart of all the transactions constituting the

service delivery process.

16

An Example of Service
Blueprinting
Standard
execution time
2 minutes

Brush
shoes
30

secs

Total acceptable
execution time
5 minutes

Apply
polish

30
secs

Collect

Buff

payment

45

15
secs

secs

/
Clean
Seen by
customer

shoes
45

Fail
point

Wrong
color wax

Materials

..

( e g , polish, cloth)

secs

Line of
visibility

Not seen by
customer but

necessary to

performance

Select and
purchase
supplies
17

Benefits of Service Blueprint

More precise than verbal description of service process.
Allows creating, study and testing of service conceptually
on paper before implementation.
Useful for training, communication and quality
improvement process.

Quality

improvement processes allow application of

value analysis to evaluate new and existing services.

Also helpful to determine the fail points.

18

Blueprints Can Be Used By

Service Marketers
- Creating realistic
customer expectations
service system design

Operations Management
- Rendering the service

as promised
managing fail points
training systems
quality control

Human Resources
- Empowering the
human element
job descriptions
selection criteria
appraisal systems

System Technology
- Providing necessary

tools:
system specifications

19

Designing a Service
Organization
Identification of

target market ( who is our

customer)
Service concept (how do we differentiate from
others?)
Service strategy (what is our service package
and the operating focus of our service)
Service delivery system (what are the actual
processes, staff and facilities by which the
service is created)

Three Contrasting Service Designs

The production line approach (ex. McDonald ' s)
The self-service approach (ex. automatic teller
machines)

The personal attention approach (ex. Ritz-Carlton Hotel

Company)

Service Delivery System Design

Facility location and layout
Service-scope
- Ambient conditions
- Spatial layout and functionality
- Signs, symbols, and artifacts

Process and job design

Technology and information support systems
Organizational structure

Service Encounter Design

Customer Contact Behavior & Skills
Requirements
- Script dialogue
Service Provider Selection & Empowerment
Service Recovery and Guarantees
- Service upsets and recovery
- Service guarantees-explicit and implicit
-

23

CSF in Service Encounters

Service provider
Human

g)

Machine

Employee selection
Interpersonal skills
Support technology
Trust

Easy to access

Fast response
Easy to access

Compatibility
Security

Remote monitoring
Repair/ maintenance

User friendly

Security

ATM

Tracking

EDI

Role of Other Customers in

Service Encounter?
Management can adopt some methods to have pleasant
encounter:
Selecting right customer
Establishing rules of behavior e.g. no smoking
Facilitate positive customer -customer interactions

25

Characteristics of a Well- Designed

Service System
Each element

of the service system is consistent

with the operating focus of the firm

It is user-friendly

It is robust

It is structured so that consistent performance by its

people and systems is easily maintained

26

Characteristics of a Well- Designed

Service System
It provides effective link between the back office
and the front office

It

manages the evidence of service quality in

such a way that customers see the value of the
service provided

It is cost-effective

27

Applying Behavioral Science to

Service Encounters

The front-end and back-end of the encounter are

not necessarily equal

Segment the pleasure, combine the pain (longevity

is more important)

Let the customer have a say in the process

Pay attention to norms and rituals

Let the punishment fit the crime in service recovery

28

Service Guarantees as Design

Drivers
Recent research suggests:
- Any guarantee is better than no guarantee
- Involve the customer as well as employees in
the design
- Avoid complexity or legalistic language
- Do not quibble or wriggle when a customer
invokes a guarantee
- Make it clear that you are happy for customers
to invoke the guarantee

29

What a guarantee does?

Forces firm to focus on customers' needs
Sets clear standards: Tells employees

what the
company stands for and it forces the company to define
each employee ' s role responsibility in delivering the
service.

Generates

feedback: A guarantee forces company to

create a system for discovering errors through
feedback.

the firm to analyze the cause of failure. Which

failure points exists in the system? If failures can be
identified can their origin be traced and avoided.

Forces
Builds

customer loyalty: Guarantee reduces customers

risk of purchase decision and enhances loyalty thereby
increasing sales. Sanjayjharkharia
30

How to set unconditional

guarantee?
Start with a vision of error-free service.
Review every step of your delivery system to

Tdentify

obstacles preventing you from offering an unconditional

guarantee

Design entire organization to support guarantee.

The success of "Bugs" Burger Bug Killer

(BBBK) http://buqsburqer.com/

BBBK, a US-based pest-elimination company, is an example of how a

company can succeed by analyzing the elements of its service-delivery
process by asking, "What obstacles stand in the way of our guaranteeing
pest elimination?
BBBK's service guarantee to hotel and restaurant clients promises several
things

Don t make any payment until all pests on your premises have been

eliminated.
- If you are ever dissatisfied with our service, you will receive a refund for up to
12 months of the company's services - plus fees for another exterminator of
your choice for the next year.
- if a guest spots a pest on your premises, BBBK will pay for the guest's meal or
room, send a letter of apology, and pay for a future meal or stay.
- If your facility is closed down due to the presence of roaches or rodents, BBBK
will pay any fines, as well as all lost profits, plus $5,000.
32

How successful is BBBKs

guarantee?
The company, which operates throughout the United
States:

Charges

up to 10 times more than its competitors yet

has a disproportionately high market share in its operating
areas.

Its

service is so outstanding that the company rarely

needs to spend money on its guarantee.

33

Moments of Truth in Services

customer contact is called a moment of truth.
It gives the customer an opportunity to form or change
an impression about the service provider.

Each

It

also gives an opportunity to satisfy a previously

dissatisfied customer and making him a loyal customer.

Service Recovery
A service recovery is satisfying a previously dissatisfied
customer and making them a loyal customer.

Measure the costs

Break the silence and listen closely for complaints
Anticipate the needs for recovery
Act fast
Train employees
Empower the front line
Close the loop
35

Approaches to Service
Recovery
Case-by-case

addresses each customer s complaint

individually but could lead to perception of unfairness.
Systematic response uses a protocol to handle
complaints but needs prior identification of critical failure
points and continuous updating.
Early intervention attempts to fix problem before the
customer is affected.
Substitute service allows rival firm to provide service but
could lead to loss of customer.

36

Dimensions of Service Quality

(RATER, Used by customers to judge service quality)

Reliability: Perform promised service dependably &

accurately.
- Receive meals after ordering in almost uniform time intervals
- Accuracy in billing

Ability to convey trust and confidence.

Being polite and showing respect for customer.

Assurance:
-

Tangibles:

Physical facilities and facilitating goods.

- Cleanliness
- Taste

Empathy:

Ability to be approachable.

- Being a good listener.

Willingness to help customers promptly.

Avoid keeping customers waiting for no apparent reason.

Responsiveness:
-

37

Perceived Service Quality

Word of
mouth

Personal
needs

Past
experience
External communication

Dimensions of
Service Quality

Expected
service

Reliability
Assurance
Tangibles
Empathy
Responsiveness

Perceived
service

Perceived Service quality

1 . Less Expectations ES<PS
(Quality surprise)
2. Expectations met
ES-PS (Satisfactory quality)
3. More Expectations
ES>PS (Unacceptable quality)

38

Gaps in Service Quality

Word -of-mouth
communications

Personal needs

Past experience

Customer

Expected service

GAP 5

(Customer
satisfaction)

Perceived service

Service delivery (including

Provider

pre- and post-contacts )

GAP 3
GAP 1
( Market
research )

I5
<

O y.

External communications
to consumers

( Conform
ance)

Translation of perceptions into

service quality specifications

GAP 2
(Design)

t
i

Management perceptions of
consumer

39

Measuring Service Quality with

SERVQUAL

Measuring service quality is a challenge as customers satisfaction is

determined by many intangible factors

SERVQUAL: Is a multiple item scale for measuring 5 dimensions of

service quality (R-A-T-E-R). It is a two part instrument with initial
section to record customers expectation from a class of service and

the second section to record customers perception of a particular

service.

Score of the quality of service is determined by computing differences

between the ratings that customer assign to paired expectation &

perception statements

40

Application of SERVQUAL
Tracking

service

quality

trends

through

periodic

customers survey

For multiple services, SERVQUAL is used to determine if

any unit has poor service quality

Used in marketing studies to compare service with

competitor ' s service and identify the dimensions of
superior or inadequate service quality.

41

Operational Decisions in Goods

and Services
Decisions
Location Selection

Goods
Near Raw Materials

Service
Near Market

Layout Design

Enhances
Enhances efficiency
production efficiency as well as customer
satisfaction

Human Resources
and Job Design

Technical skills more Behavioral skills are

important, labour
more important,
standards are
labour standards
may vary
constant
42

Operational Decisions in Goods

and Services
Decisions
Supply chain
management
Inventory

Scheduling

Goods

Service

Critical

Important but not

Mainly tangible and

can be stored
Uniform production
rate is possible

critical
Mainly intangible
and difficult to store
Have to meet
customer demands
irrespective of
pattern

Maintenance

Often preventive

Often repair

43

Hostel Work
Learn more about SERVQUAL from web resources
Learn more about "Bugs" Burger Bug Killer from

web

resources

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