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Chapter 8:

Designing and ManagingService Processes

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

ReservationValet

Parking

Reception

Baggage

Service

CocktailBar

RestaurantEntertainment/

Sports/Exercise

Internet

Wake-up

Call

Room

Service

Business

Center

Cashier

A Bed for theNight in an

Elegant PrivateRoom with a

Bathroom

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What Happens, When, in What Sequence?

Time Dimension in Augmented Product (Fig 3.3)

Before Visit

Reservation

internet

Parking Get car

Check in

Porter

Useroom

MealPay TV

Room service

Internet

Check out

Time Frame of An Overnight Hotel Stay

(Real-time service use)

USE GUESTROOM OVERNIGHT

Internet

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Simple Flowchart for Delivery of a

People-Processing Service (Fig 3.4)

Park Car Check In

Spend

Night inRoom BreakfastCheckOut

BreakfastPrepared

Maid Makesup Room

People Processing Stay at Motel

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a

Possession-Processing Service(Fig 3.4)

Possession Processing Repair a DVD Player

Travel to

Store

Technician Examines

Player, DiagnosesProblem

Leave

Store

Return, Pick up

Player and Pay

Technician Repairs Player

(Later) Play

DVDs at Home

t

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mp e owc art or e very oMental

Stimulus-Processing Service (Fig 3.4)

Mental Stimulus Processing Weather Forecast

Turn on TV, Select

Channel

View Presentation of

Weather Forecast

TV WeatherpersonPrepares Local

Forecast

Confirm Plans for

Picnic

Meteorologists Input Datato Models and CreatesForecast from Output

CollectWeather

Data

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Weather Forecasting Is a Service

Directed at Customers Minds (Fig 3.5)

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mp e owc ar or e very o nInformation-Processing Service (Fig3.4)

Information Processing Health Insurance

Learn aboutOptions

Select Plan,Complete Forms Pay

Customer InformationEntered in Database

Printed Policy

DocumentsArrive

Insurance Coverage

Begins

University and InsuranceCompany Agree on Terms of

Coverage

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The Flower of Service (Fig 3.6)

Core

Information

Consultation

Order Taking

Hospitality

Payment

Billing

Exceptions

Safekeeping

Facilitating elements

Enhancing elements

KEY:

Th Fl f S i

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The Flower of Service:

Facilitating Services

Information

Core

Customers often require information about how to obtainand use a product or service.

Examples of elements:

Directions to service siteSchedule/service hours

Prices

Conditions of sale

Usage instructions

Th Fl f S i

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Facilitating ServicesOrder

Taking

Core

Customers need to know what is available and maywant to secure commitment to delivery. The processshould be fast and smooth.


Applications

Order entry

Reservations and check-in

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Facilitating ServicesBilling

Core

How much do I owe you?

Bills should be clear,

Accurate, and intelligible.


Periodic statements of

account activity

Machine display of amountdue

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Facilitating ServicesPayment

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

Th Fl f S i

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Core


Enhancing Services

ConsultationValue can be added to goods and services by offeringadvice and consultation tailored to

each customers needs and situation.


Customized advice

Personal counseling

Management consulting

Th Fl f S i

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Enhancing Services

Hospitality Customers who invest time and effortin visiting a business and using itsservices 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

Th Fl f S i

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Core


Enhancing Services

SafekeepingCustomers prefer not to worry aboutlooking after the personal possessionsthat they bring with them to a servicesite.


Looking after possessions

customers bring with them

Caring for goods purchased

(or rented) by customers

Th Fl f S i

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Core


Enhancing Services

ExceptionsCustomers appreciate some

flexibility when they make specialrequests and expect responsiveness whenthings dont go according to plan.


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 higherlevel of detail

Distinguish between front stage and backstage

Clarify interactions between customers and staff, andsupport by backstage activities and systems

Identify potential fail points; take preventive measures;prepare contingency

Develop standards for execution of each activitytimes fortask completion, maximum wait times, and scripts to guideinteractions between employees and customers

K C f S i

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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)

MakeReservation

Coat RoomValet

Parking

Acceptreservation

Greet

customer,take car keys

Greet, takecoat, coatchecks

Checkavailability,

insert booking

Take car toparking lot

Hang coat withvisible check

numbers

Maintainreservation

system

Maintain(or rent)facilities

Maintainfacilities/

equipment

Line ofinteraction

Line ofvisibility

Line ofinternalphysical

interaction

Contact person(visible actions)

Contact person(invisible

actions)

Front

-

Stage

Back

-

Stage

Timeline Act 1

PhysicalEvidence

Service Standardsand Scripts

SupportProcesses

W W W

uepr nt ng t e estaurant

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uepr nt ng t e estaurantExperience: 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 stepsufficiently high to satisfy and even delight customers

Standards may include time parameters, script for a technicallycorrect performance, and prescriptions for appropriate style anddemeanor

Must be expressed in ways that permit objective measurement

First impression is important as it affects customersevaluations of quality during later stages of service delivery

Customer perceptions of service experiences tend to becumulative

For low-contact service, a single failure committed frontstage 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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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 ofBostons Beth Israel Hospital

Why Redesign?

Ins t i tut ion s are l ike steel beamsthey tend to ru st .

What was once smoo th 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 obsoleteand 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

P R d i A h

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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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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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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, marriagecounseling)

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Self-Service Technologies

(SSTs) Ultimate form of customer involvement

Customers undertake specific activities using facilities orsystems 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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Customer

Co-Production

Economic rationale of self-service Productivity gains and cost savings result when

customers take over work previously performed byemployees

Lower prices, reflecting lower costs, inducecustomer to use SSTs

SSTs present both advantages and disadvantages

Benefits: Time and cost savings, flexibility, convenience

of location, greater control over service delivery, and ahigher perceived level of customization

Disadvantages: Anxiety and stress experienced bycustomers who are uncomfortable with using them

What Aspects of SSTs Please or

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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 closeas nearest computer!

Obtaining detailed information and completing transactions can be donefaster 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 asrequested, 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 worlds local bank

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HSBC: The world s local bank

Source: Courtesy HSBC

Global site brought to customers local computer

Putting SSTs to Test by

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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 anduser-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 technologiesthat will enable prompt service recovery when thingsgo wrong

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Dysfunctional Customer BehaviorDisrupts Service Process

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Six Types of Jaycustomers:

The Thief

The Rulebreaker

The Belligerent

The Deadbeat

Family Feuders

Vandals