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Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 1
Chapter 8:Designing andManagingService Processes
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Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 2
Overview of Chapter 8
Blueprinting Services to Create Valued Experiences andProductive Operations
Service Process Redesign The Customer as Co-Producer Dysfunctional Customer Behavior Disrupts Service
Processes
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Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 3
Blueprinting Services toCreate Valued Experiences andProductive Operations
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Developing a Blueprint
Identify key activities in creating and delivering service Define big picture before drilling down to obtain ahigher 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, andscripts to guide interactions between employees andcustomers
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Key Components of a Service Blueprint
1. Define standards for front-stage activities2. Specify physical evidence3. Identify principal customer actions4. Line of interaction (customers and front-stagepersonnel)
5. Front-stage actions by customer-contact personnel6. Line of visibility (between front stage and backstage)7. Backstage actions by customer contact personnel8. Support processes involving other service personnel9. 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 (Fig8.1)
MakeReservation
Coat RoomValet Parking
Acceptreservation
Greet customer,take car keys Greet, takecoat, coat
checks
Checkavailability,
insert booking
Take car toparking lot
Hang coat withvisible check
numbers
Maintainreservation
system
Maintain (orrent)
facilities
Maintainfacilities/
equipment
Line ofinteraction
Line of visibility
Line of internalphysical
interaction
Contact person(visible actions)
Contact person(invisible actions
Stage
tage
Timeline Act 1
PhysicalEvidence
Service Standardsand Scripts
SupportProcesses
W W W
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Blueprinting the Restaurant Experience:A Three Act Performance
Act 1: Prologue and Introductory Scenes Act 2: Delivery of Core Product
o Cocktails, seating, order food and wine, wine serviceo Potential fail points: Menu information complete? Menu intelligible? Everything
on the menu actually available?o Mistakes in transmitting information a common cause of quality failuree.g.
bad handwriting; poor verbal communicationo 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
o Remaining actions should move quickly and smoothly, with no surprises at theend
o Customer expectations: Accurate, intelligible and prompt bill, payment handledpolitely, guest are thanked for their patronage
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Setting Service Standards
Service providers should design standards for each step sufficientlyhigh to satisfy and even delight customerso Standards may include time parameters, script for a technically correct
performance, and prescriptions for appropriate style and demeanor 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 isrelatively more serious than in high-contact service
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Improving Reliability of Processes byFailure Proofing
Analysis of reasons for failure often reveals opportunities for failureproofing to reduce/eliminate future risk of errors Need fail-safe methods for both employees and customers Errors include:
o Treatment errorshuman failures during contact with customero 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:o Performing tasks incorrectly, in the wrong order, too slowlyo Doing work that wasnt requested in the first place
Service Perspectives Poka Yokes For service Poka Yoke is for both servers and customers. Ex surgeons have the instruments for surgery arranged in a form such
that the instruments are not left in before closing incision Dress codes, timings, guidelines to be followed etc are used as poke
yoke tools for customers
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Redesigning Service Processes
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Why Redesign?
Revitalizes process that has become outdated
Changes in external environment make existing practicesobsolete and require redesign of underlying processes
Rusting occurs internallyo Natural deterioration of internal processes; creeping
bureaucracy, unofficial standardso 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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Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 13
Process Redesign: Approaches andPotential Benefits (1) (Table 8.1)
Eliminating non-value-adding stepso Streamline front-end and back-end processes of services with goal of
focusing on benefit-producing part of service encountero Eliminate non-value-adding stepso More customized service
Delivering direct serviceo Bring service to customers instead of bringing customers to providero Productivity can be improved if companies can eliminate expensiveo retail locations
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Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 14
Process Redesign: Approaches andPotential Benefits (2) (Table 8.1)
Shifting to self-service
o Increase in productivity and service qualityo Lower costs and perhaps priceso Enhance technology reputation
Bundling services ( Air travel+ Car rental + Hotel accomodation)o Involves grouping multiple services into one offer, focusing on a well-definedcustomer groupo Often has a better fit to the needs of target segment.
Redesigning physical aspects of service processeso Focus on tangible elements of service process; include changes to facilities
and equipment to improve service experienceo Increase convenienceo Enhance the satisfaction and productivity of front-line staffo Cultivate interest in customerso Differentiate company
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Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 16
The Customer as Co-Producer
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Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 17
Levels of Customer Participation
Customer Participationo Actions and resources supplied by customers during service
productiono and/or deliveryo Includes mental, physical, and even emotional inputs
Three Levelso LowEmployees and systems do all the work
Often involves standardized service. Ex Bus Travelo MediumCustomer inputs required to assist provider
Provide needed information and instructions Make some personal effort; share physical possessions Filing Tax ret
o HighCustomer works actively with provider to co-produce theservice 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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Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 18
Self-Service Technologies (SSTs)
Ultimate form of customer involvement e.g. Internet-based services, ATMs, self-service gasoline pumps
Information-based services lend selves particularly well to SSTso Used in both supplementary services and delivery of core product
e.g. eBayno human auctioneer needed between sellers and buyers Many companies and government organizations seek to divert
customers from employee contact to Internet-based self-serviceo Economic trade-off between declining cost of these self-service systems and
rising cost of laboro Challenge: Getting customers to try this technology
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Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 19
Psychological Factors in CustomerCo-Production
Economic rationale of self-service Lower prices, reflecting lower costs, induce customer to use
SSTs Research shows that customers tend to take credit for
successful outcomes, but not blame for unsuccessful ones Critical to understand how consumers decide between using
an SSToption and relying on a human provider SSTs present both advantages and disadvantages
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Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 20
What Aspects of SSTs Please or AnnoyCustomers?
People love SSTs when
o SST machines are conveniently located and accessible 24/7often as closeas nearest computer!
o Obtaining detailed information and completing transactions can be done fasterthan through face-to-face or telephone contact
o People in awe of what technology can do for them when it works well People hate SSTs when
o SSTs failsystem is down, PIN numbers not accepted, etco They mess upforgetting passwords, failing to provide information as
requested, simply hitting wrong buttons
Key weakness of SSTs: Too few incorporate service recoverysystemso
Customers still forced to make telephone calls or personal visits
o Blame service provider for not providing more user-friendly system
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Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 23
Customers as Partial Employees
Customers can influence productivity and quality of serviceprocesses and outputs
Customers who are offered opportunities to participate at activelevel are more likely to be satisfied
However, customers cause one-third of all service problemso Difficult to recover from instances of customer failureo
Focus on preventing customer failure by collecting data on problemoccurrence, analyzing root causes, and establishing preventive solutions Managing customers as employees helps to avoid customer failures
o Conduct job analysis of customers present role in businesscompareagainst role that firm would like customers to play
o Educate customers on how expected to perform and skills neededo Motivate customers by ensuring that rewarded if they perform wello Appraise customers performance regularly
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Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 24
Dysfunctional Customer BehaviorDisrupts Service Process
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Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 25
Addressing the Challenge ofJaycustomers
Jaycustomer: A customer who behaves in a
thoughtless or abusive fashion, causingproblems for the firm, its employees, and othercustomers
More potential for mischief in servicebusinesses, especially when many customers
are present
Divergent views on jaycustomerso The customer is king and can do no wrong.o Marketplace is overpopulated with nasty people who
cannot be trusted to behave in ways that self-respecting services firms should expect and require
o
Insight: Theres truth in both perspectives
No organization wants an ongoing relationshipwith an abusive customer
T f J t
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Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 26
Types of Jaycustomers:The Thief
No intention of payingsets out to steal or pay less Services lend themselves to clever schemes to avoid payment
o For example: bypassing electricity meters, circumventing TV cables,
Firms must take preventive actions against thieves, but not alienate
honest customers by degrading their service experienceo Make allowances for honest but absent-minded customers
Six Types of Jaycustomers:
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Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 27
Six Types of Jaycustomers:The Rulebreaker
Many services need to establish rules to guide customers safelythrough the service encounter Government agencies may impose regulations that service
suppliers must enforce Some rules protect other customers from dangerous behavior
o For example: Vail and Beaver Creek, Coloradoski patrollers issue warnings
to reckless skiers by attaching orange stickers on their lift tickets Ensure company rules are necessary, not bureaucratic
Six Types of Jaycustomers:
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Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 28
Expresses resentment, abuses serviceemployees verbally or even physically Confrontations between customers
and service employees can easilyescalate
Firms should ensure employees have
skills to deal with difficult situationso In a public environment, priority is to
remove person from other customerso May be better tomake a public stand on
behalf of employees than conceal for fearof bad publicity
Six Types of Jaycustomers:The Belligerent
Confron tat ions between Custom ers and Service Employ ees Can Easi ly Escalate
Six Types Of Jaycustomers:
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Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 29
Family Feuders: People who get into arguments with other
customersoften members of their own family
The Vandal:o Service vandalism includes pouring soft drinks into bank cash machines;
slashing bus seats, breaking hotel furnitureo
Bored and drunk young people are a common source of vandalism
o Unhappy customers who feel mistreated by service providers take revengeo Prevention is the best cure
Six Types Of Jaycustomers:Family Feuders and Vandals
Six Types Of Jaycustomers:
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Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 30
Six Types Of Jaycustomers:The Deadbeat
Customers who fail to pay (as distinct from thieves who neverintended to pay in the first place)o Preventive action is better than curefor example: insisting on prepayment;
asking for credit card number when order is takeno Customers may have good reasons for not paying
If the client's problems are only temporary ones, consider long-term value ofmaintaining the relationship
For an industry-specific categorization, see Research Insights 8.1:Categorizing Jaycustomers in Hotels, Restaurants, and Bars
Consequences of Dysfunctional Customer
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Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 31
Consequences of Dysfunctional CustomerBehavior
Consequences for staff working front stage Consequences for customers can be both negative and positive Consequences for organization