Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E Chapter 8 Designing and Managing Service Processes

Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E Developing a Blueprint – Some Basic Advice  Identify key activities in creating and delivering the service  Distinguish between front stage (what customers experience) and back stage  Chart activities in sequence  Show how interactions between customers and employees are supported by backstage activities and systems  Establish service standards for each step  Identify potential fail points  Focus initially on “big picture” (later, can drill down for more detail in specific areas)

Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E Service Blueprinting: Key Components 1. Define standards for frontstage activities 2. Specify physical evidence 3. Identify principal customer actions line of interaction (customers and front stage personnel) Front stage actions by customer-contact personnel line of visibility (between front stage and backstage) Backstage actions by customer contact personnel 8. Support processes involving other service personnel 9. Support processes involving IT Where appropriate, show fail points and risk of excessive waits

Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E Simplified Example: Blueprinting a Hotel Visit (extract only) Physical Evidence Customer Actions Employee Actions Face-to-face Front Stage Phone Contact Backstage Make reservation Rep. records, confirms Arrive, valet park Check-in at reception Doorman greets, valet takes car Enter data Valet Parks Car Make up Room Register guest data Receptionist verifies, gives key to room Go to room Hotel exterior, lobby, employees, key Elevator, corridor, room, bellhop Line of Interaction Line of Visibility

Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E Improving Reliability of Processes by Failure Proofing  Analysis of reasons for failure often reveals opportunities for failure proofing to reduce/eliminate risk of errors  Errors include:  treatment errors—human failures during contact with customers  tangible errors—failures in physical elements of service  Fail-safe procedures include measures to prevent omission of tasks or performance of tasks  incorrectly  in wrong order  too slowly  not needed or specified  Need fail-safe methods for both employees and customers

Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E Process Redesign: Principal Approaches (Table 8-1)  Eliminating non-value-adding steps  Shifting to self-service  Delivering direct service  Bundling services  Redesigning physical aspects of service processes

Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E Customers as Co-Producers: Levels of Participation in Service Production  Low – Employees and systems do all the work  Medium – Customer inputs required to assist provider  Provide needed information, instructions  Make personal effort  May share physical possessions  High – Customer works actively with provider to co-produce the service

Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E Self Service Technologies (SSTs)  Self-service is ultimate form of customer involvement in service production  Customers undertake specific activities using facilities or systems provided by service supplier  Customer’s time and effort replace those of employees  Concept is not new—self-serve supermarkets date from 1930s, ATMs and self-serve gas pumps from 1970s  Today, customers face wide array of SSTs to deliver information-based services, both core and supplementary  Many companies seek to divert customers from employee contact to Internet-based self-service

Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E Service Firms as Teachers: Well-trained Customers Perform Better  Firms must teach customers roles as co-producers of service  Customers need to know how to achieve best results  Education can be provided through:  Brochures  Advertising  Posted instructions  Machine-based instructions  Websites, including FAQs  Service providers  Fellow customers  Employees must be well-trained to help advise, assist customers

Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E Managing Customers as Partial Employees to Increase Productivity and Quality 1. Analyze customers’ present roles in the business and compare to management’s ideal 2. Determine if customers know how to perform and have necessary skills 3. Motivate customers by ensuring that will be rewarded for performing well 4. Regularly appraise customers’ performance; if unsatisfactory, consider changing roles or termination

Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E The Problem of Customer Misbehavior – Identifying and Managing “Jaycustomers” What is a jaycustomer? A customer who behaves in a thoughtless or abusive fashion, causing problems for the firm itself, employees, other customers Why do jaycustomers matter?  Can disrupt processes  Affect service quality  May spoil experience of other customers What should a firm do about them?  Try to avoid attracting potential jaycustomers  Institute preventive measures  Control abusive behavior quickly  Take legal action against abusers  BUT firm must act in ways that don’t alienate other customers

Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E Six Types of “Jaycustomer”  Thief – seeks to avoid paying for service  Rule breaker – ignores rules of social behavior and/or procedures for safe, efficient use of service  Belligerent – angrily abuses service personnel (and sometimes other customers) physically and/or emotionally  Family Feuders – fight with other customers in their party  Vandal – deliberately damages physical facilities, furnishings, and equipment  Deadbeat – fails to pay bills on time Can you think of others? How should firms deal with each of these problems?