Services Improvement Techniques Polina Baranova Derbyshire Business School

Critical Incidents Specific interactions between customers and service providers that are especially satisfying or dissatisfying (Bitner et al, 1990) Depends largely on the performance of the front -line staff ‘All instances where customers come into contact with our organisation constitute ‘moments of truth’ – unique, never-to-be-repeated opportunities for us to distinguish ourselves memorably from competitors’.‘All instances where customers come into contact with our organisation constitute ‘moments of truth’ – unique, never-to-be-repeated opportunities for us to distinguish ourselves memorably from competitors’. Jan Carlzon, then President of Scandinavian Airlines, said in 1980

“Good Afternoon, How can I help you?”

Managing customer demand Aim to stimulate demand during off-peak periods and to discourage additional demand during peak periods Various methods used, e.g. –Price incentives or premiums –Service reformulated during peak/off-peak periods

E.g. ‘ happy hour’! A means of shifting demand from busy to quieter periods May also stimulate completely new demand from price sensitive segments

Managing supply Aim to make more flexible use of resources – but some resources may be very inflexible (e.g. historic tourist attractions) Hire equipment and personnel only for peak periods Undertake as much preparatory work as possible in off- peak – particularly applies to tangible elements of the service offer

Queuing A queue is a buffer between temporary excess demand and fixed service capacity Handling of queues can detract from the total service experience Techniques are used to reduce the perceptions of waiting time

Reservation systems Reservation systems: Reduce the need to queue Are useful for predicting demand and adjusting supply accordingly Allow a company to develop an early relationship with customers

Improving reliability of processes by ‘failure proofing’ (Lovelock, 2009) Reasons for failure often reveal opportunities for ‘failure proofing’ to reduce risk of future errors Fail-safe methods for both employees and customers needed

Failure proofing techniques Application of poka-yokes methods, Richard Chase and Douglas Stewart (1994) Server poka-yokes: equipment, dress code, communication. Customer poka-yokes : reminders of appointments; guidance for customers;

Overall impact of failure-proofing techniques Helping customers to avoid failure can become a source of competitive advantage, especially when companies increasingly deploy self-service technologies (Christopher Lovelock et al, Essentials of Service Marketing, 2009)

Three –steps framework to prevent Customer failures by Colgate and Bowen (2006) 1. Systematically collect information on the most common failure problems; 2. Identify their root causes – “cause and effect “ diagram; 3. Create strategies to prevent the failures identified. Consider the five strategies: 1.Redesign processes; 2.Use technology; 3.Manage customer behavior (reminders, offers, rewards); 4.Encourage “customer citizenship”; 5.Improve the servicescape.

Approaches to improve customer satisfaction and operational efficiency Getting rid of non-value adding activities; Shifting to self-service; Delivering direct service (Customisation VS Standardisation issues); Bundling service; Redesigning the physical aspects of service process

Five types of service redesign ApproachPotential Company Benefits Potential Customer Benefits Challenges/Limitations Elimination of non-value added steps Improved efficiency Increased productivity Reduction in cycle time Increased ability to customise service Differentiates company Improved efficiency, speed Shift tasks from customer to service firm Customised services Requires customer education and employee training to implement smoothly and effectively Self-service Lower costs Productivity gains Enhances technology reputation Differentiates the company Increases speed Improves access Saves money Increases perception of control and choice Must prepare customer for the role; Limits face-to-face interactions and opportunity to build relationships Harder to get customer feedback Direct service Eliminates store location limitations Expands customer base Differentiates the company Increases convenience Improves access Logistical burden Could be costly Needs credibility and trust

Five types of service redesign Approach Potential Company Benefits Potential Customer Benefits Challenges/ Limitations Bundled service Differentiates company Aids customer retention Increases per-capita service use Increases convenience Customised service Requires extensive knowledge of targeted customers May be perceived as wasteful Redesign of Physical aspects of service Improves employee satisfaction Increases productivity Differentiates company Increases convenience Enhances function Generates interest Easily imitated Requires expense to effect and maintain Raises customer expectations for the industry Source: Christopher Lovelock et al, (2009), Essentials of Service Marketing, Prentice Hall.

Service process redesign Increased customer satisfaction; Improved productivity; Reduce number of service failures; Reduced cycle time; Ideally, redesign efforts should achieve all of four measures simultaneously!