1. Designing and Managing Service Processes
Chapter 8:
Designing and Managing
Service Processes

2. Core and Supplementary Services at Luxury Hotel (Offering Much More than Cheap Motel!)
Reservation
Valet
Parking
Reception
Baggage
Service
Cocktail
Bar
Restaurant
Entertainment/ Sports/ Exercise
Internet
Wake-up
Call
Room
Business
Center
Cashier
A Bed for the Night in an Elegant Private Room with a Bathroom

3. What Happens, When, in What Sequence
What Happens, When, in What Sequence? Time Dimension in Augmented Product (Fig 3.3)
Reservation
internet
Parking
Get car
Check in
Check out
Internet
Internet
Use room
USE GUESTROOM OVERNIGHT
Porter
Pay TV
Meal
Room service
Time Frame of An Overnight Hotel Stay
(Real-time service use)
Before Visit

4. Simple Flowchart for Delivery of a People-Processing Service (Fig 3.4)
People Processing – Stay at Motel
Park Car
Check In
Spend Night in Room
Breakfast
Check Out
Breakfast Prepared
Maid Makes up Room

5. Simple Flowchart for Delivery of a Possession-Processing Service (Fig 3.4)
Possession Processing – Repair a DVD Player
Travel to Store
Technician Examines Player, Diagnoses Problem
(Later) Play DVDs at Home
Leave Store
Return, Pick up Player and Pay
Technician Repairs Player

6. Simple Flowchart for Delivery of Mental Stimulus-Processing Service (Fig 3.4)
Mental Stimulus Processing – Weather Forecast
Turn on TV, Select Channel
View Presentation of Weather Forecast
TV Weatherperson Prepares Local Forecast
Confirm Plans for Picnic
Meteorologists Input Data to Models and Creates Forecast from Output
Collect Weather Data

7. Weather Forecasting Is a Service Directed at Customers’ Minds (Fig 3

8. Simple Flowchart for Delivery of An Information-Processing Service (Fig 3.4)
Information Processing – Health Insurance
Learn about Options
Select Plan, Complete Forms
Pay
Customer Information Entered in Database
Printed Policy Documents Arrive
Insurance Coverage Begins
University and Insurance Company Agree on Terms of Coverage

9. The Flower of Service (Fig 3.6)
Information
Payment
Consultation
Billing
Core
Order Taking
Exceptions
Hospitality
Safekeeping
KEY:
Facilitating elements
Enhancing elements

10. The Flower of Service: Facilitating Services—Information
Customers often require information about how to obtain and use a product or service.
Examples of elements:
Directions to service site
Schedule/service hours
Prices
Conditions of sale
Usage instructions
Core

11. The Flower of Service: Facilitating Services—Order Taking
Core
Customers need to know what is available and may want to secure commitment to delivery. The process should be fast and smooth.
Examples of elements:
Applications
Order entry
Reservations and check-in

12. The Flower of Service: Facilitating Services—Billing
Core
“How much do I owe you?”
Bills should be clear,
Accurate, and intelligible.
Examples of elements:
Periodic statements of
account activity
Machine display of amount
due

13. The Flower of Service: Facilitating Services—Payment
Core
Customers may pay faster
and more cheerfully if you
make transactions simple
and convenient for them.
Examples of elements:
Self service payment
Direct to payee or intermediary
Automatic deduction

14. The Flower of Service: Enhancing Services—Consultation
Core
Value can be added to goods and services by offering advice and consultation tailored to
each customer’s needs and situation.
Examples of elements:
Customized advice
Personal counseling
Management consulting

15. The Flower of Service: Enhancing Services—Hospitality
Customers who invest time and effort in visiting a business and using its services deserve to be
treated as welcome guests—
after all, marketing invited them!
Examples of elements:
Greeting
Waiting facilities and amenities
Food and beverages
Toilets and washrooms
Security
Core

16. The Flower of Service: Enhancing Services—Safekeeping
Customers prefer not to worry about looking after the personal possessions that they bring with them to a service site.
Examples of elements:
Looking after possessions
customers bring with them
Caring for goods purchased
(or rented) by customers
Core

17. The Flower of Service: Enhancing Services—Exceptions
Customers appreciate some
flexibility when they make special requests and expect responsiveness when things don’t go according to plan.
Examples of elements:
Special requests in advance
Complaints or compliments
Problem solving
Restitution
Core

18. Developing a Blueprint
Identify key activities in creating and delivering service
Define “big picture” before “drilling down” to obtain a higher 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, and scripts to guide interactions between employees and customers

19. 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

20. Blueprinting the Restaurant Experience: Act 1 (Fig 8.1)
Timeline
Act 1
Service Standards and Scripts W W W …
Make Reservation
Valet Parking
Coat Room
Physical Evidence
Line of interaction
Front Stage
Greet customer, take car keys
Greet, take coat, coat checks
Accept reservation
Contact person (visible actions)
Line of visibility
Check availability, insert booking
Hang coat with visible check numbers
Take car to parking lot
Contact person (invisible actions)
Back Stage
Line of internal physical interaction
Maintain reservation system
Maintain (or rent) facilities
Maintain facilities/ equipment
Support Processes

21. Blueprinting the Restaurant Experience: 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 failure—e.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

22. Setting Service Standards
Service providers should design standards for each step sufficiently high to satisfy and even delight customers
Standards may include time parameters, script for a technically correct performance, and prescriptions for appropriate style and demeanor
Must be expressed in ways that permit objective measurement
First impression is important as it affects customer’s 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 is relatively more serious than in high-contact service
Viewed more seriously because there are fewer subsequent opportunities to create a favorable impression

23. Improving Reliability of Processes by Failure Proofing
Errors include:
Treatment errors—human 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 errors—failures 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 wasn’t requested in the first place

24. Redesigning Service Processes

25. Why Redesign?
“Institutions are like steel beams—they tend to rust. What was once smooth and shiny and nice tends to become rusty.”
Mitchell T. Rabkin MD, formerly president of Boston’s Beth Israel Hospital

26. Why Redesign? Revitalizes process that has become outdated
Changes in external environment make existing practices obsolete and 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

27. 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

28. Process Redesign: Approaches 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

29. Process Redesign: Approaches 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

30. The Customer as Co-Producer

31. Levels of Customer Participation
Actions and resources supplied by customers during service production
and/or delivery
Includes mental, physical, and even emotional inputs
Three Levels
Low—Employees and systems do all the work
Often involves standardized service
Medium—Customer inputs required to assist provider
Provide needed information and instructions
Make some personal effort; share physical possessions
High—Customer works actively with provider to co-produce the service
Service cannot be created without customer’s active participation
Customer can jeopardize quality of service outcome (e.g., weight loss, marriage counseling)

32. Self-Service Technologies (SSTs)
Ultimate form of customer involvement
Customers undertake specific activities using facilities or systems provided by service supplier
Customer’s 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. eBay—no human auctioneer needed between sellers and buyers

33. Psychological Factors in Customer Co-Production
Economic rationale of self-service
Productivity gains and cost savings result when customers take over work previously performed by employees
Lower prices, reflecting lower costs, induce customer to use SSTs
SSTs present both advantages and disadvantages
Benefits: Time and cost savings, flexibility, convenience of location, greater control over service delivery, and a higher perceived level of customization
Disadvantages: Anxiety and stress experienced by customers who are uncomfortable with using them

34. What Aspects of SSTs Please or Annoy Customers?
People love SSTs when…
SST machines are conveniently located and accessible 24/7—often as close as nearest computer!
Obtaining detailed information and completing transactions can be done faster 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 fail—system is down, PIN numbers not accepted, etc
They mess up—forgetting passwords, failing to provide information as requested, 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

35. HSBC: “The world’s local bank”
Source: Courtesy HSBC
Global site brought to customer’s local computer

36. Putting SSTs to Test by Asking a Few Simple Questions
Does the SST work reliably?
Firms must ensure that SSTs are dependable and user-friendly
Is the SST better than interpersonal alternatives?
Customers will stick to conventional methods if SST doesn’t create benefits for them
If it fails, what systems are in place to recover?
Always provide systems, structures, and technologies that will enable prompt service recovery when things go wrong

37. Dysfunctional Customer Behavior Disrupts Service Process

38. Addressing the Challenge of Jaycustomers
Jaycustomer: A customer who behaves in a thoughtless or abusive fashion, causing problems for the firm, its employees, and other customers
Divergent views on jaycustomers
“The customer is king and can do no wrong.”
Marketplace is overpopulated with nasty people who cannot be trusted to behave in ways that self-respecting services firms should expect and require
Insight: There’s truth in both perspectives
No organization wants an ongoing relationship with an abusive customer

39. Six Types of Jaycustomers:
The Thief
The Rulebreaker
The Belligerent
The Deadbeat
Family Feuders
Vandals