1. People, process and physical environment Week 3

2. Key factors to consider u ‘People’ in the service delivery process u The service ‘process’ design and delivery u The ‘physical’ service environment u Organising the ‘distribution (place)’ of the service u ‘Pricing’ the service u ‘Communicating’ the service (Week 4)

3. People in the creation/management of the service experience Managing role conflict Managing role ambiguity Emotional labour: deep/surface acting Managing role overload Creating the service experience for the customer

4. Employee/ Customer Cycle of Failure

5. “Normality” of Service Sabotage Behaviors Intermittent Routine “Openness” of Service Sabotage Behaviors CovertOvert Customer-Private Service Sabotage Customer-Public Service Sabotage e.g., Waiters serving smaller servings, bad beer, or sour wine e.g., Talking to guests like young kids and putting them down Sporadic-Private Service SabotageSporadic-Public Service Sabotage e.g., Chef occasionally purposefully slowing down orders e.g., Waiters spilling soup onto laps, gravy onto sleeves, or hot plates into someone’s hands Service Sabotage

6. Employee/ Customer Cycle of Success

7. Service employees and management issues Criteria to evaluate performance on service experience creation On role performance, constantly to update on changes about service standards Right people – balance of Social and technical Skills to create experience For outstanding service experience creation

8. Service employees and management issues Starbucks case u Reward: for > 20hrs/week work employees - can join healthcare programme and buy shares - can join healthcare programme and buy shares - are offered disability and life insurance - are offered disability and life insurance u Selection: recruit passionate people who love coffee - select a diverse workforce that reflects the - select a diverse workforce that reflects the Starbucks’ community Starbucks’ community u Training: every employee (barista) gets 24hrs training in the first 2 to 4 weeks training includes coffee knowledge, coffee history, weeks training includes coffee knowledge, coffee history, drink preparation and a 4hr workshop called ‘brewing the drink preparation and a 4hr workshop called ‘brewing the perfect cup’ Management trainee for 8 to 12 weeks which covers details of perfect cup’ Management trainee for 8 to 12 weeks which covers details of store operation, information systems and the basics of managing people store operation, information systems and the basics of managing people u Performance: Starbucks employee turnover rate 60% average industry turnover 140% low employee turnover – employee can become more familiar with the clients low employee turnover – employee can become more familiar with the clients and client preferences and client preferences

9. The service delivery process – Issues to consider in service design & delivery

10. Service design process Starbucks case u Degree of tech - faster espresso machines, prepaid cards, Starbucks express (online payment), T-mobile Starbucks express (online payment), T-mobile internet hotspots at all stores internet hotspots at all stores u Degree of visibility – setting of brewing process and preparation at ‘front office’, so that the customer can experience at ‘front office’, so that the customer can experience the smell, noise and heat from coffee preparation the smell, noise and heat from coffee preparation u Degree of customisation – different kinds of coffee and topping combinations combinations e.g. a decaf grade skimmed mild, no foam, no whip but e.g. a decaf grade skimmed mild, no foam, no whip but some extra chocolate mocha on top some extra chocolate mocha on top u Degree of accessibility – 15,000 retail location in high-traffic areas, supermarkets, bookstores, hospitals, office buildings, supermarkets, bookstores, hospitals, office buildings, banks and served in the air by United Airlines banks and served in the air by United Airlines

11. Key steps in developing service blueprinting u Service blueprinting (service mapping): is a pictorial representation of the service process with service events linked through a series of lines which represent dependences is a pictorial representation of the service process with service events linked through a series of lines which represent dependences Key steps in developing service blueprinting u Sequencing u Visibility u Timing u Tolerance Exercise: develop/design a service blueprint for a patient taking X-ray taking X-ray

12. Developing the service ‘blueprint’(e.g. X-Ray) SEQUENCESEQUENCE TIMING Visible to customer Not visible to customer TOLERANCE

13. Flowcharts for People and Possession Processing Services

14. Flowcharts for Mental Stimulus and Information Processing Services

15. Redesigning Service Processes - Redesign aims to achieve these performance measures: u Reduced number of service failures u Reduced cycle time from customer initiation of a service process to its completion u Enhanced productivity u Increased customer satisfaction

16. Process Redesign: Approaches and Potential Benefits Streamline front-end and back-end processes of services Improve productivity and customer satisfaction Eliminating non- value-adding steps Increase in productivity and service quality Lower costs and perhaps prices Enhance technology reputation Differentiates company Shifting to self- service Improve convenience for customers Productivity can be improved by eliminating expensive retail locations Increase customer base Delivering direct service

17. Process Redesign: Approaches and Potential Benefits Involves grouping multiple services into one offer, focusing on a well-defined customer group A better fit to the needs of target segment Increase productivity with customized service Increase per capita service use Bundling services Focus on tangible elements of service process (facilities and equipment) Increase convenience Enhance satisfaction and productivity of frontline staff Cultivate interest in customers Redesigning physical aspects of service process

18. What Aspects Of SSTs Please Or Annoy Customers? Key weakness: Few firms incorporate service recovery systems such that customers are still forced to make telephone calls or personal visits People love SSTs when…People hate SSTs when… SST machines are conveniently located and accessible 24/7– often as close as the nearest computer! Obtaining detailed information and completing transactions can be done faster than through face-to-face or telephone contact SSTs fail – system is down, PIN numbers not accepted, etc. Customers themselves mess up– forgetting passwords; failing to provide information as requested; simply hitting wrong buttons

19. Self-Service Technologies (SSTs) Advantages:  Time and Cost savings  Flexibility  Convenience of location  Greater control over service delivery  High perceived level of customization Many companies and government organisations seek to divert customers from employee contact to Internet-based self-service Disadvantages:  Anxiety and stress experienced by customers who are uncomfortable with using them  Some see service encounters as social experiences and prefer to deal with people

20. The physical environment Four Seasons Hotel, New York Orbit Hotel and Hostel, Los Angeles Comparison of Hotel lobbies

21. The physical environment Cognitively based Managing reaction to varied individual responses (Approach vs. Avoidance) Emotionally based Physiologically based Appreciating functionality of the layout e.g. supermarkets, IKEA Feeling cold or hot Stressed by noise/crowd Environment to ‘take your breadth away’ or make you laugh

22. The Mehrabian-Russell Stimulus-Response Model Response/Behavior s: Approach Avoidance & Cognitive Processes Environmental Stimuli and Cognitive Processes Dimensions of Affect: Pleasure and Arousal Feelings Are a Key Driver of Customer Responses to Service Environments

23. Insights from Mehrabian-Russell Stimulus-Response Model It is a simple yet fundamental model of how people respond to environments that illustrates: u The environment, its conscious and unconscious perceptions, and interpretation influence how people feel in that environment u Feelings, rather than perceptions/thoughts drive behaviour  Typical outcome variable is ‘ approach ’ or ‘ avoidance ’ of an environment, but other possible outcomes can be added to model

24. The Russell Model of Affect

25. Insights from Russell’s Model of Affect u Emotional responses to environments can be described along two main dimensions: u Pleasure: subjective, depending on how much individual likes or dislikes environment u Arousal: how stimulated individual feels, depends largely on information rate or load of an environment u Separates cognitive emotions from emotional dimensions u Advantage: simple, direct approach to customers’ feelings u Firms can set targets for affective states

26. An Integrative Framework: The Servicescape Model

27. u Identifies the main dimensions in a service environment and views them holistically u Internal customer and employee responses can be categorized into cognitive, emotional, and physiological responses, which lead to overt behavioural responses towards the environment u Key to effective design is how well each individual dimension fits together with everything else

28. Managing the physical environment Atmospherics Tangible service evidence Market space Spatial Layout Heat, light, sound Music, selection, colour, noise Effect length of stay, Walking speed in store Signage, symbols Rich curtains vs blinds Build customer expectations of service experience The service experience Design with purpose Hospital vs. hotel Convenience vs. enjoyment The internet as a service environment – ease of navigation, design aesthetics Encourage users to explore – approach rather than avoid

29. Summary u The influence of: - people - process and - Physical environment in delivering the service experience in delivering the service experience u Next week: Price, distribution and promotion