Service Design

and Management

Chris Jarvis MG2066 1

 Overview

 Defining "service"?
 Service-Product Mix
 Service Guarantees
 Service Cycle
 Customer Contact
 Service Matrix
 Employees and Service
 Strategy: Focus & Advantage
 Service Blue printing
 Fail-safe Methods
 a Well-Designed Service Delivery System
Chris Jarvis MG2066 2
 True or false?

 Everyone is an expert on services???

 Services are idiosyncratic?

 Quality of work is not quality of service?

 Most services contain a mix of tangible and intangible attributes?

 High-contact services are experienced, goods are consumed?

 Managing services marketing, personnel and operations know-how?
 Services involve cycles of transactions involving face-to-face
encounters, information exchange, social and mechanical interaction?

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 Service – defined by

 Tangible and intangible elements

 Most services include elements of products
 The customer is involved in delivery
 Simultaneous production and consumption
 Problems in defining and measuring
 quantity & quality
 productivity
 Demand variances (peaks-troughs) are significant
 Other manufacturing-service differences?
Service Design Issues?
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 Product, information and service processing

 Where is the service in?

 Fertilizers, furniture, vehicles, personal computers,
food, pharmaceuticals
 Information services?
 accountants, lawyers, call centres, insurance offices
 Health and pleasure services?
 Beauty , hospitals, health farms, physiotherapists,
restaurants.

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 Product Service Mix

Goods Services

100% 75% 50% 25% 0% 25% 50% 75% 100%

Self-service green grocer

Car manufacture
Carpet sales and fitting
Pizza Hut
Cordon-bleu restaurant
Car maintenance
Hairdressing
Consulting services

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 Place and approach

Place/virtual/remote
Facilities-based
Service Field-based
Strategy Internal (client-server)
Approaches
Customer production line
Systems Staff
self-service
personal attention
High and Low contact

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 Service Design Questions

 Who is our customer?

 How do we differentiate our service?
 What is our service package & operating focus
 What are the processes, staff, facilities?
 Can we protect the service?
 Aspects of service package - defined by prior staff
training
 Speed of change of service offerings

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 Service Matrix

Interaction & Customisation

Low High

EasyJet Hospital?
Labour intensity

DHL/FedEx Internet banking

Low Motel Repair services
Golf course

Retailing Solicitor
Wholesaler Doctor
High Driving school Personal trainer
Retail bank Accountant
Architect

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 Banking - High/Low contact

Hig Low
h
Facility location Near customer ?
Facility layout According to expectation? ?
Product design Ambiance, user friendly? ?
Process design Intimate stages ?
Scheduling ? ?
Capacity planning Full? Lost customer ?
Staff skills ? Technical skills only?
Quality control ? Measurable, fixed
Time standards ? Forms = surrogates - tight times
Wages Time-based pay? Output-based pay?
Capacity planning Capacity=peak demand ?
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 Heroes and villains

Delighted Club
Class
Recovery planning Heroes member
Satisfied

Customers'
Dissatisfied
experience

Complainant

What is
Furious
litigation Villains ServQual?

performance

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 Operating Focus

Customer treatment - friendliness, help

Speed and convenience of delivery
Price and payment
Variety of services (singular or one-stop shop)
Quality of tangibles e.g. the pie, the insurance
Unique skills - flambe, hair cut, roofer

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 Staff, Operations, Innovation and Contact

Skills Clerical Helping Verbal Procedural Craft/trade Analytical

Operations Forms On Lines Control Manage Client

Focus documents demand responses flows capacity interaction

Technol Automation DB queries Application

Routing Self-serve Teams
innovation IT eMail software

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 Service Design, Quality and Intangibles

Quality (measured by deliverer or customer)

depends on
 Tangibles and intangibles in the package.
Controls to improve utilisation & reduce costs.
These may
 simplify & routinise to reduce consumer
choice. A, B & C - take-or-leave-menus.
 But "I do not want a standard package".
"Fine - but pay more. Even then we may not be
able to control quality".

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 Service Design Issues

 A. Engineer for efficiency and utilisation


Routinisation
 Table d'hote packages
 Impersonal vs. contact
 Move from point of contact to back-office
 Automate e.g. ATMs, tele-sales & call-centres, tracking systems

 B.(content
Design from a customer service perspective
+ quality of interaction/experience)
 enrich the experience
 balance perceived quality with costs of service
 customer-orientation: research & specify relationships
 what is a TQM approach to service design?
 specify service objectives and bench-mark against rivals

 A & B - not mutually exclusive.

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 Service design and strategy

 Specify
 the tangible service elements/steps Strategic objectives
 customer participation
- best
 waiting (cannot stock a service)
- cheapest
 the intangible aspects
 how efficiencies must be secured - quickest
 quality assurance measures - most innovative
 Move front shop ==> back shop - brand loyalty
 take the customer out of the process - repeat business
 use the customer as labour
 increase staff flexibility to balance capacity & demand
"Service managers face problems that may be insignificant
to production managers who have much to learn from the
service ethic".

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 Engineering Strategies for Services

Front shop/Back room

service design may seek to minimise customer participation
 "front shop" for face-to-face elements.
 select activities to move to "back-room" and apply
conventional production principles
 no customer access to back-room?

Internet banking
On-line help desk

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 The Holiday to Aghios Nikolios

 The Brochure - vetting every entry

 travel and transfer arrangement
 hotel & apartment
 check resort/villa environment before brochure publishing:
disco, steps to climb etc.
 Representatives
 visit daily + available for clients
 ability to act - fielding the problem (no prejudice)
 narrow margins - one refund Ë flood.
 minor complaints but clients are trapped.
 be irritated or pay extra to fly home
 The flight home

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 Fail-safe Services - Poka-Yoke methods

 Avoid mistakes becoming service defects

 Apply fail-safe methods to 3T?
 Physical and visual warnings
Was task done correctly?

Task What tangibles or

What was attitude environmental
and responsiveness features were
of staff? missing??

Treatment Tangibles

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 Air Travel Service Elements

Request flight
information
Leave Make
Airport reservation

Collect
Bags Arrives at
airport
Poke Yoke Exercise:
Leave
aircraft Filling in the missing details

Check in
In-flight
service

Board Proceed to gate

aircraft & security check
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 Gaffs - Mea Culpa?

• Waitress chewing gum

• Nurse did not wash hands
• Wine is corked
• Food is cold
• Booked into wrong hotel
• Passenger forgets passport
• Passenger late for check-in
• 50 minutes between placing order and service to table
• Lost record card at clinic
• etc

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 Strategy: Focus & Advantage - Performance Priorities

 Product/service innovation
 Cost leadership
 Treatment of the customer
 Speed and convenience of service delivery
a n d
 Pricing and pricing structure
a l
erv Q u
 Variety - pick and mix, uniqueness, modularisation
g
S a r k n
 The quality of the tangible goods
i
 Awareness and valuation of the intangibles
c hm
Ben
 Unique skills that constitute the service offering

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 Internal Client-server Relationships

Delight the customer

External
client

Internal Server

Internal client
and server

Internal Server

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 Customers as staff

 self-service - flexibility in coping with demand.

 separate front shop/back-room - enabled by technology.
 Shelf filling vs. wand goods into trolleys.
 Automatic self-service banking
 bank card payment at the petrol pump
 remove the need for service attendants.
 self-services
 open longer
 less waiting time
 cost reductions for the service provider
 lower prices
 somemisscustomers
 the help and advice.
 become excluded - socially neglected
 Where else can they to go?
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 Customer Contact and staffing

 Less skilled staff?

 More training required.
 Loyalty & competence as key quality elements?
 What do we mean by “customer contact”?
 Signs of inefficiency in customer contact?
 Differentiate high - low contact services
 Quality and failure costs.
The service level must be delivered. Identify the levels and
components that customers value

 Cost the components and evaluate

 contribution of quality?
 how much customers will pay?
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 Services and staff flexibility

 Excess
demand?
capacity or rely on PTs to balance capacity -

 More PTs ==> increase in workforce size.

 unfamiliar with products & systems, less skilled.
 Labour turnover and reliability - Vicious circle.
 Few hours, move on quickly - why train?
 Need quality staff but investment not justified
 So we live with unskilled, uncommitted staff.
 Remedies?
 multi-skilling and rewards
 back-room staff move to front shop at peak time
 skeleton crew at the back
 Success depends on sensitivity of backroom tasks

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 Guarantees and service-level agreements

 Promise of service satisfaction underpinned by actions

 Monitoring and controlling
 quantified standards
 subjective standards - meaningful to customer
 99% reliability
 Pay-out/penalties on failure
 Unconditional - no small print
 Easy to understand and to communicate
 Straightforward to invoke •Flight overbooked
•Train late
•ISP downtime

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 Well-Designed Service System

• Each element -consistent with operating focus

• user-friendly
• robust
• designed for consistent performance by staff & systems
• Seamless links between back & front office.
• evidence of service quality is visible - customers "see" the
value provided. Credible?
• cost-effective.

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 Principles - Lyth and Johnston (1988)

balance service efficiency with requisite quality.

Focus on
 intangibles within service package
 the customer viewpoint
 critical role of customer contact staff & how they
are supported.
 performance monitoring
 internal consistency within the service system

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 L & J: Nine Service Design Principles

1. define service concept clearly & in detail. ServQual

2. evaluate image concept
 good service labelled poor if image out of line with customer expectations
 trace back to service presentation
3. study the customer view (be a customer)
 manage expectations & perceptions during & after
 break out of designer & operator "bounded rationality & familiarity".
4. Top management commitment to service quality
 Mission + clear objectives.
 Quality: inextricably linked to staff-customer contact.
 MbyExample: top mgt. lip-service undermines credibility
5. Define functional & technical quality standards
 tangibles - as for physical products.
 intangibles & subjective elements
 key ingredients in package e.g. cleaning, waiting, manner/appearance, skills
 share understandings, recruit, train & reward for delivery expectation.
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 L & J: Nine Service Design Principles

6. examine existing procedures and systems

 "re-design" to support front-end providers.
 service the servers via back-room procedures & support
7. develop standard procedures to control
 bankers (routinise), semi-controllables & unpredictables

routines may not fit random events

if safety critical - allocate resources

emphasise training for the unexpected, communicate & empower
8. systems must support the good service objectives.
 treat customer service staff as internal customers.
9. implement standards & performance monitoring
 Or drift, loose energy & deteriorate.
 inspection activities are essential
 action to restore and revitalise where needed.
 Inspection/feedback: SPC, surveys, panels, "mystery" shoppers
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