Chapter 8:

Designing and Managing Service Processes

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 1

Overview of Chapter 8

Blueprinting Services to Create Valued Experiences and Productive Operations Service Process Redesign The Customer as Co-Producer Dysfunctional Customer Behavior Disrupts Service Processes

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 2

Blueprinting Services to Create Valued Experiences and Productive Operations

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 3

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

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 4

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

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 5

Blueprinting the Restaurant Experience: Act 1 (Fig

8.1)
Timeline
Service Standards and Scripts

Act 1

Stage Physical
Evidence

Make Reservation

Valet Parking

W
Coat Room

Line of interaction

Accept reservation

Greet customer, take car keys

Greet, take coat, coat checks

Contact person (visible actions) Line of visibility

Stage

Check availability, insert booking

Take car to parking lot

Hang coat with Contact person visible check (invisible actions numbers
Line of internal physical interaction

Support Processes

Maintain reservation system

Maintain (or rent) facilities

Maintain facilities/ equipment

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 6

Blueprinting the Restaurant Experience: A Three Act Performance

Act 1: Prologue and Introductory Scenes Act 2: Delivery of Core Product
o o o o

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 failuree.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 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

Act 3: The Drama Concludes

o o

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 7

Setting Service Standards

Service providers should design standards for each step sufficiently high to satisfy and even delight customers
o

Standards may include time parameters, script for a technically correct performance, and prescriptions for appropriate style and demeanor

First impression is important as it affects customers 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

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 8

Improving Reliability of Processes by Failure Proofing

Analysis of reasons for failure often reveals opportunities for failure proofing to reduce/eliminate future risk of errors Need fail-safe methods for both employees and customers Errors include:
o o

Treatment errorshuman failures during contact with customer Tangible errorsfailures 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:

o

Performing tasks incorrectly, in the wrong order, too slowly Doing work that wasnt requested in the first place

Service Perspectives Poka Yokes For service Poka Yoke is for both servers and customers. Ex surgeons have the instruments for surgery arranged in a form such that the instruments are not left in before closing incision Dress codes, timings, guidelines to be followed etc are used as poke yoke tools for customers
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 9

Redesigning Service Processes

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 10

Why Redesign?
Revitalizes process that has become outdated
Changes in external environment make existing practices obsolete and require redesign of underlying processes

Rusting occurs internally o Natural deterioration of internal processes; creeping bureaucracy, unofficial standards o 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

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 12

Process Redesign: Approaches and Potential Benefits (1) (Table 8.1)

Eliminating non-value-adding steps
o o o

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 More customized service

Delivering direct service

o o o

Bring service to customers instead of bringing customers to provider Productivity can be improved if companies can eliminate expensive retail locations

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 13

Process Redesign: Approaches and Potential Benefits (2) (Table 8.1)

Shifting to self-service
o o o

Increase in productivity and service quality Lower costs and perhaps prices Enhance technology reputation

Bundling services ( Air travel+ Car rental + Hotel accomodation)

o o

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.

Redesigning physical aspects of service processes

o o o o o

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

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 14

The Customer as Co-Producer

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 16

Levels of Customer Participation

Customer Participation o Actions and resources supplied by customers during service production o and/or delivery o Includes mental, physical, and even emotional inputs Three Levels o LowEmployees and systems do all the work
Often involves standardized service. Ex Bus Travel
o

MediumCustomer inputs required to assist provider

Provide needed information and instructions Make some personal effort; share physical possessions Filing Tax ret

HighCustomer works actively with provider to co-produce the service

Service cannot be created without customers active participation Customer can jeopardize quality of service outcome (e.g., weight loss, marriage counseling)

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 17

Self-Service Technologies (SSTs)

Ultimate form of customer involvement
e.g. Internet-based services, ATMs, self-service gasoline pumps

Information-based services lend selves particularly well to SSTs

o

Used in both supplementary services and delivery of core product

e.g. eBayno human auctioneer needed between sellers and buyers

Many companies and government organizations seek to divert customers from employee contact to Internet-based self-service
o o

Economic trade-off between declining cost of these self-service systems and rising cost of labor Challenge: Getting customers to try this technology

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 18

Psychological Factors in Customer Co-Production

Economic rationale of self-service
Lower prices, reflecting lower costs, induce customer to use SSTs Research shows that customers tend to take credit for successful outcomes, but not blame for unsuccessful ones Critical to understand how consumers decide between using an SST option and relying on a human provider SSTs present both advantages and disadvantages

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 19

What Aspects of SSTs Please or Annoy Customers?

People love SSTs when
o
o o o o

SST machines are conveniently located and accessible 24/7often 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
SSTs failsystem is down, PIN numbers not accepted, etc They mess upforgetting passwords, failing to provide information as requested, simply hitting wrong buttons

People hate SSTs when

Key weakness of SSTs: Too few incorporate service recovery systems

o o

Customers still forced to make telephone calls or personal visits Blame service provider for not providing more user-friendly system

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 20

Customers as Partial Employees

Customers can influence productivity and quality of service processes and outputs Customers who are offered opportunities to participate at active level are more likely to be satisfied However, customers cause one-third of all service problems
o o

Difficult to recover from instances of customer failure Focus on preventing customer failure by collecting data on problem occurrence, analyzing root causes, and establishing preventive solutions Conduct job analysis of customers present role in businesscompare against role that firm would like customers to play Educate customers on how expected to perform and skills needed Motivate customers by ensuring that rewarded if they perform well Appraise customers performance regularly

Managing customers as employees helps to avoid customer failures

o

o o o

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 23

Dysfunctional Customer Behavior Disrupts Service Process

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 24

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 More potential for mischief in service businesses, especially when many customers are present Divergent views on jaycustomers
o o

The customer is king and can do no wrong. Marketplace is overpopulated with nasty people who cannot be trusted to behave in ways that selfrespecting services firms should expect and require Insight: Theres truth in both perspectives

No organization wants an ongoing relationship with an abusive customer

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 25

Types of Jaycustomers: The Thief

No intention of payingsets out to steal or pay less Services lend themselves to clever schemes to avoid payment
o

For example: bypassing electricity meters, circumventing TV cables,

Firms must take preventive actions against thieves, but not alienate honest customers by degrading their service experience
o

Make allowances for honest but absent-minded customers

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 26

Six Types of Jaycustomers: The Rulebreaker

Many services need to establish rules to guide customers safely through the service encounter Government agencies may impose regulations that service suppliers must enforce Some rules protect other customers from dangerous behavior o For example: Vail and Beaver Creek, Coloradoski patrollers issue warnings
to reckless skiers by attaching orange stickers on their lift tickets

Ensure company rules are necessary, not bureaucratic

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 27

Six Types of Jaycustomers: The Belligerent

Expresses resentment, abuses service employees verbally or even physically Confrontations between customers and service employees can easily escalate Firms should ensure employees have skills to deal with difficult situations
o

In a public environment, priority is to remove person from other customers May be better to make a public stand on behalf of employees than conceal for fear of bad publicity

Confrontations between Customers and Service Employees Can Easily Escalate Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 28

Six Types Of Jaycustomers: Family Feuders and Vandals

Family Feuders: People who get into arguments with other customersoften members of their own family
The Vandal:
o o o o

Service vandalism includes pouring soft drinks into bank cash machines; slashing bus seats, breaking hotel furniture Bored and drunk young people are a common source of vandalism Unhappy customers who feel mistreated by service providers take revenge Prevention is the best cure

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 29

Six Types Of Jaycustomers: The Deadbeat

Customers who fail to pay (as distinct from thieves who never intended to pay in the first place)
o

Preventive action is better than curefor example: insisting on prepayment; asking for credit card number when order is taken Customers may have good reasons for not paying
If the client's problems are only temporary ones, consider long-term value of maintaining the relationship

For an industry-specific categorization, see Research Insights 8.1: Categorizing Jaycustomers in Hotels, Restaurants, and Bars

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 30

Consequences of Dysfunctional Customer Behavior

Consequences for staff working front stage Consequences for customers can be both negative and positive

Consequences for organization

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