Service Process Design

What is a Service?
Goods and services are produced in our economy. What is
the difference between a good and a service?
In a crude way a good is something you can take with you
after purchase, whereas a service is more intangible. What
do you bring home after a dental visit? Sore gums?
With a service production and consumption occur
simultaneously. Plus, many services are act or interactions
between the producer and the consumer.
Doctors, lawyers and even teachers provide services.

Service-Product
Bundle
Many services come as part of a larger package of bundle of
things. Service-product bundle consists of
1) The physical goods or facilitating goods,
2) The tangible service provided or explicit service, and

3) The psychological service or implicit service.

The range can be from heavily into goods to mainly
services. On the one end you have grocery shopping where
you have mainly goods being taken with then services of
product information and checkout being provided. Haircuts
on the other hand are almost all about the service.

Service-Product Bundle
Example, about a winter ski resort.
1) The facilitating goods are the chair lifts, buildings and
mountain itself at the resort.
2) The explicit service is primarily the skiing experience, but you
also have the interaction with employees and the visual
experience in the shops and sleeping quarters.
3) The implicit service pertains to the fun generated, the sense of
security you have and the excitement of the skiing.
It is important to pay attention to all these experiences.
As an employee of a service organization (which might be in
your future) you may want to take not that customers pay
attention to their interaction with you and they want it to be a
positive experience.
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Service Recovery
Service recovery is the ability to quickly compensate for the
failure of service delivery and restore, if possible, the
service required by the customer.
Airlines have to deal with weather and mechanical
problems. When a flight is not on time, folks miss
connecting flights, business meetings and social functions.
Does recovery happen here? The airlines do what they can
to get you on the next flight!
Obviously, service failure should be held to a minimum, but
the recovery can also mean the difference between success
and failure of the company.
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Guarantees

Imagine the following as an ad in a magazine: You see a big

beautiful home with a big, green lawn and in bold type the
words Kill Roaches Dead! In small type at the bottom you
see the sentence We visit you home and get to work on the
problem for $29.95 a visit.
When the company comes to your house a big burly guys
comes in with a block of wood. He asks about the location
of the problem and when he gets there he searches the area
and when he sees a roach he smashes it with the board.
In this silly example, by design, you see the service is not
clearly defined in the ad.

Guarantees
When a customer sees a defect or imperfection in a good it
can be returned. But can a service be returned? The
money paid for the service can be returned, but the
customer really wants the service.

Service guarantees help the company in clearly defining the

process of service delivery and specifies the extent of
service recovery, if needed. Thus a process can be
designed to provide consistent service.
What guarantee does Federal Express make?

Cycle of Service
In many service businesses the customer will come in
contact with the business several times before the
completion of the service. This usually begins with a
customer inquiry and perhaps setting up an appointment to
meet. The cycle is complete when the customer is on their
way to their next endeavor.
With the delivery of a service there may be several points
were there is customer contact and each point can be
defined as a moment of truth (decisive point). Each time
there is interaction with a customer the company can be
successful or fail to meet the desire of the customer. One
bad moment of truth can wipe out many positive moments.
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Perceived Service

Perceived service is a function of all past moments of truth.

Note, that bad moments of truth may carry a greater weight
in the mind of the customer.

Customer Contact

Contact with the customer may be characterized as either

low contact or high contact.
Low contact services
-are used when face to face interaction is not required,
-require employees with technical skills, efficient
processing routines, and standardization of the product
and process, and
-can work to average demand levels and smooth out the
peaks and valleys of demand.

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Customer contact
High contact services
-are used for changing or uncertain customer demand,
-require employees who are flexible, personable, and willing
to work with the customer,
-must respond immediately as demand occurs in peak
situations, and
-generally requires higher prices and more customization
due to the variable nature of the service required.

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Service Economy

U.S. Economy

Design of Services
The designer must take into account the difference
between services and products (manufacturing):
1.services are generally intangible
2.services are often produced and received at the
same time.
3.Services can not be inventoried
4.Services can be highly visible to consumers.
5.Some services have low barriers to entry and exit
6.Location is often important in service design.

Differences Between
Goods and Services
Goods
Tangible
Can be inventoried
No interaction
between customer
and process

Services
Intangible
Cannot be
inventoried
Direct interaction
between customer
and process

Design of Services (ctn)

How do we classify services?
It is possible to make a distinction between
different types of services or service delivery
systems. These could be based on:
1. The volume of activity
2. The degree of professional skills
3. The type of the services takers

Design of Services (ctn)

Based on the above classifications, we can identify
services in the following manner:
1. Service factory such as bank, insurance, postal services,
etc
2. Service shop such as cafeteria, clinic, gym, etc
3. Mass service such as bus, college, hotel, etc
4. Personal service such as beauty salon, hair dresser
5. Professional service such as pharmacy, consultancy,
doctor
6. Nonprofessional service

Service Process Matrix

Design of Services (ctn)

Attributes of Service Design
1. Labor intensity
2. Contact
3. Interaction
4. Customization
5. Identity of the service taker (direct to a person or
direct to a thing)

Service
Design
Process

Service Design Process

Service concept

purpose of a service; it defines target market and customer

experience

Service package

mixture of physical items (physical goods or facilitating

goods), sensual benefits (explicit service), and
psychological benefits (implicit service)

Service specifications

performance specifications
design specifications
delivery specifications

Types of Incremental and New Services

Incremental services
Incremental services
Service line extensions
New services that augment current services.

Service improvements
New services in which features have changed
relative to existing services.

Style changes
Modest forms of new services that change only
the appearance of the service.

Categories of New Services (contd)

Radical
Major innovations
New services in markets not fully defined.

Start-up services
New services in established markets already
served by existing services.

New services for current markets

Added services to current customers.

A Framework for Categorizing New Services

Categories of New Services

Service Category

Content Change

Window Dressing

Not significantly different from other

services
Delivered in similar fashion

Breadth of Offering

Significant design change in content of

service
Delivered in similar fashion

Revolutionary

New in both content and delivery

method

Channel Development

Delivery of same/existing service

through a different/new channel

The Customer Contact Approach to

Designing Service Processes
Customer Contact
The presence of the customer in the system.

Extent of Contact
The percent of time the customer is involved
relative to the time required to deliver the
service.

Creation of the Service

The work process involved in providing the
service.

The Customer Contact Approach to

Designing Service Processes

High Degree
of Customer
Contact

High

Low Degree
of Customer
Contact

Percentage of customer contact

(customer influence on the system)
Difficulty in managing system

Low

Major Differences between High- and LowContact Systems in a Bank

in high-contact systems, the customer can affect time, nature of service, and
quality since the customer involved in the process

The Service Process Matrix

Interaction and customization have interrelation among themselves

Customization refers to what extent the service
could be adapted to the need of a customer.

Interaction refers to the extent which the

customer activity interfere in the service
process to change the content

Designing a New Service Organization

Service Vision (Heskett)
Identification of the target market
Who is our customer?

Defining the service concept

How do we differentiate our service in the market?

Developing the service strategy

What is our service package and its operating
focus?

Creating the service delivery system

What processes, staff, and facilities are needed?

Designing a New Service Organization

(contd)
Differences in service design and
manufacturing product development:
Service design and process development are
simultaneous.
Service operations cannot be copyrighted to
protect them from imitation by competitors.
The service package is the major output of NSD.
Prior training strongly influences the service
package.
Service organizations can change their service
offerings very rapidly.

Service system design matrix

Structuring the service encounter:

Service-System Design Matrix

Process Selection in Services

Types of Service Organizations
Service businesses( the management of org. whose primary
business requires interaction with the customer to produce the
service. Ex. Banks , airlines, hospitals, law firms. We can make
further major distinctions:
Facilities-based services that provide assistance to
customers who come to the service facility.
Field-based services that provide on-site services to
customers.
Customer support services
Provide product information and services to current external
customers.
Internal services
Provide services for other internal organizational units.

Process Selection in Services (contd)

Three contrasting service designs
The Production Line Approach (ex. McDonalds)
Orientation is toward the efficient production of results
precisely controlled execution of the central function.

The Customer Involvement Approach or Self-service

Approach ( ex. ATM )
Having the customer take a greater participatory role in
the production of the service.

The Personal Attention Approach (ex. Face to face

total customization service)
The central focus is complete customer attention and
satisfaction at all times.

Common Characteristics of
Well-Designed Service Systems
1. Each element of the service system is consistent
with the operating focus of the firm.
2. It is user-friendlycustomers can interact easily.
3. It is robustcapable of coping with variations in
demand and resources availability
4. It is structured so that consistent performance by its
people and systems is easily maintained.
5. It provides effective links between the back office
and the front office so that nothing falls between the
cracks.

Common Characteristics of
Well-Designed Service Systems (contd)
6. It manages the evidence of service quality in such a
way that customers see the value of the service
provided.
7. It is cost-effectivethere is a minimum waste of time
and resources in delivering the service.

Service Blueprinting
A tool for simultaneously depicting the service
process, the points of customer contact, and
the evidence of service from the customers
point of view.

Service Blueprint Components

Customer Actions

line of interaction
Visible Contact Employee Actions
line of visibility
Invisible Contact Employee Actions

line of internal interaction

Support Processes

Service Blueprint Components

Blueprint for Express Mail Delivery

Service

Blueprint for Overnight Hotel Stay

Service

Service Blueprint for a Cash Account

at a Discount Brokerage

Blueprint for a Corner Shoeshine

Shoeshine Profitability Analysis

Building a Service Blueprint

Application of Service Blueprints

New Service Development
concept development
market testing

Supporting a Zero Defects Culture

managing reliability
identifying empowerment issues

Service Recovery Strategies

identifying service problems
conducting root cause analysis
modifying processes

Blueprints Can Be Used By:

Service Marketers
creating realistic
customer expectations:
service system design
promotion

Operations
Management
rendering the service
as promised:
managing fail points
training systems
quality control

Human Resources
Management
empowering the human
element:
job descriptions
selection criteria
appraisal systems

System Technology
providing necessary
tools:
system specifications
personal preference
databases

Benefits of Service Blueprinting

Provides a platform for innovation.
Recognizes roles and interdependencies among
functions, people, and organizations.
Facilitates both strategic and tactical innovations.
Transfers and stores innovation and service
knowledge.
Designs moments of truth from the customers point of
view.
Suggests critical points for measurement and
feedback in the service process.
Clarifies competitive positioning.
Provides understanding of the ideal customer
experience.

Common Issues in Blueprinting

Clearly defining the process to be blueprinted
Clearly defining the customer or customer
segment that is the focus of the blueprint
Who should draw the blueprint?
Should the actual or desired service process
be blueprinted?
Should exceptions/recovery processes be
incorporated?
What is the appropriate level of detail?
Symbology
Whether to include time on the blueprint