SERVICE SYSTEM DESIGN MATRIX

The matrix establishes the relationship between three key factors of service and
how these factors relate to service production and delivery. It is used for
understanding the different elements of a service system. The matrix is useful as
it reveals many of the variables and constraints of a particular service system.
used to accurately design systems in order for them to remain competitive and
to continue to attract customers. They go through these rigorous processes so
that their business can gain competitive advantages and conquer new markets.

The first factor is the degree of contact between the consumer and the service
provider; shown at the top of the matrix. There are 3 degrees of contact. In the
buffer core, there is no contact. The permeable system allows for some
customer contact either by phone or face to face. Finally, the react able system
is both permeable by the customer, and responds to his or her needs.   
The left side of the matrix tracks the second factor of service, which is the
opportunity for sales. The greater the amount of contact; the greater the sales
opportunity. 
The right side of the matrix represents the third factor o the system; the
production efficiency. Services that require a large amount of customisation and
customer input have lower efficiency.  The matrix identifies six common ways
in which services can be delivered. These methods range from mail contact,
which involves no direct contact with the consumer. To face-to-face total
customisation; which responds directly to the needs of the customer. 
The matrix system demonstrates that as customer influence increases,
production efficiency falls, this offset however by an increase in opportunity for
sales. 

Companies can effectively put a direct mail piece in your statement for that
month and make sure that it is targeted. But in general, statement inserts aren’t
targeted. their job is to make them more and more targeted, because then people
respond to them when its meaningful.

The next delivery is Internet and on-site technology. This system allows for no
direct customer contact. So, while there is very little sales opportunity, there is a
very high level of production efficiency. An example of on-site technology is an
Automated Telling Machine. Computer screens and printed receipts provide
marketing possibilities, but no direct sales.
 A phone contact system may involve some customer contact. Today most
phone inquiries are handled by automated menus. If a customer needs to speak
directly with a telephone banker, production efficiency is compromised, but the
opportunity for sales increases.
Face to face tight specs refers to a situation with tight specifications, in which
there is very little variation in the process. An example of this type of system is
the interaction between a customer and a teller. Only a limited variety of
services are available. The teller provides some personalised service, which
creates customer loyalty. And he/she can direct a customer to a personal banker
if there is a sales opportunity. At the same time, the transaction has less
production efficiency than it would if it were conducted through an ATM.

 
With face-to-face loose specs, the service process is generally understood but
there are some options in the way that the service is performed. For example,
many variables may affect how a loan is structured, or what type of checking
account is best for a specific client.

Face-to-face total customisation allows for a wide degree of latitude in tailoring

the service to meet the specific needs of each individual client. Although
production efficiency is at its lowest, sales opportunities more than make up for
lost efficiency. In many cases these systems continue to serve individual clients
throughout their lifetime.

Managing customer introduced variability

Customers are often an integral part of service delivery process. Though
customers judge the quality of their experience by how much of the variability
they introduce is accommodated, companies have to take deliberate steps to
manage customer-introduced variability.

Customer-introduced variability-can take five forms:

1. Arrival variability: All customers do not want the service at the same
time or at times convenient for the company. For example, the arrival
time of customers at a restaurant may be inconsistent with average
demand, leading to times when servers are overloaded or underutilised.
reservations, but that makes sense only in certain situations. In many
service environments, such as retail stores, call centres, or emergency
rooms, the customers themselves cannot foresee or delay their needs. 

2. Request variability: Customer’s requirements can vary widely and a

service provider needs to have a flexible operation system, which
essentially means having more variety of equipment’s and employees
with diverse skills. For example, travellers requesting a room with a view
at a crowded hotel.
3. Capability variability: service businesses must also work with
customers whose own capabilities differ. Whether because of greater
knowledge, skill, physical abilities, or resources, some customers perform
tasks easily and others require hand-holding. Capability variability
becomes important when customers are active participants in the
production and delivery of a service. For example. Patient being unable to
explain his or her symptoms to a doctor.

4. Effort variability: When customers perform a role in a service delivery

process, they differ in terms of the effort they put in performing the role.
For example. Shoppers not bothering to put their shopping carts in a
designated area in a supermarket parking lot. 

5. Subjective preference variability: Customers vary in their opinions

about what it means to be treated well in a service environment. For
example, one bank customer interpreting a teller addressing him by his
first name as a sign of warmth, while another customer feels that such
informality is unbusinesslike. These are personal preferences, but they
introduce as much unpredictability as any other variable and make it that
much harder to serve a broad base of customers.

1) Classic Accommodation (High cost and high quality of service)

In case of classic accommodation strategy companies will have to make
sure that plenty of employees are on hand. they should also be sure that
the employees have specialized skills which will make them experts in
their own fields and train employees to handle many kinds of requests
efficiently and effectively. For this the employees must be flexible
enough to adapt to the changed circumstances. 

2) Low-cost Accommodation (Low cost and high quality of service)

Companies that achieve low-cost accommodation strategy most often do
it by persuading customers to serve themselves. This strategy is very
effective for high arrival or request variability, both of which complicate
labour scheduling. When the customer is responsible for much of the
labour, the right labour is provided at the right moment. Further, by
having customers serve themselves, companies are allowing the service
experience to vary with customers’ capability and effort and giving
customers control of the service environment. Here companies need to
hire lower-cost labour and automate task if the cost of labour is too high.
 3) Uncompromised Reduction (Low cost and medium quality of service)
Here companies need to reduce the service breadth. Then they need to
target customers on the basis of their requests so that the company’s
efforts can be channelized in the right direction. they also need to target
customers on the basis of their capabilities and their motivations to
choose the product.

4)Classic Reduction (Low cost and low quality of service)

Companies should create a mentality among customers that they are required to
make reservations for specific types of services. They should also limit the
availability of the service otherwise profit making would become impossible
and persuade customers to compromise their requests.