CHAPTER 8
Designing and Managing
Service
Slide by Lovelock, Wirtz and Chew 2009
Processes
Essentials of Services Marketing
Chapter 1 - Page 1
Overview of Chapter 8
Flowcharting Service Delivery
Blueprinting Services to Create Valued Experiences
and Productive Operations
Service Process Redesign
The Customer as Co-Producer
Self-Service Technologies
Slide by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Chapter 1 - Page 2
Flowcharting
Service Delivery
Slide by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Chapter 1 - Page 3
Flowcharting Service Delivery
Helps to Clarify Product Elements
Technique for displaying the nature and
sequence of the different steps in delivery
service to customers
Offers way to understand total customer
service experience
Shows how nature of customer involvement
with service organizations varies by type of
service:
People processing
Possession processing
Mental Stimulus processing
Information processing
Slide by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Chapter 1 - Page 4
Simple Flowchart for Delivery of a
People-Processing Service (Fig. 8.2a)
Slide by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Chapter 1 - Page 5
Simple Flowchart for Delivery of a
Possession-Processing Service (Fig. 8.2b)
Slide by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Chapter 1 - Page 6
Simple Flowchart for Delivery of a Mental
Stimulus Processing Service (Fig. 8.2c)
Slide by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Chapter 1 - Page 7
Simple Flowchart for Delivery of an
Information-Processing Service (Fig. 8.2d)
Slide by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Chapter 1 - Page 8
Blueprinting Services to
Create Valued
Experiences and
Productive Operations
Slide by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Chapter 1 - Page 9
Blueprinting
Developing a Blueprint
Identify key activities in creating and delivering service
Define big picture before drilling down to obtain a
higher level of detail
Advantages of Blueprinting
Distinguish between frontstage and backstage
Clarify interactions between customers and staff, and
support by backstage activities and systems
Identify potential fail points; take preventive measures;
prepare contingency
Pinpoint stages in the process where customer
commonly have to wait
Slide by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Chapter 1 - Page 10
Key Components of a Service Blueprint
1. Define standards for front-stage activities
2. Specify physical evidence
3. Identify main customer actions
4. Line of interaction (customers and front-stage personnel)
5. Frontstage 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 by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Chapter 1 - Page 11
Blueprinting the Restaurant Experience: Act 1
(Fig. 8.8)
Slide by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Chapter 1 - Page 12
Blueprinting The Restaurant Experience: A
Three-Act Performance
Act 1: Introductory Scenes
Act 2: Delivery of Core Product
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 failure
e.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
Act 3: The Drama Concludes
Remaining actions should move quickly and smoothly, with no surprises at
the end
Customer expectations: accurate, intelligible and prompt bill, payment
handled politely, guests are thanked for their patronage
Slide by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Chapter 1 - Page 13
Improving Reliability of Processes by
Failure Proofing
Identify fail points
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
Have poka-yokes to ensure service staff do things correctly, as
requested, or at the right speed
Customer poka-yokes focus on preparing the customer for:
The encounter
Understanding and anticipating their roles
Selecting the correct service or transaction
See Service Insights 8.1 Framework to prevent customer failures
Slide by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Chapter 1 - Page 14
Service Process
Redesign
Slide by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Chapter 1 - Page 15
Why Redesign? (1)
Institutions are like steel beamsthey tend to rust. What was
once smooth and shiny and nice
tends to become rusty.
Mitchell T. Rabkin MD,
formerly president of
Bostons Beth Israel Hospital
Slide by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Chapter 1 - Page 16
Why Redesign? (2)
Revitalizes process that has become outdated
Changes in external environment make existing practices obsolete and require
redesign of underlying processes
Creation of brand-new processes to stay relevant
Rusting occurs internally
Natural deterioration of internal processes; creeping bureaucracy; evolution of spurious,
unofficial standards
Symptoms:
- Extensive information exchange
- Data that is not useful
- High ratio of checking or control activities to value-adding activities
- Increased exception processing
- Customer complaints about inconvenient and unnecessary procedures
Slide by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Chapter 1 - Page 17
Process Redesign: Approaches and
Potential Benefits (1)
Eliminating non-value-adding steps
Simplify front-end and back-end processes with goal of
focusing on benefit-producing part of service encounter
Get rid of non-value adding steps
Improve productivity and customer satisfaction
Shifting to self-service
Increase in productivity and service quality
Lower costs
Enhance technology reputation
Differentiates company
Slide by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Chapter 1 - Page 18
Process Redesign: Approaches and
Potential Benefits (2)
Delivering direct service
Bring service to customers instead of bringing customers to service firm
Improve convenience for customers
Productivity can be improved if companies can eliminate expensive retail
locations
Increase customer base
Bundling services
Involves grouping multiple services into one offer, focusing on a welldefined customer group
Often has a better fit to the needs of target segment
Increase productivity
Add value for customers through lower transaction costs
Customize service
Increase per capita service use
Slide by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Chapter 1 - Page 19
Process Redesign: Approaches and
Potential Benefits (3)
Redesigning physical aspects of service processes
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 frontline staff
Cultivate interest in customers
Differentiate company
Slide by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Chapter 1 - Page 20
The Customer as
Co-producer
Slide by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Chapter 1 - Page 21
Levels of Customer Participation (1)
Customer Participation
Actions and resources supplied by customers during service
production and/or delivery
Includes mental, physical, and even emotional inputs
Slide by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Chapter 1 - Page 22
Levels of Customer Participation (2)
3 levels
Low Employees and systems do all the work
-Often involves standardized service
- Medium Customer helps firm create and deliver service
-Provide needed information and instructions
-Make some personal effort; share physical possessions
High Customer 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 by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Chapter 1 - Page 23
Customers as Partial Employees
Customers can influence productivity and quality of
service processes and outputs
Customers not only bring expectations and needs, they
also need to have relevant service production
competencies
Customers also need to be recruited as they are partial
employees. Firms need to get those with the skills to do
the tasks
For the relationship to last, both parties need to cooperate
with each other
Slide by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Chapter 1 - Page 24
Self-Service
Technologies
Slide by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Chapter 1 - Page 25
Self-Service Technologies (SSTs)
Ultimate form of customer involvement
Customers undertake specific activities using facilities or systems provided
by service supplier
Customers time and effort replace those of employees
-e.g. Internet-based services, ATMs, self-service gasoline pumps
Information-based services can easily be offered using SSTs
Used in both supplementary services and delivery of core product
-e.g. eBay no human auctioneer needed between sellers and buyers
Many companies seek to encourage customers to serve
themselves using Internet-based self-service
Challenge: getting customers to try this technology
Slide by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Chapter 1 - Page 26
Psychological Factors Related to the use of SSTs
SSTs advantages
Time savings
Cost savings
Flexibility
Convenience of location
Greater control over service delivery
High perceived level of customization
SSTs 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
Slide by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Chapter 1 - Page 27
What Aspects Of SSTs Please Or Annoy
Customers? (1)
People love SSTs when
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
People hate SSTs when
SSTs fail system is down, PIN numbers not accepted, etc
Poorly designed technologies that make service processes difficult to
understand and use
they mess up - forgetting passwords; failing to provide information as
requested; simply hitting wrong buttons
Slide by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Chapter 1 - Page 28
What Aspects Of SSTs Please Or Annoy
Customers? (2)
Key weakness of SSTs: Too few incorporate service
recovery systems
Customers still forced to make telephone calls or personal
visits
Slide by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Chapter 1 - Page 29
Putting SSTs to Test by
Asking a Few Simple Questions
Does the SST work reliably?
Is the SST better than interpersonal alternatives?
Firms must ensure that SSTs are dependable and userfriendly
Customers will stick to conventional methods if SST
doesnt create benefits for them
If it fails, what systems are in place to recover?
Always provide systems, structures, and technologies that
will enable prompt service recovery when things go wrong
Slide by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Chapter 1 - Page 30
Summary for Chapter 8 Designing and
Managing Service Processes (1)
Flowcharting helps clarify delivery elements. It also shows how nature of
customer involvement with service organizations varies by type of
service
Service blueprinting can be used to design a service and create a
satisfying experience for customers. Key components of the blueprint
include
Definition of standards for each front-stage activity
Physical and other evidence for front-stage activities
Principal customer actions
Line of interaction
Front-stage actions by customer-contact personnel
Line of visibility
Backstage actions by customer-contact personnel
Support processes involving other service personnel
Support processes involving information technology
Slide by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Chapter 1 - Page 31
Summary for Chapter 8 Designing and
Managing Service Processes (2)
Blueprinting a restaurant (or other service) can be a three-act
performance
Prologue and introductory scenes
Delivery of the core product
Conclusion of the drama
Failure proofing can be designed into service processes to improve
reliability
Service process redesign can be categorized into five kinds
Eliminating non-value-adding steps
Shifting to self-service
Delivering direct service
Bundling services
Redesigning the physical aspect of service processes
Slide by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Chapter 1 - Page 32
Summary for Chapter 8 Designing and
Managing Service Processes (3)
When the customer is a co-producer, issues to consider are
Levels of customer participation
Customers as partial employees
When deciding to use Self-service Technologies (SSTs), firms
should consider
Psychological factors related to the use of SSTs
Aspects of SSTs that please or annoy customers
Slide by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Chapter 1 - Page 33
