Chapter 8:

Designing and
Managing
Service Processes
Core and Supplementary Services at Luxury
Hotel
(Offering Much More than Cheap Motel!)

Reservation
Cashier Valet
Parking
Business
Reception
Center
A Bed for the
Room Night in an
Elegant Private
Service Baggage
Room with a
Bathroom Service
Wake-up Cocktail

Call Bar
Internet Entertainme Restaura
nt/ Sports/
Exercise nt
 What Happens, When, in What Sequence?
Time Dimension in Augmented Product (Fig 3.3)

Reservation

Parking Get car

Check in Check out
Internet Internet
Use
room USE GUESTROOM OVERNIGHT
internet

Porter
Pay TV
Meal
Room service

Time Frame of An Overnight Hotel Stay

Before Visit
(Real-time service use)
Simple Flowchart for Delivery
of a People-Processing
Service (Fig 3.4)
People Processing – Stay at Motel

Spend
Park Car Check In Night in Breakfast Check Out
Room

Maid Makes
Breakfast
up Room
Prepared
 of a
Possession-Processing
Service (Fig 3.4)

Possession Processing – Repair a DVD Player

Travel to Technician Examines Return, Pick up (Later) Play

Leave
Store Player, Diagnoses Player and Pay DVDs at Home
Store
Problem

Technician Repairs Player

 Simple Flowchart for Delivery of
Mental
Stimulus-Processing Service (Fig 3.4)

Mental Stimulus Processing – Weather Forecast

Turn on TV, Select View Presentation of Confirm Plans for

Channel Weather Forecast Picnic

Collect Meteorologists Input Data TV Weatherperson

Weather to Models and Creates Prepares Local
Data Forecast from Output Forecast
Weather Forecasting Is a
Service Directed at
Customers’ Minds (Fig 3.5)
 Simple Flowchart for Delivery
of An
Information-Processing Service
(Fig 3.4)

Information Processing – Health Insurance

Select Plan, Insurance Coverage Printed Policy

Learn about
Pay Begins Documents
Options Complete Forms
Arrive

University and Insurance

Customer Information
Company Agree on Terms of
Entered in Database
Coverage
The Flower of Service (Fig
3.6)

Information

Payment Consultation

Core
Billing Order Taking

Exceptions Hospitality

Safekeeping
KEY:
Facilitating elements
Enhancing elements
The Flower of Service:
Facilitating Services—
Information
Customers often require information about how to obtain
and use a product or service.

Examples of elements:

 Directions to service site

Core  Schedule/service hours
 Prices
 Conditions of sale
 Usage instructions
The Flower of Service:
Facilitating Services—Order
Taking
Customers need to know what is available and may
want to secure commitment to delivery. The process
should be fast and smooth.

Examples of elements:

Core  Applications
 Order entry
 Reservations and check-in
The Flower of Service:
Facilitating Services—Billing
“How much do I owe you?”
Bills should be clear,
Accurate, and intelligible.

Examples of elements:
Core
 Periodic statements of
account activity
 Machine display of amount
due
The Flower of Service:
Facilitating Services—
Payment
Customers may pay faster
and more cheerfully if you
make transactions simple
and convenient for them.

Core Examples of elements:

 Self service payment

 Direct to payee or intermediary
 Automatic deduction
The Flower of Service:
Enhancing Services—
Consultation
Value can be added to goods and services by offering
advice and consultation tailored to
each customer’s needs and situation.

Examples of elements:

Core
 Customized advice
 Personal counseling
 Management consulting
The Flower of Service:
Enhancing Services—
Hospitality
Customers who invest time and effort in
visiting a business and using its services
deserve to be
treated as welcome guests—
after all, marketing invited them!
Core
Examples of elements:
 Greeting
 Waiting facilities and amenities
 Food and beverages
 Toilets and washrooms
 Security
The Flower of Service:
Enhancing Services—
Safekeeping
Customers prefer not to worry about
looking after the personal possessions
that they bring with them to a service
site.

Core Examples of elements:

 Looking after possessions

customers bring with them
 Caring for goods purchased
(or rented) by customers
The Flower of Service:
Enhancing Services—
Exceptions
Customers appreciate some
flexibility when they make special
requests and expect responsiveness when
things don’t go according to plan.

Core
Examples of elements:

 Special requests in advance

 Complaints or compliments
 Problem solving
 Restitution
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
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
 Blueprinting the Restaurant
Experience:
Timeline Act 1
Act 1 (Fig 8.1)

Service Standards W
W
and Scripts Make W Valet
Coat Room …
Stage

Physical
Reservation Parking
Evidence Line of
interaction
Greet
Front -

Accept Greet, take Contact person

customer, coat, coat
reservation take car keys
(visible actions)
checks
Line of
visibility
Check Hang coat with
- Stage

Take car to Contact person

availability, visible check (invisible
insert booking parking lot numbers actions)
Line of
internal
Back

Maintain Maintain Maintain physical

interaction
reservation (or rent) facilities/
Support system facilities equipment
Processes
Blueprinting the Restaurant
Experience: A Three Act
Performance
 Act 1: Prologue and 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, guest are thanked for their patronage
Setting Service
Standards
 Service providers should design standards for each step sufficiently
high to satisfy and even delight customers
 Standards may include time parameters, script for a technically correct
performance, and prescriptions for appropriate style and demeanor
 Must be expressed in ways that permit objective measurement

 First impression is important as it affects customer’s 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
 Viewed more seriously because there are fewer subsequent opportunities to
create a favorable impression
 Improving Reliability of
Processes by Failure
Proofing
 Errors include:

 Treatment errors—human failures during contact with customer

○ e.g., lack of courteous or professional behavior, failure to acknowledge, listen to, or
react appropriately to the customer
 Tangible errors—failures 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:
 Performing tasks incorrectly, in the wrong order, too slowly
 Doing work that wasn’t requested in the first place
Redesigning Service Processes
Why Redesign?

“Institutions are like steel beams—they tend to

rust. What was once smooth and shiny and nice
tends to become rusty.”

Mitchell T. Rabkin MD,

formerly president of
Boston’s Beth Israel Hospital
 Why Redesign?
 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 redundancy
- High ratio of checking or control activities to value-adding
activities, increased exception processing
- Customer complaints about inconvenient and unnecessary procedures
Process Redesign:
Approaches and
Potential Benefits
 Eliminating non-value-adding steps
 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
 Improve efficiency
 More customized service
 Differentiate company
 Delivering direct service
 Bring service to customers instead of bringing customers to provider
 Improve convenience for customers
 Productivity can be improved if companies can eliminate expensive
retail locations
 Increase customer base
 Process Redesign:
Approaches and Potential
 Benefits
Shifting to self-service
 Increase in productivity and service quality
 Lower costs and perhaps prices
 Enhance technology reputation
 Greater convenience
 Bundling services
 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
 Increase productivity
 Add value for customers through lower transaction costs
 Customize service
 Increase per capita service use
 Process Redesign:
Approaches and Potential

Benefits
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 front-line staff
 Cultivate interest in customers
 Differentiate company
The Customer as Co-Producer
Levels of Customer
Participation
 Customer Participation
 Actions and resources supplied by customers during service production

and/or delivery
 Includes mental, physical, and even emotional inputs

 Three Levels
 Low—Employees and systems do all the work
- Often involves standardized service
 Medium—Customer inputs required to assist provider
- 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 customer’s active participation
- Customer can jeopardize quality of service outcome (e.g., weight loss, marriage
counseling)
 Self-Service Technologies
(SSTs)
 Ultimate form of customer involvement
 Customers undertake specific activities using facilities or
systems provided by service supplier
 Customer’s time and effort replace those of employees
○ e.g. Internet-based services, ATMs, self-service gasoline pumps
 Information-based services lend selves particularly
well to SSTs
 Used in both supplementary services and delivery of core
product
○ e.g. eBay—no human auctioneer needed between sellers and buyers
Psychological Factors in
Customer
Co-Production
 Economic rationale of self-service
Productivity gains and cost savings result when
customers take over work previously performed by
employees
 Lower prices, reflecting lower costs, induce
customer to use SSTs
 SSTs present both advantages and disadvantages
Benefits: Time and cost savings, flexibility, convenience
of location, greater control over service delivery, and a
higher perceived level of customization
Disadvantages: Anxiety and stress experienced by
customers who are uncomfortable with using them
What Aspects of SSTs Please
or Annoy Customers?
 People love SSTs when…
 SST machines are conveniently located and accessible 24/7—often 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
 They mess up—forgetting passwords, failing to provide information as
requested, simply hitting wrong buttons
 Key weakness of SSTs: Too few incorporate service recovery systems
 Customers still forced to make telephone calls or personal visits
 Blame service provider for not providing more user-friendly system
HSBC: “The world’s local
bank”

Source: Courtesy HSBC

Global site brought to customer’s local

computer
Putting SSTs to Test by
Asking a Few Simple
Questions
 Does the SST work reliably?
 Firms must ensure that SSTs are dependable and
user-friendly

 Is the SST better than interpersonal alternatives?

 Customers will stick to conventional methods if SST
doesn’t 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
Dysfunctional Customer Behavior
Disrupts Service Process
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
 Divergent views on jaycustomers
 “The customer is king and can do no wrong.”

 Marketplace is overpopulated with nasty people who

cannot be trusted to behave in ways that self-
respecting services firms should expect and require
 Insight: There’s truth in both perspectives

 No organization wants an ongoing relationship

with an abusive customer
Six Types of Jaycustomers:
 The Thief
 The Rulebreaker
 The Belligerent
 The Deadbeat
 Family Feuders
 Vandals