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Chapter 8:

Designing and Managing Service Processes

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

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

Parking
Reception

Baggage Service Cocktail Bar

Call Internet

Entertainment/ Restaurant Sports/ Exercise

What Happens, When, in What Sequence? Time Dimension in Augmented Product (Fig 3.3)

Reservation

Parking Check in Internet Use room Porter Meal Pay TV

Get car Check out Internet USE GUESTROOM OVERNIGHT internet

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

Park Car

Check In

Spend Night in Room

Breakfast

Check Out

Maid Makes up Room

Breakfast Prepared

Simple Flowchart for Delivery of a Possession-Processing Service


(Fig 3.4)
Possession Processing Repair a DVD Player

Travel to Store

Technician Examines Player, Diagnoses Problem

Leave Store

Return, Pick up Player and Pay

(Later) Play DVDs at Home

Technician Repairs Player

Simple Flowchart for Delivery of Mental Stimulus-Processing Service


Mental Stimulus Processing Weather Forecast

(Fig 3.4)

Turn on TV, Select Channel Collect Weather Data

View Presentation of Weather Forecast

Confirm Plans for Picnic

Meteorologists Input Data to Models and Creates Forecast from Output

TV Weatherperson Prepares Local 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

Learn about Options

Select Plan, Complete Forms

Pay

Insurance Coverage Begins

Printed Policy Documents Arrive

University and Insurance Company Agree on Terms of Coverage

Customer Information Entered in Database

The Flower of Service (Fig 3.6)


Information Payment Billing
Core

Consultation Order Taking

Exceptions Safekeeping
KEY:

Hospitality

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:

Core

Directions to service site Schedule/service hours Prices Conditions of sale Usage instructions

The Flower of Service: Facilitating ServicesOrder 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 ServicesBilling


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 ServicesPayment


Customers may pay faster
and more cheerfully if you make transactions simple and convenient for them. Examples of elements:

Core

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 customers 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. Examples of elements:

Core

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 dont 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: Act 1 (Fig 8.1) Timeline Act 1


Stage
Service Standards and Scripts Physical Evidence

Make Reservation

Valet Parking

W Coat Room

Line of interaction

Front -

Accept reservation

Greet customer, take car keys

Greet, take coat, coat checks Hang coat with visible check numbers

Contact person (visible actions) Line of visibility Contact person (invisible actions) Line of internal physical interaction

- Stage

Check availability, insert booking

Take car to parking lot

Back

Support Processes

Maintain reservation system

Maintain (or rent) facilities

Maintain facilities/ equipment

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 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

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 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
Viewed more seriously because there are fewer subsequent

opportunities to create a favorable impression

Improving Reliability of Processes by Failure Proofing

Errors include:
Treatment errorshuman 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 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:


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

Redesigning Service Processes

Why Redesign?

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

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
LowEmployees and systems do all the work
-

Often involves standardized service

MediumCustomer inputs required to assist provider


-

Provide needed information and instructions Make some personal effort; share physical possessions Service cannot be created without customers active participation Customer can jeopardize quality of service outcome (e.g., weight loss, marriage counseling)

HighCustomer works actively with provider to co-produce the service


-

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 lend selves particularly well to SSTs


Used in both supplementary services and delivery of core

product

e.g. eBayno 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 24/7often 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 failsystem is down, PIN numbers not accepted, etc

They mess upforgetting 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 worlds local bank

Source: Courtesy HSBC

Global site brought to customers 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 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

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 selfrespecting services firms should expect and require
Insight: Theres truth in both perspectives

No organization wants an ongoing relationship with an abusive customer

Six Types of Jaycustomers:


The

Thief

The
The The

Rulebreaker
Belligerent Deadbeat Feuders

Family

Vandals

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