8 Designing and Managing Service Processes

8/3/2019 8 Designing and Managing Service Processes

1/29

Designing and ManagingService Processes


2/29

Blueprinting Services to

Create Valued Experiences and

Productive Operations


3/29

Developing a Blueprint

Identify key activities in creating and delivering service

Define big picture before drilling down to obtain ahigher level of detail

Distinguish between front stage and backstage

Clarify interactions between customers and staff, andsupport by backstage activities and systems

Identify potential fail points; take preventive measures;prepare contingency

Develop standards for execution of each activity timesfor task completion, maximum wait times, and scripts toguide interactions between employees and customers


4/29

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 personnel6. 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


5/29

Blueprinting the Restaurant Experience: Act 1

MakeReservation

Coat RoomValet

Parking

Acceptreservation

Greetcustomer,

take car keysGreet, takecoat, coat

checks

Checkavailability,

insert booking

Take car to

parking lot

Hang coat withvisible check

numbers

Maintainreservation

system

Maintain(or rent)facilities

Maintainfacilities/

equipment

Line ofinteraction

Line ofvisibility

Line ofinternalphysical

interaction

Contact person(visible actions)

Contact person(invisible

actions)

Front

-

Stage

Back

-

Stage

TimelineAct 1

PhysicalEvidence

Service Standardsand Scripts

SupportProcesses

W W W


6/29

Blueprinting the RestaurantExperience: 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 howpromptly 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, paymenthandled politely, guest are thanked for their patronage


7/29

Setting Service Standards

Service providers should design standards for each step sufficientlyhigh to satisfy and even delight customers

Standards may include time parameters, script for a technically correctperformance, 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 ofquality during later stages of service delivery

Research by Marriott Hotels indicates that four of five top factorscontributing to customer loyalty come into play during the first 10 minutesof service delivery

Customer perceptions of service experiences tend to be cumulative

For low-contact service, a single failure committed front stage isrelatively more serious than in high-contact service

Viewed more seriously because there are fewer subsequent opportunitiesto create a favorable impression


8/29

Improving Reliability of Processes byFailure Proofing

Analysis of reasons for failure often reveals opportunities for failureproofing to reduce/eliminate future risk of errors

Need fail-safe methods for both employees and customers

Errors include:

Treatment errorshuman failures during contact with customer

e.g., lack of courteous or professional behavior, failure to acknowledge, listento, 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


9/29

Redesigning Service Processes


10/29

Mitchell T. Rabkin MD,formerly president of

Bostons Beth Israel Hospital

Why Redesign? (1)

Institutions are like steel beamsthey tend to rust.What was once smooth and shiny and nice

tends to become rusty.


11/29

Why Redesign? (2)

Revitalizes process that has become outdated

Changes in external environment make existing practices obsoleteand 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


12/29

Process Redesign: Approaches andPotential Benefits (1)

Eliminating non-value-adding steps

Streamline front-end and back-end processes of services with goal offocusing 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


13/29


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


14/29


Redesigning physical aspects of service processes

Focus on tangible elements of service process; include changes tofacilities and equipment to improve service experience

Increase convenience

Enhance the satisfaction and productivity of front-line staff Cultivate interest in customers

Differentiate company


15/29

The Customer as Co-Producer


16/29

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

HighCustomer 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)


17/29

Self-Service Technologies (SSTs)

Ultimate form of customer involvement

Customers undertake specific activities using facilities or systems providedby 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

Many companies and government organizations seek to divert

customers from employee contact to Internet-based self-service Economic trade-off between declining cost of these self-service systems

and rising cost of labor

Challenge: Getting customers to try this technology


18/29

Psychological Factors in CustomerCo-Production

Economic rationale of self-service

Productivity gains and cost savings result when customers take over workpreviously performed by employees

Lower prices, reflecting lower costs, induce customer to use SSTs

Research shows that customers tend to take credit for successful

outcomes, but not blame for unsuccessful ones

Critical to understand how consumers decide between using an SSToption and relying on a human provider

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 ofcustomization

Disadvantages: Anxiety and stress experienced bycustomers who areuncomfortable with using them


19/29

What Aspects of SSTs Please or AnnoyCustomers?

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 donefaster 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 asrequested, 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


20/29

Putting SSTs to Test byAsking a Few Simple Questions

Does the SST work reliably?

Firms must ensure that SSTs are dependable anduser-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 technologiesthat will enable prompt service recovery when thingsgo wrong


21/29

Customers as Partial Employees

Customers can influence productivity and quality of serviceprocesses and outputs

Customers who are offered opportunities to participate at activelevel are more likely to be satisfied

However, customers cause one-third of all service problems

Difficult to recover from instances of customer failure Focus on preventing customer failure by collecting data on problem

occurrence, analyzing root causes, and establishing preventive solutions

Managing customers as employees helps to avoid customer failures

Conduct job analysis of customers present role in businesscompare

against role that firm would like customers to play Educate customers on how expected to perform and skills needed

Motivate customers by ensuring that rewarded if they perform well

Appraise customers performance regularly


22/29

Dysfunctional Customer BehaviorDisrupts Service Process


23/29

Addressing the Challenge ofJay customers

Jay customer: A customer who behaves in a thoughtless or abusivefashion, causing problems for the firm, its employees, and othercustomers

More potential for mischief in service businesses, especially whenmany customers are present

Divergent views on jay customers The customer is king and can do no wrong.

Marketplace is overpopulated with nasty people who cannot be trusted tobehave in ways that self-respecting services firms should expect andrequire

Insight: Theres truth in both perspectives

No organization wants an ongoing relationship with an abusivecustomer


24/29

Six Types of Jaycustomers:The Thief

No intention of payingsets out to steal or pay less

Services lend themselves to clever schemes to avoid payment

For example: bypassing electricity meters, circumventing TV cables, ridingfree on public transportation

Firms must take preventive actions against thieves, but not alienatehonest customers by degrading their service experience

Make allowances for honest but absent-minded customers


25/29

Six Types of Jaycustomers:The Rulebreaker

Many services need to establish rules to guide customers safelythrough the service encounter

Government agencies may impose regulations that service suppliersmust enforce

Some rules protect other customers from dangerous behavior

For example: Vail and Beaver Creek, Coloradoski patrollers issuewarnings to reckless skiers by attaching orange stickers on their lift tickets

Ensure company rules are necessary, not bureaucratic


26/29

Expresses resentment, abuses service employees verbally or evenphysically

Confrontations between customers and service employees can easilyescalate

Firms should ensure employees have skills to deal with difficult

situations

In a public environment, priority is to remove person from other customers

May be better tomake a public stand on behalf of employees than concealfor fear of bad publicity

Six Types of Jaycustomers:The Belligerent

Confrontations between Customers and Service Employees Can Easily Escalate


27/29

Family Feuders: People who get into arguments with other

customersoften members of their own family

The Vandal:

Service vandalism includes pouring soft drinks into bank cash machines;slashing bus seats, breaking hotel furniture

Bored and drunk young people are a common source of vandalism

Unhappy customers who feel mistreated by service providers take revenge

Prevention is the best cure

Six Types Of Jaycustomers:Family Feuders and Vandals


28/29

Six Types Of Jaycustomers:The Deadbeat

Customers who fail to pay (as distinct from

thieves

who neverintended to pay in the first place)

Preventive action is better than curefor example: insisting onprepayment; asking for credit card number when order is taken

Customers may have good reasons for not paying

-If the client's problems are only temporary ones, consider long-term valueof maintaining the relationship


29/29

Consequences of DysfunctionalCustomer Behavior

Consequences for staff working front stage Abused employees may find their emotions negatively affected and/or

suffer long-term psychological damage

Productivity and quality may suffer

Consequences for customers can be both negative and positive

Exposure to unpleasant incidents can spoil consumption experience;some customers may even terminate their use of the service

Bad behavior can be contagious

But customers may rally to support of abused employee

Consequences for organization

Unmotivated employees may work less effectively

Abused employees may take medical leave

Direct financial costs of restoring damaged property, legal fees, payingfraudulent claims

Documents

8 Designing and Managing Service Processes