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Managing Customer Managing Customer SatisfactionSatisfaction
Week 5Week 5
Service ProcessesService Processes
Service processes: objectivesService processes: objectives
To define service processes and their To define service processes and their importanceimportance
To understand the nature of service To understand the nature of service processesprocesses
To provide some tools to help ‘engineer’ To provide some tools to help ‘engineer’ service processesservice processes
To explain how to reposition service To explain how to reposition service processesprocesses
Process design: IntroductionProcess design: Introduction
Process design describes and prescribes Process design describes and prescribes the procedures: the procedures: To be followed in service deliveryTo be followed in service delivery How these procedures interact with other How these procedures interact with other
resources such as materials, equipmentresources such as materials, equipment
How service activities (sub-processes) link How service activities (sub-processes) link together to create the whole interrelated together to create the whole interrelated chain of processes to deliver value to chain of processes to deliver value to customers and the organizationcustomers and the organization
Service processes & Service processes & their importancetheir importance
Excellent service = satisfies the customer Excellent service = satisfies the customer & meets the strategic intention of the & meets the strategic intention of the organizationorganization
Interrelates processes, departments, Interrelates processes, departments, people, decisions and activities = gluepeople, decisions and activities = glue
Must manage cost & quality targets from Must manage cost & quality targets from end-to-end (e2e)end-to-end (e2e) Holiday exampleHoliday example
Front office processesFront office processes
Front office processes deal directly with the Front office processes deal directly with the customer and may be visible to themcustomer and may be visible to themCustomer roles varyCustomer roles vary Well defined – adding money to your cell phoneWell defined – adding money to your cell phone Service depends on the skill of the provider – lawyerService depends on the skill of the provider – lawyer
Trend: Shift from provider to customerTrend: Shift from provider to customer Provide a clear process – elong for travel Provide a clear process – elong for travel
arrangementsarrangements
Common problem – customers are Common problem – customers are unpredictableunpredictable
Back office processesBack office processes
Back office processes operate at a Back office processes operate at a distance from the customer and are largely distance from the customer and are largely invisible to theminvisible to them
Shift to & from back office operationsShift to & from back office operations Consolidation of common processesConsolidation of common processes Reduces immediate need to respond to Reduces immediate need to respond to
customer requestscustomer requests Take advantage of technology (photo Take advantage of technology (photo
processing)processing)
Service experienceService experience
Service experienceService experience Face-to-faceFace-to-face TelephoneTelephone E-service - Internet based & other remote (ATM)E-service - Internet based & other remote (ATM)
RisksRisks Financial risk may be difficult for the customer to Financial risk may be difficult for the customer to
assess – used carassess – used car Physical risk – holiday in Thailand (political unrest)Physical risk – holiday in Thailand (political unrest) Psychological risk – anxiety Psychological risk – anxiety
Customer variablesCustomer variables
Customer mindset – logging a complaint Customer mindset – logging a complaint or going to Disneylandor going to Disneyland
Customer moodCustomer mood
Personality clashes Personality clashes
The servicescapeThe servicescape
Servicescape describes the physical and Servicescape describes the physical and information surroundings of the service information surroundings of the service operation operation The environment for both staff (front & The environment for both staff (front & back office) and customersback office) and customersServicescape can:Servicescape can: Affect the customer’s experienceAffect the customer’s experience Influence customer behaviorInfluence customer behavior Influence employeesInfluence employees
The nature of service processingThe nature of service processing
Processes need to be engineered and Processes need to be engineered and controlledcontrolled
Three questionsThree questions How much service product variety does the How much service product variety does the
process have to deal with?process have to deal with? What type of process is it, in terms of volume What type of process is it, in terms of volume
& variety that it can handle& variety that it can handle Where is the value-added for the customer?Where is the value-added for the customer?
Service process mixService process mix
Runners – standard activities, high volumeRunners – standard activities, high volume Often predictable (bank balance inquiry)Often predictable (bank balance inquiry) Lend themselves to efficient operations thru Lend themselves to efficient operations thru
automationautomation
Repeaters – more complex standard activities, Repeaters – more complex standard activities, less frequent. May be a result of growth (new less frequent. May be a result of growth (new bank services, BOC Wealth Management)bank services, BOC Wealth Management) Difficult to automate, uses more resourcesDifficult to automate, uses more resources Learning curve involved thru repeat occurrences Learning curve involved thru repeat occurrences
Service process mixService process mix
Strangers – non-standard activities that Strangers – non-standard activities that usually migrate to repeaters or runners. usually migrate to repeaters or runners. Least efficient.Least efficient.
Requires more flexibility and adaptabilityRequires more flexibility and adaptability
Managing runners, repeaters, strangersManaging runners, repeaters, strangers See Table 6.1. pg. 186See Table 6.1. pg. 186 Remember the importance of variety and Remember the importance of variety and
volume (Week 1)volume (Week 1)
Capability processesCapability processes
Flexible to change service outcomes – Flexible to change service outcomes – managing strangers vs. runnersmanaging strangers vs. runners
Professional services – lawyersProfessional services – lawyers
Creative services – advertising agencyCreative services – advertising agency
Consultants Consultants
Offer solutions to their customersOffer solutions to their customers
Central task: Must maintain their skill baseCentral task: Must maintain their skill base
Capability processesCapability processes
Capability process characteristics:Capability process characteristics:Particular skill or knowledge baseParticular skill or knowledge baseKnowledge/skill may reside with an individual Knowledge/skill may reside with an individual (lost if s/he leaves the organization)(lost if s/he leaves the organization)Few processes are documentedFew processes are documentedLittle consistency in approaching tasksLittle consistency in approaching tasksR&D is centered on the individual’s capabilityR&D is centered on the individual’s capabilityMove down the diagonal as standardization Move down the diagonal as standardization increasesincreasesTend to be service partnerships or projectsTend to be service partnerships or projectsStrangers and repeaters dominate activitiesStrangers and repeaters dominate activities
Commodity processesCommodity processes
High volume services – rigid service conceptHigh volume services – rigid service concept
competes on consistent quality and pricescompetes on consistent quality and prices Fast food restaurantsFast food restaurants Appliance repairAppliance repair Computer repairComputer repair
Central taskCentral task Maintain consistency of serviceMaintain consistency of service Customers feel as if they are individualsCustomers feel as if they are individuals Manage resource productivityManage resource productivity
Commodity processesCommodity processes
Commodity process characteristics:Commodity process characteristics:Tightly controlled processesTightly controlled processesCustomer-facing staff are junior staff and poorly paidCustomer-facing staff are junior staff and poorly paidFocused trainingFocused trainingDeals well with changes in demandDeals well with changes in demandActivities characterized by runners with an increase Activities characterized by runners with an increase in repeaters as differentiation increases through in repeaters as differentiation increases through mass customizationmass customizationCentral task: create a planned environment for Central task: create a planned environment for efficient and consistent delivery of service activitiesefficient and consistent delivery of service activities
Profiling processesProfiling processes
Capability-commodity profiles assist Capability-commodity profiles assist managers in locating their existing managers in locating their existing processes and determine if action needs processes and determine if action needs to be takento be taken
Motor (Auto) insurance profileMotor (Auto) insurance profile
The direct operation should focus on fast The direct operation should focus on fast response and low costresponse and low cost
Broker operations should focus on Broker operations should focus on flexibility and personal serviceflexibility and personal service
Key decision area matrix (KDAM)Key decision area matrix (KDAM)
A means of categorizing service A means of categorizing service processesprocesses
Customer involvement – the degree to Customer involvement – the degree to which the customer is involved in the which the customer is involved in the service delivery processservice delivery process
Customer contact (being a hotel guest)Customer contact (being a hotel guest)
Customer involvement (IKEA)Customer involvement (IKEA)
Key decision area matrix (KDAM)Key decision area matrix (KDAM)
Large organizations may include all 4 typesLarge organizations may include all 4 types
Service factory Service factory high volume, low variationhigh volume, low variation Runners and occasionally repeatersRunners and occasionally repeaters Low consumer involvement (McD’s)Low consumer involvement (McD’s)
Do-it-yourselfDo-it-yourself high volume, low variationhigh volume, low variation Runners and occasionally repeatersRunners and occasionally repeaters High consumer involvement (Amazon.com)High consumer involvement (Amazon.com)
Key decision area matrix (KDAM)Key decision area matrix (KDAM)
Service projectsService projects Repeaters & strangersRepeaters & strangers Limited customer involvementLimited customer involvement Close links between front & back office (market Close links between front & back office (market
research)research)
Service partnershipService partnership Repeaters & strangersRepeaters & strangers Highly customized with high customer involvementHighly customized with high customer involvement Co-development (client and provider)Co-development (client and provider) Management of front-back office link critical Management of front-back office link critical
(managing investment portfolios)(managing investment portfolios)
Engineering service processesEngineering service processes
““The key to good service design is about The key to good service design is about taking a customer perspective and taking a customer perspective and understanding the whole service process” understanding the whole service process” (Johnston & Clark, pg. 198)(Johnston & Clark, pg. 198)
Tools for engineering service Tools for engineering service Process mapping (FO&BO)Process mapping (FO&BO) Walk-through audits (FO)Walk-through audits (FO) Service transaction analysis (FO)Service transaction analysis (FO)
Process mapping
Charting a service process in order to Charting a service process in order to assist in the evaluation, design & assist in the evaluation, design & development of processesdevelopment of processesCapture all activities & relationships – time Capture all activities & relationships – time consumingconsumingResultsResults Shared viewShared view Understanding of each role in the e2e processUnderstanding of each role in the e2e process
Mapping toolsMapping tools
Analysis of process mapsAnalysis of process maps
Does the process support the strategic Does the process support the strategic intentions of the operation?intentions of the operation?
Does each activity provide added value?Does each activity provide added value?
Is the process ‘in control’? Is the process ‘in control’? What targets and measures are in place?What targets and measures are in place?
Who ‘owns’ the process?Who ‘owns’ the process?
Is the level of visibility appropriate?Is the level of visibility appropriate?
Is the process efficient?Is the process efficient?
How can the process be improved?How can the process be improved?
Walk-through auditsWalk-through audits
Undertaken by staffUndertaken by staff
Key – choosing what to assessKey – choosing what to assess
Choose the elements critical to the Choose the elements critical to the customercustomer
Service transactions analysis (STA)Service transactions analysis (STA)
Combines service concept, process, transaction Combines service concept, process, transaction quality assessment, service ‘messages’ & quality assessment, service ‘messages’ & customer emotionscustomer emotionsFive stagesFive stages Agreement on service conceptAgreement on service concept Walk through of the actual processWalk through of the actual process Interpretation of customer evaluationInterpretation of customer evaluation Symbols for visible profile of transaction outcome (+, Symbols for visible profile of transaction outcome (+,
0, -)0, -) Use form to discuss improvementsUse form to discuss improvements
STA seeks to identify reasons for outcomes so STA seeks to identify reasons for outcomes so that appropriate actions may be takenthat appropriate actions may be taken
Controlling service processesControlling service processes
Objective – consistent outcomes for Objective – consistent outcomes for customers: reliabilitycustomers: reliability
Two aspects of controlTwo aspects of control Assessing capabilitiesAssessing capabilities Quality systems such as ISO 9000Quality systems such as ISO 9000
Capable processesCapable processes
Deming – evidence that quality is built in Deming – evidence that quality is built in using statistical process control (SPC) using statistical process control (SPC) methodologymethodology
Distribution samplingDistribution sampling
Statistical process control chartStatistical process control chart Used to control and improve runners in high Used to control and improve runners in high
volume, standard processesvolume, standard processes
Quality systemsQuality systems
ISO 9000, etc. develop standard operating ISO 9000, etc. develop standard operating procedures (SOP) that can be audited based on procedures (SOP) that can be audited based on customer requirements and market conditionscustomer requirements and market conditionsAdvantagesAdvantages Develops a disciplined approach to controlling critical Develops a disciplined approach to controlling critical
elements of service deliveryelements of service delivery External auditing awards improves morale and External auditing awards improves morale and
reputationreputation Includes a formal review process that results in Includes a formal review process that results in
improvementsimprovements Opportunities for re-design before the formal audit Opportunities for re-design before the formal audit
Repositioning service processesRepositioning service processes
Pressures for change (see next slide)Pressures for change (see next slide)
Organizations must manage the gap between Organizations must manage the gap between what is marketed and what is deliveredwhat is marketed and what is delivered
Ways to reposition service processesWays to reposition service processes Building capability through systems & trainingBuilding capability through systems & training Building capability through incremental developmentBuilding capability through incremental development Moving to a commodity by constraining flexible Moving to a commodity by constraining flexible
resources (chef to McD burger flipper)resources (chef to McD burger flipper) Moving to a commodity through investment in process Moving to a commodity through investment in process
capabilitycapability
Managing the gap between Managing the gap between marketing and operationsmarketing and operations
Customer service departmentsCustomer service departments
Named personal contactNamed personal contact
Account managersAccount managers
Change the nature of the service (DIY Change the nature of the service (DIY over the Internet)over the Internet)
Change customer expectationsChange customer expectations