People, process and physical People, process and physical environmentenvironment

Week 3Week 3

Key factors to considerKey factors to consider

‘‘People’People’ in the service in the service delivery processdelivery process

The service The service ‘process’‘process’ design and deliverydesign and delivery

The The ‘physical’‘physical’ service service environmentenvironment

Organising the Organising the ‘distribution (place)’‘distribution (place)’ of of the servicethe service

‘‘Pricing’Pricing’ the service the service ‘‘Communicating’Communicating’ the the

serviceservice

(Week 4)(Week 4)

PeoplePeople in the creation/management of in the creation/management of the service experience the service experience

Managing

role conflict

Managing

role ambiguity

Emotional labour:

deep/surface acting

Managing

role overloadCreating

the

service

experience

for the customer

Employee/ Customer CEmployee/ Customer Cycle of Failure ycle of Failure

“Normality” of Service Sabotage Behaviors

Intermittent

Routine

“Openness” of Service Sabotage Behaviors

Covert Overt

Customer-Private Service Sabotage Customer-Public Service Sabotage

e.g., Waiters serving

smaller servings, bad beer,

or sour wine

e.g., Talking to guests like

young kids and putting them

down

Sporadic-Private Service Sabotage Sporadic-Public Service Sabotage

e.g., Chef occasionally

purposefully slowing down

orders

e.g., Waiters spilling soup

onto

laps, gravy onto sleeves, or

hot plates into someone’s

hands

Service Sabotage

Employee/ Customer Cycle of Success Employee/ Customer Cycle of Success

Service employees and management Service employees and management issuesissues

Criteria to

evaluate

performance on service

experience creation

On role performance,

constantly to

update on changes about

service standards

Right people – balance of

Social and technical

Skills to create experience

For outstanding

service experience

creation

Service employees and management Service employees and management issues Starbucks caseissues Starbucks case

Reward:Reward: for for > 20hrs/week work employees > 20hrs/week work employees - can join healthcare programme and buy shares- can join healthcare programme and buy shares - are offered disability and life insurance- are offered disability and life insurance

Selection:Selection: recruit passionate people who love coffeerecruit passionate people who love coffee - select a diverse workforce that reflects the - select a diverse workforce that reflects the Starbucks’ communityStarbucks’ community

Training:Training: every employee (barista) gets 24hrs training in the first 2 to 4 every employee (barista) gets 24hrs training in the first 2 to 4 weeks training includes coffee knowledge, coffee history, weeks training includes coffee knowledge, coffee history, drink preparation and a 4hr workshop called ‘brewing the drink preparation and a 4hr workshop called ‘brewing the perfect cup’ Management trainee for 8 to 12 weeks which covers details of perfect cup’ Management trainee for 8 to 12 weeks which covers details of store operation, information systems and the basics of managing peoplestore operation, information systems and the basics of managing people

Performance:Performance: Starbucks employee turnover rate 60% average industry turnover 140%Starbucks employee turnover rate 60% average industry turnover 140% low employee turnover – employee can become more familiar with the clients low employee turnover – employee can become more familiar with the clients and client preferences and client preferences

The service delivery The service delivery processprocess – Issues – Issues to consider in service design & to consider in service design & delivery delivery

Service design processService design processStarbucks caseStarbucks case Degree of techDegree of tech - - faster espresso machines, prepaid cards, faster espresso machines, prepaid cards, Starbucks express (online payment), T-mobileStarbucks express (online payment), T-mobile internet hotspots at all storesinternet hotspots at all stores

Degree of visibilityDegree of visibility – setting of brewing process and preparation – setting of brewing process and preparation at ‘front office’, so that the customer can experienceat ‘front office’, so that the customer can experience the smell, noise and heat from coffee preparationthe smell, noise and heat from coffee preparation

Degree of customisationDegree of customisation – – different kinds of coffee and topping different kinds of coffee and topping combinationscombinations e.g. a decaf grade skimmed mild, no foam, no whip bute.g. a decaf grade skimmed mild, no foam, no whip but some extra chocolate mocha on top some extra chocolate mocha on top

Degree of accessibilityDegree of accessibility – – 15,000 retail location in high-traffic areas,15,000 retail location in high-traffic areas, supermarkets, bookstores, hospitals, office buildings, supermarkets, bookstores, hospitals, office buildings, banks and served in the air by United Airlinesbanks and served in the air by United Airlines

Key steps in developing service Key steps in developing service blueprintingblueprinting

Service blueprinting (service mapping):Service blueprinting (service mapping): is a pictorial representation of the service process with is a pictorial representation of the service process with

service events linked through a series of lines which service events linked through a series of lines which represent dependencesrepresent dependences

Key steps in developing service blueprintingKey steps in developing service blueprinting SequencingSequencing VisibilityVisibility Timing Timing ToleranceTolerance

Exercise: develop/design a service blueprint for a patient Exercise: develop/design a service blueprint for a patient taking X-raytaking X-ray

Developing the service ‘blueprint’(e.g. X-Ray)Developing the service ‘blueprint’(e.g. X-Ray)

S

E

Q

U

E

N

C

E

TIMING

Visible to customer

Not visible to customer

TOLERANCE

Flowcharts for People and Possession Flowcharts for People and Possession Processing ServicesProcessing Services

Flowcharts for Mental Stimulus and Flowcharts for Mental Stimulus and Information Processing ServicesInformation Processing Services

Redesigning Service ProcessesRedesigning Service Processes

- Redesign aims to achieve these performance measures:- Redesign aims to achieve these performance measures:

Reduced number of service failuresReduced number of service failures Reduced cycle time from customer initiation of a Reduced cycle time from customer initiation of a

service process to its completionservice process to its completion Enhanced productivityEnhanced productivity Increased customer satisfactionIncreased customer satisfaction

Process Redesign: Approaches and Process Redesign: Approaches and Potential Benefits Potential Benefits

Process Redesign: Approaches and Process Redesign: Approaches and Potential Benefits Potential Benefits

What Aspects Of SSTs Please Or Annoy What Aspects Of SSTs Please Or Annoy Customers?Customers?

Key weakness: Few firms incorporate service recovery systems such that customers are still forced to make telephone calls or personal visits

People love SSTs when… People hate SSTs when…

• SST machines are conveniently located and accessible 24/7– often as close as the nearest computer!

•Obtaining detailed information and completing transactions can be done faster than through face-to-face or telephone contact

• SSTs fail – system is down, PIN numbers not accepted, etc.

• Customers themselves mess up–forgetting passwords; failing to provide information as requested; simply hitting wrong buttons

Self-Service Technologies (SSTs)Self-Service Technologies (SSTs)

Advantages: Time and Cost savings

Flexibility

Convenience of location

Greater control over service delivery

High perceived level of customization

Many companies and government organisations seek to divert customers from employee contact to Internet-based self-service

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

The The physicalphysical environment environment

Four Seasons Hotel, New YorkOrbit Hotel and Hostel, Los Angeles

Comparison of Hotel lobbiesComparison of Hotel lobbies

The The physicalphysical environment environment

Cognitively

based

Managing reaction to varied

individual responses

(Approach vs. Avoidance)

Emotionally

based

Physiologically

based

Appreciating

functionality of the layout

e.g. supermarkets, IKEA

Feeling cold or hot

Stressed by noise/crowdEnvironment to ‘take your

breadth away’ or

make you laugh

The Mehrabian-Russell The Mehrabian-Russell Stimulus-Response Model Stimulus-Response Model

Response/Behaviors:

Approach Avoidance &

Cognitive Processes

Environmental Stimuli and Cognitive

Processes

Dimensions of Affect:

Pleasure and Arousal

Feelings Are a Key Driver of Customer Responses to Service Environments

Insights from Mehrabian-Russell Insights from Mehrabian-Russell Stimulus-Response ModelStimulus-Response Model

It is a simple yet fundamental model of how people It is a simple yet fundamental model of how people respond to environments that illustrates: respond to environments that illustrates: The environment, its conscious and unconscious The environment, its conscious and unconscious perceptions, and interpretation influence how people feel in perceptions, and interpretation influence how people feel in that environmentthat environmentFeelings, rather than perceptions/thoughts drive Feelings, rather than perceptions/thoughts drive behaviourbehaviourTypical outcome variable is Typical outcome variable is ‘‘approachapproach’’ or or ‘‘avoidanceavoidance’’ of of an environment, but other possible outcomes can be an environment, but other possible outcomes can be added to modeladded to model

The Russell Model of AffectThe Russell Model of Affect

Insights from Russell’s Model of AffectInsights from Russell’s Model of Affect

Emotional responses to environments can be described Emotional responses to environments can be described along two main dimensions:along two main dimensions: Pleasure: subjective, depending on how much Pleasure: subjective, depending on how much

individual likes or dislikes environmentindividual likes or dislikes environment Arousal: how stimulated individual feels, depends Arousal: how stimulated individual feels, depends

largely on information rate or load of an environmentlargely on information rate or load of an environment Separates cognitive emotions from emotional Separates cognitive emotions from emotional

dimensionsdimensions Advantage: simple, direct approach to customers’ Advantage: simple, direct approach to customers’

feelingsfeelings Firms can set targets for affective statesFirms can set targets for affective states

An Integrative Framework: An Integrative Framework: The Servicescape Model The Servicescape Model

An Integrative Framework: An Integrative Framework: The Servicescape ModelThe Servicescape Model

Identifies the main dimensions in a service environment Identifies the main dimensions in a service environment and views them holisticallyand views them holistically

Internal customer and employee responses can be Internal customer and employee responses can be categorized into cognitive, emotional, and physiological categorized into cognitive, emotional, and physiological responses, which lead to overt behavioural responses responses, which lead to overt behavioural responses towards the environmenttowards the environment

Key to effective design is how well each individual Key to effective design is how well each individual dimension fits together with everything elsedimension fits together with everything else

Managing the Managing the physical physical environmentenvironment

Atmospherics

Tangible service

evidenceMarket space

Spatial Layout

Heat, light, sound

Music, selection, colour, noise

Effect length

of stay,

Walking speed

in store

Signage, symbols

Rich curtains vs blinds

Build customer

expectations

of service experience

The service

experience

Design with purpose

Hospital vs. hotel

Convenience vs.

enjoyment

The internet as a service environment – ease of navigation, design aesthetics

Encourage users to explore – approach rather than avoid

SummarySummary

The influence of:The influence of:

- people- people

- process and- process and

- Physical environment - Physical environment

in delivering the service experiencein delivering the service experience

Next week:Next week:

Price, distribution and promotionPrice, distribution and promotion