Service Process Design

Chapter 5
R. Dan Reid
and Nada R. Sanders, P=84

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 DESIGNING SERVICES
• Most of us think we know what is needed to
run a good service organization.
• After all, we encounter services almost every
day, at banks, fast-food restaurants, doctor’s
offices, barber shops, grocery stores, and even
the university.
• We have all experienced poor service quality and
would gladly offer advice as to how we think it could
be better.
• there are some very important features of services to
be considered.
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 Definition of Service
Key Concepts

• Intangibility of the product

• No finished goods inventory
• Simultaneous production and consumption
• Difficulty in defining and measuring quality
and productivity
• Other Differences between Manufacturing
and Service

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 The service/product continum
• Pure service or pure prdt are very rare.
– No prdt with intrinsic value involved. E.g. lawyer
• Often we have a service/product bundle.
• Combination of prdt with service (most common)

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 Service-Product Bundles
• Serv-prdt bundle is The combination of goods and
services provided to a customer.
• Serv-prdt bundle has 4 components:
• The supporting facility: buildings, equipment,
furniture, etc.
• Physical goods/facilitating goods: what you can
carry away.
• Tangible service/explicit service: what the seller
does for you.
• Psychological benefits/implicit service: how you
feel about it.
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 Moments of truth
• It is the customer – service encounter
• Every positive or negative experience of the
consumer would have fall-out on the overall
service experience
• In services, the last experience remains
uppermost in your mind. Therefore, it is not
enough to be good, you have to be
consistently good

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 Comparison of Goods and Services (Figure 5.1)

Goods Services

100% 75% 50% 25% 0% 25% 50% 75% 100%

Self-service groceries
Automobile
Installed carpeting
Fast-food restaurant
Gourmet restaurant
Auto maintenance
Haircut
Consulting services

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 Cycle of Service for an Airline (Figure 5.2)
Customer requests
schedule information
Leaves Makes
Airport reservation

Receive
Baggage Arrives at
airport

Departs
Plane Checks
baggage and
Receives checks in for
in-flight flight
service

Proceeds to gate
Boards and security check
aircraft
Receives
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boarding pass
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 Customer Contact
• Definition of “contact”- interaction b/n the
service system and the customer. Each
“moment of truth” is a contact.
• Potential inefficiency as a function of
customer contact
• Characteristics of high- and low-contact
services
• Advantage: potential for new ideas.
• Disadvantage: potential cause of
inefficiency in services.
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 Customer Contact…
• High contact (front room) services
– Direct customer contact
– Customer has control of process or influences
process
• Low contact (back room) services
– Out of sight of customer
– Provider has control of process
• Goal: move as much activity as possible to
the back room. Why?

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 The Service Typology
• Service Factory
• Mass Service
• Service Shop
• Professional Service

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 Service Matrix (Figure 5.3)

Degree of Interaction and Customization

Low High
Service factory Service shop
Degree of Labor intensity

Airlines Hospitals
Low Tracking Computer dating
Hotels Repair services
Resort and recreation

Mass services Professional Services

Retailing Lawyers
High Wholesaling Doctors
Schools Accountants
Retail aspects of Architects
commercial banking
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 How Are Services Classified?

• We can classify service organizations based on similar

characteristics in order to understand them better.
• A common way to classify services is based on the degree
of customer contact.
• See next figure about Classification of service operations, P-85

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 Links in the service-profit chain
(See Figure 5.4)

• Internal service quality

• Employee satisfaction
• Employee retention
• Employee productivity
• External service value
• Customer satisfaction
• Customer loyalty
• Revenue growth
• Profitability

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 The service-profit chain…
• Service quality is directly proportional to
employee satisfaction.
• Satisfied employees will produce satisfied
customers.
 Morale
 Motivation
 Mood

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 Related Concepts
• Service guarantee
– Analogous to a guarantee for a good
– Requires specific criteria and responses
• Service Recovery
– What you do to compensate the customer for
bad service.

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 The End!

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