Service Development

and Design
“Ultimately, only one thing really
matters in service encounters-the
customers perception of what
occurred”
 Challenges of service design
 Oversimplification-words are simply inadequate
to describe a whole complex service system.
 Incompleteness-In describing services people
tend to omit details or elements.
 Subjectivity-describing a service in words will be
biased by personal experience.
 Biased interpretation-NO two people will
describe “responsive,” “quick,” or “flexible” in
exactly same way.
 New service Development
 NSD system should have four
characteristics
It must be objective, not subjective.
It must be precise, not vague
It must be fact driven, not opinion driven
It must be methodological not philosophical
 Types of new services
 Major innovations
 Start up business
 New services for currently served market.
 Service line extensions
 Service improvements
 Style changes
 Service Redesign
 Self service-move the customer into
production mode
 Direct service-
 Preservice
 Bundeled service-
 Stages in New Service
Development
 Idea generation-screen ideas against new
service strategy
 Concept development and evaluation-test
concepts with customers and employees
 Business analysis-test the profitability and
feasibility
 Service development and testing-conduct service
prototype test
 Market testing-test service and other marketing
mix elements
 Commercialization
Business strategy development
Offerings
Current New customers
customers
Existing services Share building Market
development

New services Service diversification

development
 Idea generation
 Formal solicitation of new ideas
Formal brainstorming
Solicitation of new ideas from employees
and customers
Observing customers
 Service development and concept
evaluation
 Inherent characteristics of the services,
particularly intangibility and simultaneous
production and consumption place complex
demand on this phase of the process.
 The new service concept would be evaluated by
asking employees and customer whether they
are favorable to the concept.
 Assuming the service concept is favorably
evaluated the next step is determined the
feasibility and potential profit implications.
 Implementation
 During this phase the concept is refined to
the point where a detailed service
blueprint representing the implementation
plan can be produced.
 Feedback is reviewed and integrated into
the design constantly before, during, and
after the launch
 Market testing-at this stage it is important to
pilot run the service to be sure that operation
details are functioning smoothly.
 Commercialization-the service goes live and is
introduced to the market place.
 Post introduction evaluation-the information
gathered during commercialization of the service
can be reviewed and changes made to the
delivery process, staffing or marketing mix
variable.
 Service blueprinting
 A tool for simultaneously depicting the
service process, the points of customer
contact, and the evidence of service from
the customer's point of view.
 It is a picture or map that accurately
portrays the service system.
Service blueprinting

Process

Service
Blueprint Points of contact

Evidence
 Blueprinting components
 Physical evidence
 Customer actions

(line of interaction)
 Onstage contact employee actions

(Line of visibility)
 Backstage contact employee actions

(Line of internal interaction)

 Support processes
 Customer action area encompasses the steps, choices,
activities, and interactions that the customer performs
in the process of purchasing, consuming, and
evaluating the service.
 The steps and action that an onstage employee
performs that are visible to the customer
 The actions that occur behind the scenes to support
the onstage activities are contact employees
 The support process section of the blueprinting covers
the internal services, steps, and interactions that take
place to support the contact employees.
 The four key areas
 Line of interaction-representing direct interaction
between customer and the organization.
 Line of visibility-this separates all service
activities that are visible to the customer from
those that are not .
 Line of internal interaction-it separates contact
employees activity from those of other service
support people.
 At the very top the blue print is physical
evidence
 Blueprint for technology-delivered
self service
 If there are truly no employees involved in
the service the contact person area of the
blue print is not needed.
 The area above the line of visibility can be
used to illustrate the interface between
the customer and the computer website
.the area can be relabeled onstage
technology.
 Benefits of service blueprinting
 Provides an overview so employee can relate.
 Identifies fail points
 Line of interaction between external customers
and employees illuminates the customers role
and demonstrate where the customer
experiences quality.
 Line of visibility promotes a conscious decision
on what customers should see and which
employees will be in contact with customers.
 Line of internal interaction clarifies interfaces
across departmental lines thus strengthening
continuous quality improvement.
 Provide a basis for identifying and assessing
cost, revenue and capital invested in each
element of the service.
 Constitute a rational basis for external and
internal marketing.
 Facilitate top-down, bottom-up approach to
quality improvement.
 Building a blueprint
 Identify the process to be blueprinted.
 Identify the customer or customer segment
 Map the process from the customers point of
view
 Map contact employee actions, onstage and
backstage, and/or technology actions
 Link contact activities to needed support
functions
 Add evidence of service at each customer action
step
 Quality Function Deployment
 QFD- “a system for translating customer
requirement into appropriate company
requirements at every stage, from
research through production design and
development to manufacture
;distribution;installation;and marketing,
sales and services.”
 High- Performance Service
Innovations
 Choose the right project
 Integrate new services
 Consider multiple measures of success
 Learn from major success
 Maintain some flexibility
 Learn from major success

 Market synergy
 Market driven new product process
 Effective marketing communications
 Customer service
 Managerial and financial synergy
 Launch preparation
 Product responsiveness
 Product advantage
 Innovative technology6
 Setting service standards
 Formal research
 On-the job experience
 Improving Reliability of service
process by failure proofing
 Fail-Safe method for service Personnel-
performing task incorrectly, in the wrong
order, or too slowly, or doing work that
was not requested in the first place.
 Fail-Safe methods for the customers
Customer-Defined service standard
 Understanding customer expectations and
perceptions is the first step in delivering high
service quality.
 Service companies often experience difficulty in
setting standards and goal for the organization.
 In most companies, integrating the work of the
marketing function and the operations function
(functional integration) is not a typical approach.
 Factors necessary for appropriate
service standards
 Standardization of service behaviors and
actions.
 In reality many service tasks are routine.
 Even in highly customized services, many
aspects of service provision can be
routinized.
 According to one long term observer of
service industries standardization of
services can take three form.
 Substitution of technology for personal
contact and human effort.
 Improvement in work method
 Combination of these two methods
 Technology and work improvement
methods facilitate the standardization, by
breaking tasks down and providing them
efficiently. it also provide the firm to
calibrate service standards such as length
of time etc. accuracy with which the
operations are performed and the number
of problem that occur, with this
understanding the more easily establishes
appropriate service standards.
Formal service target and goals
 Companies have an accurate sense of how
well they are performing service that is
critical to their customers-how long it take
to conduct a transaction, how frequently
service fails how quickly they settle
customer complaints-and strive to improve
by defining goals that lead them to meet
or exceed customer expectations.
 Formal goals
 There are specific targets for individual behavior
or actions.
 Overall department or company target, most
frequently used as a percentage, across all
execution of behavior or action.
 Walt Disney calibrates employee performance on
a behavioral scale that contribute to guests
perception of high service quality. whether they
are set and monitored using audits such as
timed action) or customer perception such as
opinion about courtesy), service standards
provide a means for formal goal setting.
 Customer not company defined
standards
 To close gap 2. standards set by companies
must be based on customer requirement and
expectations rather than just on internal
company goal.
 Through precise measurement of expectations,
the company often discovers that it has been
over delivering to many customer needs.
 Customer defined standards need not conflict
with productivity
“Hard" Customer defined standards
 Thing that can be counted ,timed, or
observed through audits. for eg. A study
has found that most frequently cited
customer complaint was late product and
service delivery(44 percent), followed by
product and service quality
mistakes(31percent)
Customer defined hard standard in
internet context
 Ship to target-the percentage of orders
delivered on time with complete accuracy.
 Initial field incident rate (IFIR)-the
frequency of customer problems.
 On time first time fix (OTFTF)-the
percentage of problem fixed on the first
visit by a service representative arriving at
the time promised.
“Soft" Customer-Defined Standards
 “Not everything that counts can be
counted, and not everything that can be
counted, counts." for example
understanding and knowing the customer.
 Soft standards provide direction guidance
and feedback to the employees.
 They are opinion based measure that
cannot be observed and must be collected
by talking to customer.
 Example
 For a Hotel
 Customer Priorities—Treat me with respect
 Customer defined standards-uniforms are
to be immaculate, wear proper and safe
footwear, wear name tag, adhere to
grooming standards, notify supervisor
immediately of hazards, use proper
telephone etiquette, do not screen calls,
Examples of hard customer defined
service
 Customer priorities  Customer defined
 On time delivery of standards
express mail  Number of packages
right day late
 Number of packages
wrong day late
 Number of missed
pickup
Cultural influences lead to different
service delivery expectations?
 Responsiveness varies by cultures

 Reliability varies by culture

 Implications for service standards

 One time fixes
 One time fixes are technology, policy, or
procedure changes that . When
instituted, address customer requirments
 Building Blocks: The Service
Encounter Sequence
 Customer-defined standards are
established to define processes or human
performance operationally to meet the
expectations of customer performance
 Process for developing customer-
defined standards
 Step 1: Identify existing or desired service
encounter sequence
 Step 2: Translate Customer Expectations
into behaviors and actions for each service
encounter.
 Step 3: Select Behaviors and actions for
standards
 Step 4:set hard or soft standards
 Step 5:Develop feedback mechanism
 Step 6:Establis measure and target Level
 Step7:Track measure against standard
 Step8:provide feedback about
performance to employees
 Step9:Update target level and measures
 Step3:select behavior and actions
for standards
 The standards are based on behavior and
actions that are very important to customer
 The standards cover performance that needs to
be improved or maintained.
 The standards cover behavior and actions
employee can improve.
 The standards are accepted by employees.
 The standards are predictive rather than reactive
 The standards are challenging but realistic
 Service Performance Indexes
 Service performance indexes are comprehensive
composites of most critical performance
standards.
 Most companies build these indexes by (1)
understanding the most important requirements
of the customer, (2) Linking these requirements
to tangible and measurable aspects of service
provision and(3) using the feedback from these
indexes to identify and improve service
problems.
 For example
 Airline Performance Index
 On time flights, Number of accidents,
Flight problems, pilot error, overbooking,
Mishandled baggage, fare complaints,
frequent flier awards, other complaints,
refund complaints, service complaint,
ticket complaints.
 Physical evidence and services
cape
 Physical evidence is the environment in
which the service is delivered and where
the firm and the customer interact, and
any tangible commodity that facilitate
performance or communication of service.
 The physical facility is referred as
servicescapes.
 Element of physical evidence
 Servicescape-Facility Exterior-exterior
design, Signage, parking, landscape,
surrounding environment.
 Facility Interior-interior design, equipment,
signage, layout, air quality, temperature.
 Other tangibles- stationary, billing
statements, reports, employee dress,
uniforms, brochures, web pages.
 Virtual Servicescape
 Web pages and virtual service tours allow
customers to preview a service experience
and see tangible evidence of the service.
 Internet technology clearly provides
tremendous opportunities for firm to
communicate about their services
 For example
 Airline
 Servicescape-airline gate area, airplane
exterior, airplane interior (décor, seat and
quality).
 Other tangibles-Ticket food, uniforms,
website etc.
 Types of servicescapes
 Self service (customer only)-for eg. Golf
land, ATM.
 Interpersonal services (both customer and
employee)-For E.g.. Hotel, restaurant,
Health clinic etc.
 Remote service (employee only)-For Eg.
Telephone company, Insurance company,
Many professional services.
 Roles of the servicescape
 Package-it wraps the service and convey
an external image to what is inside.
 Facilitator-in aiding the performances of
persons in the environment.
 Socializer- it helps to convey expected
roles, behavior, and relationship.
 Differentiator-the design of the physical
facility can differentiate a firm from its
competitor.
 Framework for understanding
Servicescape effect on behavior
 Stimulus-organism-response theory
 Multidimensional environment is the
stimulus, consumer and the employees
are the organism that respond to the
stimuli
 Physical Holistic Internal Behavior
Environmental Environment Responses
Dimensions
Cognitive Emotional Physiological
Individual
Belief Mood & Pain
Behaviors
Ambient Categoriz Attitude Comfort
•Affiliation
Conditions ation Movement •Exploration
•Temperature Symbolic Physical fit •Stay Longer
•Air Quality Meaning •Commitment
•Noise •Carry out plan
•Music
•Odor Employee
•Etc. Responses Social Interaction
Space/Function Between & among
Perceived
•Layout customers &
Servicescape
•Equipment Employees
•Furnishings Customer
•Etc. Responses
Signs, Symbols, Individual
& Artifacts Behaviors
•Signage Cognitive Emotional Physiological •Attraction
•Personal Artifacts Belief Mood & Pain •Stay/explore
•Style of Décor Categoriz Attitude Comfort •Spend money
•Etc ation Movement •Return
Symbolic Physical fit •Carry out plan
Meaning
 Individual behavior
 Approach behavior include all positive
behavior and avoidance behavior reflect
the opposite.
 In addition to attracting or deterring entry,
the Servicescape can actually influence the
degree of success consumers and
employees experience in executing their
plans once inside.
 Social interaction
 All social interaction is affected by the
physical container in which it occur.
 Internal responses to the
Servicescape
 Employee and customers respond to dimension
of their physical surrounding cognitively,
emotionally, and physiologically, and those
responses are what influences their behavior in
the environment.
 It has an effect on peoples belief about a place
and their belief about people, products found in
that place, in a form of nonverbal
communication imparting meaning.
 In addition to influencing belief, the
perceived Servicescape can directly elicit
emotional responses, than in turns
influence behavior
 Environment, whether natural or
engineered, will elicit emotions that can be
captured by two basic
dimensions(1)pleasure/displeasure and(2)
degree of arousal
 Approaches for understanding
Servicescape effects
 Environment surveys
 Direct observation
 Experiments
 Photographic blueprint
 Guidelines for physical evidence
strategy
 Recognize the strategic impact of physical
evidence
 Map the physical evidence of the service
 Clarify roles of the Servicescape
 Assess and identify physical evidence
opportunities
 Be prepared to update and modernize the
evidence
 Work cross functionally
 A vast amount of research in engineering
and design has addressed human
physiological responses to ambient
conditions as well as physiological
responses to equipment design.
 Ambient condition includes background
characteristic of the environment such as
temperature, lighting, noise, music, scent
and color.
 Assignment
 Given the need for customer-defined service
standards, do firms need company-defined
standards at all? Could all standards in a
company be customer defined? Why or why not?
What functional department in a firm would
object for having all the standards customer
defined?
 Describe and give example of how Servicescape
play each of the following role: package,
facilitator, socializer, and differentiator