Designing and

Managing
Service Processes
Overview

 Blueprinting Services to Create Valued Experiences

and Productive Operations

 Service Process Redesign

 The Customer as Co-Producer

 Dysfunctional Customer Behavior Disrupts Service

Processes
Elements influencing service process design

 Degree of tangibility

 Recipient of service

 Place and time

 Customisation vs standardisation

 Consumer relationships

 Demand and supply

 Service process and profitability

 Service process and productivity

 Blueprinting Services to
Create Valued Experiences and
Productive Operations
 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.
Developing a Blueprint

 Identify key activities in creating and delivering service

 Define “big picture” before “drilling down” to obtain a

higher level of detail

 Distinguish between “front stage” and “backstage”

 Clarify interactions between customers and staff, and

support by backstage activities and systems

 Identify potential fail points; take preventive measures;

prepare contingency

 Develop standards for execution of each activity— times

for task completion, maximum wait times, and scripts to
guide interactions between employees and customers
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 personnel
6. 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
 Blueprinting the Restaurant Experience:
Act 1
Timeline Act 1
Service Standards W
W
and Scripts Make W Valet
Coat Room …
Stage

Physical
Reservation Parking
Evidence Line of
interaction
Greet
Front -

Accept Greet, take Contact person

customer, coat, coat
reservation take car keys
(visible actions)
checks
Line of
visibility
Check Hang coat with
- Stage

Take car to Contact person

availability, visible check (invisible
insert booking parking lot numbers actions)
Line of
internal
Back

Maintain Maintain Maintain physical

interaction
reservation (or rent) facilities/
Support system facilities equipment
Processes
Blueprinting the Restaurant
Experience: 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 how
promptly 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, payment
handled politely, guest are thanked for their patronage
Setting Service Standards

 Service providers should design standards for each step sufficiently

high to satisfy and even delight customers
 Standards may include time parameters, script for a technically correct
performance, and prescriptions for appropriate style and demeanor
 First impression is important as it affects customer’s evaluations of
quality during later stages of service delivery
 Research by Marriott Hotels indicates that four of five top factors
contributing to customer loyalty come into play during the first 10 minutes
of service delivery
 Customer perceptions of service experiences tend to be cumulative
 For low-contact service, a single failure committed front stage is
relatively more serious than in high-contact service
 Improving Reliability of Processes by
Failure Proofing
 Analysis of reasons for failure often reveals opportunities
for failure proofing to reduce/eliminate future risk of
errors
 Need fail-safe methods for both employees and customers
 Errors include:
 Treatment errors—human failures during contact with customer
― e.g., lack of courteous or professional behavior, failure to
acknowledge, listen to, or react appropriately to the customer
 Tangible errors—failures 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 wasn’t requested in the first place
Redesigning Service Processes
Why Redesign?

“Institutions are like steel beams—they tend to

rust. What was once smooth and shiny and nice
tends to become rusty.”
Why Redesign?

 Revitalizes process that has become outdated

 Changes in external environment make existing practices obsolete

and 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
Process Redesign: Approaches and
Potential Benefits

 Eliminating non-value-adding steps

 Streamline front-end and back-end processes of services with goal of
focusing 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
Process Redesign: Approaches and
Potential Benefits
 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
Process Redesign: Approaches and
Potential Benefits

 Redesigning physical aspects of service processes

 Focus on tangible elements of service process; include changes to
facilities and equipment to improve service experience
 Increase convenience
 Enhance the satisfaction and productivity of front-line staff
 Cultivate interest in customers
 Differentiate company
The Customer as Co-Producer
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
 Low—Employees and systems do all the work
- Often involves standardized service
 Medium—Customer inputs required to assist provider
- Provide needed information and instructions
- Make some personal effort; share physical possessions
 High—Customer works actively with provider to co-produce the service
- Service cannot be created without customer’s active participation
- Customer can jeopardize quality of service outcome (e.g., weight loss, marriage
counseling)
Self-Service Technologies (SSTs)

 Ultimate form of customer involvement

 Customers undertake specific activities using facilities or systems provided
by service supplier
 Customer’s time and effort replace those of employees
― e.g. Internet-based services, ATMs

 Information-based services lend selves particularly well to SSTs

 Used in both supplementary services and delivery of core product
― e.g. eBay—no 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
Psychological Factors in Customer
Co-Production
 Economic rationale of self-service
 Productivity gains and cost savings result when customers take over work
previously 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 SST
option 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 of
customization
 Disadvantages: Anxiety and stress experienced by customers who are
uncomfortable with using them
What Aspects of SSTs Please or Annoy
Customers?
 People love SSTs when…
 SST machines are conveniently located and accessible 24/7—often as close
as nearest computer!
 Obtaining detailed information and completing transactions can be done
faster 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 fail—system is down, PIN numbers not accepted, etc
 They mess up—forgetting passwords, failing to provide information as
requested, 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
HSBC: “The world’s local bank”

Source: Courtesy HSBC

Global site brought to customer’s local

computer
Putting SSTs to Test by
Asking a Few Simple Questions

 Does the SST work reliably?

 Firms must ensure that SSTs are dependable and
user-friendly

 Is the SST better than interpersonal alternatives?

 Customers will stick to conventional methods if SST
doesn’t create benefits for them

 If it fails, what systems are in place to recover?

 Always provide systems, structures, and technologies
that will enable prompt service recovery when things
go wrong
 Customers as Partial Employees
 Customers can influence productivity and quality of service
processes and outputs
 Customers who are offered opportunities to participate at active
level 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 customer’s present role in business—compare
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
Dysfunctional Customer Behavior
Disrupts Service Process
 Addressing the Challenge of
Jaycustomers
 Jaycustomer: A customer who behaves in a
thoughtless or abusive fashion, causing
problems for the firm, its employees, and other
customers
 More potential for mischief in service
businesses, especially when many customers
are present
 Divergent views on jaycustomers
 “The customer is king and can do no wrong.”
 Marketplace is overpopulated with nasty people
who cannot be trusted to behave in ways that self-
respecting services firms should expect and require
 Insight: There’s truth in both perspectives
 No organization wants an ongoing relationship
with an abusive customer
Consequences of Dysfunctional
Customer 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, paying
fraudulent claims
Summary : Designing and Managing Service
Processes

 Service blueprinting can be used to design a service and create a

satisfying experience for customers. Key components of the
blueprint include:
 Definition of standards for each front-stage activity
 Physical and other evidence for front-stage activities
 Principal customer actions
 Line of interaction
 Front-stage actions by customer-contact personnel
 Line of visibility
 Backstage actions by customer-contact personnel
 Support processes involving other service personnel
 Support processes involving information technology

 Blueprinting a restaurant (or other service) can be a three-act

performance
 Prologue and introductory scenes
 Delivery of the core product
 Conclusion of the drama
Summary for : Designing and Managing
Service Processes

 Service standards need to be expressed in measurable terms

and failure proofing designed into service processes to improve
reliability

 Service process redesign can be categorized into five kinds:

 Eliminating non-value-adding steps
 Shifting to self-service
 Delivering direct service
 Bundling services
 Redesigning the physical aspect of service processes
 When the customer is a co-producer, issues to consider are:
 Levels of customer participation
 Self-service technologies (SST)
 Psychological factors in customer co-production
 Aspects of SST that please or annoy customers
 Customers as partial employees
Summary for Chapter 8: Designing and
Managing Service Processes (3)

 Dysfunctional customer behavior of jaycustomers disrupts service

processes

 Six types of jaycustomers:

 Thief
 Rulebreaker
 Belligerent
 Family Feuders
 Vandal
 Deadbeat
 Dysfunctional behavior can have consequences for staff, and
positive or negative consequences for customers