Chapter 8:
Designing and Managing
Service Processes
Core and Supplementary Services at Luxury Hotel
(Offering Much More than Cheap Motel!)
Reservation
Cashier
Valet
Parking
Business
Center
Room
Service
Wake-up
Call
Internet
Reception
A Bed for the
Night in an
Elegant Private
Room with a
Bathroom
Baggage
Service
Cocktail
Bar
Entertainment/
Restaurant
Sports/
Exercise
What Happens, When, in What Sequence?
Time Dimension in Augmented Product (Fig 3.3)
Reservation
Parking
Get car
Check out
Internet
Check in
Internet
Use
room
USE
GUESTROOM OVERNIGHT
internet
Porter
Meal
Pay TV
Room service
Time Frame of An Overnight Hotel Stay
Before Visit
(Real-time service use)
Simple Flowchart for Delivery of a
People-Processing Service (Fig 3.4)
People Processing – Stay at Motel
Park Car
Check In
Maid Makes
up Room
Spend
Night in
Room
Breakfast
Breakfast
Prepared
Check
Out
Simple Flowchart for Delivery of a
Possession-Processing Service
(Fig 3.4)
Possession Processing – Repair a DVD Player
Travel to
Store
Technician Examines
Player, Diagnoses
Problem
Leave
Store
Technician Repairs Player
Return, Pick up
Player and Pay
(Later) Play
DVDs at Home
Simple Flowchart for Delivery of Mental
Stimulus-Processing Service
(Fig 3.4)
Mental Stimulus Processing – Weather Forecast
Turn on TV, Select
Channel
Collect
Weather
Data
View Presentation of
Weather Forecast
Meteorologists Input Data
to Models and Creates
Forecast from Output
Confirm Plans for
Picnic
TV Weatherperson
Prepares Local
Forecast
Weather Forecasting Is a Service
Directed at Customers’ Minds
(Fig 3.5)
Simple Flowchart for Delivery of An
Information-Processing Service (Fig 3.4)
Information Processing – Health Insurance
Learn about
Options
Select Plan,
Complete Forms
University and Insurance
Company Agree on Terms of
Coverage
Pay
Insurance Coverage
Begins
Customer Information
Entered in Database
Printed Policy
Documents
Arrive
The Flower of Service (Fig 3.6)
Information
Payment
Billing
Consultation
Core
Exceptions
Hospitality
Safekeeping
KEY:
Facilitating elements
Enhancing elements
Order Taking
The Flower of Service:
Facilitating Services—Information
Customers often require information about how to obtain
and use a product or service.
Examples of elements:
Core
 Directions to service site
 Schedule/service hours
 Prices
 Conditions of sale
 Usage instructions
The Flower of Service:
Facilitating Services—Order
Taking
Customers need to know what is available and may
want to secure commitment to delivery. The process
should be fast and smooth.
Examples of elements:
Core
 Applications
 Order entry
 Reservations and check-in
The Flower of Service:
Facilitating Services—Billing
“How much do I owe you?”
Bills should be clear,
Accurate, and intelligible.
Examples of elements:
Core
 Periodic statements of
account activity
 Machine display of amount
due
The Flower of Service:
Facilitating Services—Payment
Customers may pay faster
and more cheerfully if you
make transactions simple
and convenient for them.
Core
Examples of elements:
 Self service payment
 Direct to payee or intermediary
 Automatic deduction
The Flower of Service:
Enhancing Services—
Consultation
Value can be added to goods and services by offering
advice and consultation tailored to
each customer’s needs and situation.
Examples of elements:
Core
 Customized advice
 Personal counseling
 Management consulting
The Flower of Service:
Enhancing Services—Hospitality
Customers who invest time and effort
in visiting a business and using its
services deserve to be
treated as welcome guests—
after all, marketing invited them!
Core
Examples of elements:
 Greeting
 Waiting facilities and amenities
 Food and beverages
 Toilets and washrooms
 Security
The Flower of Service:
Enhancing Services—Safekeeping
Customers prefer not to worry about
looking after the personal possessions
that they bring with them to a service
site.
Core
Examples of elements:
 Looking after possessions
customers bring with them
 Caring for goods purchased
(or rented) by customers
The Flower of Service:
Enhancing Services—Exceptions
Customers appreciate some
flexibility when they make special
requests and expect responsiveness when
things don’t go according to plan.
Core
Examples of elements:
 Special requests in advance
 Complaints or compliments
 Problem solving
 Restitution
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
(Fig 8.1)
Timeline
Act 1
Check
availability,
insert booking
Back
Accept
reservation
Support
Processes
W
Valet
Parking
W
W
Coat Room
…
Line of
interaction
Front -
Physical
Evidence
Make
Reservation
- Stage
Stage
Service Standards
and Scripts
Maintain
reservation
system
Greet
customer,
take car keys
Take car to
parking lot
Maintain
(or rent)
facilities
Greet, take
coat, coat
checks
Contact person
(visible actions)
Hang coat with
visible check
numbers
Contact person
(invisible
actions)
Maintain
facilities/
equipment
Line of
visibility
Line of
internal
physical
interaction
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
 Must be expressed in ways that permit objective measurement

First impression is important as it affects customer’s
evaluations of quality during later stages 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
 Viewed more seriously because there are fewer subsequent
opportunities to create a favorable impression
Improving Reliability of
Processes by Failure Proofing

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.”
Mitchell T. Rabkin MD,
formerly president of
Boston’s Beth Israel Hospital
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
Increase per capita service use
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, self-service gasoline pumps

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
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

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?


Is the SST better than interpersonal alternatives?


Firms must ensure that SSTs are dependable and
user-friendly
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
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

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 selfrespecting services firms should expect and require
 Insight: There’s truth in both perspectives

No organization wants an ongoing relationship
with an abusive customer
Six Types of Jaycustomers:
 The
Thief
 The
Rulebreaker
 The
Belligerent
 The
Deadbeat
 Family

Feuders
Vandals