Service Design and Management

Overview Defining "service"? Service-Product Mix Service Guarantees Service Cycle Customer Contact Service Matrix Employees and Service Strategy: Focus & Advantage Service Blue printing Fail-safe Methods a Well-Designed Service Delivery System

Defining "service"?

Service-Product Mix

Service Guarantees

Service Cycle

Customer Contact

Service Matrix

Employees and Service

Strategy: Focus & Advantage

Service Blue printing

Fail-safe Methods

a Well-Designed Service Delivery System

True or false? Everyone is an expert on services??? Services are idiosyncratic? Quality of work is not quality of service? Most services contain a mix of tangible and intangible attributes? High-contact services are experienced, goods are consumed? Managing services marketing, personnel and operations know-how? Services involve cycles of transactions involving face-to-face encounters, information exchange, social and mechanical interaction?

Everyone is an expert on services???

Services are idiosyncratic?

Quality of work is not quality of service?

Most services contain a mix of tangible and intangible attributes?

High-contact services are experienced, goods are consumed?

Managing services marketing, personnel and operations know-how?

Services involve cycles of transactions involving face-to-face encounters, information exchange, social and mechanical interaction?

Service – defined by Tangible and intangible elements Most services include elements of products The customer is involved in delivery Simultaneous production and consumption Problems in defining and measuring quantity & quality productivity Demand variances (peaks-troughs) are significant Other manufacturing-service differences? Service Design Issues?

Tangible and intangible elements

Most services include elements of products

The customer is involved in delivery

Simultaneous production and consumption

Problems in defining and measuring

quantity & quality

productivity

Demand variances (peaks-troughs) are significant

Other manufacturing-service differences?

Service Design Issues?

Product, information and service processing Where is the service in? Fertilizers, furniture, vehicles, personal computers, food, pharmaceuticals Information services? accountants, lawyers, call centres, insurance offices Health and pleasure services? Beauty , hospitals, health farms, physiotherapists, restaurants.

Where is the service in?

Fertilizers, furniture, vehicles, personal computers, food, pharmaceuticals

Information services?

accountants, lawyers, call centres, insurance offices

Health and pleasure services?

Beauty , hospitals, health farms, physiotherapists, restaurants.

Product Service Mix 100% 75% 50% 25% 0% 100% 75% 50% 25% Goods Services Self-service green grocer Car manufacture Carpet sales and fitting Pizza Hut Cordon-bleu restaurant Car maintenance Hairdressing Consulting services

Place and approach Place/virtual/remote Facilities-based Field-based Internal (client-server) Approaches production line self-service personal attention High and Low contact Customer Service Strategy Staff Systems

Place/virtual/remote

Facilities-based

Field-based

Internal (client-server)

Approaches

production line

self-service

personal attention

High and Low contact

Service Design Questions Who is our customer? How do we differentiate our service? What is our service package & operating focus What are the processes, staff, facilities? Can we protect the service? Aspects of service package - defined by prior staff training Speed of change of service offerings

Who is our customer?

How do we differentiate our service?

What is our service package & operating focus

What are the processes, staff, facilities?

Can we protect the service?

Aspects of service package - defined by prior staff training

Speed of change of service offerings

Service Matrix Interaction & Customisation Low High Low High EasyJet DHL/FedEx Motel Golf course Retailing Wholesaler Driving school Retail bank Solicitor Doctor Personal trainer Accountant Architect Hospital? Internet banking Repair services Labour intensity

Banking - High/Low contact Low High Facility location Facility layout Product design Process design Scheduling Capacity planning Staff skills Quality control Time standards Wages Capacity planning Near customer According to expectation? Ambiance, user friendly? Intimate stages ? Full? Lost customer ? ? ? Time-based pay? Capacity=peak demand ? ? ? ? ? ? Technical skills only? Measurable, fixed Forms = surrogates - tight times Output-based pay? ?

Heroes and villains Furious litigation Complainant Dissatisfied Satisfied Delighted Villains Heroes Recovery planning Club Class member What is ServQual? Customers' experience performance

Operating Focus Customer treatment - friendliness, help Speed and convenience of delivery Price and payment Variety of services (singular or one-stop shop) Quality of tangibles e.g. the pie, the insurance Unique skills - flambe, hair cut, roofer

Customer treatment - friendliness, help

Speed and convenience of delivery

Price and payment

Variety of services (singular or one-stop shop)

Quality of tangibles e.g. the pie, the insurance

Unique skills - flambe, hair cut, roofer

Staff, Operations, Innovation and Contact Skills Technol innovation Operations Focus Clerical Automation IT Forms documents Helping Routing On demand Verbal DB queries eMail Lines responses Procedural Application software Control flows Craft/trade Self-serve Manage capacity Analytical Teams Client interaction

Service Design, Quality and Intangibles Quality (measured by deliverer or customer) depends on Tangibles and intangibles in the package. Controls to improve utilisation & reduce costs. These may simplify & routinise to reduce consumer choice. A, B & C - take-or-leave-menus. But "I do not want a standard package". "Fine - but pay more. Even then we may not be able to control quality".

Quality (measured by deliverer or customer) depends on

Tangibles and intangibles in the package.

Controls to improve utilisation & reduce costs. These may

simplify & routinise to reduce consumer choice. A, B & C - take-or-leave-menus.

But "I do not want a standard package".

"Fine - but pay more. Even then we may not be able to control quality".

Service Design Issues A. Engineer for efficiency and utilisation Routinisation Table d'hote packages Impersonal vs. contact Move from point of contact to back-office Automate e.g. ATMs, tele-sales & call-centres, tracking systems B. Design from a customer service perspective (content + quality of interaction/experience) enrich the experience balance perceived quality with costs of service customer-orientation: research & specify relationships what is a TQM approach to service design? specify service objectives and bench-mark against rivals A & B - not mutually exclusive.

A. Engineer for efficiency and utilisation

Routinisation

Table d'hote packages

Impersonal vs. contact

Move from point of contact to back-office

Automate e.g. ATMs, tele-sales & call-centres, tracking systems

B. Design from a customer service perspective (content + quality of interaction/experience)

enrich the experience

balance perceived quality with costs of service

customer-orientation: research & specify relationships

what is a TQM approach to service design?

specify service objectives and bench-mark against rivals

A & B - not mutually exclusive.

Service design and strategy Specify the tangible service elements/steps customer participation waiting (cannot stock a service) the intangible aspects how efficiencies must be secured quality assurance measures Move front shop ==> back shop take the customer out of the process use the customer as labour increase staff flexibility to balance capacity & demand "Service managers face problems that may be insignificant to production managers who have much to learn from the service ethic". Strategic objectives - best - cheapest - quickest - most innovative - brand loyalty - repeat business

Specify

the tangible service elements/steps

customer participation

waiting (cannot stock a service)

the intangible aspects

how efficiencies must be secured

quality assurance measures

Move front shop ==> back shop

take the customer out of the process

use the customer as labour

increase staff flexibility to balance capacity & demand

"Service managers face problems that may be insignificant to production managers who have much to learn from the service ethic".

Engineering Strategies for Services Front shop/Back room service design may seek to minimise customer participation "front shop" for face-to-face elements. select activities to move to "back-room" and apply conventional production principles no customer access to back-room? Internet banking On-line help desk

Front shop/Back room service design may seek to minimise customer participation

"front shop" for face-to-face elements.

select activities to move to "back-room" and apply conventional production principles

no customer access to back-room?

Internet banking

On-line help desk

The Holiday to Aghios Nikolios The Brochure - vetting every entry travel and transfer arrangement hotel & apartment check resort/villa environment before brochure publishing: disco, steps to climb etc. Representatives visit daily + available for clients ability to act - fielding the problem (no prejudice) narrow margins - one refund Ë flood. minor complaints but clients are trapped. be irritated or pay extra to fly home The flight home

The Brochure - vetting every entry

travel and transfer arrangement

hotel & apartment

check resort/villa environment before brochure publishing: disco, steps to climb etc.

Representatives

visit daily + available for clients

ability to act - fielding the problem (no prejudice)

narrow margins - one refund Ë flood.

minor complaints but clients are trapped.

be irritated or pay extra to fly home

The flight home

Fail-safe Services - Poka-Yoke methods Avoid mistakes becoming service defects Apply fail-safe methods to 3T? Physical and visual warnings Was task done correctly? What was attitude and responsiveness of staff? What tangibles or environmental features were missing?? Task Tangibles Treatment

Avoid mistakes becoming service defects

Apply fail-safe methods to 3T?

Physical and visual warnings

Air Travel Service Elements Leave Airport Collect Bags Arrives at airport Request flight information Make reservation Check in Proceed to gate & security check Board aircraft In-flight service Leave aircraft Poke Yoke Exercise: Filling in the missing details

Gaffs - Mea Culpa? Waitress chewing gum Nurse did not wash hands Wine is corked Food is cold Booked into wrong hotel Passenger forgets passport Passenger late for check-in 50 minutes between placing order and service to table Lost record card at clinic etc

Waitress chewing gum

Nurse did not wash hands

Wine is corked

Food is cold

Booked into wrong hotel

Passenger forgets passport

Passenger late for check-in

50 minutes between placing order and service to table

Lost record card at clinic

etc

Strategy: Focus & Advantage - Performance Priorities Product/service innovation Cost leadership Treatment of the customer Speed and convenience of service delivery Pricing and pricing structure Variety - pick and mix, uniqueness, modularisation The quality of the tangible goods Awareness and valuation of the intangibles Unique skills that constitute the service offering ServQual and Benchmarking

Product/service innovation

Cost leadership

Treatment of the customer

Speed and convenience of service delivery

Pricing and pricing structure

Variety - pick and mix, uniqueness, modularisation

The quality of the tangible goods

Awareness and valuation of the intangibles

Unique skills that constitute the service offering

Internal Client-server Relationships Internal Server Internal Server Internal client and server External client Delight the customer

Customers as staff self-service - flexibility in coping with demand. separate front shop/back-room - enabled by technology. Shelf filling vs. wand goods into trolleys. Automatic self-service banking bank card payment at the petrol pump remove the need for service attendants. self-services open longer less waiting time cost reductions for the service provider lower prices some customers miss the help and advice. become excluded - socially neglected Where else can they to go?

self-service - flexibility in coping with demand.

separate front shop/back-room - enabled by technology.

Shelf filling vs. wand goods into trolleys.

Automatic self-service banking

bank card payment at the petrol pump

remove the need for service attendants.

self-services

open longer

less waiting time

cost reductions for the service provider

lower prices

some customers

miss the help and advice.

become excluded - socially neglected

Where else can they to go?

Customer Contact and staffing Less skilled staff? More training required. Loyalty & competence as key quality elements? What do we mean by “customer contact”? Signs of inefficiency in customer contact? Differentiate high - low contact services Quality and failure costs. The service level must be delivered. Identify the levels and components that customers value Cost the components and evaluate contribution of quality? how much customers will pay?

Less skilled staff?

More training required.

Loyalty & competence as key quality elements?

What do we mean by “customer contact”?

Signs of inefficiency in customer contact?

Differentiate high - low contact services

Quality and failure costs. The service level must be delivered. Identify the levels and components that customers value

Cost the components and evaluate

contribution of quality?

how much customers will pay?

Services and staff flexibility Excess capacity or rely on PTs to balance capacity - demand? More PTs ==> increase in workforce size. unfamiliar with products & systems, less skilled. Labour turnover and reliability - Vicious circle. Few hours, move on quickly - why train? Need quality staff but investment not justified So we live with unskilled, uncommitted staff. Remedies? multi-skilling and rewards back-room staff move to front shop at peak time skeleton crew at the back Success depends on sensitivity of backroom tasks

Excess capacity or rely on PTs to balance capacity - demand?

More PTs ==> increase in workforce size.

unfamiliar with products & systems, less skilled.

Labour turnover and reliability - Vicious circle.

Few hours, move on quickly - why train?

Need quality staff but investment not justified

So we live with unskilled, uncommitted staff.

Remedies?

multi-skilling and rewards

back-room staff move to front shop at peak time

skeleton crew at the back

Success depends on sensitivity of backroom tasks

Guarantees and service-level agreements Promise of service satisfaction underpinned by actions Monitoring and controlling quantified standards subjective standards - meaningful to customer 99% reliability Pay-out/penalties on failure Unconditional - no small print Easy to understand and to communicate Straightforward to invoke Flight overbooked Train late ISP downtime

Promise of service satisfaction underpinned by actions

Monitoring and controlling

quantified standards

subjective standards - meaningful to customer

99% reliability

Pay-out/penalties on failure

Unconditional - no small print

Easy to understand and to communicate

Straightforward to invoke

Flight overbooked

Train late

ISP downtime

Well-Designed Service System Each element -consistent with operating focus user-friendly robust designed for consistent performance by staff & systems Seamless links between back & front office. evidence of service quality is visible - customers "see" the value provided. Credible? cost-effective.

Each element -consistent with operating focus

user-friendly

robust

designed for consistent performance by staff & systems

Seamless links between back & front office.

evidence of service quality is visible - customers "see" the value provided. Credible?

cost-effective.

Principles - Lyth and Johnston (1988) balance service efficiency with requisite quality. Focus on intangibles within service package the customer viewpoint critical role of customer contact staff & how they are supported. performance monitoring internal consistency within the service system

balance service efficiency with requisite quality.

Focus on

intangibles within service package

the customer viewpoint

critical role of customer contact staff & how they are supported.

performance monitoring

internal consistency within the service system

L & J: Nine Service Design Principles 1. define service concept clearly & in detail. 2. evaluate image concept good service labelled poor if image out of line with customer expectations trace back to service presentation 3. study the customer view (be a customer) manage expectations & perceptions during & after break out of designer & operator "bounded rationality & familiarity". 4. Top management commitment to service quality Mission + clear objectives. Quality: inextricably linked to staff-customer contact. MbyExample: top mgt. lip-service undermines credibility 5. Define functional & technical quality standards tangibles - as for physical products. intangibles & subjective elements key ingredients in package e.g. cleaning, waiting, manner/appearance, skills share understandings, recruit, train & reward for delivery expectation. ServQual

1. define service concept clearly & in detail.

2. evaluate image concept

good service labelled poor if image out of line with customer expectations

trace back to service presentation

3. study the customer view (be a customer)

manage expectations & perceptions during & after

break out of designer & operator "bounded rationality & familiarity".

4. Top management commitment to service quality

Mission + clear objectives.

Quality: inextricably linked to staff-customer contact.

MbyExample: top mgt. lip-service undermines credibility

5. Define functional & technical quality standards

tangibles - as for physical products.

intangibles & subjective elements

key ingredients in package e.g. cleaning, waiting, manner/appearance, skills

share understandings, recruit, train & reward for delivery expectation.

L & J: Nine Service Design Principles 6. examine existing procedures and systems "re-design" to support front-end providers. service the servers via back-room procedures & support 7. develop standard procedures to control bankers (routinise), semi-controllables & unpredictables routines may not fit random events if safety critical - allocate resources emphasise training for the unexpected, communicate & empower 8. systems must support the good service objectives. treat customer service staff as internal customers. 9. implement standards & performance monitoring Or drift, loose energy & deteriorate. inspection activities are essential action to restore and revitalise where needed. Inspection/feedback: SPC, surveys, panels, "mystery" shoppers

6. examine existing procedures and systems

"re-design" to support front-end providers.

service the servers via back-room procedures & support

7. develop standard procedures to control

bankers (routinise), semi-controllables & unpredictables

routines may not fit random events

if safety critical - allocate resources

emphasise training for the unexpected, communicate & empower

8. systems must support the good service objectives.

treat customer service staff as internal customers.

9. implement standards & performance monitoring

Or drift, loose energy & deteriorate.

inspection activities are essential

action to restore and revitalise where needed.

Inspection/feedback: SPC, surveys, panels, "mystery" shoppers