Transcript Slide 1
Chapter 8:
Designing and Managing Service Processes
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 1
Overview of Chapter 8
Blueprinting Services to Create Valued Experiences and Productive Operations
Service Process Redesign
The Customer as Co-Producer
Dysfunctional Customer Behavior Disrupts Service Processes
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 2
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
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 3
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
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Identify fail points and risks of excessive waits Set service standards and do failure-proofing
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 4
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
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
Viewed more seriously because there are fewer subsequent opportunities to create a favorable impression Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 5
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
See Service Perspectives 8.1 – Poka Yokes
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 6
Why Redesign? (2)
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
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 7
Process Redesign: Approaches and Potential Benefits (1)
(Table 8.1)
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 Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 8
Process Redesign: Approaches and Potential Benefits (2)
(Table 8.1)
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 Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 9
Process Redesign: Approaches and Potential Benefits (3)
(Table 8.1)
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 Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 10
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)
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 11
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
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 Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 12
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 Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 13
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
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 14