Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 1
Chapter 8:Designing and Managing Service Processes
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 2
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 - 3
Blueprinting Services to Create Valued Experiences and
Productive Operations
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 4
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 - 5
Key Components of a Service Blueprint
1. Define standards for front-stage activities2. Specify physical evidence 3. Identify principal customer actions4. Line of interaction (customers and front-stage personnel) 5. Front-stage actions by customer-contact personnel6. Line of visibility (between front stage and backstage) 7. Backstage actions by customer contact personnel8. Support processes involving other service personnel9. Support processes involving IT
• 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 - 6
Blueprinting the Restaurant Experience: Act 1 (Fig 8.1)
Make Reservation
Coat RoomValet Parking
Accept reservation
Greet customer, take car keys
Greet, take coat, coat
checks
Check availability,
insert booking
Take car to parking lot
Hang coat with visible check
numbers
Maintain reservation
system
Maintain (or rent)
facilities
Maintain facilities/
equipment
Line of interaction
Line of visibility
Line of internal physical
interaction
Contact person (visible actions)
Contact person (invisible actions)
Front - Stage
Back - Stage
…
Timeline Act 1
Physical Evidence
Service Standards and Scripts
Support Processes
W W W
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 7
Blueprinting the Restaurant Experience: A Three Act Performance
• Act 1: Prologue and Introductory Scenes• Act 2: Delivery of Core Product
o Cocktails, seating, order food and wine, wine serviceo Potential fail points: Menu information complete? Menu intelligible? Everything
on the menu actually available?o Mistakes in transmitting information a common cause of quality failure—e.g.
bad handwriting; poor verbal communicationo 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
o Remaining actions should move quickly and smoothly, with no surprises at the end
o Customer expectations: Accurate, intelligible and prompt bill, payment handled politely, guest are thanked for their patronage
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 8
Setting Service Standards
• Service providers should design standards for each step sufficiently high to satisfy and even delight customers o 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
• 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
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 9
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:
o Treatment errors—human failures during contact with customero 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:o Performing tasks incorrectly, in the wrong order, too slowlyo Doing work that wasn’t requested in the first place
• Service Perspectives – Poka Yokes – • For service Poka Yoke is for both servers and customers.• Ex surgeons have the instruments for surgery arranged in a form such
that the instruments are not left in before closing incision• Dress codes, timings, guidelines to be followed etc are used as poke
yoke tools for customers
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 10
Redesigning Service Processes
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 12
Why Redesign?
• Revitalizes process that has become outdated
• Changes in external environment make existing practices obsolete and require redesign of underlying processes
• Rusting occurs internallyo Natural deterioration of internal processes; creeping
bureaucracy, unofficial standards o 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 - 13
Process Redesign: Approaches and Potential Benefits (1) (Table 8.1)
• Eliminating non-value-adding stepso Streamline front-end and back-end processes of services with goal of
focusing on benefit-producing part of service encounter o Eliminate non-value-adding steps o More customized service
• Delivering direct serviceo Bring service to customers instead of bringing customers to providero Productivity can be improved if companies can eliminate expensive o retail locations
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 14
Process Redesign: Approaches and Potential Benefits (2) (Table 8.1)
• Shifting to self-serviceo Increase in productivity and service quality o Lower costs and perhaps priceso Enhance technology reputation
• Bundling services ( Air travel+ Car rental + Hotel accomodation)o Involves grouping multiple services into one offer, focusing on a well-defined
customer group o Often has a better fit to the needs of target segment.
• Redesigning physical aspects of service processeso Focus on tangible elements of service process; include changes to facilities
and equipment to improve service experience o Increase convenienceo Enhance the satisfaction and productivity of front-line staff o Cultivate interest in customerso Differentiate company
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 16
The Customer as Co-Producer
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 17
Levels of Customer Participation
• Customer Participationo Actions and resources supplied by customers during service
production o and/or deliveryo Includes mental, physical, and even emotional inputs
• Three Levels o Low—Employees and systems do all the work
Often involves standardized service. Ex Bus Travelo Medium—Customer inputs required to assist provider
Provide needed information and instructions Make some personal effort; share physical possessions – Filing Tax ret
o 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 - 18
Self-Service Technologies (SSTs)
• Ultimate form of customer involvement e.g. Internet-based services, ATMs, self-service gasoline pumps
• Information-based services lend selves particularly well to SSTso 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-serviceo Economic trade-off between declining cost of these self-service systems and
rising cost of labor o Challenge: Getting customers to try this technology
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 19
Psychological Factors in Customer Co-Production
• Economic rationale of self-service
• 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
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 20
What Aspects of SSTs Please or Annoy Customers?
• People love SSTs when…o SST machines are conveniently located and accessible 24/7—often as close
as nearest computer!o Obtaining detailed information and completing transactions can be done faster
than through face-to-face or telephone contact o People in awe of what technology can do for them when it works well
• People hate SSTs when…o SSTs fail—system is down, PIN numbers not accepted, etco They mess up—forgetting passwords, failing to provide information as
requested, simply hitting wrong buttons • Key weakness of SSTs: Too few incorporate service recovery
systemso Customers still forced to make telephone calls or personal visitso Blame service provider for not providing more user-friendly system
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 23
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 problemso Difficult to recover from instances of customer failureo 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
o Conduct “job analysis” of customer’s present role in business—compare against role that firm would like customers to play
o Educate customers on how expected to perform and skills neededo Motivate customers by ensuring that rewarded if they perform wello Appraise customers’ performance regularly
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 24
Dysfunctional Customer Behavior Disrupts Service Process
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 25
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 jaycustomerso “The customer is king and can do no wrong.”o Marketplace is overpopulated with nasty people who
cannot be trusted to behave in ways that self-respecting services firms should expect and require
o 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 - 26
Types of Jaycustomers: The Thief
• No intention of paying—sets out to steal or pay less• Services lend themselves to clever schemes to avoid payment
o For example: bypassing electricity meters, circumventing TV cables,
• Firms must take preventive actions against thieves, but not alienate honest customers by degrading their service experienceo Make allowances for honest but absent-minded customers
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 27
Six Types of Jaycustomers: The Rulebreaker
• Many services need to establish rules to guide customers safely through the service encounter
• Government agencies may impose regulations that service suppliers must enforce
• Some rules protect other customers from dangerous behavior o For example: Vail and Beaver Creek, Colorado—ski patrollers issue
warnings to reckless skiers by attaching orange stickers on their lift tickets• Ensure company rules are necessary, not bureaucratic
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 28
• Expresses resentment, abuses service employees verbally or even physically
• Confrontations between customers and service employees can easily escalate
• Firms should ensure employees have skills to deal with difficult situationso In a public environment, priority is to
remove person from other customerso May be better to make a public stand on
behalf of employees than conceal for fear of bad publicity
Six Types of Jaycustomers: The Belligerent
Confrontations between Customers and Service Employees Can Easily Escalate
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 29
• Family Feuders: People who get into arguments with other customers—often members of their own family
• The Vandal: o Service vandalism includes pouring soft drinks into bank cash machines;
slashing bus seats, breaking hotel furnitureo Bored and drunk young people are a common source of vandalismo Unhappy customers who feel mistreated by service providers take revenge o Prevention is the best cure
Six Types Of Jaycustomers:Family Feuders and Vandals
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 30
Six Types Of Jaycustomers: The Deadbeat
• Customers who fail to pay (as distinct from “thieves” who never intended to pay in the first place)o Preventive action is better than cure—for example: insisting on prepayment;
asking for credit card number when order is takeno Customers may have good reasons for not paying
If the client's problems are only temporary ones, consider long-term value of maintaining the relationship
• For an industry-specific categorization, see Research Insights 8.1: Categorizing Jaycustomers in Hotels, Restaurants, and Bars
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 31
Consequences of Dysfunctional Customer Behavior
• Consequences for staff working front stage
• Consequences for customers can be both negative and positive
• Consequences for organization