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Service Design

Types of Service Design


 Major innovation are new service for markets as yet undefined.
eg: Federal Express introduction of nationwide, overnight small package delivery service.
 Many innovations now and in the future will evolve from information, computer, &
internet-based technologies.
 Startup business consist of new of new service for a market that is already served by
existing products that meet the same generic needs.
eg: ATMs for bank transactions.
 New services for the currently served market represent attempts to offer existing
customers of the organization a service not previously available from the company.
eg: airlines offering fax & phone service during flights.
 Service line extensions represent augmentations of the existing service line.
eg: such as a restaurant adding new menu items, an airline offering new routes.
 Service improvements represent perhaps the most common type of service innovation.
Changes in features of service that are already offered might involve faster execution of
an existing service process.
eg: extended hours of service.
 Style changes represent the most modest service innovations, although they are often
highly visible and can have significant effects on consumer perceptions, & emotions.
eg: Changing the colour scheme of a restaurant.
Stages in new service Development
Business P
New-service
Idea
L
Strategy
Concept A
Strategy
Business
Ge Analysis N
Service
Developme
Development
Market Testing
Development
Commercialization
IMPL N
ner
Development
nt
Post &
introduction
EME
NTA I
EvaluationTION N
atio
& Testing
Evaluation G
n
1. Business Strategy Development
 Organization has to review the Vision & Mission.
 The new service strategy and specific new service ideas must fit within the larger
strategic picture of the organization.

2. New-service Strategy Development

Offerings Markets

Current Customer New Customer

Existing Services Share Building Market Development

New Services Service development Diversification

3. Idea Generation
 The ideas generated at this phase can be passed through the new service strategies
screen described in the preceding step.
 Ideas are generated from employees and customers and learning about
competitors offerings are most common approach.
 The sources of new idea is inside (internal) & outside (External) organization.
 There should exist some formal mechanism for ensuring new service possibilities.
 This mechanism include the responsibility of generating new ideas through
suggestion box for employees & customer, new development teams that meet
regular, surveys & focus group with customer and employees, and formal
competitive analysis to identify new services.
 New service ideas may arise outside the formal mechanism total dependence on
luck is not a good strategy.

4. Service concept Development & Evaluation


 Once the ideas are generated the next stage is to develop.
 Drawing pictures and describing an intangible service in concrete terms tells
about what the concept is & to sharpen multi parties have to be involved to define
the exact concept.
 Through the initial concept development phase it become clear that not everyone
in the organization had the same idea about how this description would translate
into actual service & that there were a variety of ways the concept could be
developed.
 The new service concept would then be evaluated by asking customer &
employees whether they understand the idea of the proposed service, whether they
are favorable to the concept, & whether they feel it satisfies there need. .

5. Business Analysis
 In this stage is to determine its feasibility & potential profit implications.
 Demand analysis, revenue projections cost analysis and operational feasibility are
assessed at this stage.
 This stage will involve preliminary assumptions about the cost of hiring and
training personnel, delivery system & other cost.
 The organization will pass the result of the business analysis through its
profitability and feasibility screen to determine whether the new service idea
meets the minimum requirements.
6. Service Development & Testing
 In this stage involves construction of product prototypes & testing for consumer
acceptance.
 In this stage, service development should involve all who have a stake in the new
service, contact employees, functional representatives from marketing, operations,
and human resources.
 During this phase the concept is refined to the point where the detailed service
blueprint representing the implementation plan for the service can be produced.
 Eg: when a large state hospital was planning a new computer based information
service for doctor thought out its state, it involve many groups in the service
development and eveluation stage, including medical researchers, computer
programmers & operators, telecommunications experts.

7. Market Testing
 In this stage the product is tested in a limited areas to determine the service mix.
 Pilot survey is conducted.
8. Commercialization
 At this stage in the process, the service goes live and is introduced to the
marketplace.
 This stage has 2 primary objectives.
 First, to build and maintain acceptance of the new service among large number of
service delivery personnel who will be responsible day to day for service quality.
 Second, to monitor all aspects of the service during introduction & through the
complete service cycle.
 Every detail of the service should be assessed i.e transactions, billing, complaints,
& delivery process.
9. Post-introduction Evaluation
Service Recovery
 Service recovery refers to the actions taken by an organization in response to a
service failure.

Service Failures

 Failures occur for all kinds of reason like.


 The service may be unavailable when promised.
 It may be delivered late or too slowly.

 The out come may be incorrect or poorly executed.

 Employees are rude or inattentive.

 Service does not meet customer expectations.

System and Delivery Failures

 System failures: failures in core service offering. Examples are spoiled food,
warm beer, unannounced change in flight schedules, cold food, dirty plane.
 Service delivery failure: employee response to unreasonably slow service, and
other core service failures.

Unavailable, Slow Service

 Unavailable Service: Services normally available are lacking or absent.


 Unreasonably Slow Service: Services customers perceive as being unreasonably
slow.
Customer Error Service Failures

 Employee response to customer error: failure is admitted by customer mistake.


 Examples of customer error are lost tickets, lost hotel key.

Service Recovery

 Greatest impact on customer satisfaction comes from:

– An apology and a quick response for failures.

– Compensation for outcome failures, such as out of stock conditions.

Recovery Paradox

 Ex: Think of a hotel customer who arrives to check in and finds there is no room
available for him.
 In an effort to recovery, the hotel front desk person immediately upgrades this
guest to a better room at the same original price.
 The customer is so thrilled with this compensation that he is extremely satisfied
with this experience, even more impressed with the hotel than he was before and
vows to be a loyal in future.
 Conclusion is that companies should plan to disappoint customer so they can
recovery and gain even greater loyalty from them as a result this idea is know as
RECOVERY PARADOX

How customer respond to service failures.


r with
Provide
in to
Compla
Action Compla
Take
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ProviderFriend

Stay
&
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in to

Failure
Service
ers
Provid
Switch
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third
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ComplaNothing
Do

Types of Complain

 Research suggests that people can be grouped into categories based on how they
respond to failures.

They are classified as

Passives Complainers:-

 This group of customer is least likely to take any action.

 They are unlikely to say anything to the provider and also to the third party.
Voicers Complainers:-

 These customer actively complain to the service provider.

 They are less likely to spread negative word of mouth to third party.

 These Customer should be viewed as the service providers best friend.

Irates Complainers:-

 These customer are more likely to engage in negative word of mouth to friends and
relatives.

 They switch the providers.

 They are unlikely to complain the third party.

Activists Complainers:-

 These customer complain on all dimensions complain to the providers.

 Spread negative word of mouth.

Why Don’t Customers Complain

 Service problems are voiced less often because complainers do not think it will
help or know what to do.
 Due to intangibility and inseparability 2500 shoppers said courtesy, knowledge,
and friendliness are most important components of customer service.

When They Complain, What Do Customer Expect?

 When customer complain they generally have high expectations.

 They expect a fair treatment.

 The service recovery experts, Steve Brown and Steve Tax have specified 3 types of fair
treatment they are:-

 Outcome Fairness:-

 Customers expect outcomes, or compensation, that match the level of their


dissatisfaction.

 The compensation can take the form of actual monetary compensation, an apology,
future free services, reduce charges, repairs, and replacements.
 They expect equity in the exchange ie they want to feel that the company has “paid” for
his mistakes in manner at least equal to what customer has suffered.

for eg:- hotel guest could be offered the choice of a refund or a free upgrade to a better
room in compensation for his room not being available on arrival.

 Procedural Fairness:-

 In addition to fair compensation, customers expect fairness in terms of polices, rules, and
timeliness of the complaint process.

 They want easy access to the complaint process, and they want the things handled
quickly, preferably by the first person they contact.

 interaction Fairness:-

 Above and beyond their expectations of fair compensation and quick procedure,
customer expect to be treated politely, with care and honest.

 This form of fairness can dominate the others if the customer feel the company and its
employees have uncaring attitudes and have done little try to resolve the problem.

Service Recovery Strategies

Welcome and
Act
encourage
quick
complain
ly

Learn from Treat


recovery customer
expenses Fairly

Learn Fail
from lost safe the
customer service
 Fail Safe Your Service:-
 The first rule of service quality is to do it right the first time.

 In this way recovery is unnecessary, customer get what they expect the service and
compensating for errors can be avoided.

 Welcome and encourage Complaints:-

 The complain should welcome and encourage complaints.

 Complaints should be anticipated, encouraged, and tracked. Complaining customer


should truly be viewed as a friend.

 Act quickly:-

 Complaining customer want quick response.

 The company should be prepared to act quickly to the customer problem. By these ways:

 Take care of problems on the front line.

 Customers want the person who hears their complaints to solve their problems whether a
complaint is registered in person, over the phone or viva the internet.

 Empower Employees

 Employees must be trained and empowered to solve problem as they occur.

 Allow the customer to solve their own problem.

 Treat Customers Fairly:-

 It is critical to treat each customer fairly in terms of the outcome they receive.

 The process by which the service recovery takes place and in terms of interpersonal
treatment they receive.

 Learn from Recovery Experiences:-

 “Problem – resolution situations are more than just opportunities to fix flawed services
and strengthen ties with customer.

 This strategy is to learn from the customers who defect or decide to leave.

 This is to prevent the same mistakes and losing more customers in future.

 Return to “Doing it Right”


Service Guarantees
Meaning
 A Guarantee is a particular type of recovery tool.
Guarantee is “an assurance of the quality of a length of use to be expected from
product offered for sale, offer with a promise of reimbursement”
Goals
 Service guarantees facilitate three goals:
• Reinforces customer loyalty.
• Builds market share.
• Forces firm offering guarantee to improve overall service quality.
Benefits
 A good guarantee forces the company to focus on its customer.
• To develop a meaningful guarantee, the company must know what is
important to its customer, what they expect.
• Company should clearly understand what the Satisfaction clearly means
to customer.
 A effective guarantee sets clear standards for the organization.
• It promotes the company to clearly define what it experts of its
employees and to communicate to them.
• The guarantee provides employees with service oriented goals that can
quickly align employee behavior around customer satisfaction.
 A effective guarantee sets clear standards for the organization.
• for eg:- Pizza Hut’s guarantee that “ if you’re not satisfied with your pizza,
let our restaurant know, we’ll make it right or give you money back” lets
employees know exactly what they should do if a customer complains.
It is also clear to employees that making it right for the customer is a
important company goal
 It is also clear to employees that making it right for the customer is a
important company goal.
 A good guarantee generates immediate and relevant feedback from
customers.
The guarantee communicates to customers that they have the right to
complain.
• It provides an incentive for customer to complain and thereby provides
more representative feedback to a company than simply relying on the
relatively few customer who typically voice their concerns.
 When the guarantee is invoked there is an instant opportunity to recover.
• Satisfying the customer and helping to retain his loyalty.
 Information generated through the guarantee can be tracked and
integrated into continuous improvement efforts.
• A feedback link between customer and service operations decisions can
be strengthened through guarantee.
 Studies of the impact of service guarantees suggest that employee morale
and loyalty can be enhanced as a result.
• A guarantee generates pride among employees.
• Through feedback from the guarantee, improvements can be made in the
service that benefit customers, and indirectly employees.
 For customers, the guarantee reduces their sense of the risk.
• Guarantee reduces risk and builds confidence in the organization.
• Service are intangible and often highly personal, customers seek
information and cues that will help to reduce their sense of uncertainty.
• Guarantee have been shown to reduce risk and increase positive
evaluation of the service before purchasing.
Types of Service Guarantee
 Single Attribute specific Guarantee .
• only the one key service attribute is covered.
 Multi Attribute Specific Guarantee.
• Only few important service attributes are covered.
 Full satisfaction Guarantee.
• All service aspects covered with no exceptions.

Term Guarantee Example


Scope

Single one key “Any of three specified popular pizzas is


Attribute service guaranteed to be served within 10 minutes of
specific attribute ordering on working days between 12 am to 2
Guarante is covered. pm. If the pizza is late, the customer’s next
e order is free.”

Term Guarantee Example


Scope

Multi Few Our quality commitment to you is to provide : A


Attribute important friendly efficient check in, A clean comfortable
Specific service room where everything works, A friendly
Guarantee attributes efficient check out.
are
If we in your opinion do not deliver on this
covered.
commitment, we will give $40 in cash. No
question asked. It is your interpretation.

Term Guarantee Example


Scope

Full All service Lands End Guarantee – “If you are not
satisfacti aspects completely satisfied with any item you buy
on covered from us, at any time during your use of it,
Guarante with no return it and we will refund your full purchase
e exceptions. price.

We mean every word of it. Whatever, Whenever,


Always. But to make sure this is perfectly clear,
we have decided to simplify it further.
Guaranteed period.”

Service Blueprint
Introduction

“A picture or map that accurately portrays the service system so that the
different people involved in providing it can understand and deal with it
objectively regardless of their roles or their individual points of view”

 A service blueprint depicts:

– process of service delivery

– roles of customers

– roles of service employees

– visible elements of service


Components of a Service Blueprint
Customer Actions
Line of interaction
“Onstage” Contact
Line of visibility Employee Actions
“Backstage” Contact
Line of internal interaction
Employee Actions
Support Processes
Customer Actions

 Customer actions area encompasses the steps, choices, activities, &


interactions that the customer performs in the process of purchasing,
consuming, and evaluating the service.

Onstage” Contact Employee Actions


 The steps and activities that the contact employee performs that are
visible to the customer are the onstage employee contact actions.

eg: intermediate meetings, and final delivery of legal documents.

Backstage Contact Employee Actions

 Those contact employees actions that occur behind the scenes to support
the onstage activities are the backstage contact employee actions.

eg: preparing the final documents.

Support processes

 The support processes section of the blueprint covers the internal


services, steps, & interactions that take place to support the contact
employees in delivering the service.

Service Blueprint

 The four key action areas are separated by horizontal lines.

 Line of interaction, representing direct interaction between the customer


and the organization.

 Line of visibility separates all service activities that are visible to the
customer from those that are not visible.

 Line of internal interaction, which separates contact employee activities


from those of other service support activities and people

 Physical evidence at each stage is important and should be identified


explicitly.

Customer Expectations of Service

CASE STUDY
Virgin Trains is a brand that has had the major challenge of bringing the
UK rail industry into the twentieth century. The company is responsible for
linking towns and cities across the length and breadth of the country with over
35 million passenger journeys each year. It has therefore undertaken a significant
level of marketing research to identify what people expect from train travel.

Many passengers have now had the experience of travelling on airlines or


on overseas railways and as a result their expectations from long-distance train
travel have increased.

The research has highlighted the significant and highly diverse


expectations that customers have of train travel. No longer is a seat and access
to toilets and basic refreshments acceptable; passengers now expect – demand
even – a choice of on-board meals, health-conscious snacks, reading material
and entertainment. Business, and increasingly leisure, travellers also want
access to the Internet and emails through on-board wireless Internet and the
opportunity to use and charge their laptop and mobile. This clearly demonstrates that
customer expectations of service performance do not remain constant. Organizations
need to be aware of how these expectations are changing and adapt their
service offering accordingly.

Source: adapted from Knight, T. and Deas, S., ‘Across the tracks’,
Research (February 2006)

Meaning

Customer expectations are beliefs about service delivery that serve as


standards or reference points against which performance is judged.

OR

It is defined as the perceived-value customers seek from the purchase of a good


or service.
Customers compare their perceptions of performance with these reference
points when evaluating service quality, thorough knowledge about customer
expectations is critical to services marketers.

Illustration

Let us imagine that you are planning to go to a restaurant Suppose you went
into the restaurant for which you held the minimum tolerable expectation, paid
very little money and were served immediately with good food Next suppose that
you went to the restaurant for which you had the highest (ideal) expectations, paid a
lot of money and were served good (but not fantastic)food. Which restaurant
experience would you judge to be best?

The answer is likely to depend a great deal on the reference point that you
brought to the experience. Because the idea of customer expectations is so
critical to evaluation of service, we see about the different levels of
expectations.

Levels of customer expectations


Expected service: levels of expectations

 Customers hold different types of expectations about service.

 we focus on two types. The highest can be termed desired service: the
level of service the customer hopes to receive – the ‘wished for’ level of
performance.

 Desired service is a blend of what the customer believes ‘can be’ and
‘should be’.

 for eg: consumer who sign up for matrimonial service expect to find
compatible, attractive, intersting people to marry. The expectation reflects
the hopes and wishes and belief that they may be fulfilled, they would
probably not purchase the service.

for eg: you will engage the services of college placement office when you are
ready to graduate. What are your expectations for the service? In all likelihood
you want the office to find you a job- the right job in the right geography for the
right salary because that is what you hope and wish for.

 We probably see that the economy may constrain the availability of ideal
job openings in companies.

 In such situation & in general, customers hope to achieve their service


desires but recognize that this is not always possible.

 For such reason they hold another lower level expectation for the
threshold of acceptable service.

 The lower level expectation has been termed as adequate service.

The Zone of Tolerance


The extent to which customers recognize and are willing to accept this
variation is called the Zone of Tolerance.

If service drops below adequate service (the minimum level considered


acceptable) customers will be frustrated and their satisfaction with the
company will be undermined.

If service performance is higher than the zone of tolerance at the top end
– where performance exceeds desired service – customers will be very pleased
and probably quite surprised as well.

Desired Service Delights

Zone of
Tolerance Desirables

Adequate Service Musts


The range of expectations between desired and adequate…

• can be wide or narrow

• can change over time


• can vary among individuals

• may vary with the type of product/service

Factors Influence Customer Expectation of Service

Sources of Desired Service Expectation

Personal Needs

Personal needs, those states or conditions essential to the physical or


psychological well-being of the customer, are important factors that shape
what customers desire in service.

Personal needs can fall into many categories, including physical, social,
psychological and functional.

A fan who regularly goes to baseball games right from work, and is therefore
thirsty and hungry, hopes and desires that the food and drink Vendors will
pass by his section frequently,

Where as a fan that regularly has dinner elsewhere has a low or zero level of
desired service from the vendors.
Enduring service intensifier

These are individual, stable factors that lead the customer to a heightened
sensitivity to service. One of the most important of these factors can be called
derived service expectations, which occur when customer expectations are
driven by another person or group of people.

Sources of adequate service expectations

Temporary service intensifier

The first set of elements, temporary service intensifiers, consists of short-term,


individual factors that make a customer more aware of the need for service.

Personal emergency situations in which service is urgently needed (such as an


accident and the need for car insurance or a breakdown in office equipment
during a busy period) raise the level of adequate service expectation,
particularly the level of responsiveness required and considered acceptable.

Perceived service alternatives

Perceived service alternatives are other providers from whom the customer can
obtain service.
If customers have multiple service providers to choose from, or if they can
provide the service for themselves, their levels of adequate service are higher
than those of customers who believe it is not possible to get better service
elsewhere.

 It is important that service marketers fully understand the complete set


of options that customers view as perceived alternatives.

Customer’s self-Perceived service role

 Customers’ expectations are partly shaped by how well they believe they
are performing their own roles in service delivery.

 One role of the customer is to specify the level of service expected.

 A customer who is very clear with a waiter about how rare he or she
wants his or her meat cooked in a restaurant will probably be more
dissatisfied if the meat comes to the table overcooked than a customer
who does not clearly state the degree of cooking expected.

Situational factors

 Levels of adequate service are also influenced by situational factors,


defined as service performance conditions that customers view as beyond
the control of the service provider.

 For example, where personal emergencies such as serious car accidents


would likely intensify customer service expectations of insurance
companies may lower service expectations because customers recognize
that insurers are inundated with demands for their services.

 Customers who recognize that situational factors are not the fault of
the service company may accept lower levels of adequate service given the
context.

 In general, situational factors temporarily lower the level of adequate


service, widening the zone of tolerance..

Predicated Service

The level of service that customers believe they are likely to get. This type of
service expectation can be viewed as predictions made by customers about
what is likely to happen during an impending transaction or exchange.

 If customers predict good service, their levels of adequate service are


likely to be higher than if they predict poor service.

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