Managing Customer Managing Customer SatisfactionSatisfaction

Week 5Week 5

Service ProcessesService Processes

Service processes: objectivesService processes: objectives

To define service processes and their To define service processes and their importanceimportance

To understand the nature of service To understand the nature of service processesprocesses

To provide some tools to help ‘engineer’ To provide some tools to help ‘engineer’ service processesservice processes

To explain how to reposition service To explain how to reposition service processesprocesses

Process design: IntroductionProcess design: Introduction

Process design describes and prescribes Process design describes and prescribes the procedures: the procedures: To be followed in service deliveryTo be followed in service delivery How these procedures interact with other How these procedures interact with other

resources such as materials, equipmentresources such as materials, equipment

How service activities (sub-processes) link How service activities (sub-processes) link together to create the whole interrelated together to create the whole interrelated chain of processes to deliver value to chain of processes to deliver value to customers and the organizationcustomers and the organization

Service processes & Service processes & their importancetheir importance

Excellent service = satisfies the customer Excellent service = satisfies the customer & meets the strategic intention of the & meets the strategic intention of the organizationorganization

Interrelates processes, departments, Interrelates processes, departments, people, decisions and activities = gluepeople, decisions and activities = glue

Must manage cost & quality targets from Must manage cost & quality targets from end-to-end (e2e)end-to-end (e2e) Holiday exampleHoliday example

Front office processesFront office processes

Front office processes deal directly with the Front office processes deal directly with the customer and may be visible to themcustomer and may be visible to themCustomer roles varyCustomer roles vary Well defined – adding money to your cell phoneWell defined – adding money to your cell phone Service depends on the skill of the provider – lawyerService depends on the skill of the provider – lawyer

Trend: Shift from provider to customerTrend: Shift from provider to customer Provide a clear process – elong for travel Provide a clear process – elong for travel

arrangementsarrangements

Common problem – customers are Common problem – customers are unpredictableunpredictable

Back office processesBack office processes

Back office processes operate at a Back office processes operate at a distance from the customer and are largely distance from the customer and are largely invisible to theminvisible to them

Shift to & from back office operationsShift to & from back office operations Consolidation of common processesConsolidation of common processes Reduces immediate need to respond to Reduces immediate need to respond to

customer requestscustomer requests Take advantage of technology (photo Take advantage of technology (photo

processing)processing)

Simplified service processesSimplified service processes

Changing front office and back office activities

Service experienceService experience

Service experienceService experience Face-to-faceFace-to-face TelephoneTelephone E-service - Internet based & other remote (ATM)E-service - Internet based & other remote (ATM)

RisksRisks Financial risk may be difficult for the customer to Financial risk may be difficult for the customer to

assess – used carassess – used car Physical risk – holiday in Thailand (political unrest)Physical risk – holiday in Thailand (political unrest) Psychological risk – anxiety Psychological risk – anxiety

Customer perceived risk and social interaction

Customer variablesCustomer variables

Customer mindset – logging a complaint Customer mindset – logging a complaint or going to Disneylandor going to Disneyland

Customer moodCustomer mood

Personality clashes Personality clashes

The servicescapeThe servicescape

Servicescape describes the physical and Servicescape describes the physical and information surroundings of the service information surroundings of the service operation operation The environment for both staff (front & The environment for both staff (front & back office) and customersback office) and customersServicescape can:Servicescape can: Affect the customer’s experienceAffect the customer’s experience Influence customer behaviorInfluence customer behavior Influence employeesInfluence employees

The nature of service processingThe nature of service processing

Processes need to be engineered and Processes need to be engineered and controlledcontrolled

Three questionsThree questions How much service product variety does the How much service product variety does the

process have to deal with?process have to deal with? What type of process is it, in terms of volume What type of process is it, in terms of volume

& variety that it can handle& variety that it can handle Where is the value-added for the customer?Where is the value-added for the customer?

Service process mixService process mix

Runners – standard activities, high volumeRunners – standard activities, high volume Often predictable (bank balance inquiry)Often predictable (bank balance inquiry) Lend themselves to efficient operations thru Lend themselves to efficient operations thru

automationautomation

Repeaters – more complex standard activities, Repeaters – more complex standard activities, less frequent. May be a result of growth (new less frequent. May be a result of growth (new bank services, BOC Wealth Management)bank services, BOC Wealth Management) Difficult to automate, uses more resourcesDifficult to automate, uses more resources Learning curve involved thru repeat occurrences Learning curve involved thru repeat occurrences

Service process mixService process mix

Strangers – non-standard activities that Strangers – non-standard activities that usually migrate to repeaters or runners. usually migrate to repeaters or runners. Least efficient.Least efficient.

Requires more flexibility and adaptabilityRequires more flexibility and adaptability

Managing runners, repeaters, strangersManaging runners, repeaters, strangers See Table 6.1. pg. 186See Table 6.1. pg. 186 Remember the importance of variety and Remember the importance of variety and

volume (Week 1)volume (Week 1)

Types of process: volume & varietyTypes of process: volume & variety

Capability processesCapability processes

Flexible to change service outcomes – Flexible to change service outcomes – managing strangers vs. runnersmanaging strangers vs. runners

Professional services – lawyersProfessional services – lawyers

Creative services – advertising agencyCreative services – advertising agency

Consultants Consultants

Offer solutions to their customersOffer solutions to their customers

Central task: Must maintain their skill baseCentral task: Must maintain their skill base

Capability processesCapability processes

Capability process characteristics:Capability process characteristics:Particular skill or knowledge baseParticular skill or knowledge baseKnowledge/skill may reside with an individual Knowledge/skill may reside with an individual (lost if s/he leaves the organization)(lost if s/he leaves the organization)Few processes are documentedFew processes are documentedLittle consistency in approaching tasksLittle consistency in approaching tasksR&D is centered on the individual’s capabilityR&D is centered on the individual’s capabilityMove down the diagonal as standardization Move down the diagonal as standardization increasesincreasesTend to be service partnerships or projectsTend to be service partnerships or projectsStrangers and repeaters dominate activitiesStrangers and repeaters dominate activities

Commodity processesCommodity processes

High volume services – rigid service conceptHigh volume services – rigid service concept

competes on consistent quality and pricescompetes on consistent quality and prices Fast food restaurantsFast food restaurants Appliance repairAppliance repair Computer repairComputer repair

Central taskCentral task Maintain consistency of serviceMaintain consistency of service Customers feel as if they are individualsCustomers feel as if they are individuals Manage resource productivityManage resource productivity

Commodity processesCommodity processes

Commodity process characteristics:Commodity process characteristics:Tightly controlled processesTightly controlled processesCustomer-facing staff are junior staff and poorly paidCustomer-facing staff are junior staff and poorly paidFocused trainingFocused trainingDeals well with changes in demandDeals well with changes in demandActivities characterized by runners with an increase Activities characterized by runners with an increase in repeaters as differentiation increases through in repeaters as differentiation increases through mass customizationmass customizationCentral task: create a planned environment for Central task: create a planned environment for efficient and consistent delivery of service activitiesefficient and consistent delivery of service activities

Profiling processesProfiling processes

Capability-commodity profiles assist Capability-commodity profiles assist managers in locating their existing managers in locating their existing processes and determine if action needs processes and determine if action needs to be takento be taken

Motor (Auto) insurance profileMotor (Auto) insurance profile

Motor (Auto) insurance profileMotor (Auto) insurance profile

The direct operation should focus on fast The direct operation should focus on fast response and low costresponse and low cost

Broker operations should focus on Broker operations should focus on flexibility and personal serviceflexibility and personal service

Depicting different surgery processes

Key decision area matrix (KDAM)Key decision area matrix (KDAM)

A means of categorizing service A means of categorizing service processesprocesses

Customer involvement – the degree to Customer involvement – the degree to which the customer is involved in the which the customer is involved in the service delivery processservice delivery process

Customer contact (being a hotel guest)Customer contact (being a hotel guest)

Customer involvement (IKEA)Customer involvement (IKEA)

Key decision area matrix (KDAM)Key decision area matrix (KDAM)

Key decision area matrix (KDAM)Key decision area matrix (KDAM)

Large organizations may include all 4 typesLarge organizations may include all 4 types

Service factory Service factory high volume, low variationhigh volume, low variation Runners and occasionally repeatersRunners and occasionally repeaters Low consumer involvement (McD’s)Low consumer involvement (McD’s)

Do-it-yourselfDo-it-yourself high volume, low variationhigh volume, low variation Runners and occasionally repeatersRunners and occasionally repeaters High consumer involvement (Amazon.com)High consumer involvement (Amazon.com)

Key decision area matrix (KDAM)Key decision area matrix (KDAM)

Service projectsService projects Repeaters & strangersRepeaters & strangers Limited customer involvementLimited customer involvement Close links between front & back office (market Close links between front & back office (market

research)research)

Service partnershipService partnership Repeaters & strangersRepeaters & strangers Highly customized with high customer involvementHighly customized with high customer involvement Co-development (client and provider)Co-development (client and provider) Management of front-back office link critical Management of front-back office link critical

(managing investment portfolios)(managing investment portfolios)

Engineering service processesEngineering service processes

““The key to good service design is about The key to good service design is about taking a customer perspective and taking a customer perspective and understanding the whole service process” understanding the whole service process” (Johnston & Clark, pg. 198)(Johnston & Clark, pg. 198)

Tools for engineering service Tools for engineering service Process mapping (FO&BO)Process mapping (FO&BO) Walk-through audits (FO)Walk-through audits (FO) Service transaction analysis (FO)Service transaction analysis (FO)

Process mapping

Charting a service process in order to Charting a service process in order to assist in the evaluation, design & assist in the evaluation, design & development of processesdevelopment of processesCapture all activities & relationships – time Capture all activities & relationships – time consumingconsumingResultsResults Shared viewShared view Understanding of each role in the e2e processUnderstanding of each role in the e2e process

Mapping toolsMapping tools

Process mapping symbols

Loan application process mapLoan application process map

Analysis of process mapsAnalysis of process maps

Does the process support the strategic Does the process support the strategic intentions of the operation?intentions of the operation?

Does each activity provide added value?Does each activity provide added value?

Is the process ‘in control’? Is the process ‘in control’? What targets and measures are in place?What targets and measures are in place?

Who ‘owns’ the process?Who ‘owns’ the process?

Is the level of visibility appropriate?Is the level of visibility appropriate?

Is the process efficient?Is the process efficient?

How can the process be improved?How can the process be improved?

Walk-through auditsWalk-through audits

Walk-through auditsWalk-through audits

Undertaken by staffUndertaken by staff

Key – choosing what to assessKey – choosing what to assess

Choose the elements critical to the Choose the elements critical to the customercustomer

Service transactions analysis (STA)Service transactions analysis (STA)

Combines service concept, process, transaction Combines service concept, process, transaction quality assessment, service ‘messages’ & quality assessment, service ‘messages’ & customer emotionscustomer emotionsFive stagesFive stages Agreement on service conceptAgreement on service concept Walk through of the actual processWalk through of the actual process Interpretation of customer evaluationInterpretation of customer evaluation Symbols for visible profile of transaction outcome (+, Symbols for visible profile of transaction outcome (+,

0, -)0, -) Use form to discuss improvementsUse form to discuss improvements

STA seeks to identify reasons for outcomes so STA seeks to identify reasons for outcomes so that appropriate actions may be takenthat appropriate actions may be taken

Example of STA Example of STA for an estate agentfor an estate agent

Controlling service processesControlling service processes

Objective – consistent outcomes for Objective – consistent outcomes for customers: reliabilitycustomers: reliability

Two aspects of controlTwo aspects of control Assessing capabilitiesAssessing capabilities Quality systems such as ISO 9000Quality systems such as ISO 9000

Capable processesCapable processes

Deming – evidence that quality is built in Deming – evidence that quality is built in using statistical process control (SPC) using statistical process control (SPC) methodologymethodology

Distribution samplingDistribution sampling

Statistical process control chartStatistical process control chart Used to control and improve runners in high Used to control and improve runners in high

volume, standard processesvolume, standard processes

A capable process and out-of-control process

Statistical process control chart

Quality systemsQuality systems

ISO 9000, etc. develop standard operating ISO 9000, etc. develop standard operating procedures (SOP) that can be audited based on procedures (SOP) that can be audited based on customer requirements and market conditionscustomer requirements and market conditionsAdvantagesAdvantages Develops a disciplined approach to controlling critical Develops a disciplined approach to controlling critical

elements of service deliveryelements of service delivery External auditing awards improves morale and External auditing awards improves morale and

reputationreputation Includes a formal review process that results in Includes a formal review process that results in

improvementsimprovements Opportunities for re-design before the formal audit Opportunities for re-design before the formal audit

Repositioning service processesRepositioning service processes

Pressures for change (see next slide)Pressures for change (see next slide)

Organizations must manage the gap between Organizations must manage the gap between what is marketed and what is deliveredwhat is marketed and what is delivered

Ways to reposition service processesWays to reposition service processes Building capability through systems & trainingBuilding capability through systems & training Building capability through incremental developmentBuilding capability through incremental development Moving to a commodity by constraining flexible Moving to a commodity by constraining flexible

resources (chef to McD burger flipper)resources (chef to McD burger flipper) Moving to a commodity through investment in process Moving to a commodity through investment in process

capabilitycapability

Managing the gap between Managing the gap between marketing and operationsmarketing and operations

Customer service departmentsCustomer service departments

Named personal contactNamed personal contact

Account managersAccount managers

Change the nature of the service (DIY Change the nature of the service (DIY over the Internet)over the Internet)

Change customer expectationsChange customer expectations

Managing the gap between Managing the gap between marketing and operationsmarketing and operations

Pressure to changePressure to change

Strategies for change