Module 4

MODULE 4
ALIGNING
STRATEGY,
SERVICE DESIGN,
AND STANDARDS
1
11/17/10 Shridhar Kidiyoor
Provider GAP 2
CUSTOMER
Customer-Driven
COMPANY Service Designs and
Standards
GAP 2
Company
Perceptions of
Consumer
Expectations
2
Service Development and
Design
• Challenges of Service Design
• New Service Development
• Types of New Services
• Service Redesign
Continued
3
Planning & Creating Services
4
The Flower of Service
Core Product surrounded by Cluster of

Supplementary Services
5
Service Offering for an Overnight Hotel Stay
6
Risks of Relying on Words
Alone to
Describe Services
• Oversimplification
• Incompleteness
• Subjectivity
• Biased Interpretation
7
8
Augmented Hotel Product
9
Examples of Information
Elements
10
Examples of Order-taking
Elements
11
Examples of Payment Elements
12
Examples of Billing Elements
13
Examples of Hospitality
Elements
14
Examples of Consultation
Elements
• Advice
• Auditing
• Personal Counseling
• Tutoring/Training in Product use
• Management or Technical Consulting
15
New Service Development Process
 Business Strategy Development or Review
 New Service Strategy Development
Front End
 Idea Generation
Planning
Screen ideas against new service strategy
 Concept Development and Evaluation
Test concept with customers and employees
 Business Analysis
Test for profitability and feasibility
 Service Development and Testing
Conduct service prototype test

 Market Testing
Implementation
Test service and other marketing-mix elements
 Commercialization
Source: Booz-Allen & Hamilton,
1982; Bowers, 1985; Cooper, 1993;
Khurana & Rosenthal 1997.  Postintroduction Evaluation
16
New Service Strategy Matrix for
Identifying Growth Opportunities
Markets
Offerings Current Customers New Customers
Existing SHARE MARKET

Services BUILDING DEVELOPMENT
New SERVICE DIVERSIFICATION

Services DEVELOPMENT
17
Service Mapping/Blueprinting
• A tool for simultaneously depicting the
service process, the points of customer
contact, and the evidence of service from
the customer’s point of view.
Proces
Service s
Points of
Mappin Contact
g Evidenc
e
18
Service Blueprint
Components
CUSTOMER ACTIONS
line of interaction
“ONSTAGE” CONTACT EMPLOYEE ACTIONS

line of visibility
“BACKSTAGE” CONTACT EMPLOYEE ACTIONS

line of internal interaction
SUPPORT PROCESSES
19
Service Blueprint
Components
20
Flowchart for Meal delivery Scenarios
21
Express Mail Delivery Service
Truck, Packaging
Forms, Hand-held Computer Truck, Packaging
Uniform Forms, Hand-held Computer
Uniform
(Back Stage) (On Stage)EVIDENCE
CUSTOMR
CONTACT PERSON PHYSICAL
Customer Customer Receive

Calls Gives Package
Package
Driver
Picks Deliver
Up Pkg. Package
Customer
Service
Order
Airport Fly to
Dispatch Unload Load
Driver
Receives Sort Fly to
& Loads Center & On
Destinati Sort Truck
PROCESS
SUPPORT
Load on
Airplane
on
Sort
Packages
22
Overnight Hotel Stay
Bill
Desk
Hotel Cart for Desk Elevators Cart for Room Menu Delivery Food Lobby
Exterior Bags RegistrationHallways Bags Amenities Tray Hotel
EVIDENCE
CUSTOMR
PHYSICAL
Parking Papers Room Bath Food Exterior

Lobby Appearance Parking
Key
Arrive Give Bags Call Check out
Go to Receive Sleep Receive
at to Check in Room Eat and
Room Bags Shower Food
Hotel Bellperson Service Leave
(Back Stage)(On Stage)
CONTACT PERSON
Greet and
Process Deliver Deliver Process
Take
Registration Bags Food Check Out
Bags
Take
Take Bags Food
to Room Order
SUPPORT PROCESS
Registration Prepare Registration

System Food System
23
Building a Service Blueprint
Step 1 Step 2 Step 3 Step 4 Step 5 Step 6
Identify the Identify the Map the Map contact Link Add
process to customer or process employee customer evidence of
be blue- customer from the actions, and contact service at
printed. segment. customer’s onstage person each
point of and back- activities to customer
view. stage. needed action step.
support
functions.
24
Application of Service
Blueprints
• New Service Development
• Concept development
• Market testing
• Supporting a “Zero Defects” Culture
• Managing reliability
• Identifying empowerment issues
• Service Recovery Strategies
• Identifying service problems
• Conducting root cause analysis
• Modifying processes
25
Blueprints Can Be Used By:
• Service Marketers
– Creating realistic CEs.
– Service system design, that is, Communicating with
customers and getting their feedback at the concept and
service development stages of the process.
– Promotion & Positioning.
– Seeing clearly all employees who interact with customers and
thus serve as “marketers” from the customer’s perspective.
– Identifying all SE points that might potentially be monitored
for CS & SQ.
– Analyzing the appropriateness of PE provided at each point
of customer contact.
26
• Operations Management
– rendering the service as promised
• Managing fail points
• Training systems
• Quality control
27
• Human Resources
– empowering the human element
• Job descriptions
• Selection criteria
• Appraisal systems
28
• System Technology
– providing necessary tools:
• System specifications
• Personal preference databases
29
Conceptual Model Of SQ
30
The Gap Theory Revisited
• The knowledge gap:
– Is the difference between what SPs believe customers
expect and customers' actual needs and expectations.
• The standards gap:
– Is the difference between management's perceptions
of CEs and the quality standards established for
service delivery.
• The delivery gap:
– Is the difference between specified delivery standards
and the SP’s actual performance on these standards.
31
The Gap Theory Revisited
• The internal communications gap
– Is the difference between what the company's advertising and
sales personnel think are the product's features, performance,
and SQ level and what the company is actually able to deliver.
• The perceptions gap

– Is the difference between what is, in fact, delivered and what
customers perceive they have received (because they are unable
to accurately evaluate service quality).
• The interpretation gap:
– Is the difference between what an SP’s communication efforts (in
advance of service delivery) promise and what a customer thinks
was promised by these communications.
• The service gap:
– Is the difference between what customers expect to receive and
their perceptions of the service that is delivered.
32
Flight Delay Reasons
33
Delay Statistics
34
House of Quality for Village Volvo
CE
Strength of
Relationship
between CE
and related Competitive
service element Assessment
35
Observations
• Investments in training is fruitful.
• Training has the highest weighted score,
yet its difficulty rank is relatively low.
• Training is strongly related to Reliability, the
most important CE and a good training will
also impact:
– Responsiveness
– Assurance
– Tangibles.
36
Observations
• Village Volvo is weakest on the
Responsiveness dimension of service.
• Capacity is the most strongly related
production factor.
• Should we then, improve

Responsiveness through increasing
capacity?
37
On Capacity Factor
• Capacity’s weighted score is relatively low
since it has no effect on other service
attributes.
• Increasing capacity has a high difficulty
rating.
• Thus, investments in capacity may not be
the highest priority.
• Other means of addressing responsiveness
issues may need to suffice—for example
training and providing better information.
38
Reliability versus Investment
39
Customer-defined Service
Standards
• Factors Necessary For Appropriate Service
Standards
• Customer-Defined Service Standards
• Process for Developing Customer-defined
Standards
40
What is CDS?
• These are the standards which help close
the provider gap,
• Basically they are the operational goals
and measures based on pivotal customer
requirements that are visible and
measured by customers,
• Operation standards more to meet
customer requirements than company’s
operational needs.
41
Types of CDS
• Hard CDS:
– Measurable by some physical dimension/unit
etc. and observable.
• Soft CDS:
– Measures that can be only gotten by perception,
by interacting, communicating
• One time Fixes:
– Technology,Policy, Procedural when
implemented address customer requirements
42
Examples of Hard
Customer-Defined Standards
43
Examples of Soft
Customer-Defined Standards
44
AT&T’s Process Map for
Measurements
Business Process Customer Need Internal Metric
Reliability (40%) % Repair Call
30% Product
Easy To Use (20%) % Calls for Help
Features / Functions (40%) Functional Performance Test
Knowledge (30%) Supervisor Observations

30% Sales Responsive (25%) % Proposal Made on Time
Follow-Up (10%) % Follow Up Made
Total
Delivery Interval Meets Needs (30%) Average Order Interval
Quality 10% Installation
Does Not Break (25%) % Repair Reports
Installed When Promised (10%) % Installed On Due Date
No Repeat Trouble (30%) % Repeat Reports

15% Repair Fixed Fast (25%) Average Speed Of Repair
Kept Informed (10%) % Customers Informed
Accuracy, No Surprise (45%) % Billing Inquiries

15% Billing Resolve On First Call (35%) % Resolved First Call
Easy To Understand (10%) % Billing Inquiries
Source: AT&T General Business Systems 45
Exercise for Creating Customer-
Defined Service Standards
• Form a group of four people
• Use your school’s undergraduate or graduate
program, or an approved alternative
• Complete the customer-driven service standards
importance chart
• Establish standards for the most important and
lowest-performed behaviors and actions
• Be prepared to present your findings to the class
46
CDS and Measurements
Exercise for KIMS Students
Service Encounter Student Requirements Measurements
Service
Quality
47
Getting to Actionable Steps
Requirements: Diagnosticity:
Abstract Low
Satisfaction Value
Relationship General
Solution Provider Concepts
Dig Reliability Empathy
Deeper Assurance Tangibles Dimensions
Responsiveness Price
Dig Delivers on Time

Deeper Returns Calls Quickly Attributes
Knows My Industry
Dig Delivers by Weds 11/4 Behaviors

Deeper Returns Calls in 2 Hrs
Knows Strengths of and Actions
My Competitors
Concrete High
48
Process for Setting CDS
1. Identify Existing or Desired Service Encounter Sequence
2.2.Translate
TranslateCustomer
CustomerExpectations
ExpectationsInto
IntoBehaviors/Actions
Behaviors/Actions
3.3.Select
SelectBehaviors/Actions
Behaviors/Actionsfor
forStandards
Standards
4. Set Hard or Soft Standards
Measure by Measure by
Audits or Hard 5.5.Develop Transaction-
DevelopFeedback
Feedback Soft
Operating Data Mechanisms Based Surveys
Mechanisms
6.6.Establish
EstablishMeasures
Measuresand
andTarget
TargetLevels
Levels
7. Track Measures Against Standards
8.8. Update
UpdateTarget
TargetLevels
Levelsand
andMeasures
Measures 49
Importance/Performance Matrix
HIGH 10.0
Improve Maintain
Does whatever it takes to
correct problems (9.26, 7.96)
Delivers on promises specified in proposal/contract (9.49, 8.51)

Gets project within budget, on time (9.31, 7.84)
Completes projects

correctly, on time (9.29, 7.68)
   Gets price we originally agreed upon (9.21, 8.64)
Tells me cost ahead of time (9.06, 8.46)
9.0   
Provides equipment that operates as vendor said it would (9.24, 8.14)
Gets back to me when
Takes responsibility for their mistakes (9.18, 8.01)
promised (9.04, 7.63)
Delivers or installs on
promised date (9.02, 7.84)
Importance
8.0
LOW 7.0
HIGH
8.0 9.0 10.0
11/17/10 Performance
Shridhar Kidiyoor 50
Linkage between Soft Measures and Hard
Measures for Speed of Complaint
Handling
10
9
Large Customers
8
SATISFACTION
7
Small Customers
6
5
4
3
2
1
2 4 6 8 12 16 20 24
0
WORKING HOURS
51
D
EN
E
TH
52

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MODULE 4

Core Product surrounded by Cluster of

 New Service Strategy Development

Test for profitability and feasibility

 Service Development and Testing

Conduct service prototype test

Existing SHARE MARKET

New SERVICE DIVERSIFICATION

“ONSTAGE” CONTACT EMPLOYEE ACTIONS

“BACKSTAGE” CONTACT EMPLOYEE ACTIONS

Customer Customer Receive

Parking Papers Room Bath Food Exterior

Registration Prepare Registration

Step 1 Step 2 Step 3 Step 4 Step 5 Step 6

• The perceptions gap

• Should we then, improve

Knowledge (30%) Supervisor Observations

No Repeat Trouble (30%) % Repeat Reports

Accuracy, No Surprise (45%) % Billing Inquiries

Dig Delivers on Time

Dig Delivers by Weds 11/4 Behaviors

1. Identify Existing or Desired Service Encounter Sequence

4. Set Hard or Soft Standards

7. Track Measures Against Standards

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