CHAPTER 8
Designing and Managing
Service Processes
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 1
Overview of Chapter 8
Flowcharting Service Delivery
Blueprinting Services to Create Valued Experiences
and Productive Operations
Service Process Redesign
The Customer as Co-Producer
Self-Service Technologies
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 2
Flowcharting
Service Delivery
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Flowcharting Service Delivery
Helps to Clarify Product Elements
Technique for displaying the nature and
sequence of the different steps in delivery
service to customers
Offers way to understand total customer
service experience
Shows how nature of customer involvement
with service organizations varies by type of
service:
➔ People processing
➔ Possession processing
➔ Mental Stimulus processing
➔ Information processing
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 4
Simple Flowchart for Delivery of a
People-Processing Service (Fig. 8.2a)
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Simple Flowchart for Delivery of a Mental
Stimulus Processing Service (Fig. 8.2c)
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Blueprinting Services to
Create Valued
Experiences and
Productive Operations
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Blueprinting
Developing a Blueprint
Identify key activities in creating and delivering service
Define “big picture” before “drilling down” to obtain a
higher level of detail
Advantages of Blueprinting
Distinguish between “frontstage” and “backstage”
Clarify interactions between customers and staff, and
support by backstage activities and systems
Identify potential fail points; take preventive measures;
prepare contingency
Pinpoint stages in the process where customer
commonly have to wait
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 10
Key Components of a Service Blueprint
1. Define standards for front-stage activities
2. Specify physical evidence
3. Identify main customer actions
4. Line of interaction (customers and front-stage personnel)
5. Frontstage 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
- Identify fail points and risks of excessive waits
- Set service standards and do failure-proofing
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Service Process
Redesign
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 15
Why Redesign? (1)
“Institutions are like steel beams—they tend to rust. What was
once smooth and shiny and nice
tends to become rusty.”
Mitchell T. Rabkin MD,
formerly president of
Boston’s Beth Israel Hospital
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 16
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 that is not useful
- High ratio of checking or control activities to value-adding activities
- Increased exception processing
- Customer complaints about inconvenient and unnecessary
procedures
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 17
Process Redesign: Approaches and
Potential Benefits (0)
1. Eliminating non-value-adding steps
2. Shifting to self-service
3. Delivering direct service
4. Bundling services
5. Redesigning physical aspects of service processes
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 18
Process Redesign: Approaches and
Potential Benefits (1)
Eliminating non-value-adding steps
➔Simplify front-end and back-end processes with goal of
focusing on benefit-producing part of service encounter
➔Get rid of non-value adding steps
➔Improve productivity and customer satisfaction
Shifting to self-service
➔Increase in productivity and service quality
➔Lower costs
➔Enhance technology reputation
➔Differentiates company
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 19
Process Redesign: Approaches and
Potential Benefits (2)
Delivering direct service
➔ Bring service to customers instead of bringing customers to service firm
➔ Improve convenience for customers
➔ Productivity can be improved if companies can eliminate expensive retail
locations
➔ Increase customer base
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 © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 20
Process Redesign: Approaches and
Potential Benefits (3)
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 frontline staff
➔ Cultivate interest in customers
➔ Differentiate company
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 21
The Customer as
Co-producer
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 22
Levels of Customer Participation (1)
Customer Participation
➔Actions and resources supplied by customers during service
production and/or delivery
➔Includes mental, physical, and even emotional inputs
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Levels of Customer Participation (2)
3 levels
➔ Low – Employees and systems do all the work
- Often involves standardized service
- Medium – Customer helps firm create and deliver service
- 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 © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 24
Customers as Partial Employees
Customers can influence productivity and quality of
service processes and outputs
Customers not only bring expectations and needs, they
also need to have relevant service production
competencies
Customers also need to be recruited as they are “partial
employees”. Firms need to get those with the skills to do
the tasks
For the relationship to last, both parties need to cooperate
with each other
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 25
Self-Service
Technologies
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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 can easily be offered using
SSTs
➔ Used in both supplementary services and delivery of core product
- e.g. eBay – no human auctioneer needed between sellers and buyers
Many companies seek to encourage customers to serve
themselves using Internet-based self-service
➔ Challenge: getting customers to try this technology
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 27
Psychological Factors Related to the use of SSTs
SSTs advantages
➔Time savings
➔Cost savings
➔Flexibility
➔Convenience of location
➔Greater control over service delivery
➔High perceived level of customization
SSTs disadvantages
➔Anxiety and stress experienced by customers who are uncomfortable with
using them
➔Some see service encounters as social experiences and prefer to deal with
people
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 28
QnA
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