SERVICES DEVELOPMENT
AND DESIGN
Services Development and
Design
Why do new services fail?
Challenges of service design
Types of new services
Stages in new service development
Service classification: a design issue
• Equipment vs people based classification
(Thomas)
• Maister and Lovelock- 2 X 2 matrix for service
classification
• The service process matrix (Schmenner)
• Haywood-Farmer- three-dimensional model
• The design of service systems (Wemmerlöv)
Why do new services fail?
Failure to understand customers expectations
Failure to match service standards & design with
customers expectations.
No unique benefits offered
Insufficient demand
Unrealistic goals for the service
Poor fit within the organization portfolio
Poor location
Insufficient financial backing
Poor timing
Design and specification flaws
Challenges of Service
Design
The characteristics of services are the roots
of the challenge in designing services.
As services are intangible they are difficult to
describe and communicate.
Four risks of describing services in words
(Lynn Shostack)
1. Oversimplification
2. Incompleteness
3. Subjectivity
4. Biased interpretation
New Service Development Stages
A. Front End Planning
1. Business strategy review/development
2. New service strategy development
3. Idea generation
4. Concept development and evaluation
5. Business analysis
B. Back End Implementation
6. Service development and testing
7. Market testing
8. Commercialization
9. Post introduction evaluation
1. Business Strategy
Development
The new service strategy and specific
new service ideas must fit within the
larger strategic picture of the
organization.
2. New Service Strategy
Development
Use the Ansoff matrix framework for
identifying growth strategies.
Idea Generation
The idea should fit the basic business
and new service strategies.
Sources of new service ideas
Contact personnel
Brainstorming session
Employees
Customers
User research
Competitors offerings
Service Concept Development and
Evaluation
Once the idea fits the business and new
service strategies, it is ready for initial
development.
At this stage:
a) Define the concept of the new service
b) Describe the specific features & characteristics
c) Develop the service design document
d) Evaluate the response of customers and
employees to the new service concept.
Business Analysis
Determine the feasibility of the service
concept and its profit potential.
Implementation
This is the service development and testing
stage
Develop a detailed service blue print
Translate the blue print in to specific
implementation plan.
Market Testing
It is needed to determine:
a) Market place acceptance of the product
b) Acceptance of marketing mix variables: -
pricing, promotion, and distribution
systems.
Commercialization
This is the introduction stage of the
service to the market place.
Two primary objectives:
1) To build and maintain acceptance of the
new service
2) To monitor all aspects of the service
during introduction and through the
complete service cycle.
Post Introduction Evaluation
At this stage:
a) Review the information gathered
during the commercialization of the
service.
b) Make changes to the delivery process,
staffing, or marketing mix variables
based on the response of the market to
the new service offer.
The concept of design
As service is a process where people interact with the
production and delivery of an experience, service design
should encapsulate all aspects of that experience:
The role of the customer
The balance between front and back office
The impact of technology, e.g. the involvement of
equipment
The location of service consumption (e.g. a fixed single
facility, multi-site, mobile)
Employee skills/behavior and degree of discretion
The nature of the service process, e.g. standardized,
customized
The significance of procedures
The nature and channels of communication
The contribution of the physical evidence to service
Service Classification: A Design Issue
Equipment vs people based classification
(Thomas)
Equipment-based
automated (vending machine, car wash), monitored by
relatively unskilled operators (taxis, dry cleaning),
automated operated by skilled operators (airlines, computer
timesharing).
People-based
unskilled labour (janitorial services, guards)
skilled labour (car repair, plumbing)
professionals (lawyers, accountants) for service production
According to Thomas, placing a service on the spectrum
necessitates answering two questions:
1. How is the service rendered?
2. What type of equipment or people render the service?
Maister and Lovelock- 2 X 2 matrix for service classification
Classifying dimension Service operation type
Low client contact
Factory
Low customization
Low client contact
Job shop
High customization
High client contact
Professional service
High customization
High client contact
Mass service
Low customization
The service process matrix (Schmenner)
Degree of Interaction and customization
Low High
Low Service factory: Service shop:
Airlines Trucking Hospitals
Degree Hotels Auto repair
of Resorts & recreation Other repair services
Labor
Intensity Mass service: Professional services:
Retailing Physicians
Wholesaling Lawyers
Schools Accountants
High Retail aspects of Architects
commercial banking
Haywood-Farmer- three-dimensional model
degree of contact : whether the customer has to be present, as is the case
with a haircut;
degree of labor-intensity : whether it is possible to automate the service, as
with automatic teller machines; and
the degree of service customization: how much standardization is
possible, e.g. can a standard programme be devised for all customers of a
health club?
Where a service is low in all three dimensions (cell 1 e.g. the back office of a
bank) it is like a factory, with emphasis on quality control and focusing on
physical facilities and procedures.
As one moves towards cells 5–8, two factors become prominent.
Where the service is low in labor intensity, the customer’s impression of the
physical facilities, processes and procedures is important and care must be
taken to make sure equipment is reliable, easy to use and user proof.
As high contact and interaction services increase in labor intensity, more
attention must be paid to making sure staff behave appropriately.
As customization increases (moving towards cells 3, 4, 7 and 8) the service
process and product must be designed to fit the customer.
In services high on all three dimensions, physical facilities, procedures,
processes, personal behavior and professional judgment all become important.
Contd
High 6 8
DC
Low
High 2 4
DLI
5 7
1 3
Low
Low DSC High
Ctd…
Examples of services in each octant:
1 Utilities, transportation of goods
2 Lecture teaching, postal services
3 Stockbroking, courier services
4 Repair services, wholesaling, retailing
5 Computerized teaching, public transit
6 Fast food, live entertainment
7 Charter services, hospitals
8 Design services, advisory services, healing
services
Service Blueprinting
It is a picture or map that accurately
portrays the service system so that
different people can understand and
deal with it regardless of their roles.
It visually displays:
1. The process of the service delivery
2. The points of customers contact
3. The roles of employees and customers
4. Visible elements of the service evidence.
The Purpose of Service
Blueprinting
a) To enable employees, customers, &
managers know what the service is.
b) To make employees and customers see
their roles in the service delivery.
c) To understand all of the steps and flows
involved in the service process.
Blue Print Components
1. Customer action
2. Onstage contact employees action
3. Backstage contact employees action
4. Support process.
The Customer Action
All the steps, choices, activities, and
interactions that the customer performs
in the process of purchasing, consuming,
and evaluating the service.
Customers actions in legal service.
A decision to contact an attorney
A face-to-face meeting
Receipt of documents
Receipt of a bill
Onstage Contact Employee’s Action
All the steps and activities that the
contact employee performs that are
visible to the customer.
Onstage employee actions in a legal
service
Initial interview
Intermediate meetings
Final delivery of legal documents.
Backstage Contact Employee Action
Actions that occur behind the scenes to
support the onstage activities.
Backstage contact employees actions in
a legal service.
Preparation of the attorney for a meeting
Preparation of the final document.
The Support processes
Covers the internal services, steps, and
interactions that take place to support
the contact employees in delivering the
service.
Support processes in a legal service.
Legal research by staff.
Secretarial service etc.
The Line of Interaction
It represents direct interactions between
the customer and the organization.
Anytime a vertical line crosses the
horizontal line of interaction, a service
encounter has occurred (a direct contact
between the customer & the
organization has taken place.)
The Line of Visibility
It separates what the contact employees
do onstage from they do backstage.
The Line of Internal Interaction
It separates contact employees activities
from those of other services support
activities and people.
Building a Blueprint
Step 1 Identify the process to be blueprinted
Step 2 Identify the customer or segment
Step 3 Map the process from customers point
of view
Step 4 Map contact employees actions,
onstage & backstage actions.
Step 5 Link customers and contact
employees activities to support functions.
Step 6 Add evidence of service at each
customer action step.
