Chapter 8:

Designing and
Managing
Service Processes

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 1
 Overview of Chapter 8

1. Blueprinting Services to Create Valued

Experiences and Productive Operations*

2. Service Process Redesign

3. The Customer as Co-Producer*

4. Dysfunctional Customer Behavior

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 2
 1. Blueprinting Services to
Create Valued Experiences and
Productive Operations

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 3
 Developing a Blueprint

1. Identify key activities in creating and delivering

service

2. Define big picture before drilling down to obtain

a higher level of detail

3. Distinguish between front stage and backstage

4. Clarify interactions between customers and staff, and

support by backstage activities and systems

5. Identify potential fail points; take preventive

measures; prepare contingency

6. Develop standards for execution of each activity

times for task completion, maximum wait times, and
scripts to guide interactions between employees and
customers

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 4
 Key Components of a Service Blueprint
(Figure 8.1: pp. 236-239)

1. Define standards for front-stage activities

2. Specify physical evidence
3. Identify principal customer actions
4. Line of interaction (customers and front-stage
personnel)
5. Front-stage 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
- Set service standards and do failure-proofing*
-Identify fail points and risks of excessive waits*
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 5
 Blueprinting the Restaurant
Experience: A Three Act Performance
Act 1: Prologue and Introductory Scenes*

Act 2: Delivery of Core Product

Cocktails, seating, order food and wine, wine service
Potential fail points: Menu information complete? Menu intelligible?
Everything on the menu actually available?
Mistakes in transmitting information a common cause of quality failure
e.g. bad handwriting; poor verbal communication
Customers may not only evaluate quality of food and drink, but how
promptly it is served, serving staff attitudes, or style of service

Act 3: The Drama Concludes

Remaining actions should move quickly and smoothly, with no surprises at
the end
Customer expectations: Accurate, intelligible and prompt bill, payment
handled politely, guest are thanked for their patronage

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 6
 Blueprinting the Restaurant Experience:
Act 1 (Fig 8.1)
Timeline Act 1
Service Standards W
W
and Scripts Make W Valet
Coat Room
Stage

Physical
Reservation Parking
Evidence Line of
interaction
Greet
Front -

Accept Greet, take Contact person

customer, coat, coat
reservation take car keys
(visible actions)
checks
Line of
visibility
Check Hang coat with
- Stage

Take car to Contact person

availability, visible check (invisible
insert booking parking lot numbers actions)
Line of
internal
Back

Maintain Maintain Maintain physical

interaction
reservation (or rent) facilities/
Support system facilities equipment
Processes

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 7
 Setting Service Standards

1. Service providers should design standards for each step sufficiently

high to satisfy and even delight customers
1. Standards may include time parameters, script for a technically
correct performance, and prescriptions for appropriate style and
demeanor
2. Must be expressed in ways that permit objective measurement
2. First impression is important as it affects customers evaluations of
quality during later stages of service delivery
1. Research by Marriott Hotels: four of five top factors contributing
to customer loyalty come into play during the first 10 minutes
of service delivery
3. Customer perceptions of service experiences tend to be cumulative
4. For low-contact service, a single failure committed front stage is
relatively more serious than in high-contact service
1. Viewed more seriously because there are fewer subsequent
opportunities to create a favorable impression

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 8
 Improving Reliability of Processes by
Failure Proofing

1. Analysis of reasons for failure often reveals opportunities

for failure proofing to
2. Need fail-safe methods for both employees and customers
3. Errors include:
1. Treatment errorshuman failures during contact with customer
1. e.g., lack of courteous or professional behavior, failure to
acknowledge, listen to, or react appropriately to the customer
2. Tangible errorsfailures in physical elements of service
1. e.g., noise pollution, improper standards for cleaning of facilities and
uniforms, equipment breakdown
4. Goal of fail-safe procedures is to prevent errors such as:
1. Performing tasks incorrectly, in the wrong order, too slowly
2. Doing work that wasnt requested in the first place

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 9
 2. Redesigning Service Processes

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 10
 Why Redesign? (1)

Institutions are like steel beamsthey tend to

rust. What was once smooth and shiny and nice
tends to become rusty.

Mitchell T. Rabkin MD,

formerly president of
Bostons Beth Israel Hospital

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 11
 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 redundancy
- High ratio of checking or control activities to value-adding
activities, increased exception processing
- Customer complaints about inconvenient and unnecessary
procedures
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 12
 Process Redesign: Approaches and
Potential Benefits (1) (Table 8.1)
Eliminating non-value-adding steps
Streamline front-end and back-end processes of services with goal of
focusing on benefit-producing part of service encounter
Eliminate non-value-adding steps
Improve efficiency
More customized service
Differentiate company
Delivering direct service
Bring service to customers instead of bringing customers to provider
Improve convenience for customers
Productivity can be improved if companies can eliminate expensive
retail locations
Increase customer base

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 13
 Process Redesign: Approaches and
Potential Benefits (2) (Table 8.1)
Shifting to self-service
Increase in productivity and service quality
Lower costs and perhaps prices
Enhance technology reputation
Greater convenience
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 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 14
 Process Redesign: Approaches and
Potential Benefits (3) (Table 8.1)

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 front-line staff
Cultivate interest in customers
Differentiate company

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 15
 3. The Customer as Co-Producer*

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 16
 Levels of Customer Participation

Three Levels
LowEmployees and systems do all the work
- Often involves standardized service
MediumCustomer inputs required to assist provider
- Provide needed information and instructions
- Make some personal effort; share physical possessions
HighCustomer works actively with provider to co-produce
the service
- Service cannot be created without customers active
participation
- Customer can jeopardize quality of service outcome
(e.g., weight loss, marriage counseling)
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 17
 Self-Service Technologies (SSTs)*

Ultimate form of customer involvement

Customers undertake specific activities using facilities or systems provided
by service supplier
Customers time and effort replace those of employees

e.g. Internet-based services, ATMs, self-service gasoline pumps

Information-based services lend selves particularly well to SSTs
Used in both supplementary services and delivery of core product

e.g. eBayno human auctioneer needed between sellers and buyers

Many companies and government organizations seek to divert customers
from employee contact to Internet-based self-service
Economic trade-off between declining cost of these self-service systems
and rising cost of labor
Challenge: Getting customers to try this technology

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 18
 Psychological Factors in Customer
Co-Production
Economic rationale of self-service
Productivity gains and cost savings result when customers take over
work previously performed by employees
Lower prices, reflecting lower costs, induce customer to
use SSTs
Critical to understand how consumers decide between
using an SST option and relying on a human provider
SSTs present both advantages and disadvantages
Benefits: Time and cost savings, flexibility, convenience of location,
greater control over service delivery, and a higher perceived level
of customization
Disadvantages: Anxiety and stress experienced by customers who
are uncomfortable with using them

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 19
 What Aspects of SSTs Please or Annoy
Customers?
People love SSTs when
SST machines are conveniently located and accessible 24/7often as
close as nearest computer!
Obtaining detailed information and completing transactions can be
done faster than through face-to-face or telephone contact
People in awe of what technology can do for them when it works well
People hate SSTs when
SSTs failsystem is down, PIN numbers not accepted, etc
They mess upforgetting passwords, failing to provide information as
requested, simply hitting wrong buttons
Key weakness of SSTs: Too few incorporate service recovery systems
Customers still forced to make telephone calls or personal visits
Blame service provider for not providing more user-friendly system

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 20
 HSBC: The worlds local bank
(Fig 8.2)

Source: Courtesy HSBC

Global site brought to customers local computer

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 21
 Putting SSTs to Test by
Asking a Few Simple Questions

Does the SST work reliably?

Firms must ensure that SSTs are dependable and
user-friendly

Is the SST better than interpersonal alternatives?

Customers will stick to conventional methods if SST
doesnt create benefits for them

If it fails, what systems are in place to recover?

Always provide systems, structures, and technologies
that will enable prompt service recovery when things
go wrong

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 22
 Customers as Partial Employees
Customers can influence productivity and quality of service processes
and outputs
Customers who are offered opportunities to participate at active level
are more likely to be satisfied
However, customers cause one-third of all service problems
Difficult to recover from instances of customer failure
Focus on preventing customer failure by collecting data on problem
occurrence, analyzing root causes, and establishing preventive solutions
Managing customers as employees helps to avoid customer failures
Conduct job analysis of customers present role in businesscompare
against role that firm would like customers to play
Educate customers on how expected to perform and skills needed
Motivate customers by ensuring that rewarded if they perform well
Appraise customers performance regularly

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 23
 4. Dysfunctional Customer Behavior

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 24
 Addressing the Challenge of
Jaycustomers
Jaycustomer: A customer who behaves in a
thoughtless or abusive fashion, causing
problems for the firm, its employees, and other
customers
More potential for mischief in service
businesses, especially when many customers are
present
Divergent views on jaycustomers
The customer is king and can do no wrong.
Marketplace is overpopulated with nasty
people who cannot be trusted to behave in
ways that self-respecting services firms should
expect and require
No organization wants an ongoing relationship
with an abusive customer

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 25
 Six Types of Jaycustomers:
1. The Thief

No intention of payingsets out to steal or pay less

Services lend themselves to clever schemes to avoid
payment
For example: bypassing electricity meters, circumventing
TV cables, riding free on public transportation
Firms must take preventive actions against thieves, but
not alienate honest customers by degrading their service
experience
Make allowances for honest but absent-minded customers

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 26
 Six Types of Jaycustomers:
2. The Rulebreaker

Many services need to establish rules to guide customers

safely through the service encounter
Government agencies may impose regulations that
service suppliers must enforce
Some rules protect other customers from dangerous
behavior
For example: Vail and Beaver Creek, Coloradoski
patrollers issue warnings to reckless skiers by attaching
orange stickers on their lift tickets
Ensure company rules are necessary, not bureaucratic

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 27
 Six Types of Jaycustomers:
3. The Belligerent
Expresses resentment, abuses service
employees verbally or even physically
Confrontations between customers
and service employees can easily
escalate
Firms should ensure employees have
skills to deal with difficult situations
In a public environment, priority is
to remove person from other
customers
May be better to make a public
stand on behalf of employees than
conceal for fear of bad publicity

Confrontations between Customers and Service Employees Can Easily Escalate

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 28
 Six Types Of Jaycustomers:
4&5: Family Feuders and Vandals
Family Feuders: People who get into arguments with
other customersoften members of their own family
The Vandal:
Service vandalism includes pouring soft drinks into bank
cash machines; slashing bus seats, breaking hotel
furniture
Bored and drunk young people are a common source of
vandalism
Unhappy customers who feel mistreated by service
providers take revenge
Prevention is the best cure

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 29
 Six Types Of Jaycustomers:
6. The Deadbeat

Customers who fail to pay (as distinct from thieves

who never intended to pay in the first place)
Preventive action is better than curefor example:
insisting on prepayment; asking for credit card number
when order is taken
Customers may have good reasons for not paying
- If the client's problems are only temporary ones,
consider long-term value of maintaining the
relationship
For an industry-specific categorization, see Research
Insights 8.1: Categorizing Jaycustomers in Hotels,
Restaurants, and Bars
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 30
 Consequences of Dysfunctional
Customer Behavior
Consequences for staff working front stage
Abused employees may find their emotions negatively affected and/or
suffer long-term psychological damage
Productivity and quality may suffer
Consequences for customers can be both negative and positive
Exposure to unpleasant incidents can spoil consumption experience;
some customers may even terminate their use of the service
Bad behavior can be contagious
But customers may rally to support of abused employee
Consequences for organization
Unmotivated employees may work less effectively
Abused employees may take medical leave
Direct financial costs of restoring damaged property, legal fees, paying
fraudulent claims

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 8 - 31