SERVICE

DESIGN
Service-Dominant Logic (SDL)
2
Goods-Dominant logic to Service-Dominant logic

Value Cocreation

Customer Journey and Service Design

Design Thinking methods to aid Service Design

Development of Strategic Service Vision (SSV)

Data Envelopment Analysis

NSD cycle

Service Blueprinting

Elements of Service Delivery System

Service Attributes –Car Repair

Convenience Reliability Responsiveness Time

Was the service Was the problem Were customer How long did the
center conveniently fixed and will the service personnel customer have to
“fix” last? willing and able to wait?
located?
answer questions?

Assurance Courtesy Tangibles Consistency

Did the customer Were customer Were the facilities Was the service
service personnel service personnel & clean? Were
quality good, and
seem knowledgeable the cashier friendly personnel neat?
was it consistent
about the repair? and courteous? with previous visits?
Service System Design
All service design factors should relate to the service
strategy and concept. Generally, the key factors include
• Location • Standardization of service offering
• Facility layout • Customer contact time
• Product design • Frontline personnel discretion
• Scheduling • Sales opportunity, and
• Worker skills • Customer participation
• Quality control and measures
• Time standards Mexico emerges as new hub / hotspot for
• Demand/capacity planning Indian IT companies’ operations / CXM

• Industrialization level geographical proximity and cultural compatibility

to both the US and Canada.
Service Design Factors
SERVICE CONCEPT
A service The organising idea: The essence of the service bought or used by the
concept is a customer (Understanding the differences between customer groups is key
to success)
shared
understanding The service experience: The customer’s direct experience of the service
of the nature process, which concerns the way the service provider deals with the
of the service customer (Treatment in a hospital - Body part / Human Being)
provided and The service outcome: The result for the customer of the service (output
received, from surgery is the replaced hip, whereas the desired outcome for the
which should patient will be a working hip)
encapsulate The service operation: The way in which the service will be delivered
information
about:
The value of the service: The benefit that customers perceive to be
inherent in the service weighed against the cost of that service
Developing New Service
How to compete in an Airline business?
One is to think that the business is merely performing a function
transporting people from A to B, on time and at the lowest possible
price. That’s the commodity mind set, thinking of an airline as the bus
of the skies.

Another way to compete is to go beyond the function and compete on the

basis of providing an experience. We want to make the process of flying
from A to B as effortless and pleasant as possible. Anyone can fly
airplanes, but few organizations can excel in serving people. Because it’s a
competence that’s hard to build and also hard for competitors to match.
Lord Marshall, a past chairman of British Airways
GDL to SDL
Goods-Dominant Logic to Service-Dominant Logic

Customer Participation | Simultaneity | Perishability | Intangibility | Heterogeneity

– Non-transferrable ownership
Service Package
Supporting
Facility

Explicit Services
SERVICE EXPERIENCE
Implicit Services
Information Facilitating Goods
Service System Design Tools

–Service Blueprinting
–Focus on moments of truth

–Utility-based Service Design

–Perceived utility to customer
Service Blueprint for Espresso Coffee Shop
 SERVICE BLUEPRINT
Physical Emergency Waiting Registration Wait Area Consultation Pharmacy Pharmacy &
Triage Room Bed
Evidence Dept Area Counter TV Room Wait Area Inventory

Proceed and
Want to Arrive at Get Token to Wait and get Receive Put in Wait @ Pickup Medicine.
Customer Get Assisted by Registration
see Emergency see the Called for Consultation & Observation Pharmacy. Payment Leave
Actions Triage Nurse and Payment
Doctor Dept. Triage nurse Consultation Treatment Bed Make Adjustments
Payments
Line of Visibility Decide if Senior
On-stage Doctor
Nurse Assess Patient Doctor & Pharmacy
Contact Admin Clerk Consultation Pharmacist
Patient requires Support Clerk
Person Line of Interaction and Treatment
Observation Nurse

Queue Centralized
Payment
Backstage Management healthcare Coordinating Consultants
Line of Internal System
System Database
Interaction

Support
IT Maintenance Team Pharmaceutical Suppliers
Processes
Utility
Based
Service
Design
Process Attributes
Service Quality Attribute Examples

Reliability • Service begins on time

• Accurate records and billing
• Predictable treatment Responsiveness
Responsiveness • Prompt service
• Availability (hours of operation)
• Willingness to help customers
• Ability to compensate for service breakdowns
Assurance • Employee knowledge, courtesy and confidence
• Employee competence
Empathy • Provision of caring attention to customers
• Employee approachability and sensitivity to customers’ need
Tangibles • Product characteristics:
• Specifications | Packaging
• Appearance of
• Physical facilities, Equipment, Personnel and
Communication materials
Managing Service Experiences
Experience Trends
Cocooning: Our desire to build ourselves strong and cozy nests where we can retreat from the world
and enjoy ourselves in safety and comfort. (Cooking shows or DIY Crafts)
Clanning: Our need to associate with likeminded individuals and to identify ourselves with a
particular group that shares our outlook and values. (Coffee Shops)
Fantasy adventure: Our need to seek out risk-free fantasy and adventure experiences as a break
from the mundane day-to-day activities. (Computer Games, Theme Parks)
Pleasure revenge: Another form of escape comes in the form of sensual and pleasurable activities
that provide a feeling of compensation for all of life’s struggles. (Massage Therapy and Spas).
Small indulgences: The trend toward people rewarding themselves regularly with small affordable
luxuries. (Starbuck’s latte coffee drinks, dining out, and gourmet food items)
Anchoring: This term refers to the increasing tendency for people to seek fulfillment in spiritual
values and looking back to the past to recapture what was comforting and reassuring then.
Egonomics: This reaction to the standardization imposed by the computer age manifests itself
through various avenues of self-expression and personal statements.
 The Process of Customer Experience Place where the
servicescape customer consumes
the service and
everything that the
customer interacts
bakery smells, with in that setting
misting,
lighting, and
pyrotechnics

Training / Discussion Computer Games

TV/ Circus / Theatre / Video/DVD Water Shows / Church

photos of the guest doing the activity
Marc McCluskey's Service Maturity Model
Baseline service: the focus is mainly on responding to
requests in a timely manner

Operational efficiency: the focus is on cost reduction

Customer support excellence: the focus is on efficiency

The focus is on changing the concept of service and

growing market opportunity
Selecting the Location for a Service Operation
–Location strategy is a plan that includes determining the
objectives of your company and then finding the right location
to achieve them.
–Facility location determination is a business-critical strategic
decision.
–There are several factors, which determine the location of
facility among them competition, cost and corresponding
associated effects.
–The goal of an organization is customer delight for that it
needs access to the customers at minimum possible cost.
Formulating a Location Strategy
• Facilities • Geographical proximity
• Availability of skilled workers
• Feasibility • Costs
• Logistics • Room for development
• Labor • Availability of amenities and services
• Business Area
• Community and site • Demand-Sensitive Services: Walk–up
• Trade zones Convenience – to attract customers
• Political risk through location (banks, restaurants and
retail stores.
• Governmental regulation • Delivered Services: Delivery
• Environmental regulation Convenience- to cover a geographic
• Incentives area (food delivery, package delivery,
repair service, and ambulance service)
Location Analysis Techniques
In the location factor rating system,
– Location Factor Rating Method • Factors that are important in the
– Centre of Gravity Technique location decision are identified. Each
factor is weighted from 0 to 1 to
– Load Distance Method prioritize the factor and reflects its
importance.
• A subjective score is assigned (usually
between 0 and 10) to each factor
based on its attractiveness compared
with other locations, and weighted
scores are summed.
• Decisions typically will not be made
based solely on these ratings, but they
provide a good way to organize and
rank factors.
Factor Rating Method Example
In finding a suitable location for a new bank branch, eight sites listed below are rated on a 1-10
scale on four attributes. The weighting of each attributes is in parentheses in the column
heading. What are the scores of each location? What decision (s) should be made?
Centre of Gravity Technique
Centre of Gravity Technique Example
Four hospitals located in a city are cooperating to establish a
centralized blood-bank facility to serve them all. On the x,y
coordinate grid of the city in km, the hospitals are found at the
following locations: H1=(5,10), H2=(7,6), H3=(4,2) and
H4=(16,3). The expected number of deliveries per week from the
blood bank to each hospital is estimated at 450, 1200, 300 and
1,500 respectively.
Using centre of gravity method, recommend a location for the
blood bank that will minimize the total distance traveled.
Load-Distance Technique
– A variation of the Centre of Gravity Method. Instead of finding a single location this
method identifies load distance for each of the identified sites.
 Load-Distance Technique Example
XYZ company wants to evaluate three different sites for its new distribution centre
relative to the four suppliers. The coordinates of the three sites under consideration are
as follows. Location coordinates of suppliers and expected loads are A(200,200); B(100,
500); C(250, 600); D(500,300). A = 75, B = 105, C = 135, D = 60
– Site 1: x1 = 360, y1 = 180
– Site 2: x2 = 420, y2 = 450
– Site 3: x3 = 250, y3 = 400

Since site 3 has the lowest load-distance value, it

would be assumed that this location would also
minimize transportation costs
Outsourcing
– Outsourcing refers to hiring another company to perform a task that is
currently performed internally. The vast bulk of outsourcing is done
“onshore,” so it is a separate decision from offshoring.
– Typically, outsourced activities are deemed not central to the mission of a
company, or activities that outside vendors can perform more efficiently,
with better response time, and/or at better quality.
– For example, many firms outsource peripheral functions such as their
cafeterias, copy centers, trucking, building maintenance, payroll, etc. These
activities are usually seen as not being the core, central activities of the firm
doing the outsourcing.
– Further, it is reasonable to assume that a firm that runs, say, hundreds of
cafeterias as their main business could run a cafeteria more effectively than
a firm that only runs one cafeteria, where the cafeteria is merely a side
business.
Risks and Benefits of Outsourcing
Benefits Risks

Contract Appropriateness
Access to expertise
Outsource Firm (solvency / strikes)

Information Privacy
Pooling effect on variability
Competitive Advantage

Lower Costs Future Pricing

Loss of Firm knowledge / career path /

Higher Quality
Customer Empathy / identification
 Offshoring
Offshoring is a decision independent from outsourcing, but
highly intertwined with decoupling. Offshoring can be defined as
performing work for customers in one country in a different
country. The offshored unit can be either “captive” (owned by
the same firm that did the work onshore) or outsourced.

For example, General Electric, American Express, British Airways,

Swissair and many other firms have captive call centers in India
The workers in India handle callers from the United States
(offshoring) but are employees of the American firm.