Managing Customer Satisfaction

1. Managing Customer Satisfaction Week 5 Service Processes

2. Service processes: objectives • To define service processes and their importance • To understand the nature of service processes • To provide some tools to help ‘engineer’ service processes • To explain how to reposition service processes

3. Process design: Introduction • Process design describes and prescribes the procedures: • To be followed in service delivery • How these procedures interact with other resources such as materials, equipment • How service activities (sub-processes) link together to create the whole interrelated chain of processes to deliver value to customers and the organization

4. Service processes & their importance • Excellent service = satisfies the customer & meets the strategic intention of the organization • Interrelates processes, departments, people, decisions and activities = glue • Must manage cost & quality targets from end-to-end (e2e) • Holiday example

5. Front office processes • Front office processes deal directly with the customer and may be visible to them • Customer roles vary • Well defined – adding money to your cell phone • Service depends on the skill of the provider – lawyer • Trend: Shift from provider to customer • Provide a clear process – elong for travel arrangements • Common problem – customers are unpredictable

6. Back office processes • Back office processes operate at a distance from the customer and are largely invisible to them • Shift to & from back office operations • Consolidation of common processes • Reduces immediate need to respond to customer requests • Take advantage of technology (photo processing)

7. Simplified service processes

8. Changing front office and back office activities

9. Service experience • Service experience • Face-to-face • Telephone • E-service - Internet based & other remote (ATM) • Risks • Financial risk may be difficult for the customer to assess – used car • Physical risk – holiday in Thailand (political unrest) • Psychological risk – anxiety

10. Customer perceived risk and social interaction

11. Customer variables • Customer mindset – logging a complaint or going to Disneyland • Customer mood • Personality clashes

12. The servicescape • Servicescape describes the physical and information surroundings of the service operation • The environment for both staff (front & back office) and customers • Servicescape can: • Affect the customer’s experience • Influence customer behavior • Influence employees

13. The nature of service processing • Processes need to be engineered and controlled • Three questions • How much service product variety does the process have to deal with? • What type of process is it, in terms of volume & variety that it can handle • Where is the value-added for the customer?

14. Service process mix • Runners – standard activities, high volume • Often predictable (bank balance inquiry) • Lend themselves to efficient operations thru automation • Repeaters – more complex standard activities, less frequent. May be a result of growth (new bank services, BOC Wealth Management) • Difficult to automate, uses more resources • Learning curve involved thru repeat occurrences

15. Service process mix • Strangers – non-standard activities that usually migrate to repeaters or runners. Least efficient. • Requires more flexibility and adaptability • Managing runners, repeaters, strangers • See Table 6.1. pg. 186 • Remember the importance of variety and volume (Week 1)

16. Types of process: volume & variety

17. Capability processes • Flexible to change service outcomes – managing strangers vs. runners • Professional services – lawyers • Creative services – advertising agency • Consultants • Offer solutions to their customers • Central task: Must maintain their skill base

18. Capability processes • Capability process characteristics: • Particular skill or knowledge base • Knowledge/skill may reside with an individual (lost if s/he leaves the organization) • Few processes are documented • Little consistency in approaching tasks • R&D is centered on the individual’s capability • Move down the diagonal as standardization increases • Tend to be service partnerships or projects • Strangers and repeaters dominate activities

19. Commodity processes • High volume services – rigid service concept • competes on consistent quality and prices • Fast food restaurants • Appliance repair • Computer repair • Central task • Maintain consistency of service • Customers feel as if they are individuals • Manage resource productivity

20. Commodity processes • Commodity process characteristics: • Tightly controlled processes • Customer-facing staff are junior staff and poorly paid • Focused training • Deals well with changes in demand • Activities characterized by runners with an increase in repeaters as differentiation increases through mass customization • Central task: create a planned environment for efficient and consistent delivery of service activities

21. Profiling processes • Capability-commodity profiles assist managers in locating their existing processes and determine if action needs to be taken

22. Motor (Auto) insurance profile

23. Motor (Auto) insurance profile • The direct operation should focus on fast response and low cost • Broker operations should focus on flexibility and personal service

24. Depicting different surgery processes

25. Key decision area matrix (KDAM) • A means of categorizing service processes • Customer involvement – the degree to which the customer is involved in the service delivery process • Customer contact (being a hotel guest) • Customer involvement (IKEA)

26. Key decision area matrix (KDAM)

27. Key decision area matrix (KDAM) • Large organizations may include all 4 types • Service factory • high volume, low variation • Runners and occasionally repeaters • Low consumer involvement (McD’s) • Do-it-yourself • high volume, low variation • Runners and occasionally repeaters • High consumer involvement (Amazon.com)

28. Key decision area matrix (KDAM) • Service projects • Repeaters & strangers • Limited customer involvement • Close links between front & back office (market research) • Service partnership • Repeaters & strangers • Highly customized with high customer involvement • Co-development (client and provider) • Management of front-back office link critical (managing investment portfolios)

29. Engineering service processes • “The key to good service design is about taking a customer perspective and understanding the whole service process” (Johnston & Clark, pg. 198) • Tools for engineering service • Process mapping (FO&BO) • Walk-through audits (FO) • Service transaction analysis (FO)

30. Process mapping • Charting a service process in order to assist in the evaluation, design & development of processes • Capture all activities & relationships – time consuming • Results • Shared view • Understanding of each role in the e2e process • Mapping tools

31. Process mapping symbols

32. Loan application process map

33. Analysis of process maps • Does the process support the strategic intentions of the operation? • Does each activity provide added value? • Is the process ‘in control’? • What targets and measures are in place? • Who ‘owns’ the process? • Is the level of visibility appropriate? • Is the process efficient? • How can the process be improved?

34. Walk-through audits

35. Walk-through audits • Undertaken by staff • Key – choosing what to assess • Choose the elements critical to the customer

36. Service transactions analysis (STA) • Combines service concept, process, transaction quality assessment, service ‘messages’ & customer emotions • Five stages • Agreement on service concept • Walk through of the actual process • Interpretation of customer evaluation • Symbols for visible profile of transaction outcome (+, 0, -) • Use form to discuss improvements • STA seeks to identify reasons for outcomes so that appropriate actions may be taken

37. Example of STA for an estate agent

38. Controlling service processes • Objective – consistent outcomes for customers: reliability • Two aspects of control • Assessing capabilities • Quality systems such as ISO 9000

39. Capable processes • Deming – evidence that quality is built in using statistical process control (SPC) methodology • Distribution sampling • Statistical process control chart • Used to control and improve runners in high volume, standard processes

40. A capable process and out-of-control process

41. Statistical process control chart

42. Quality systems • ISO 9000, etc. develop standard operating procedures (SOP) that can be audited based on customer requirements and market conditions • Advantages • Develops a disciplined approach to controlling critical elements of service delivery • External auditing awards improves morale and reputation • Includes a formal review process that results in improvements • Opportunities for re-design before the formal audit

43. Repositioning service processes • Pressures for change (see next slide) • Organizations must manage the gap between what is marketed and what is delivered • Ways to reposition service processes • Building capability through systems & training • Building capability through incremental development • Moving to a commodity by constraining flexible resources (chef to McD burger flipper) • Moving to a commodity through investment in process capability

44. Managing the gap between marketing and operations • Customer service departments • Named personal contact • Account managers • Change the nature of the service (DIY over the Internet) • Change customer expectations

45. Managing the gap between marketing and operations

46. Pressure to change

47. Strategies for change