Minder Chen, Ph.D. Associate Professor of MIS CSU Channel Islands Minder.Chen@CSUCI.EDU

1. Service Innovation & Customer Relationship Management Minder Chen, Ph.D. Associate Professor of MIS CSU Channel Islands Minder.Chen@CSUCI.EDU

2. Human Activities: Sociotechnical System Evolution Estimated world (pre-1800) and then U.S. Labor Percentages by Sector Estimations based on Porat, M. (1977) Info Economy: Definitions and Measurement

3. SSME (Service Sciences, Management, & Engineering) Because the world is a giant service system. Top Ten Nations by Labor Force Size (about 50% of world labor in just 10 nations) A = Agriculture, G = Goods, S = Services 2004 2004 United States (A) Agriculture: Value from harvesting nature (G) Goods: Value from making products (S) Services: Value from enhancing the capabilities of things (customizing, distributing, etc.) and interactions between things The largest labor force migration in human history is underway, driven by global communications, business and technology growth, urbanization and low cost labor.

4. Service Characteristics • A service is a deed, a performance, a process, an effort. • What is being bought is intangible. • Services are produced and consumed almost simultaneously. Services in principle cannot be inventories. (No inventory) • Customers are involved in the production of the services. (Co-production) • Manufacturing firms also have a service component of their own. • Instant delivery and custom design (personalization) are both services.

5. Distinguishing services from goods • Inseparability • Services are created and consumed at the same time • Services cannot be inventoried • Demand fluctuations cannot be solved by inventory processes • Quality control cannot be achieved before consumption • Consideration: Does the ability to tailor and customize goods to the customers’ demands and preferences mean that these goods also have an inseparability characteristic? • Heterogeneity • From the client’s perspective, there is typically a wide variation in service offerings • Personalization of services increases their heterogeneous nature • Perceived quality-of-service varies from one client to the next • Consideration: Can a homogeneous perception of quality due to customer preference idiosyncrasies (or due to customization) also benefit the goods manufacturer?

6. Distinguishing services from goods • Intangibility • Services are ideas and concepts that are part of a process • The client typically relies on the service providers’ reputation and the trust they have with them to help predict quality-of-service and make service choices • Regulations and governance are means to assuring some acceptable level of quality-of-service • Consideration: Do most services processes involve some goods? • Perishability (No inventory) • Any service capacity that goes unused is perished • Services cannot be stored so that when not used to maximum capacity the service provider is losing opportunities • Service capability estimation and planning are key aspects for service management • Consideration: Do clients who participate in some service process acquire knowledge which represents part of the stored service’s value? What might the impact be? • Co-produced

7. Industry vs. Services: A Matter of Degree

8. Services: The Front-stage Experience manufacturing

9. Service Layering • Pure service: Legal service, barber shop • IT-enabled Service/Self service: Google for information search, eBay for online auction services, WebMD for online health information • IT Services: IT outsourcing service provider (IBM Global Service), on-demand data center (EDS), on-demand computing (IBM) • Service-wrapped IT products: iTune and iPod; GM OnStar (Emergency service + remote diagnosis & sensing + GPS & Navigation) • Manufacturing services: IC design houses, TSMC foundry service • Pure manufacturing: Manufacturing of commodity products Source: Minder Chen, 2007

10. Products vs. Services • Products can be seen as the physical embodiment of the service provided. • Cars • provide comfortable transportation services • Televisions • deliver entertainment • Cosmetics • offer beatification services • Cameras • provides services for wonderful memory

11. OnStar Service from GM OnStar By GM | OnStar.com, Car Safety Device and Vehicle Security System http://www.onstar.com/us_english/jsp/index.jsp Screen clipping taken: 2007/3/6, 上午07:56

12. iPod and iTune Apple - iPod + iTunes, http://www.apple.com/itunes/, Screen clipping taken: 2007/3/6, 08:02

13. Apple Stores

14. Experience Economic: Build-A-Bear Workshop http://www.buildabear.com/aboutus/ourcompany/process.aspx

15. Computing Clouds: Amazon Web Services Amazon Web Services Developer Connection : AWS Solutions Catalog http://solutions.amazonwebservices.com/connect/index.jspa Screen clipping taken: 2007/3/6, 上午08:08

16. More T-shaped People to work in, study, and innovate service systems Engineering (Technology) Management (Business) Social Science (People) Slide by Jean Paul Jacob

17. Which Has More Value? Nike provide service to distribute comfortable shoes and an imagination (90% value) A factory in Indonesia produces shoes (10% value) Apple offers iPhones for better communication and entertainment (85% value) Foxconn manufactures iPhones for Apple (15% value)

18. Service-Oriented Model & Architecture The service target may be the service client itself.

19. Service innovation is inherently multidisciplinary Knowledge sources driving service innovations… Business Administration and Management Technology Innovation Business Innovation Science & Engineering Global Economy & Markets Social-Organizational Innovation Demand Innovation Social Sciences (Micro-lending/Microcredit) 合板印刷 /Groupon SSME = Service Sciences, Management, and Engineering

20. Customer Relationship Management (CRM) The measures an organization takes to • identify, • select, • acquire, • work with, and • retain its customers. Acquiring new customer vs. retaining existing customer Acquisition costs vs. customer life time value

21. Objectives of CRM • The right offer (products or services) • To the right person (target marketing) • At the right time (spacing outbound calls) • Through the right channel (direct vs. channel) • Via appropriate media (phone, email, Web) • By the right employees and service partners.

22. Recency, Frequency, and Monetary Value • An organization can find its most valuable customers by using a formula that industry insiders call RFM: • How recently a customer purchased items (recency) • How frequently a customer purchases items (frequency) • How much a customer spends on each purchase (monetary value)

23. The Evolution of CRM

24. Three Types of CRM Usages

25. CRM Data

26. Operational CRM and Analytical CRM

28. Software as a Service: Salesforce.com Close More Deals Close deals faster by providing a single place for updating deal information, tracking opportunity milestones, and recording interactions. Easily analyze your sales pipeline so you can quickly identify and eliminate any bottlenecks in the sales cycle. Top 10 Deals Month-to-Date Trending Closed Business by Month Top Sales Reps Sales Marketing Open Opportunities Presentation Proposal Negotiation Won Yes No You can monitor your opportunities reports and dashboards to keep track of your top deals and prioritize your time. New Customers Support Customize Salesforce to fit your internal sales methodologies and processes, making it easier to monitor your sales pipeline. Salesforce gives your entire company a 360-degree view of your customers and facilitates collaboration across your organization, helping you build strong, lasting customer relationships. Keep an archive of your dead opportunities. Use email marketing and call downs to re-market to your archived opportunities.

29. CRM Framework

30. Highest Level Business Flow Source: Oracle.

31. Customer Life Cycle The Proof! Translate Failure into Success! Pre-Divorce/ Divorce Awareness Winback "Moments of Truth" Targeting Intensive Care Market and Customer Research and analysis Welcome Sales Processes (Including Business Partners) Account Management Getting To Know Cross-Selling, Profit Opportunities Delivery, Welcoming service and Continuous Contact Processes

32. MOT Analysis Example: A Credit Card Company • Pri to MOT • Recognition • Information gathering • Comparison • MOT • Applying for Credit Card • Receiving Credit Card • Using Credit Card • Providing Information • Changing and Upgrading • Gifts giving • Emergency Assisting • After MOT • No usage follow-up • Stop membership follow-up

33. Employees and Customers “You don’t get happy guests with unhappy employees.” J. W. Marriot

34. The Inverted Organizational Pyramid

35. Customers at the Top Steve Alter, Service system fundamentals: Work system, value chain, and life cycle, IBM SYSTEMS JOURNAL, VOL 47, NO 1, 2008.

36. Value Chain of People Business Profitability + + + Employee Value Customer Satisfaction + + Shareholder Value +

37. Service Profit Chain Source: Putting the Service-Profit Chain to Work (HBR Classic)

38. Southwest Airline Flight Attendant doing raps!! at http://www.youtube.com/watch?v=ivjybzdXVmI

39. Lifetime Value of a Customer CLTV: Customer Life Time Value = $8,000

40. Customer Loyalty From why satisfied customers defect. By Jones, T. D. & Sasser Jr., W. E. Harvard business Review, (November–December), 1995 p. 91.

42. The Wheel of Loyalty

43. The Service Triangle WOM: Words of Mouth

44. Service Value Chain Framework

45. Service blueprint components Physical evidence Customer actions Onstage Employee actions Backstage Employee actions Support processes Desktop PC and applications, ticket, records IT request, problem call to help desk, etc Line of interaction Takes call, opens ticket, visit to employee desk side Line of visibility Refers to manuals, asks for help from team Line of internal interaction Time recording, payroll, training, etc

46. Service Blueprint of Luxury Hotel

47. ServQual (Service Quality Gap) Model Customer gap Communication gap Performance Gap Listening Gap Service Design and standards gap

48. The Cycle of Success

49. Integrated Framework for CRM Strategy Multi-channel Integration Process Performance Assessment Process Strategy Development Process Value Creation Process Information Management Process

50. Integrated Framework for CRM Strategy