ALIGNING STRATEGY, SERVICE DESIGN, AND STANDARDS

CUSTOMER

COMPANY

GAP 2

Customer-Driven Service Designs and

Standards

Company Perceptions of

Consumer Expectations

Provider GAP 2

Closing Gap 2

Service Development and Design

Customer-defined service standards

Physical Evidence and Servicescape

Customer Defined Customer Defined Service StandardsService Standards

Not everything that counts can be counted;

And not everything that can be counted counts.

FedEx sets std.s thru SQI

Unforgiving internal performance measurement

Hierarchy of Horrors Ignoring percentages And focusing on

actual complaints Weekly quality report 100% satisfaction with every

transaction

12-item statistical SQI Right day late deliveries 1 Wrong day late deliveries 5 Traces not answered 1 Complaints reopened 5 Missing proofs of delivery 1 Invoice adjustments 1 Missed pickups 10 Damaged packages 10 Lost packages 10 Aircraft delay 5 Overgoods 5 Abandoned calls 1 International 1

Factors necessary for appropriate service standards

Standardization of service behaviour and actions

Formal service targets and goals

Customer defined standards

Standardization of Services

Two viewpoints– Not possible as customization is

important• Less empowered employees.• Makes service impersonal.

– Almost all service tasks are routine• More productive uses of employee resources.

How much and when is the question

Industrialization of services

Three form of standardization of services

Using technology for personal contact.

Improvement in work method Combination of these two.

Formal service targets and goals

Establishing formal standards to guide employees.

Specific , quantified , measurable service goals

Specific at employee level Specific at departmental level

Customer defined standards

Company defined standards are there for achieving company goals.

May not be able to close the GAP 2 Need for -Operational standards

based on pivotal customer requirements that are visible to and measured by customers.

Two types of standards

Hard customer defined standards– Things that can be counted, timed or

observed through audits.• Reliability• Responsiveness

Soft customer defined standards– Opinion based measures that can not be

observed and must be collected by talking to the customers, employees or others.

Tolerances to standards may vary

Hard & Soft std.s at Ford Motor Company

Appointment available within one day of customer’s requested service day.

Write-up begins within four minutes or less

Service needs are courteously identified, accurately recorded on repair order and verified with customer.

Vehicle services right on the first visit. Service status provided within one minute

of inquiry. Vehicle ready at agreed-upon time Thorough explanation given of work done,

coverage and charges.

One time fixes

Do away with standards Technology , policy or procedures

changes that when instituted address customer requirements.

Mostly through use of technology– Information databases , automated

transactions

Understanding Service encounter sequence

Understand the service blueprint Customer overall service quality

evaluation is the accumulation of evaluations of multiple service experiences.

Overall average performance Good start vs. Good finish

Service Encounter Customer Requirements Measurements

ServiceQuality

Customer-Driven standards and Measurements Exercise

AT&T’s Process Map for Measurements

Reliability

(40%)Easy To Use

(20%)Features / Functions

(40%)

Knowledge

(30%)Responsive

(25%)Follow-Up

(10%)

Delivery Interval Meets Needs

(30%)Does Not Break

(25%)Installed When Promised

(10%)

No Repeat Trouble

(30%)Fixed Fast

(25%)Kept Informed

(10%)

Accuracy, No Surprise

(45%)Resolve On First Call

(35%)Easy To Understand

(10%)

Business Process Customer Need Internal Metric30% Product

30% Sales

10% Installation

15% Repair

15% Billing

% Repair Call% Calls for HelpFunctional Performance Test

Supervisor Observations% Proposal Made on Time% Follow Up Made

Average Order Interval% Repair Reports% Installed On Due Date

% Repeat ReportsAverage Speed Of Repair% Customers Informed

% Billing Inquiries% Resolved First Call% Billing Inquiries

TotalQuality

Source: AT&T General Business Systems

Expressing customer requirements

Need to convert customer requirements into specific behaviours and action.

Different levels of abstraction/concreteness– General customer requirement

• Satisfaction, value , relationship– Abstract dimensions of service quality

• Reliability , responsiveness, assurances– Attributes( defining dimensions)

• Delivers on time– Specific actions and behaviour

• Deliveries in 48 hours

Satisfaction ValueRelationship Solution Provider

Reliability EmpathyAssurance TangiblesResponsiveness Price

Delivers on TimeReturns Calls QuicklyKnows My Industry

Delivers by Weds 11/4Returns Calls in 2 HrsKnows Strengths of My Competitors

Requirements:Abstract

Concrete

Dig Deeper

Dig Deeper

Dig Deeper

Diagnosticity:Low

High

General Concepts

Dimensions

Behaviors and Actions

Attributes

Getting to Actionable Steps

Measurements of Behaviors and Actions

Hard Measurements– Consists of accounts, audit or timed

actions – ex. Missing proof of delivery, wrong day delivery, overgoods

Soft Measurements– Customer opinions about whether

perf. Met the std.s estd. – trailer calls, relationship surveys

Process For Developing Customer Defined Standards

Step 1- Identify Existing Or Desired Service Encounter Sequence.

Step 2- Translate Customer Expectation Into Behaviours And Action For Each Service Encounter.

Step 3- Select Behaviours/Actions For Standards.

Step 4 –Set Hard Or Soft Standards.

Select Behaviors/Actions for Standards

Important Criteria for creation of standards– Are based on behaviors and actions that are

very important to the customers– Cover the performance that needs to be

improved or maintained– Cover behaviors & actions employees can

improve– Are accepted by employees– Are predictive rather than reactive– Are challenging but realistic

Step 5- Develop Feedback Mechanism.

Step 6 – Establish Measures And Target Levels.

Step 7- Track Measures Against Standards.

Step 8- Provide Feedback About Performance To Employees.

Step 9 – Update Target Levels And Measures.

Importance/Performance Matrix

HIGH

HIGH

Performance

10.0

8.0

7.0

9.0

LOW

8.0 9.0 10.0

Importance

Improve Maintain

Refocus

Service Performance Indices Comprehensive composites of the

most critical performance standards. Various steps involved are

– Understanding the most important requirement of the customer

– Linking these requirements to tangible and measurable aspects of service provision

– Using the feedback from these indices to identify and improve service problems

Feedback used for reward and recognition

PHYSICAL EVIDENCEPHYSICAL EVIDENCE

AND

THE SERVICESCAPE

Physical evidence

Communicating service quality attributes

Setting customer expectations Creating service experience

Organization’s physical facility – SERVICESCAPE

Coffee shop

Music store

Elements of Physical Evidence

Servicescape Other tangibles Facility exterior Exterior design Signage Parking Landscape Surrounding environment

Facility interior Interior design Equipment Signage Layout Air quality/temperature

Business cards Stationery Billing statements Reports Employee dress Uniforms Brochures Web pages Virtual servicescape

Types of Sericescapes

Servicescape use Complexity of servicescape Typology implications

Typology of Service Organizations Based on Variations in Form and Use

of the ServicescapeComplexity of the servicescape evidence

Servicescapeusage

Elaborate Lean

Self-service(customer only)

Golf LandSurf 'n' Splash

ATMTicketronPost office kioskInternet servicesExpress mail drop-off

Interpersonalservices(both customer andemployeee)

HotelRestaurantsHealth clinicHospitalBankAirlineSchool

Dry cleanerHot dog standHair salon

Remote service(employee only)

Telephone companyInsurance companyUtilityMany professional services

Telephone mail-order deskAutomated voice-messaging-based services

Roles of the servicescape

Package Facilitator Socializer Differentiator

A Framework for Understanding Environment-User Relationships in Service Organizations

Approaches for understanding servicescape effects

Environment surveys Direct observation Experiments Photographic blueprints

Guidelines for physical evidence strategy

Recognize the strategic impact of PE Map the PE of service Clarify roles of the servicescape Assess and identify PE opportunities Be prepared to update and

modernize the evidence Work cross-functionally