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Unified Service Theory
the defining characteristic of all service business is process dependency upon customer resources
service supply chains are…
bidirectional
PCN Analysis
a systematic way of studying and designing effective interactions
service process
one in which the firm’s customers each provide essential input resources to the process
non-service process
a firm can perform before receiving resources from individual customers (usually financial resources)
which firms have service processes and non-service processes
all firms
process
a sequence of steps
PCN stands for
process chain network
process chain
a sequence of process steps with an identifiable purpose
value
improve the well-being of some entities
dashed arrow
loose temporal dependency
process entity
any entity that participates in a process
operant resources
act on other resources (surgeon acts on a patient)
operand resources
they are acted upon (surgery patient)
specific beneficiary
benefit from the specific purpose of the process
generic beneficiary
receive generic resource (money) from process
process domain
the set of process steps that are initiated, led, performed, or to some degree controlled by the process entityc
co-productive
the step involves both entities as operant and/or operand resources
coproduction
producing together
different domains
independent, surrogate, direct
Creating a PCN Diagram
identify process to analyze
identify entities that participate
record the steps that mark the start and end
fill in intermediate steps
value proposition
a formal or implied proposal about why any particular entity should participate in a particular process chain
The common goal
to be happy
happiness is…
a multi-dimensional construct
contextual
exists on a continuous scale
is relative to some baseline
is an emotion
value potential
an ability to satisfy needs in the futureva
value realization
the actual satisfaction of needs in the present
value creation
a realization of value by customers
value co-creation
multiple entities are simultaneously realizing benefits
the key to sustainable process chain relationships is…
trustl
loyalty (textbook)
the propensity for one entity to make decisions that are in alignment with the other entity
what is the most reliable indicator of a sustainable process chain relationship?
loyalty
Net Present Happiness (NPH)
the perceived happiness coming out of an interaction
Assemble sandwich process design options
PI = prepackaged sandwiches in factory
PS = assemble sandwich in restaurant kitchen
DI = assemble sandwich at Subway
CS = assemble sandwich at buffet
CI = assemble sandwich at home
Factors of a process in each domain
PI = economies of scale
CI = customization
DI = process inefficiency
S = surrogate positioning (best balance of efficiency and coproduction
enabling innovation
enable customers to do things previously provided by provider
relieving innovation
firm takes over activities that previously were done by customers
servitization
manufacturing firms make a strategic process shift into related services
SPA steps
have them describe process from their perspective
have them identify parts of process they think customers would consider valuable
have them identify parts of the process that are burdensome or problematic
PI-Region 1: internal operations
characterized by efficiency and accomplishing tasks
PS-Region 2: Back office
characterized by quick and accurate response to customer requirements
DI-Region 3: personal interactions
characterized by empathetic understanding of adaption to customer needs (highest customer density)
CS-Region 4: self-service
characterized by robustness and clear dissemination of customer roles
CI-Region 5: DIY
characterized by an effective match between customer capabilities and resource features
Customer Intensity
the degree to which a provider process varies in response to customer variation
types of variation
arrival
request
capability
effort
subjective preference
learning curve theory
standard, repetitive processes experience a greater learning effect than varying processes
low customer intensity strategy
reducing the impact of customer variation on the firms’ processes
high customer intensity strategy
accommodating customer variation
Psychology of Queing
Unoccupied is worse than occupied
preprocess is worse than inprocess
anxiety is bad
uncertain is worse than known duration
unexplained is worse than explained
unfair is worse than equitable
the more valuable the service the more willing to wait
waiting alone is worse than together
time-perishable capacity
capacity for service processes cannot be preserved at times of low demand
activity based costing
the resource activity is used to determine the cost
inactivity based costing
how the cost of idle capacity is accounted for in the cost of production
independent process operates at utilization while direct interaction processes operate at _
80-90%, 10-20%
search properties
search information before purchase
experience properties
experience the service to assess quality
credence properties
customers must rely on credible sources of information
Independent processing demand
inventory can be used to match capacity to demand
high resource utilization (80-90%)
activity based costing
Interactive Processing Demand
customer inventory (queues) match demand to capacity
low resource utilization (10-20%)
inactivity based costing
custom offering
provider performs the customization
customizable offering
an offering that can be modified by the customer
value of CRM system
customers receive service that matches their needs without having to re-communicate their preferences at every interaction which increases loyalty
An effective CRM system requires
employee and customer buy in
the provider controls the process by providing…
Standard operating procedures (SOPs)
The employee controls the process by
using their own judgement for how the process should progress
the customer controls the process by
specifying how they think the process should proceed (self-service)
service-encounter triad
company/customer = efficiency vs satisfaction
customer/employee = satisfaction vs autonomy
employee/company = autonomy vs efficiency
complicatedness
number of steps in a process
divergence
uncertainty about and decision ambiguity around the execution of a process or a process step (expert judgement required)
quality
the performance of an offering relative to an expectation
robust
continues to perform as designed even when subject to customer variation
poka yoke
a failure prevention mechanism
service recovery
effort taken to redo the part of the process that failed and to rectify the damage to the customer’s attitude and loyalty
Why is service recovery not enough?
only 4% of dissatisfied customers actually complain. You can’t fix what you don’t know about
Unconditional Service Guarantee
unconditional
easy to understand and communicate
meaningful
easy and painless to invoke
easy and quick to collect on
Benefits of unconditional guarantees
forces provider to focus on customer
sets clear standards for performance
generates more feedback
forces the provider to understand why service fails
marketing benefits
quality only matters when coupled with _
value
Perils of measuring customers
subjective
intrusive
resist being measured
halo-effect
self-selected sampling
scale interpretation
feedback process
how to use (type of analysis)
how to collect (type of solicitation)
when to collect (in process vs ex post)
where it will go (channeling)
where to use feedback (4 categories)
design, marketing, operations, customer support
types of surveys
dichotomous
scale
list
field
open-ended
solicitation types
active or passive
visibility
what % of customers think a solicitation is directed at them
channeling
where the feedback goes in the company and who responds
value constellations
networks of entities configured to interact in a way to provide mutual value
Prime mover
having competencies in integrating the competencies of other firms
what types of factors are included in the lifetime value of customers
base profit
profit from increased purchases and higher balances
profit from reduced operating costs
profit from referrals
profit from price premiums
How does customer retention impact profitability
companies can boost profits by almost 100% by retaining just 5% more of their customers
What are common strategies for retaining customers
watch the door
try to win customers back
improve upon the complaints of defectors
decide which service quality investments are profitable
find your target market
use defections as a primary performance measure for employees
What are ways companies move to servitization
Stage 1: goods or services
Stage 2: goods + services
Stage 3: goods + services + support + knowledge + self service
what drives servitization
customer demand
in what ways is servitization a competitive tool
sets up barriers to competitors, 3rd parties, and customers,
is a differentiator
creates dependencyHo
w does servitization play in strategic positioning
how far into services to go?
what services to choose?
when is services too much?
when is more services too much?
think about your customers and what they want? Would adding this service add value to your offering?
Think about your core competencies. Could you provide this offering at a good quality?
what impact does emotions have on customer behavior and response
emotions influence what we remember, how we score encounters and the decisions we make
what is an emotionprint
service flowcharts that describe how customers feel during the process
where are emotionprints applicable
in processes where the emotional state of customers is directly tied to steps in the service cycle
how to create trust
professional appearance
clear communication
active involvement
smart follow-up
likability
willingness to take the high road
what are the two forms of control
behavioral: customers get to do it themselves
cognitive: can’t influence, but have knowledge of what is going on
what is the ultimate purpose of firms
mobilize customers to create value for themselves
what is the true source of competitive advantage
the ability to conceive the entire value-creating system and make it work
Note
Flashcard