When it comes to support services, the service design stage is often the most complex part of the process. As well as creating an overall concept for the service, it is also necessary to prepare ideas on how they will be marketed and make detailed calculations of the prices and costs.
Figure: Activities within the service design phase
The service concept should describe first the outcome (i.e. what the service offers, or the ‘service description’), second the process (i.e. how the desired results of the service are brought about, or the ‘process description’), and, third, the required resources (i.e. what is needed to achieve this, or the ‘resource description’).
Service concept: description of the outcomes
Services are purchased to solve a problem faced by the customer. The customers expect the service to deliver this one result, or indeed multiple results, and to provide a benefit by solving their problem. The customer is primarily interested in the result – how this is brought about is generally of secondary importance in the customer’s mind. One of the most important parts of the development phase is therefore to describe outcome of the service to be delivered to the customer. This should comprise a written description that covers all the following aspects:
- Description of the benefit to the customer,
- Description of the core service,
- Description of any additional services,
- Description of possible variants (e.g. to cater to different customer groups),
- Definition of service levels (i.e. quality standards that must be met when delivering the service).
For companies that have a large portfolio of services, it makes sense to use the same structure for all their service descriptions. This makes it very easy to create a complete catalogue of services that gives customers a clear overview of exactly which services the company offers.
Remark: One way of dealing with more complex services is to divide them up into sub-services; ideally, these services should be designed in a modular format. This can be particularly beneficial in situations where support services are offered as an all-in package that is subsequently customised, i.e. by tailoring certain elements of the package to meet each customer’s individual needs.
Service concept: description of the processes
To achieve the desired service result it is generally necessary to run through a delivery process, typically involving both the service provider and the customer. After drawing up the service description to define what the results of the service are, the next step is to define the processes that describe how the service and the associated results will actually be brought about. This process description should therefore be prepared after completing the service description.
A number of commercial software tools are available to help create process descriptions. Various overviews and comparisons of the latest process modelling tools can be found in the relevant literature.
A useful modelling method worth mentioning in this context is ‘service blueprinting,’ which was developed specifically for describing service processes. A service blueprint provides a clear and detailed depiction of the processes involved in providing a service, with particular emphasis on picturing the service from the customer’s perspective. In its simplest form, the service blueprint may simply constitute a process consisting of individual activities that are carried out in sequence.
Service blueprinting makes an important distinction between customer actions and activities carried out by the company. However, as processes become more complex, it becomes harder to maintain a clear overview of which actions are assigned to customers and which to the company. It is therefore necessary to separate the sequence of actions into two different areas that are separated by a ‘line of visibility.’ This line separates the service delivery into onstage actions (which can be seen by customers) and backstage actions (which cannot be directly seen by customers).
As a rule, the description of the service delivery process should include everything from initial customer contact (e.g. a customer enquiry) to the very last service-related activity (e.g. billing, archiving). The diagram below demonstrates how this works using the example of airport repair shop services mentioned earlier:
Figure: Service Blueprint (example)
Once the service blueprint has been created, the next step is to use this model to investigate how the process could potentially be optimised. The goal is to optimise the concept to the greatest possible degree before it reaches the implementation phase, rather than undertaking costly process improvements after the service has been launched. Practical experience has shown that this optimisation step should focus, in particular, on cutting back the following ‘time sinks’:
- Eliminating non-value creating processes,
- Reducing the number of interfaces,
- Reducing switches between different media,
- Reducing waiting times.
The process description should be designed to cover some 80 to 90 percent of cases in the service delivery process. The aim is to avoid creating overly complex process descriptions that cover even the most intricate, specialised cases, making them far too elaborate for the vast majority of cases.
Service concept: description of the resources
Once the process description has been created for a service, this can be used as a basis for drawing up a resource plan to list the resources required to deliver the service. This gives a clearer idea of which resources need to be deployed to subsequently deliver the service, particularly in terms of personnel and equipment.
Bearing in mind the key importance of ‘soft’ factors in service delivery, one of the key tasks in service development is to get a clear idea of how and where the various employees will be deployed. When developing a service it is, however, not advisable to directly link the tasks in a process to specific people, organisational positions or formal definitions of required qualifications: if a service is to be used by different organisational units, then it is important not to tie the description of the required resources to specific people or positions. Equally, providing a formal definition of required qualifications (e.g. MSc) is often not appropriate, since these are typically subject to country-specific variations and other differences that could make them unsuitable for general application in a service description.
The best way to avoid this problem is by using role concepts. A role concept describes the employee skills required to deliver the service in the form of roles. A role is defined by the experience, knowledge and abilities that are required for individual tasks. However, it says nothing about the person who will take on this role. A role is linked to skills and responsibilities. It can be assigned to multiple tasks and, equally, multiple roles may be assigned to one and the same task.
The allocation of roles to individual process steps can either be integrated into the process description that was created previously or presented in the form of a table.
Figure: Resource planning with role concepts
By avoiding directly linking specific individuals to specific tasks, role concepts create a very flexible planning tool. Skills and responsibilities can be defined from an early stage, and it becomes easier to assess qualification requirements and implement training and qualification programs. It also makes it easier to spot capacity bottlenecks earlier and take on new employees with plenty of time to spare.
In addition to human resources, a support service also requires material resources. The process of identifying, describing and planning the equipment and materials required is similar to that of creating role concepts. It generally proceeds as follows:
- Identify what equipment is required,
- Assign the equipment to individual process steps,
- Describe the equipment,
- Determine the overall equipment requirements for subsequent delivery of the service.
Once again, the allocation of equipment and materials to individual process steps can either be integrated into a process description or presented in the form of a table.
In parallel to the service concept consisting of descriptions of the outcomes, processes and resources, it is also necessary to develop a marketing concept. Above all, this means defining a marketing strategy and planning what is known as the marketing mix. The process of developing the marketing strategy should include defining target groups, positioning the new service within the overall portfolio of services, and clarifying internal responsibilities for the marketing activities. The subsequent marketing mix stage includes a definition of all the operational activities and instruments required to support the marketing of the new service.
It is advisable to focus on the ‘four Ps’ of product, price, place, and promotion when designing a marketing mix. These are broken down as follows:
Scope of performance, unique selling points, cross-selling potential, branding.
Price level, differential pricing (e.g. by location, time, quantity, special reduced rates), price bundling, cross-selling prices, terms and conditions of delivery and payment.
Distribution sites, distribution channels, sales partners, delivery capacity, delivery benefits.
Advertising strategy, advertising media (exhibitions, journals, internet, etc.), promotional materials (brochures, direct mail, events, etc.), internal communication.
If required, the development of the marketing strategy can also include the ‘four Rs’ of referrals, retention, related sales, and recovery, which means taking the following additional points into account:
- Building up and exploiting referrals,
- Developing customer acquisition and customer retention strategies,
- Bundling together related sales, and
- Introducing an active complaints management process.
The key challenge at this stage is to tailor all these activities to the new service in a way that leads to the best possible overall effect.
Calculation of prices and costs
As well as designing the service and defining the marketing mix, the service design phase also involves calculating the prices and costs of the new support service in detail.
A template developed in the T-REX project can be used for this purpose. It includes typical cost items for the development of the support service as well as examples of the fixed costs and variable costs involved in delivering the support service. If the decision is taken to include a risk analysis, it is generally a good idea to calculate figures not only for the most probable or ‘normal’ case, but also for the best case and worst case scenarios.
Another key part of this phase is to determine the effects that the new or redesigned support service will have on the product business.
The final result of the service design phase should be a clearly formulated support service concept that provides detailed operational plans to supplement the more strategic considerations contained in the business model.
What are the key activities in the service design phase?
- Describe the services
- Model the processes
- Plan the resources
- Plan the marketing
- Calculate the prices and costs