This article is part of a series on Value Creation.
Services make up about 70% of the U.S. economy. Some are services such as restaurants, beauty salons, hotels, and the like. But many are services performed by global companies traditionally thought of as product-centric – companies like Intel, Boeing, and DuPont, among many others.
So service is a key element of value creation for most global companies.
“One of the biggest drivers of competitiveness today is effective service design,” explains Thunderbird Professor Douglas Olsen. He and Professor Richard Ettenson teach the concept of value provision through service excellence in the Value Creation and Winning in the Global Arena program.
Olsen explains, “In this course we present techniques for effective service design, leveraging technology and people to understand where the pain points are for the customer – and also where the pain points are for internal customers.” So it’s not just external value creation but also improving the efficiency of service development, delivery, and tracking.
Customer service has five dimensions:
- Reliability – The ability to provide what was promised dependably and accurately
- Knowledge – The knowledge and courtesy of employees, and their ability to convey trust and confidence
- Empathy – The degree of caring and individual attention provided to customers
- Responsiveness – The willingness to help and provide prompt service
- Tangibles – The physical facilities and equipment, and the appearance of personnel
“One of the biggest drivers of competitiveness today is effective service design.” – Click to tweet
Measuring – and improving – service excellence
One popular customer service metric is Net Promoter Score (NPS), which is calculated based on just one question: On a scale of 1-10, how likely is it that you would recommend our company/product/service to a friend or colleague? But it’s not the metric Olsen recommends. “NPS was billed as the one number you need to grow your business, but it doesn’t come close to predicting business growth. It sheds little light on what a leader needs to do to deliver better value to the customer.”
Delivering better value through service starts with understanding the customer’s experience with your product and service through what’s known as services blueprinting. Only after diagraming the process can improvements be concretely identified. Services blueprinting is useful for:
- Understanding the consumer’s experience – Services blueprinting illuminates the consumer’s role and demonstrates where the consumer experiences quality. It promotes a conscious decision on what consumers see and which employees should be in contact, and it provides a consumer-focused basis for developing metrics to track service success.
- Designing and developing new services – Services blueprinting provides a common point of discussion for new service development or service improvement.
- Service improvement – Services blueprinting assists in identifying fail points and opportunities for improvement. It clarifies competitive positioning by comparing company and competitor processes when both are mapped.
- Standardizing service processes – Services blueprinting stimulates strategic discussions by illuminating the elements and connections that constitute the service.
- Improving cross-functional effectiveness – Services blueprinting ensures there is actually ownership for each component so that things are not lost in translation and employees can relate ‘what I do’ to the service viewed as an integrated whole.
“Delivering better value through service starts with understanding the customer’s experience with your product and service.” – Click to tweet
The role of technology
“It’s important to look for opportunities to infuse technology into processes to improve the customer experience,” Olsen explains. Service experiences that don’t involve interacting with other humans are already relatively common. Think: getting cash from the ATM, shopping on Amazon.com. We will be seeing much more of that. In fact, Olsen says, the service experience will eventually not involve humans at all, but rather producers’ technology interfacing with consumers’ technology.
Technology-to-technology service experiences aren’t ubiquitous yet, but there are plenty of examples of technology making the human service experience better. Consider, for example, telemedicine. Or Amazon’s new fully automated store. Or Domino’s switch from a pizza company to a tech company that happens to make pizza. Or Levi’s Intel-developed IoT technology built to “enhance the consumer’s experience.” The list goes on.
As products and services are increasingly commoditized, service excellence becomes an evermore important competitive differentiator. Like value creation in product development, value creation through service begins with knowing your customers, how they experience your organization, and where the pain points and opportunities for improvement lie.
Thunderbird professors Douglas Olsen, Ph.D. and Richard Ettenson, Ph.D. teach these concepts in depth in the Value Creation and Winning in the Global Arena program. Beat out your competitors by understanding the new realities of the global marketplace. Learn more about the Value Creation and Winning in the Global Arena program.
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