Teaching an Old Service New Tricks: The Promise of Service Redesign

1. Teaching an Old Service New Tricks: The Promise of Service Redesign Berry, L. L., and Lampo, S. K. (2000), “Teaching an Old Service New Tricks: The Promise of Service Redesign”, Journal of Service Research, 2(3), 265-275.

2. Outline: • Abstract • Introduction • Service Redesign • A Framework for Service Redesign • Self-Service • Direct Service • Pre-Service • Bundled Service • Physical Service • Discussion

3. Abstract • Contrary to the focus of most recent service design literature, creating new services is not the only option. Berry and Lampo (2000) explore another viable competitive option-the redesigning of existing services. • Service firms can be innovative with what exists just as they can be innovative with what does not.

4. Introduction (1) • Most of the recent service design literature focuses on new service development (Cooper et al., 1994; Martin and Horne 1993, 1995). However, Berry and Lampo (2000) argue that creating new services is not the only option. • Berry and Lampo (2000) propose another viable competitive option-the redesigning of existing services.

5. Introduction (2)- Glow Bowling • The development of “glow bowling” is introduced in 1995. • turning off vs. turn on, make everything glow! • Additional physical enhancements • 41.9 million to 44.8 million people who have bowled at least once in a year. • Up to 40% open play revenue increases (Wilson, 1998)

6. Introduction (3)- Smart Cards • Smart Cards represent an application of technology that is transforming many traditional services. • Being used in telecommunications, financial, health, entertainment, education, transportation, hospitality, and military services.

7. Service Redesign (1) • Service redesign is the reconstitution, rearrangement, or substitution of process that make up a service. • A redesigned service can add value for customers by improving the service’s benefits or reducing it’s burdens (Zeithaml, 1988).

8. Service Redesign (2) • Improving access to service, increasing speed of delivery, improving functionality, or reducing it’s costs can decrease the customer’s burdens or sacrifice. • For companies, service redesign can attract new customers, increase service use, improve competitive differentiation, increase productivity, reduce labor costs and strengthen employee motivation and satisfaction.

9. Service Redesign Approaches

10. A Framework for Service Redesign(1)

11. A Framework for Service Redesign(2)

12. Self-Service(1) • Customers require frequent and flexible access (e.g., overnight package shipping and tracking). • Speed of service delivery is paramount (e.g., buying gasoline). • Service performance requires limited skills that are easily transferable to customers (e.g., self-service soft-drink dispensers in fast-food restaurants).

13. Self-Service(2) • Technology exists to enable customers to perform the service (e.g., automatic teller machines). • Customers may be concerned about disclosing private information to service personnel (e.g., online financial transactions). • Gross margins are low, making cost-saving alternative especially attractive (e.g., selling gasoline).

14. Direct Service (1) • Customers must significantly disrupt their normal routines to receive the service (e.g., taking an automobile to the shop for repairs). • Customers’ inconvenience in visiting the service facility outweights the benefits of their service (e.g., going to a store to rent and then later return a video).

15. Direct Service (2) • Customers dislike personally interacting with the service provider (e.g., visiting dealerships to buy a care and “negotiating” a deal). • Technology allows the remote delivery of services (e.g., distance learning).

16. Pre-Service • Customers must supply detailed information to receive the service (e.g., online retailers). • Customers are usually in a hurry to receive the service (e.g., renting a car at an airport). • Customers plan service consumption ahead of time (e.g., airline travel). • Customers use the service frequently (e.g., grocery shopping).

17. Bundles Service • Customers can be segmented based on use or need (e.g., platinum or gold credit cards). • Efficient consumption requires technical knowledge (e.g., automotive maintenance services). • Customers associate core service with other related services (e.g., a hairstyling salon with manicures and pedicures). • Customers are convenience minded (e.g., gasoline buyers who wish to wash their care, buy a snack, or use an ATM on the same stop).

18. Physical Service • Consumption requires the customer’s presence at the service facility (e.g., an airport). • The service is difficult for customers to evaluate prior to purchase (e.g., a restaurant). • Physical comfort is an important determinant of customer and/or employee satisfaction (e.g., an airliner). • Competing service are quite similar to one another in operational performance (e.g., taxi services).

19. Discussion(1) • Authors reviewed more than 100 examples and used them to develop a framework of service redesign approaches available to companies. • There are five service redesign approaches: self-service, direct service, pre-service, bundles service, and physical service separately. • Importantly, these approaches often are used in combination, adding greater value to customers and producing greater returns to the company.

20. Discussion(2) • E-Z Pass illustrate the simultaneous application of self-service and pre-service. • Central to Amazon.com’s soaring sales growth is the combined appeal of self-service, direct service, and pre-service.