Service Design for a Holistic Customer Experience: A Process Framework

Abstract

Modern service design practices conceptualize services as multistep processes. At each step, customers derive an uncertain value, which depends on a functional benefit and a subjective experience. The latter may depend on experiences realized at previous steps. Service designs determine the provider effort at each step given that customers prefer less-variable experiences, and enable a holistic perspective of the overall experience. We quantify two factors that shape service designs: the type of steps ((i) routine steps, where effort increases the functional benefit and decreases the experience variability, and (ii) nonroutine steps, where effort increases the functional benefit at the expense of higher variability) and a holistic coupling factor (at each step, the design is determined not only by experience realizations at predecessor steps but also by how it can shape subsequent experiences). The optimal efforts depend on the combination of these two factors, giving rise to actionable design rules. For a positive coupling factor, step type homogeneity leads to “spread the effort” designs (complementary efforts), whereas a negative coupling factor suggests focusing the effort on a few key steps at the expense of the rest of the service (substitutable efforts). Step type heterogeneity reverses these recommendations. Moreover, when the customer experience unfolds according to a nonstationary process with serial correlation, the effort at each step is determined by an impact zone defined by the steps surrounding the focal service step. Stronger correlation always induces higher effort, whereas weaker correlation may induce less effort in services with heterogeneous step types. This paper was accepted by Serguei Netessine, operations management.