Why Britain needs a revolution in service design
Article by Trish Lorenz
Monday evening. Two friends go to the movies to watch Sex and the City. After checking times on the cinema website, they turn up, only to find the film isn’t showing. “The website’s always out of date,” shrugs the man behind the till. They buy tickets for another movie and head upstairs for a coffee, only to be told the machine isn’t working. Luckily, the traditional ice cream tray comes out before the film starts.
Eight out of ten Britons have had a poor experience when buying services, according to the National Consumer Council. Sometimes it’s merely frustrating, at other times totally infuriating, but it’s never good for business. A survey by BSI British Standards found that two-thirds of Britons believe customer service is getting worse: 72% have taken their custom elsewhere after receiving bad service, while 91% said they are more likely to go back to a business that provided good service.
That’s a great deal of revenue being lost – and serious damage being done to corporate reputations. Britons are pigeonholed as a nation of whingers happy to harangue businesses for their failings, but research suggests that many of our grievances are legitimate and, as the credit crunch bites, we’re far more likely to act on them.
Some organisations believe that having a customer service department is the be-all and end-all. But such departments are invariably dedicated to resolving issues after they arise. What is needed, says Chris Downs, director of service design consultancy live|work, is something far deeper and more wide-ranging: “Service design is about ensuring service pervades the entire business model of a company.”
Service design involves creating services that meet customer needs and make good business sense. Service design recognises that by considering every way customers interact with a business, revenue can be increased by finding new channels to market and reducing customer churn. And churn is a serious problem: websites that compare customer service and showcase horror stories enable buyers to avoid companies with a poor reputation. Online campaigns against bad service (try Googling a budget airline or retailer and the word ‘service’) are damaging brands.
Pledges of good service are not enough. They need to be part of a system that delivers something of genuine value to companies and their customers. Downs says: “The sale of a product only accounts for about 20% of its potential lifetime value. Servicing that product provides the other 80%.”
Alison Copus shares Downs’ view. A former marketing director at Virgin Atlantic, Copus is now partner at business consultancy Coincidence. “At Virgin Atlantic we recognised that thinking about product and service separately was nowhere near as powerful as thinking about them as one. Launching a new product is one thing, but changing service flow around it brings many new opportunities,” she says.
She points to the relaunch of Virgin Atlantic’s business lounge at Heathrow Airport, which saw the airline offer customers everything from spray tans to a cocktail bar and restaurant. The airline sent its staff for training at restaurants, bars and hairdressers. Copus remembers: “We had to invest in the lounge because we were running out of space, but the next question was what should we offer? We wanted to be innovative and redesigning the service gave us that opportunity.”
Service innovation can offer numerous benefits, she says: “Product is easy to imitate, but service is much more difficult. It offers a far more sustainable competitive advantage.”
The banking industry is discovering just that. Bank of America worked with service design specialist IDEO to target mothers in their thirties and forties. Fran Samalionis, head of service design at IDEO, says: “We spent time with mothers and discovered they found lots of ways to save money. But it wasn’t how much they saved – it was the act of saving that was important.”
So Bank of America launched its ‘Keep the Change’ campaign. Each time a customer used their debit card the bank rounded up the amount to the nearest dollar and put the difference into a saving account. ‘Keep the Change’ generated 2.5 million customers, 700,000 new current accounts and one million new savings accounts.
Product is easy to imitate, but service offers a far more sustainable competitive advantage
As companies strive to retain more customers, service design may become even more important. “There’s growing recognition that new customers are costly to acquire, which is why there’s now a greater focus on retention,” says Downs.
Most surveys suggest that acquiring customers is between six and eight times more expensive than retaining them. The BSI British Standards survey suggests that keeping more customers can boost profit by more than half, yet there was no attempt to persuade 73% of dissatisfied customers to stay, even though more than a third said a simple apology would have stopped them going elsewhere.
Service design also delivers for the public sector. Downs says focusing on customer needs “drives efficiency back [into the business], rather than letting efficiency drive delivery, which can cause service issues”.
He points to a rural ambulance service that had many isolated patients, yet prided itself on efficiency, simultaneously running two or three journeys to ensure there were no wasted trips.
But some patients had to wait five hours to reach hospital. “One old lady we spoke to had a permanently crooked finger because it had taken so long to get to hospital after she broke it that it had partially reset. While the system was efficient, the service was terrible. If you take a service design approach, you’re striving for quality, not simply service optimisation.”
This is an important distinction. Almost every organisation has a system for measuring customer satisfaction, yet many customers remain dissatisfied. Organisations may be using the wrong benchmark – consider train operators who change timetables at short notice to meet punctuality targets but then infuriate passengers who face unnecessary delays.
Irate First Great Western passengers stage a fare strike in 2007.
Although overall customer satisfaction with rail is up, ticket prices continue to cause discontent, having risen by 13.6% since 1995. In 2007, irate commuters risked £1,000 fines after staging a fare strike to protest at prices, delays and overcrowding on First Great Western trains.
BSkyB shows a better way forward. It wanted to boost call-centre satisfaction rates and contacted consultancy Engine, which began monitoring customer calls. Engine developed a service model based on the idea that customers need looking after on an emotional level as well as a functional one.
The model was translated into practical tools and systems, including call-handling guidelines. A pilot involving hundreds of call handlers showed a 50% increase in customer satisfaction.
As the financial benefits of service design become clear – and market conditions grow tougher by the day – the need for businesses to place retaining and delighting customers at the top of their agenda has never been more urgent.
| Why customers change service providers |
% |
| Poor customer service/attitude |
 56 |
| High cost |
37 |
| Poor handling of complaints |
30 |
| Poor quality of goods/services |
29 |
| Billing or account errors |
22 |
Source: BSI tickbox.net survey of 1,845 UK adults. Figures refer to previous 12 months
Trish Lorenz is a design journalist and consultant and former service design consultant with Virgin Atlantic.
Seven steps to successful service design
How to make customer service effective in any organisation, using tested IDEO methods
- Assess or audit the business
Understand the current service offer and identify additional service potential. New services must meet customer needs, make good business sense and be feasible to bring to market.
- View service experience through customers’ eyes
Shadow consumers through their experience of the organisation. This exceeds the usual qualitative and quantitative research and aims to uncover latent needs consumers are less able to articulate. Identify possible new services and areas where current services are underperforming.
- Prototype the new service
New services can be hard to visualise. Produce something tangible, for example a sample advert that sells the offer to your target audience. Create something everyone within the organisation can understand. Until it is possible to see, touch and feel, it may be hard to decide whether to implement the new service.
- Collaborate internally
Silos of expertise are unavoidable, but effective service design invites collaboration. Establish multi-disciplinary teams and communicate the programme widely.
- Enable frontline staff
Frontline staff know where service issues lie, but often feel unable to make changes. It is important to build a ‘can-do’ attitude by teaching frontline staff how to develop, share and implement new ideas.
- Measure impact
Evaluate progress by measuring results against benchmarks set at the start of the project.
- Encourage ongoing innovation
Service is about developing long-term relationships with customers. Iterative improvements and a culture of innovation are vital.
Adapted from guidance by IDEO’s Fran Samalionis
Article first published in Design Council Magazine, Issue 5, Winter 2008
Picture credits
Sex and the City poster: Rex images
Hoover ad: Rex images