Bill Hollins selects some examples of successful service design, and highlights some of the lessons to be learnt from those who have not taken service design seriously enough
Lesson 1: Service extensions, especially at the marketing stage, can be the most profitable innovations
Project: Doorstep delivery
Client: Domino Pizza
Year: mid-1980s to present
It was in New York in the mid 1980s that Domino Pizza first identified the potential market opportunities for pizza delivery. Though arriving somewhat later in the pizza takeaway market than some of its competitors, Domino Pizza decided to extend its service to doorstep deliveries. Through this innovation the company grew quickly. And, as services cannot be patented, it was an idea copied by many.
Lesson 2: Effective use of service blueprinting can enhance customer satisfaction
Project: Outpatients department improvement
Client: Exeter Wonford Hospital outpatients
Designer: Lyn Randall, Bournemouth University
Year: 1992
Lyn Randall improved the design of Exeter Wonford outpatients’ department through a service blueprint exercise completed in 1992. Through making the service far more efficient, the customer experience improved and the throughput of patients increased.
There was an additional, unexpected, spin-off. The hospital was about to purchase more land to increase the size of its overcrowded car park. When the improvements to the outpatients department were implemented it was found that the car park was significantly less crowded and the purchase of land to enlarge it was (at that time) unnecessary, saving £1million.
Lesson 3: Market research and understanding customer requirements can be key drivers for service design
Project: BAA customer experience
Client: BAA
Designer: Raymond Turner, Group Design Director
Year: 1999 to present
Under the guidance of Group Design Director Raymond Turner, BAA planned the rail link between Heathrow Airport and central London reducing journey time to only 15 minutes. Market research showed overwhelmingly that customers wanted a luxury experience and were prepared to pay the correspondingly high price. The service was introduced in 1999 and is now used by almost 20,000 people each day.
Lesson 4: Using mystery shoppers can ensure that service standards are maintained and continually improved
Project: Expansion through consistency of service delivery
Client: J D Wetherspoon Pubs
Designer: In-house
J D Wetherspoon has achieved spectacular growth through set procedures for designing and developing the services in each new pub. It also has quality standards that are checked and maintained through a group of 800 mystery shoppers. After a visit, managers are given a report on their pub and staff are paid a bonus if the report is complimentary. Rather than paying staff bonuses on the quantity of output, paying bonuses on good quality output can ensure consistency and improvement in service.
Lesson 5: In certain circumstances, poor design of the processes can destroy an organisation
Project: Security and fraud protection
Client: Barings Bank & Allfirst (Allied Irish Bank)
A key part of service design is the development of processes for security and the avoidance of fraud. The design of the processes used at these two banks were insufficient. Barings Bank collapsed in 1995 after trader Nick Leeson caused the bank an £850million loss, while Allied Irish Bank’s Baltimore-based subsidiary, Allfirst, suffered damage to both profit and confidence after John Rusnak caused it to sustain £500million loss in 2002.
Lesson 6: Involving the internal customers - your employees - can improve efficiency and lead to company expansion
Project: Expansion through consistency of service delivery
Client: Cool Logistics
Designer: Kevin Valentine & Richard Perkes
Year: 2004
Cool Logistics specialises in the design and manufacture of insulated shipping systems for the pharmaceutical industry and allied sectors. The company has been structured around, and runs on service design principles, and its continuing success suggests that service design works.
The key to this success has been to focus on customer requirements, and to be flexible enough to develop tailor-made solutions to meet these. The mission of the company is 'striving to be a pleasure to do business with'. This means getting close to customers. Each customer deals mainly with only one person in the company, allowing a personal relationship to be built between customer and company. Before invoices are sent out, all customers are telephoned to obtain customer feedback and to ensure that they are pleased with the service that has been provided. This has virtually eliminated customer complaints. But the spectacular growth of Cool Logistics had a down side - the stress of working harder and faster was beginning to cause problems for the employees.
The solution was an internal market research investigation, in which questions were put to all employees covered aspects of work, processes and communication, and problems or ideas that could improve employees' work or make life at work less stressful. After the results were analysed, solutions were implemented to make the company a happier and more efficient place in which to work.
Lesson 7: Not understanding customer requirements is still the main cause of product and service failure
Project: The Internet University
Client: UK Government
The Internet University (UkeU), launched in September 2003, was abandoned after only 900 of the expected 5,600 students enrolled for courses and less than one per cent of money from the private sector was obtained to fund the scheme.
Estimated losses were £50million. The Commons Education Committee review in March 2005 concluded that 'there was no formal market research undertaken to assess either the level of demand, the nature of the demand or the type of e-learning required. There was no systematic evaluation of the markets... and no understanding of consumer demand'. Or as committee Chairman Barry Sheerman said: 'The UkeU was a terrible waste of money'.
Lesson 8: A seemingly large initial outlay can reap huge financial rewards as service blueprints can be sold on to competitors later
Project: Secure internet banking
Client: Security First Network Bank (Now owned by Royal Bank of Canada)
Designer: In-house team
Year: 1995
This was the first internet ban, started by Michael McChesney and opened in Pineville, Kentucky. It is now based in Atlanta, Georgia. The secure software used – designed to be secure yet easy to use and convenient – took two years and $20million to design and develop. These systems are now sold to 4,000 other banks worldwide.
Lesson 9: An extension of a service through innovative design can both save money and improve the customer experience
Project: Web tracking of packages
Client: Federal Express
Designer: In-house team
Year: 1994 to present
FedEx added information systems to its express transportation in December 1994. Its 900,000 packages are tracked each month via the internet. Customers are automatically emailed to inform them of a package in transit, and the tracking number supplied enables the package to be tracked via the web if required.
This system saves $4million per year in answering telephone queries. And the recent addition of radio tags on the parcel labels has now allowed even more accurate measures of where any package is at any one time.
Lesson 10: Educating your customers might be time consuming, but is often a fundamental part of the service design process
Project: Homeserve
Client: South Staffordshire Water Group
Designer: Richard Harpin and Jeremy Middleton
Year: 1991 to present
Homeserve was started in 1991 to provide insurance cover for plumbing, electrical and gas emergencies in areas not covered by normal household insurance, which would normally cover damage but not the fault that caused it. Its success is put down to what designer Jeremy Middleton calls a 'relentless focus on a real customer need' coupled with strong marketing.
The service’s initial challenged including educating potential customers that their existing insurance did not cover all home emergencies. Then the company had to convince customers that Homeserve could provide them with an adequate repair service.
Since 1987, Harpin and Middleton had been operating an emergency repair service for all domestic home emergencies. They have since become the UK's leading provider with more than seven million policies and 2,000 repairers. Originally part-owned by South Staffordshire Water Group, the service was demerged to become Homeserve Group plc in 2004. Growth has been at 25% per year and turnover is now at £369million.
Lesson 11: A good product backed up by good service and continuous improvement is a recipe for success
Project: Pret a Manger
Designer: Julian Metcalf and Sinclair Beecham
Year: 1986 to present
Pret a Manger was started by two property law students from the Polytechnic of Central London (now the University of Westminster). Although they did no formal market research prior to setting up the business, they had correctly identified a potentially successful niche in the market.
Noting growing awareness of the benefits of healthy eating, they produced fresh, high quality, additive- and preservative-free sandwiches and other health orientated lunches. These are produced fresh each morning before the shop opens, ensuring fast customer service. The founders also detected a rise in the numbers that took lunch breaks at their desks and so built orders by phone and email for collection or delivery into the offering.
In the shops service is friendly, with higher staff pay and lower staff turnover compared with others in the industry. Every applicant at Pret a Manger has an ‘experience’ day in the shop and at the end of the day the rest of the staff vote on whether the applicant should get the job. Through this they believe that staff will be happier and the applicant will meet the criteria of customer focus. Staff are paid a bonus based on the effectiveness of the service as judged by a team of 'mystery shoppers’, and employees are further motivated by being offered free English lessons and regular parties. The company believes that the staff will be more empathetic to their customers if they have a people-centred culture within the organisation.
Since its launch Pret a Manger has actively monitored customers' preferences and tastes. Customers are invited to suggest improvements either by in-shop cards or through the company's website. Pret now has 150 stores including branches in Hong Kong, Tokyo and New York, and a turnover of £150million.
Lesson 12: Designing a service that customers can see a clear benefit in using also has measurable benefits for the organisation
Project: Oyster Card
Designer: Transys
Year: 2002 to present
The Oyster Card, developed as part of the £1.2billion Private Finance Initiative, was introduced for three reasons: first, to reduce queuing at ticket offices during peak periods; second, to make better use of staff; and third, to reduce fraud. Transport for London placed the contract with Transys, a consortium of specialist firms, for the provision of an advanced ticketing system. It was hoped that the Oyster Card would eventually replace most paper tickets.
Fraud, estimated to be running at £43million per year, was the main driver of the project. The main loss of revenue stemmed from customers either travelling without tickets or using tickets not valid for the whole journey.
The Oyster Card not only speeds up the travel process for customers, it also makes it easy to check if the card is being used correctly through a portable hand-held machine used by ticket inspectors.
The advantages for the customer have been the speed and ease with which they can get through barriers and on to the station, and also in the savings that they make through using the Oyster Card. It can currently be used on the London Underground, London buses and trams, Docklands Light Railway and National Rail Services in London, providing 'seamless journeys across London'.
In future, the Oyster Card will be linked to the provision of other services including shopping. This is a great example of advances in technology being applied to improve customer experience.
Lesson 13: Offering a service that fills a gap in the market can introduce environmental benefits too
Project: Xparts
Designer: Douglas Meany
Year: 2003 to present
The high cost of garage labour and spare parts from the authorised main car dealers means many people consider DIY repairs using parts from the local breakers' yard. However, the search for the right part for particular models can be lengthy and laborious.
The problem can be compounded if you own an old car that is involved in a minor accident: the insurance cover for an old car can be low and it does not take much damage for a car to be declared a write-off. When old cars are damaged their owners tend either to have them towed away or to go looking for old parts for DIY repairs.
A web-based service designed by a company called Xparts is designed for just these customers. The customer types in details of the car and the part required and sends it to Xparts online. Xparts then acts as a central agency that redirects all enquiries to a large number of reputable breakers' yards located throughout the country. Any yard that has the part then contacts the customer by phone or email, often within minutes of the request, and the sale then takes place. The parts are delivered to the customers' door within the next 24 hours, at a cheaper price than from a main dealer.
Not only is this an efficient service, it should also help keep damaged but basically road-worthy cars out of the waste stream for longer - making it an environmentally friendly service as well.