Customer-Based or Service-Demand Variety

03/29/2022 Compiled by Valmeek Kudesia

Types of Customer-Based or Service-Demand Variety

Arrival Variability

• When/ whether needs make themselves known or appear

• Classic response is appointments/reservations

Request Variability

• What the customer is asking for

• This could be simple or complex to properly handle

Capability Variability

• How much the customer understands

• Are they knowledgeable about their need or do they need a great deal explaining?

• Customer is part of input to production process and therefore contributes high variability

Effort Variability

• How much help the customer wants

• Are they happy to do things for themselves?

• Do they want someone else to do it all for them (and potentially wait longer)?

Subjective Preference Variability

• Different customers have different opinions on things e.g. are they happy just to accept the whole?

• Are they inquisitive and want someone to break it down into all its parts and explain the rationale for each?

• Have been conditioned to be passive in the interaction and not continue afterwards? (which leads to disengagement and lack follow-through)

Approach to Customer-Based or Service-Demand Variety

• Derived from customer heterogeneity and need levers to guide/influence

• Basic choice accommodate variability or reduce/constrain

• Low cost accommodation -> customer self-service

Diagnosing Service Design Mismatch to Customer

The Offering

1. Which service attributes (convenience? friendliness?) does the firm target for excellence?

2. Which ones does it compromise in order to achieve excellence in other areas?

3. How do its service attributes match up with targeted customers’ priorities?

The Funding Mechanism

1. Are customers paying as convenient as possible?

2. Can operational benefits be reaped from service features?

3. Are there longer-term benefits to current service features?

4. Are customers happily choosing to perform work (without the lure of a discount) or just trying to avoid more-miserable alternatives?

The Employee Management System

1. What makes employees reasonably able to produce excellence?

2. What makes them reasonably motivated to produce excellence?

3. Have jobs been designed realistically, given employee selection, training, and motivation challenges?

The Customer Management System

1. Which customers are you incorporating into your operations?

2. What is their job design?

3. What have you done to ensure they have the skills to do the job?

4. What have you done to ensure they want to do the job?

5. How will you manage any gaps in their performance?

The Whole Service Model

1. Are the decisions you make in one dimension supported by those you’ve made in the others?

2. Does the service model create long-term value for customers, employees, and shareholders?

3. How well do extensions to your core business fit with your existing service model?

4. Are you trying to be all things to all people—or specific things to specific people?

References

• Breaking the Trade-Off Between Efficiency and Service, Frances X. Frei, HBR 2006

• The Four Things a Service Business Must Get Right, Frances X. Frei, HBR April 2008