Four elements of service encounter design

LensCrafters Case Study

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well, and empower them to meet and exceed customer expectations.

6-6 An Integrative Case Study of LensCrafters o illustrate how goods and services are designed in an integrated fashion, we will study LensCrafters—a well-known provider of eyeglasses produced “in about an hour.” We use the framework for goods and service design shown in Exhibit 6.1.

Steps 1 and 2—Strategic Mission, Market Analysis, and Competitive Priorities LensCrafters (www.lenscrafters.com) is an optical chain of about 860 special service shops with on-site eyeglass production capabilities in the United States, Canada, and Puerto Rico. All resources necessary to create and deliver “one-stop-shopping” and eyeglasses “in about an hour” are available in each store.

LensCrafters' mission statement is focused on being the best by

creating customers for life by delivering legendary customer service, developing and energizing associates and leaders in the world's best work place, crafting perfect-quality eyewear in about an hour, and delivering superior overall value to meet each customer's individual needs.21

Step 3—Customer Benefit Package Design and Configuration Our perception of the LensCrafters customer benefit package is the integrated set of goods and services depicted in Exhibit 6.11. The primary good (eyewear) and the primary service (accurate eye exam and one-hour service) are of equal importance. Peripheral goods and services encircle the primary ones to create “a total LensCrafters' experience.”

GWImages/Shutterstock.com

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Exhibit 6.11 One Example View of LensCrafters' Customer Benefit Package

© Cengage Learning 2013

Steps 4a and b—Manufactured Good Design and Process Selection The manufacturing process is integrated into the service facility to provide rapid order response, yet not sacrifice quality. In this industry, it is unusual for customers to watch their eyeglasses being made and this “service experience” is viewed as adding value. The equipment used in the labs is the most technologically advanced equipment in the industry. The eyewear is manufactured to specifications in a clean, modern, and professionally run facility.

Other issues that LensCrafters would need to consider in designing its manufacturing processes are the following:

How are eyeglass lenses and frames ordered? Are these materials ordered by individual stores or consolidated by region/district? How can the high quality of eyewear be ensured? What new materials are available? What items should be stored at the region/district warehouse and stores? What type of purchasing and inventory control systems should be used? How should supplier performance be evaluated? What eyewear-making equipment should be used? What is the latest technology? Which equipment is most flexible? Should the equipment be purchased or leased? How should it be maintained and by whom? What is the most efficient production procedure to make the goods and meet time schedules? Where should quality be checked in the manufacturing process?

Step 4c—Service-Delivery System Design The service-delivery system, as evidenced by the location and layout, servicescape, service processes, job designs, technology, and organizational structure, is combined into an integrated service-delivery system. LensCrafters' stores are located in high-traffic areas such as shopping centers and malls within 5 to 10 miles of the target market.

A typical store layout is shown in Exhibit 6.12. The servicescape is designed to convey an impression of quality and professionalism. The store is spacious, open, clean, carpeted, with professional merchandise display areas, modern furniture in the retail area, and modern equipment in the laboratory, technicians in white lab coats, shiny machines in the lab, and bright lights throughout. The store display cases, eye examination areas, and fitting stations are in the high-contact area where customers and service providers interact frequently. Optometry degrees, certifications, and licenses hanging on the wall provide physical evidence of employees' abilities.

A greeter directs each customer to the appropriate service area as he or she enters the store. The low contact area of a LensCrafters store—the optical laboratory—is separated from the retail area by large glass panels. The optical laboratory becomes

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a “showroom” where the customer's perception of the total delivery process is established. The store is a service factory. The typical service process begins when a customer makes an appointment with an optician and

continues until the eyeglasses are received and paid for. Between these two events, the customer travels to the store, parks, receives a greeting from store employees, obtains an eye examination, selects frames, is measured for proper eyeglasses and frame fit, watches the eyeglasses being made in the laboratory, and receives a final fitting to make sure all is well. Information flow in the forms of prescriptions, bills, and receipts complements the physical flows of people and eyewear.

Exhibit 6.12 A Schematic View of a Typical LensCrafters' Store Layout

© Cengage Learning 2013

Step 4d—Service Encounter Design Each job at LensCrafters—sales associate, lab technician, and doctor of optometry—requires both technical skills and service management skills. Associates are well trained, friendly, and knowledgeable about their jobs. The lab technicians are certified in all work tasks and processes. Many associates are cross-trained.

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1. 2. 3. 4.

5.

At the service-encounter level, key issues that managers need to consider include the following:

What human resource management processes and systems will ensure hiring the right people, training them properly, and motivating them to provide excellent service? What recognitions and rewards should be provided? How are associates trained to handle service upsets and service recovery? What standards should be set for grooming and appearance? What behavioral standards, such as tone of voice, physical mannerisms, and the words that associates use in customer interactions, should be set? How should employee performance be measured and evaluated? What can be done to make the one-hour wait a positive experience for customers?

LensCrafters reinforces its customer benefit package with a comprehensive 30-day unconditional service guarantee design defined as follows:

You buy a pair of glasses at LensCrafters and then you think, ‘Maybe red's not my color.’ Or, you question, ‘Wow, should I have gotten the antireflective coating?’ Or after wearing them for a while you realize, ‘These really aren't going to be comfortable enough to wear every day.’

Whatever your reason, if you don't completely love your eyeglasses or prescription sunglasses, you can exchange or return them for a full refund at LensCrafters—no excuses, no explanations. That's what our 30-Day Unconditional Guarantee is all about— giving you peace of mind with every pair.

So how does it work? Simple. Just return your eyeglasses—in their original condition—to LensCrafters within 30 days. We'll exchange them for a new pair or refund your money. Why do we do it? Because LensCrafters stands behind each and every pair of our glasses. And we want to make sure you simply love them.

What does ‘Unconditional’ really mean? The 30 days begins on the date you actually receive your eyeglasses. You can return or exchange your new eyewear as many times as needed within the 30-day time period. However, the 30 days

does not start over with each return or exchange. If you exchange your purchase for a pair at a lower price, we'll refund the price difference. If you exchange your purchase for a pair at a higher price, you'll only pay the price difference. If your eyeglasses get broken, you can use our 1-Year Replacement Discount.22

Steps 5 and 6—Market Introduction/Deployment and Evaluation Although the company has been around for some time, it undoubtedly faces challenges in replicating its design concept in new locations. On a continuing basis, as technology and procedures change, LensCrafters will have to develop processes to introduce changes into all existing locations to maintain operational consistency and achieve its strategic objectives. For example, how might it react as competitors such as Walmart enter the optical industry?

As you see, LensCrafters, manufacturing and service design depends on a variety of operations management concepts, all of which are integrated and support a rather complex customer benefit package.

Discussion Questions How might today's technology, such as the Internet, be used to understand the voice of the customer? What lessons can be learned from the LaRosa's Pizzeria boxed example? In building a House of Quality, what departments or functions should be involved in each step of the process? Explain how the goal-post view of conforming to specifications differs from Taguchi's loss function. Would you rather buy an automobile where suppliers used the goal-post or Taguchi models? Why? Propose an explicit service guarantee for an airline. Clearly explain why you included the features of your service guarantee (maximum of one page). Do you think that an airline would adopt it? Why or why not?

Problems and Activities Note: an asterisk denotes problems for which an Excel spreadsheet template in the Premium Online Content may be used.

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a. b. c. d. e. f. g.

a. b. c. d. e. f. g. h. i.

2.*

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Build a House of Quality (showing only the voice of the customer, technical features, interrelationships, and relationship matrix from Exhibit 6.2) for designing and producing chocolate chip cookies. The voice of the customer consists of:

Soft Fresh Bittersweet Not burned Large size Moderate price Lots of chocolate

The technical features identified are: Baking temperature Baking time Type of chocolate Proportion of chocolate Size Shape Thickness Batch size Amount of preservatives

Clearly explain your reasoning for your ratings of the interrelationships and relationship matrix. Can you think of other technical features that should be included to better address the voice of the customer? Suppose that the specifications for a part (in inches) are 6.00 ± 0.05, and that the Taguchi loss function is estimated to be L(x) = 6,500 (x - T)2. Determine the economic loss if x = 6.07 inches. A quality characteristic has a design specification (in cm.) of 0.200 ± 0.020. If the actual process value of the quality characteristic exceeds the target by 0.020 on either side, the product will require a repair of $50. Find the value of k and state the Taguchi loss function. What is the economic loss associated with x = 0.015? For the situation in problem 3, what are the economic design specifications if the cost of inspection and adjustment is $7.50? Suppose that the design specifications for a hydraulic cylinder are 10.00 ± 0.10 centimeters, and that the Taguchi loss function is estimated to be L(x) = 2,400 (x - T)2.

Determine the estimated loss for a production order if the quality characteristic under study takes on a value of 10.04 and 100 parts are produced. Assume the production process is recalibrated weekly and a new sample of cylinders after recalibration reveals an x-bar of 9.789. What action, if any, is need in this situation? Explain.

The service center for a brokerage company provides three functions to callers: account status, order confirmations, and stock quotes. The reliability was measured for each of these services over one month with these results: 90 percent, 70 percent and 80 percent, respectively. What is the overall reliability of the call center? Two cooling fans are installed in some laptop computers. Suppose the reliability of each cooling fan is 0.99. What percent improvement in reliability does adding the second fan provide? Given the following diagram, determine the total system reliability if the individual component reliabilities are: A = 0.98, B = 0.92, and C = 0.85. (Hint: Use Equations 6.2 and 6.3 and note that the reliabilities of the parallel components are different.)

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a. b. c.

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A simple electronic assembly consists of two components in a series configuration with reliabilities as shown in the figure below.

Engineers would like to increase the reliability by adding additional components in one of the two proposed designs shown in the figure on the next page (notice the difference in the diagram design with respect to being in series and parallel):

Find the reliability of the original design. Explain how the configurations of the proposed designs differ. Which proposed design has the best reliability?

Research and write a short paper (maximum two typed pages) illustrating an example of how a company applies concepts of Design for Environment (DfE). Choose a servicescape for a business with which you are familiar and list key physical attributes of the servicescape using the three subdimensions, and discuss their impact on customer service and value. Explain how the servicescape establishes the behavioral setting for your example. Select a service at your school, such as financial aid, bookstore, curriculum advising, and so on. Propose a redesign of this service and its service-delivery system. First, baseline the current service and system, and then suggest how to redesign and improve it. Make use of chapter ideas as best you can. Identify a job in an organization and describe how the four elements of service-encounter design are designed and managed for this job. (The job you select could be in a professional organization such as a dentist or tax advisor, or in a routine service organization such as a hotel check-in desk clerk or airline flight attendant.) When Walt Disney created the Disney empire in the 1950s, he forbid its star characters such as Mickey Mouse and Pluto to talk. Mr. Disney thought it would be too difficult to control the service encounters between customers and Disney characters, and it would ruin the ‘magic’ of Disney. Therefore, Disney characters were trained to gesture and use only their body language to interact and entertain guests. Today, Disney is experimenting with talking characters. What are some advantages and disadvantages of talking Disney characters from a service design perspective? Research the current status of this Disney design decision and include a brief summary in your write-up (no more than two typed pages).

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15. Identify a service-provider job and associated service encounters and design and write a job description for it. (Consider desired customercontact skills and behaviors, education and training requirements, empowerment capabilities, hiring criteria, and so on.)

Tom's Auto Service Case Study Tom's Auto Service (TAS) is a regional quick-service vehicle oil-change and lubricant-change service somewhat similar to Jiffy Lube and Tuffy Tire & Auto Service. TAS seeks to differentiate its 32 stores from competition by focusing on peripheral goods and services, the servicescape, and customer-friendly employees. The primary customer benefit package consists of friendly and professional employees who regularly interact with customers providing oil, oil filters, air filters, tires, windshield wiper blades, and lubricants. Automotive associations also certify TAS mechanical and technical personnel, and their certificates are displayed in the customer waiting room. All technical work is guaranteed for 90 days. Employees are carefully interviewed for employment, and background checks are done on technical skills and criminal history. Video on-the-job-training is required of all new hires. All employees are trained to operate the store cash register and payment software. Store managers are responsible for the overall store operations and the customer waiting lounge.

The customer waiting area is larger and more comfortable at Tom's Auto Service than at most of their

competitors.

Stocklite/Shutterstock

Many other peripheral goods and services define TAS's customer benefit package. For example, the customer waiting rooms include several blends of fresh coffee and tea, sodas, current magazines, Wi-Fi, and a high-definition television. Customers receive vehicle maintenance brochures and discount coupons for their next visit. TAS also offers other services, such as cleaning the vehicle's windows outside and inside, vacuuming carpets, reviewing service history with the customer, and explaining the technical aspects of vehicle service if the customer asks or if a potential safety or mechanical problem is discovered.

The facility layout consists of four service bays, with a pit below three of the bays for draining and changing oil and lubricants. All necessary tools and equipment are provided for each bay. The customer waiting area is carpeted and larger than those of competitors, with comfortable sofas and chairs. A large glass window in the waiting area allows customers to see their vehicles being serviced in any of the bays. Employees are professionally dressed in clean blue uniforms paid for by TAS with their first names embroidered on them. To maintain a professional appearance, employees are required to wash their arms and hands after each service job.

A vehicle checklist is used to ensure completeness of the work and as a means of quality control. The standard time to complete a routine job is 18 minutes in the bay area, plus 9 minutes for customer check-in and checkout. Other work, such as changing tires, takes longer. Store managers and assistant managers are trained and empowered to approve free service if the customer is dissatisfied for any reason.

TAS surveys customers regularly as a way of understanding customer satisfaction. Results from 206 customer surveys are summarized in Exhibit 6.13. Samples of good and bad written customer comments are shown in Exhibit 6.14. These results are over the past three months for nine randomly selected stores. Store managers never know when their store may be in the corporate survey results. The corporate vice presidents of marketing, human resource management, and operations were asked to analyze these data to determine what actions might be necessary to reward or improve performance.

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Exhibit 6.13 TAS Customer Quarterly Example Survey Results (n = 206 )

Survey Questions Average Score on 1 (worst)to5 (best) Scale Store Managers 1. Store managers monitor my vehicle's maintenance and repair very well. 4.36 2. Store managers understand my individual wants and needs. 3.87 3. Store managers always go over the vehicle check sheet with me prior to paying the bill. 4.40 Standards of Performance 4. Cleaning the vehicle windows and vacuuming are extra services that I like. 4.66 5. Knowing the vehicle history makes me feel secure that I am doing the right thing in terms of vehicle maintenance and repair. 4.43

6. My vehicle was fixed correctly (i.e., technically competent). 4.83 7. Standards of performance at TAS are clearly visible inside the store, such as employee certifications and good equipment. 4.54

8. Standards of performance at TAS are clearly advertised in the media and help me understand what to expect during vehicle service. 4.68

Employees 9. TAS employees are really good at what they do. 4.06 10. Service personnel are polite, friendly, and clearly explain technical details if I ask. 4.01 11. When problems come up, the mechanics are always helpful in correcting and explaining the issue/problem. 3.88

Facility 12. The facility is clean and well maintained. 4.84 13. The customer waiting area is really nice and why I come here. 4.79 Overall Experience 14. The total time I spent in TAS was as expected. 4.59 15. My service experience during each repeat visit is of consistent high quality and meets my expectations. 3.94

16. TAS is clearly better than competitors. 4.45

Exhibit 6.14 Five Good and Five Bad Sample TAS Customer Written Comments 1. I come to TAS because of the outstanding vehicle technical knowledge and skills of the employees. 2. Believe it or not, I really like the coffee and enjoy reading the magazines in the waiting area. 3. The mechanics are very careful and conscientious when working on my car. 4. When I complained that there were streaks on my windows, they redid my windows and gave me a discount coupon for my next visit—real nice people. 5. Very fast and convenient service—I'll be back. 6. Store managers are super but the mechanics don't like to talk to us customers. 7. I won't come back; a mechanic kept staring at me! 8. I felt pressured to buy the air and fuel filters but they looked clean to me. 9. All the mechanics seem hurried while I was there. 10. The mechanic got grease on my fender and when I ask him to please clean it off, he shrugged and wiped it off with a cleaner.

The VP of operations, David Margate, decided to analyze this information. A final report to the CEO was due in two weeks. To assist Mr. Margate, answer the following questions.

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Case Discussion Questions 1. Define and draw the customer benefit package and state TAS's mission, strategy, and rank order of competitive priorities. 2. Identify and briefly describe the ‘design’ features of the (a) service-delivery system and (b) service encounters. 3. Identify and briefly describe five processes TAS stores use and their relative importance. 4. Given your analysis of the survey data, what opportunities for improvement, if any, do you recommend? 5. Summarize you final recommendation to the CEO.