The concept of Flower of Service as an innovative way of appraising core and supplementary services

Opening vignetteAs you walk along the street, the aroma drifts through the air and attracts you. It is drawing you toward the store with the green sign that has now become a common sight. You enter Starbucks, the place where you can sit down and enjoy a great cup of coffee in a comfortable settee or on a chair. You can also surf the Internet on the free wireless broadband service that is available in many of the Starbucks outlets around the world. Starbucks is a place that you would associate with coffee, before anything else.As a service innovation, Starbucks has been transforming itself into a place for entertainment. It wants to extend the pop culture. It does that through Hear Music Starbucks. Customers can buy from an extensive selection of hand-selected and compiled physical CDs in the Starbucks Hear Music Coffeehouses. Alternatively, they can burn personalized CDs from a digital inventory of more than a million sound tracks, including new recordings that can only be found in some Starbucks outlets. Debut albums of some new musicians are actually launched and available only exclusively at Starbucks outlets. Starbucks also sells movie DVDs and books from emerging as well as established authors. It has tied up with Apples iTunes Wi- Fi Music Store to allow music playing at selected Starbucks cafes, up to the last ten songs played, to be browsed, bought and downloaded wirelessly onto the iPhone or iPod. This music will sync back to the Mac or PC the next time it is connected. Soon, we will no longer associate Starbucks with just mocha. Rather, we will see it as a place to relax and feel at home. Starbucks is a company that has developed new service innovations with great success. However, it cannot rest on its laurels as competition is intense. It has to continue to reinvent itself to maintain its edge in the industry.All service organisations face choices concerning the types of products to offer and how to deliver them to customers. To better understand the nature of services, it is useful to distinguish between the core product and the supplementary elements that facilitate its use and enhance its value for customers.

Service ProductWhat do we mean by a service product? A service product consists of two components, the core product and supplementary services. The core product is based on the core set of benefits and solutions delivered to customers. These are usually defined with reference to a particular industry like healthcare or transportation. For example, in healthcare, the core product may be the restoration of the body back to an optimum condition. Surrounding the core product is a variety of service-related activities called supplementary services. Supplementary services augment the core product by facilitating its use and enhancing its value and appeal. The supplementary services often play an important role in differentiating and positioning the core product against competing services.

The flower of serviceThere are two kinds of supplementary services. Facilitating supplementary services are either needed for service delivery, or help in the use of the core product. Enhancing supplementary services add extra value for the customer. These different supplementary services can be classified into one of the following eight clusters: -

A. Facilitating ServicesB. Enhancing Services

1. Information1. Consultation

2. Order-taking2. Hospitality

3. Billing3. Safekeeping

4. Payment4. Exceptions

In the following Figure, the eight clusters are displayed as petals surrounding the center of a flower, hence we call it the Flower of Service. The petals are arranged in a clockwise sequence depending on how they are likely to be encountered by customers. However, the sequence may sometimes vary. For instance, payment may have to be made before service is delivered rather than afterwards. In a well-designed and well-managed service organization, the petals and core are fresh and well-formed. A service that is badly designed or poorly delivered is a like a flower with missing or dried petals. Even if the core is perfect, the flower looks unattractive. Think about one of your negative experiences as a service customer. When you were dissatisfied with a particular purchase, was it the core that was at fault, or was it a problem with one or more of the petals? Facilitating elementsEnhancing elements

A companys market positioning strategy helps to decide which supplementary services should be included. If a companys strategy is to add benefits to increase customers perceptions of quality, then more supplementary services are required. For example, airlines such as Emirates, the award-winning Dubai based airline, may offer supplementary service like goodie bags to soothe hyperactive children. There is also in-flight entertainment such as cartoons and games that can keep the children occupied for hours. This will help to reduce the stress faced by parents traveling with young children. If the strategy is to compete on low prices, then fewer supplementary services are required.FACILITATING SUPPLEMENTARY SERVICES1. InformationTo obtain full value from any good or service, customers need relevant information (Figure below). New customers and prospects are especially hungry for information. Information may sometimes be required by law. These include conditions of sale and use, warnings, reminders, and notification of changes. Customers also appreciate advice on how to get the most value from a service and how to avoid problems. Companies should make sure that the information they provide is both timely and accurate. If not, it is likely to make customers feel irritated or cause them inconvenience.

Traditional ways of providing information to customers include using front-line employees, printed notices, brochures, and instruction books. Information can also be provided through videos or software-driven tutorials, touchscreen video displays, or through company web sites. The types of information range from train and airline schedules, to assistance in locating specific retail outlets, to information on the services of professional fi rms. Many business logistics companies offer shippers the opportunity to track the movements of their packages, which have been assigned a unique identification number. For example, Amazon.com provides online customers with a reference number and they can track the goods that they have bought, and know when to expect the goods.2. Order-TakingOnce customers are ready to buy, the company accepts applications, orders, and reservations (Figure below). The process of order-taking should be polite, fast, and accurate so that customers do not waste time and endure unnecessary mental or physical eff ort. Technology can be used to make order-taking easier and faster for both customers and suppliers.

Order-taking includes applications, order entry, and reservations or check-ins. Banks, insurance companies, utilities, and universities usually require potential customers to go through an application process. Order entry can be received through a variety of sources such as through sales personnel, phone, and e-mail or online. Airlines now make use of ticketless systems, based on telephone or web site reservations. Customers receive a confirmation number when they make reservations and need to only show identification at the airport to claim their seats and receive a boarding pass. Northwest Airlines promotes order-taking online.3. BillingBilling is common to almost all services (unless the service is provided free of charge). Customers usually expect bills to be clear. Inaccurate, illegible, or incomplete bills risk disappointing customers who may, up to that point, have been quite satisfied with their experience. If customers are already dissatisfied, the billing mistake may make them even angrier. Billing should also be timely, because it encourages people to make payment faster. Procedures range from verbal statements to a machine-displayed price, and from handwritten invoices to elaborate monthly statements of account activity and fees (Figure below). Perhaps the simplest approach is self-billing. This is when the customer adds up the amount of an order and authorizes a card payment or writes a check. In such instances, billing and payment are combined into a single act, although the seller may still need to check for accuracy.

Busy customers dislike being kept waiting for a bill to be prepared. There are different ways in which bills can be presented to customers in a faster way. Hotels and rental car firms now have express check-outs. Many hotels may push bills under guestroom doors on the morning of departure showing charges to date. Others offer customers the choice of seeing their bills beforehand on the TV monitors in their rooms. Some car rental companies have an express check-out procedure. An agent meets customers as they return their cars. After they have checked the mileage and fuel gauge readings, the bill is printed on the spot using a portable wireless terminal.4. PaymentIn most cases, a bill requires the customer to take action on payment. One exception is the bank statement which shows details of charges that have already been deducted from the customers account. Increasingly, customers expect it to be easy and convenient to make payment, including using credit, when they make purchases in their own countries, and while traveling abroad. A variety of options exist for customers to make payment. For self-service payment systems, one may make payment by inserting coins, banknotes, tokens or cards into machines. Good maintenance of the equipment is important.

If the equipment breaks down, it can destroy the purpose of such a system. Most payment still takes the form of cash or credit cards. However, more and more shopping is being done online. PayPal offers a fuss-free and secure way to make payments for goods bought over the Internet. Online shoppers must first register with PayPal and have a credit card to use the service. Customers can make their payments via PayPal who will process the payment to the seller. PayPal will then charge the amount owed to the registered buyers account.

ENHANCING SUPPLEMENTARY SERVICES1. ConsultationNow we move to enhancing supplementary services, led by consultation. Consultation involves a dialog to probe customer requirements and then develop a solution that is suited to the needs of the customer. Figure below provides examples of several supplementary services in the consultation category.

At its simplest level, consultation consists of immediate advice from a knowledgeable service person in response to the request, What do you suggest? (For example, you might ask the person who cuts your hair for advice on different hairstyles and products). Finally, management and technical consulting for corporate customers include the solution selling associated with expensive industrial equipment and services. Effective consultation requires an understanding of each customers current situation, before suggesting a suitable course of action. Good customer records can be a great help in this respect, particularly if relevant data can be retrieved easily from a remote terminal. In an Internet environment, which encourages customers to engage in self-service applications and be more self-reliant, companies should not forget the personal touch of a live human being during the process of consultation. The human touch of a friendly customer-service officer will certainly be valued and remembered, and will go a long way for customers.Counselling is another type of consultation that is less direct than consultation. It involves helping customers understand their situations better, so that they can come up with their own solutions and action programs. For example, diet centers such as Weight Watchers use counselling to help customers change behaviours so that weight loss can be sustained after the diet program has ended. Finally, advice, another form of consultation, can also be offered through tutorials, group training programs, and public demonstrations.2. HospitalityHospitality-related services should, ideally, reflect pleasure at meeting new customers and greeting old ones when they return. Well-managed businesses try, at least in small ways, to ensure that their employees treat customers as guests. Courtesy and consideration for customers needs apply to both face-to-face encounters and telephone interactions (Figure below). Hospitality is an element that can be more clearly displayed in face-to-face encounters. In some cases, it starts (and ends) with an offer of transport to and from the service site on courtesy shuttle buses. If customers must wait outdoors before the service can be delivered, then a thoughtful service provider will offer weather protection. If customers have to wait indoors, then there can be a waiting area with seating and even entertainment (TV, newspapers or magazines) to pass the time. Recruiting employees who are naturally warm, welcoming, and considerate helps to create a hospitable atmosphere. Shoppers at Giordano, an international clothing retailer with markets in the Asia Pacific and the Middle East, are given a cheerful Hello and Thank you when they enter and leave the store, even if they did not buy anything. The quality of the hospitality services offered by a firm can increase or decrease satisfaction with the core product. This is especially true for people-processing services where customers cannot easily leave the service facility. Private hospitals often seek to enhance their appeals by providing the level of room service that might be expected in a good hotel. This includes the provision of quality meals. Some airlines seek to differentiate themselves from their competitors with better meals and more attentive cabin crew and Singapore Airlines is well-recognized in both areas.

Failures in hospitality can extend to the physical design of the areas where customers wait prior to receiving service.3. SafekeepingWhile visiting a service site, customers often want their personal possessions to be looked after. In fact, some customers may choose not to go to certain places that do not have safekeeping services like a safe and convenient car park. On-site safekeeping services includes coatrooms; baggage transport, handling and storage; safekeeping of valuables; and even child care and pet care (Figure here).4. ExceptionsExceptions involve supplementary services that fall outside the normal service delivery. Exceptions include special requests, and problem solving (Figure below).

Companies should anticipate exceptions and develop back-up plans and guidelines in advance. That way, employees will not appear helpless and surprised when customers ask for special assistance. Well-defined procedures make it easier for employees to respond promptly and effectively. Managers need to keep an eye on the level of exception requests. Too many requests may indicate that standard procedures need to be changed. For example, if a dentist keeps receiving requests for more information about a particular dental procedure, then this may indicate that it is time to perhaps print some brochures that educate customers. A flexible approach to exceptions is generally a good idea, because it reflects responsiveness to customer needs. On the other hand, too many exceptions may have a negative impact on other customers, and overburden employees.

Managerial ImplicationsThe eight categories of supplementary services forming the Flower of Service collectively provide many choices for enhancing core products. As noted earlier, some are facilitating services that enable customers to use the core product more effectively. Others are extras that enhance the core or even reduce its non-financial costs. Any badly handled element may negatively affect customers perceptions of service quality.Not every core product is surrounded by a large number of supplementary services from all eight petals. People-processing services tend to have more supplementary elements, especially hospitality, since they involve close (and often extended) interactions with customers. When customers do not visit the service factory, the need for hospitality may be limited to just letters and telecommunications. Possession-processing services sometimes place heavy burdens on safekeeping elements. However, there may be no need for this particular petal when providing information-processing services, whereby customers and suppliers interact at arms length. Financial services that are provided electronically are an exception to this however. Companies must ensure that their customers intangible financial assets and their privacy are carefully safeguarded in transactions that take place through the telephone or the web.A study of Japanese, American, and European firms serving business-to- business markets found that most companies simply added layer upon layer of services to their core offerings without knowing what customers really valued.4 Managers surveyed in the study indicated that they did not understand which services should be offered to customers as a standard package accompanying the core, and which could be offered as options for an extra charge. There are no simple rules governing decisions for core products and supplementary services. However, managers should continually review their own policies and those of competitors to make sure they are in line with what the market practices, and customer needs.

Submitted by Group 10-Anirban Patra (NA14010)Ashish Kumar Sinha (NA14015)Jayanti Pradhan (NA14026)Kamlesh R. Bawankule (NA14027)Sushant Arnav (NA14056)