Why Service Design Is So Relevant

Service design is a core skill of any successful business. This might seem a surprising statement, but put it another way it will actually seem pretty obvious. That is, to be successful a business must know who its target customers are, what value it is delivering, and why customers choose its products and services rather than those of competitors. And to survive over time, the business must also be able to respond to external trends and changes in customer needs; and be able to make enough money to survive on the way through. This goes right back to Michael Porter who said the fundamental role of a business is to find and satisfy customers.

So how do businesses find and satisfy customers and keep doing so over time? Especially now, with new businesses much faster and cheaper to launch than ever before.

The answer is to ensure your business can answer the following questions, and to regularly test whether yesterday’s answers to the questions are still relevant today. The questions can be grouped under three headings – Why, How, and Wow:

 

Why does your business exist

  1. What customer need does your business address, or in service design terms, what problem does your business solve?
  2. Who has that problem?
  3. Is the pain of the problem bad enough for target customers to seek a solution or a new solution?

How

  1. How are customers solving the problem now?
  2. How will your products or services solve the problem?

Wow

  1. Are your products and services so compellingly better than the alternatives they will motivate customers to change and be loyal to your product or service?

The first question is what ‘problem’ are you trying to solve. In other words, what is happening in customers’ lives that your product and service will help with. This can be an ‘opportunity’ or an ‘unmet need’ rather than a ‘problem’, or a combination. Some ‘problems’ are functional, e.g. how do I get my tax return done. Others are emotional, e.g. many luxury goods are about increasing users’ sense of self-worth. Some are social like Facebook; and others fit across all of these dimensions. By the way, ‘problem’ may not be a word you use directly with customers – they may not appreciate being told they have a problem! – but is still a useful way of framing the search for an opportunity that has inherent motivation for customers to act.

The question ‘who has the problem’ will enable you to identify your target market. This means your target market should be defined in terms that are relevant to the problem. It’s always tempting to use easily identifiable things like demographics (age, gender, education, income, etc.), but this often includes lots of assumptions and is an easy way to miss opportunities. Supermarkets used to think their target market was people (usually women) doing a large weekly shop, then realised it was also busy career professionals who want to pick something up to eat on the way home (so now there are small ‘metro’ supermarkets). The practical goal of targeting is to maximise the return on investment of marketing budgets. It might be easy to think of a target market as being all women but advertising that aims to reach ‘Australian women’ would be expensive and likely to waste money promoting your product to people who have no need or interest.

Is the pain bad enough to change – is a check on how motivated are potential customers to change their current behaviour. Buying a new product or service always involves some level of behaviour change so your target customers need to be motivated to make the change. Startups often look for those who feel the pain the worst and so are the most motivated.

How are customers solving the problem now – will identify your competitors. A competitor is anything currently used to solve the problem and often includes ‘do nothing’ or ‘D.I.Y’ if some customers currently solve the problem themselves.

Asking ‘how will your products and services solve the problem’ is a check that what your business does actually matches the problem. Its also useful to identify ‘friction points’, actions that customers have to take and which don’t add value or might make the customer think ‘I will do this later’ (which is usually code for ‘won’t get around to it ever’!).

The last question is probably the most critical – how likely is your business to get how many customers, and how long can it expect to keep those customers. This goes to the size of your potential customer base and customer lifetime value.

Startups refer to answering the above questions as finding ‘product-market fit’ – finding a product that has a market of people willing to buy it.

Once you have answers to the core questions, marketing techniques become relevant – growth hacking, pirate metrics, social and content marketing, customer success, and so on – but none of these techniques will be of much help if your business hasn’t answer the core questions.

 

Customer Service or Hostage Situation?

There is an odd wrinkle in the digital era which is that companies continue to offer customer service like a kind of hostage situation where they won’t take action unless you, the customer, sit and watch while it happens. 

I have just spent 40 minutes in a live chat session with my mobile phone provider to cancel a data plan which has appeared on my account, which had me tethered to my desk because I started the chat session on my PC.

Many years ago, you could post a letter to a service provider making some request about your account, and when they got your letter they would make it happen, while you went about your daily life untroubled by any need to go and stand next to the person undertaking the work and make bright conversation while they actioned your request.

Then the contact centre made it was necessary sit on the telephone while your request was carried out. It was never an option to describe the request and have them call back when they were done. I think this was because contact centres saw themselves as a more convenient alternative to a customer visiting a store, when a better framing of the opportunity would have been to compare it against the customer, you know, doing something else.

Which brings us to live chat. It should be like instant messaging but it’s not.

Live chat is essentially a telephone call with the sound turned off. It is still involves waiting in a queue, getting connected, explaining what you want, standing by and wait until everything is actioned, then being disconnected at the end of the chat.

Real instant messaging really would enable the customer to do something else at the same time because iM doesn’t involve an expectation of an instant reply. And an IM conversation will follow the participants across devices. So if I want to head out to go to the movies, I won’t be ‘disconnected’ if I don’t reply to a question instantly, and the conversation can seamlessly shift from PC to mobile.

This is the kind of missed opportunity that happens when companies start with solutions (‘lets get live chat’) instead of starting with customer problems (‘how can we make routine service interactions easier and frictionless’).

As for me, I am off to the movies at last….

When Service Design Meets Customer Experience

What is service design? What is customer experience? And are they the same or different? The answer is that they are different but closely connected.

Service Design is focused on overall value delivery:

  • What is the ‘job’ are you doing for your customers?
  • Who are the customers or customer segments who require that job to be done?
  • How do you perform the job?
  • What are customers paying for?

Customer Experience is focused on the interface between the organisation and its customers. It considers all ‘customer touchpoints’ – including advertising, sales, fulfilment, customer service – and seeks to optimise the end-to-end customer journey. For many companies, the focus of optimisation efforts are on ease, convenience, and providing a seamless and enjoyable experience.

Companies that combine service design and customer experience to create a ‘Service Experience’ create value for customers in ways that are much harder for competitors to copy. This is partly because delivering a Service Experience will be based on a system (vs designs and processes), and experience shows systems are much harder to replicate than the designs and processes required for products or simple services.

A Service Experience is where value delivery is inseparable from customer experience. Its focus is holistic around making customers lives easier and better. Innovation opportunities include different types of engagement with customers, and including third parties, such as building communities, and crowdsourcing.