VTS 05 1 Service System Design Matrix

Summary

Over the past two decades, services have become a vital part of global trade and the U.S. economy. The service industry is diverse, ranging from retail and entertainment to complex systems used across various industries. The Service System Design Matrix helps to understand key factors like customer contact, sales opportunities, and production efficiency. Using Chase Bank as an example, the matrix illustrates six types of service delivery systems, from mail contact to face-to-face customization. Understanding these systems is essential for optimizing service operations and enhancing both customer experience and business efficiency.

Takeaways

• 😀 Services are the fastest-growing component of the U.S. economy, with an increasing share of global trade and investment.
• 😀 The service system design matrix helps to understand the relationship between customer contact, sales opportunities, and production efficiency.
• 😀 There are three degrees of customer contact: buffered core (no contact), permeable system (some contact), and reactive system (responsive to customer needs).
• 😀 The more customer contact there is, the greater the sales opportunities but the lower the production efficiency.
• 😀 Service systems range from no customer contact (mail contact) to full face-to-face total customization, each with varying levels of efficiency and sales potential.
• 😀 Mail contact systems, like Chase’s monthly balance statements, offer no direct contact but provide marketing opportunities through inserts.
• 😀 Internet and on-site technology systems, such as ATMs and online banking, are highly efficient but provide minimal sales opportunities.
• 😀 Phone contact systems, which often involve automated menus, increase sales opportunities but reduce efficiency compared to in-person service.
• 😀 Face-to-face tight specifications services, like basic banking transactions at a teller, are efficient with limited personalization.
• 😀 Face-to-face loose specifications services, such as personalized banking by a personal banker, offer greater sales opportunities but are less efficient.
• 😀 The highest level of service customization occurs in face-to-face total customization, such as private client services at Chase, offering highly tailored financial solutions for high-net-worth individuals.
• 😀 Understanding the service system design matrix is key to optimizing service delivery systems, balancing efficiency, customer interaction, and sales opportunities.

Q & A

What is the fastest growing component of the U.S. economy according to the transcript?

The service industry is the fastest growing component of the U.S. economy.

How does the service system design matrix help in understanding service systems?

The service system design matrix helps by demonstrating the relationship between three key factors of service: the degree of contact between the customer and the service provider, the opportunity for sales, and production efficiency.

What are the three degrees of customer contact described in the service system design matrix?

The three degrees of customer contact are: the buffered core (no contact), the permeable system (some contact), and the reactive system (responsive to customer needs).

How does customer contact impact sales opportunities in the service system design matrix?

The greater the amount of customer contact, the greater the opportunity for sales, as more personalized service can uncover customer needs and offer tailored solutions.

What role does production efficiency play in the service system design matrix?

Production efficiency refers to the amount of customization and customer input required for a service. Services with high customization and customer involvement tend to have lower production efficiency.

Can you explain how Chase Bank utilizes different service delivery systems?

Chase Bank uses a variety of service delivery systems, ranging from mail contact (e.g., monthly statements with promotional inserts) to face-to-face total customization (e.g., private client services for high-net-worth individuals).

What is an example of the 'mail contact' service delivery system at Chase?

An example of mail contact is the monthly balance statements Chase sends to its customers, which include promotional materials for sales opportunities.

How does the 'internet and on-site technology' service delivery system work at Chase?

The 'internet and on-site technology' system, like ATM and online banking, allows for no direct customer contact but provides high production efficiency. While it offers some sales opportunities, the focus is more on convenience and backend processing.

What is the role of personal bankers in Chase's service delivery system?

Personal bankers provide services with loose specifications, such as recommending loans or checking accounts. They have a high opportunity for sales but lower production efficiency as they provide tailored solutions to individual needs.

How does 'face-to-face total customization' differ from other service delivery systems?

Face-to-face total customization involves direct interaction between the customer and service provider to develop personalized solutions, such as investment advice or estate planning. While this system has the lowest production efficiency, it offers the highest potential for sales and customer loyalty.