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From Dr. Scott Sampson's Understanding Services Businesses Book (click for table of contents)
SBP 5a: Likening a Service⇐Prior —[in Unit 5: Identifying Strategic Opportunities]— Next⇒SBP 5c: Positioning Amid Customers and Competitors

SBP 5b: Identifying Key Production Elements

With services, the key production process elements are often identified by understanding (a) how their presence or absence motivates the customer, and (b) how we are performing on each of those elements.

Why it occurs

This principle occurs because of the involvement of the customer in the production process. The customer cares not only what is produced, but how it is produced, since he or she has provided inputs to that process.


farm3.static.flickr.com_2092_2247431698_f68ed874ed.jpg When a company's service excels in a particular way, there are a number of ways this might affect the customer:

  1. it may be of no interest to the customer,
  2. it may satisfy the customer, or
  3. it may delight the customer, producing strong feelings for the company.

The distinction between “satisfying” the customer and “delighting” the customer is one of emotional degree, with “delight” being a much stronger emotional reaction. For example, when your dentist remodels the waiting room to offer the most comfortable waiting room chairs of any dentist around, you may be satisfied with the improvement, but not delighted. As such, the excellent chairs will be a factor in choosing a dentist, but not a driving factor. However, if the dentist offered a free foot massage for customers in the waiting room, it might result in delighted customers and increased loyalty.

So also, if a company does a particularly terrible job at a component of service delivery, the customer may react in different ways such as:

  1. it may be of no interest to the customer,
  2. it may cause the customer to be dissatisfied,
  3. it may cause the customer to be enraged, producing strong negative feelings for the company.

In the case of (2), dissatisfaction, the customer may simply choose to not patronize that service provider at that time, but would happily reconsider the next time (especially if circumstances or needs changed). In the case of (3), enragement, the customer is likely to vow to never do business with that service provider again, and to encourage others to avoid the company.

A few authors, including Terry Hill, have proposed the following terms that describe various characteristics of manufactured products: order-winning criteria (product features that motivate customers to buy our products), qualifiers (product features that qualify our products for the marketplace), and order-losing sensitive (qualifiers that customers tend to be particularly sensitive to). 1) Other authors have adapted that nomenclature somewhat to describe how characteristics of services affect customers. 2) The following is my translation of those adaptations.

  • Service winners are those characteristics that a company might excel at and thus gain a strong positive affective response from the customer.
  • Losing-sensitive service characteristics are those that, when done poorly, causes the customer to have strong negative feelings against the service provider. These strong negative feelings often drive a customer's overall negative perceptions of the company.
  • Service qualifiers are those characteristics that, if met to an adequate degree, result in the customer being just satisfied, and if not met to an adequate degree, causes the customer to temporarily not select that service provider. Meeting these characteristics to a more-than-adequate degree has little additional affect on the customer. Also, if the characteristic is not adequately met one time, but is adequately met the next time, the customer will be more than happy to give the service provider her business that next time.

Herein we are making a significant distinction between a qualifier and a losing-sensitive characteristic–losing-sensitive characteristics impact the emotional memory of customers. Qualifiers inspire a cognitive response, but little or no emotional response.

Important note: For clarity, winners, qualifiers, and losing-sensitive characteristics are positively scaled, meaning more is better. When a service provider does a good job at providing a service losing-sensitive characteristic they avoid any negative impact on the customer. Service providers only experience the negative impact of service losing-sensitive characteristics when they fail to adequately prove that characteristic of the service. The Quick Oil Change examples listed below should clarify this.

How do we know how a service characteristic will impact the customers? Certainly focus groups and other customer research techniques are helpful. Specific techniques will be discussed later in the “Measuring Service Quality and Productivity” unit.

Once we know how the presence or absence of a characteristic will impact the customer, we can use the following table to identify each of the characteristic types:

And as seen in the examples above, some service characteristics fit into more than one category.

How it effects decisions

Understanding the nature of service characteristics helps us know which to focus on for improvement.

What to do about it

farm3.static.flickr.com_2006_2399433068_a9e24d33a0.jpg When trying to determine what to focus on for service differentiation or simply service improvement, we need to consider (a) whether specific attributes are service winners, qualifiers, and/or losing-sensitive characteristics, (b) how our service is presently performing on those attributes, and © how much it will cost to improve.

What should a company focus improvement efforts on first? There is strong argument for initially focusing on service losing-sensitive characteristics that the company is doing a terrible job providing–since that is surely causing many enemies. A second area of focus should be things keeping the service provider from qualifying in the marketplace, or qualifiers that we are doing an inadequate job at meeting. Yet it is not often that either of these two actions will give a strategic differentiating advantage. The way to gain advantage is to focus on service winners that we are not currently excelling at. At this point we can consider the cost of excelling at various service winners, and choose the ones that will allow us to gain the most with customers for the lowest cost.

Where should a company not focus improvement efforts? For one, companies should not focus efforts on adequately achieved service characteristics which are not at all service winners. For example, if an auto service shop's waiting room decor is adequate, and if the waiting room decor characteristic is not a service winners, then little is to be gained by improving the waiting room decor to a level of excellence.

For example

The following are examples of various characteristics of a Quick Oil Change service. The classifications are my opinions and that of students from my class. Attributes marked “loser” are order-losing sensitive. Reactions to each attribute level is recorded as follows: =delighted, =just satisfied, =dissatisfied, =enraged. (Some attribute levels inspire somewhat neutral reactions, but could be satisfaction or dissatisfaction depending on the situation. For example, “open doctors hours” could be fine if that is when I want to take my car in, or not if not.) Note that the order-losing sensitive attributes have a negative emotional effect on the customer when performance is at a poor level.

My airline example

The following are examples of characteristics of airline service (in my opinion):

  • winner - flight times - how well does the flight fit with my time requirements. (I prefer quick flights that get me there with just a little bit of buffer time. I am thrilled with airlines that can get me perfect connections.)
  • qualifier - flight routes - do they fly to a certain location. (If I need to fly to San Diego, I will only consider airlines that have flights to San Diego. However, there are no hard feelings against the airlines that do not fly to San Diego–I will consider flying with those airlines when I need to go to other places.)
  • losing-sensitive characteristic - rude treatment by employees. (A Delta Airlines manager called a colleague of mine a “liar,” even though the colleague was ultimately proven to have been telling the truth.)

How manufacturing differs

With manufacturing, the customer is insulated from the production process. Either the customer likes and purchases the output, or does not purchase the output.

Analysis questions

  1. What elements, when present, motivate customers to select your company over alternatives (service winners)?
  2. What elements allow your company to enter the market when present, or disqualify when not present (service qualifiers)?
  3. What elements, when not present, anger the customers and thus cause them to be lost forever (service losing-sensitive characteristics)?
  4. How might this information help us design our service?

Application exercise

Create a table for your service business process like the auto service example table given as an example in the workbook. You may choose to use the same or different characteristics. For each characteristic, identify how the customer would react under poor or excellent performance. (You might use and symbols, or words like “delighted,” “satisfied,” “dissatisfied,” and “enraged.”) Categorize each characteristic as a winner, qualifier, or losing-sensitive characteristic.

1) Terry Hill, Manufacturing Strategy, Irwin, Homewood, Ill. 1989, p. 36-46.
2) Fitzsimmons2 chapter 2 pages 55-57 on Winning Customers in the Marketplace. also e.g. Heineke, J., and Davis, M. M. The Service Quality Priority Model. Decision Sciences Institute Annual Meeting, Honolulu, Hawaii, 1886-1888.

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