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How can service design influence customer loyalty?

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15th May 2014
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According to the Chartered Institute of Marketing, acquiring a new customer is between 6 and 10 times more expensive than retaining an existing one. Engage with your customers and you encourage return custom, positive word of mouth and perhaps most valuable of all, loyalty. The benefits are clear to see. Ensuring your service is fully customer-centric should be a priority.

Nowadays, the onus is on companies to get customer service right first time. Social media offers a chance for customers to provide instant feedback if an experience doesn’t match their expectations. In fact, traditional forms of communication are frequently being shunned by Generation X (those aged between 18 and 30).

For example, a recent study by Intelligent Environments highlighted that more than six in ten customers in this group demand WhatsApp-style customer service messaging from their banks. Whilst this is great for the customer, it challenges businesses to keep customers at the heart of their offering.

So what is service design, and how can it help?

Service design seeks to understand where organisations are struggling to serve customers, investigate how services can make a positive difference to both and then design solutions that deliver real value. This involves applying service design principles more widely, looking beyond the service offering of an organisation to design improvements to how a business is structured and how it operates. Over recent years, it has been employed by a wide range of industries, from banking to public transport.

It combines a wide range of practices from deep customer research to story board creation to understand a businesses main raison d'etre, allowing it to achieve a mutually beneficial relationship with its customers. To do this, you have to create smart, easy to understand solutions that can make a real and measurable impact.

Outside-in perspective

One of the first elements to keep in mind is to view your company from an outside-in perspective – to find out what customers see when they choose to engage with you over a competitor. Start with understanding, then move on to improvement

This can be achieved in a number of ways, from offering more convenient airport check-in to a less painful service hotline, even the smallest shift in focus can dramatically improve a customer experience. Being able to see what makes you attractive to customers and building upon this will stand you in the best place possible to offer consistently good customer service. According to American Express’ Global Customer Service Barometer, 70% of consumers want at the very least an apology or some form of reimbursement after a poor customer service experience – getting your customer service right first time will help limit these costs.

Choose how and when to engage

Applying the concepts of service design can also help an organisation manage its engagement with its customers – providing the correct strategy to offer positive interactions. Customers will notice the difference between when they choose to engage with an organisation and vice versa. For example, it can be very irritating for customers to receive a sales call from a company who they’re having an ongoing issue with, showing no understanding of past issues or their current circumstance. This contributes to customers not feeling valued or appreciated by particular organisations. Choosing the right way to communicate is vital.

Technology as an enabler for change

The UK’s Institute of Customer Service highlighted the fact that in 2014 customers will drive organisational change, not vice versa. Customer service will hold the key for success for many organisations and those who evolve and adapt will gain a stronger foothold compared to those who fail to understand the changing face of the customer. Technology is providing organisations with a growing range of opportunities to shape their service around customers’ needs and companies are under increasing pressure to embrace this in order to gain a competitive advantage. But new difficulties come hand-in-hand with new opportunities.

When Orange and Barclaycard applied service design to promote the launch of Quicktap, a new NFC payments initiative, they started by understanding the problem it was solving for customers. Having a new payment option that’s easy-to-use was a huge benefit, but Orange and Barclaycard needed to present this in a simple way, cutting out the confusion for end-users.

By streamlining the initiative and developing an accompanying storyboard, they were able to easily define the key benefits to customers and develop marketing materials to convey them, to coincide with the launch of Quicktap. This didn’t need to be a complex process, but it did need to be as thorough as possible to understand what potential issues might arise, and then put flexible processes in place to deal with these in a fast and effective manner.

‘Wow Moments’ vs a ‘Wow Experience’

Of course, changing a few finite details doesn’t completely alter a customer’s overall experience. Take, for example, an organisation that puts a more accurate and reliable billing process in place, giving the customer a more up-to-date and reflective bill. This is an improvement, but the service being provided is expected and does very little to improve the customer journey – this can be classed as a ‘Wow Moment’.

On the other hand, think about how John Lewis looks after its customers. Every assistant has a welcoming manner and detailed product knowledge. If you have a problem post purchase they will fix it quickly, with a minimum fuss. These are all basic things, but retailers frequently get them wrong. John Lewis is famous for getting them right, and was unsurprisingly beat its high street rivals during the Christmas rush this year. If done correctly, you can easily provide your customers with a ‘Wow Experience’.

Understanding the difference between a ‘Wow Moment’ and ‘Wow Experience’ will leave you better placed to offer consistently good service throughout the lifetime of a customer’s engagement.

Well designed services provide great customer experiences

Service design is about putting customers at the very heart of your organisation. What is does effectively is help engage with your customers in ways that make sense for them and inspire satisfaction and loyalty. The benefits are clear for all to see and, if used correctly, many elements of service design can be bought into most, if not all, industries.

To implement service design you must start by defining clear, easy to follow steps outlining what you want your businesses offering to encapsulate. By doing this, you will simplify your priorities and be able to view your company from a customer’s perspective.

For you to make the most out of service design try to understand the value that this will add to your organisation – why are you doing this? Take note of the feelings and emotional response you are aiming to share with your customers and then highlight the expected way that this will be accomplished by the service you’re offering. Getting customer experience right is all about designing your services with them in mind.  

Ben Reason is founding director of service design at niche consultancy Livework.

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