Service design is an approach that companies are increasingly adopting to ensure customer-centric development. In this blog post, we decided to focus on the business benefits of service design because, in our experience, while service design has gained a lot of attention it can sometimes be difficult to understand how it can contribute to commercial success. Among other reasons, this is due to the multifaceted nature of the business impact service design can provide and the time it takes for the impact the manifest, which can be weeks, months or even years, depending on the magnitude on the change.
Here at Hellon, we divide the business benefits offered by service design into three categories:
- increased turnover
- improved profitability and
- building a competitive edge
Service design as the source of profitable growth
We often discuss how service design is based on identifying customer needs. We have also described how the needs identified are used as the basis for generating ideas for solutions, after which the solutions proposed and prioritised are tested and developed further in collaboration with the customer. As a result of this process, the organisations we work with are able to develop more customer-centric services. But how is all this linked to the profitable growth of your business?
Whether you are developing an existing service or creating a brand new service innovation, improving customer experience and developing more customer-centric services has the following impacts in terms of increased business:
- improved customer satisfaction, increasing the use of the service,
- stronger customer loyalty, improving customer retention,
- increased number of referrals, leading to contact with more customers, and
- new services creating new sales.
Improving your profitability
In addition to growth, service design can be used to improve the profitability of your services by either making it possible to charge more for the service or by lowering the costs related to the service. Traditionally, companies have tried to improve profitability by streamlining the processes within the company. Service design, on the other hand, aims to identify new potential for profitability by focusing on developing the service process phases that produce genuine customer value or currently constitute of pain points from the customer’s point of view.
Typically, the situations that your customer would consider to be pain points are financial pain points for your company too. In other words, poor customer experience often becomes costly for the service provider. Let’s clarify this with the following example: Imagine a situation where your customer comes across a mistake or another challenge during the service and they need to contact your customer service department. Would you agree that a situation like this often ends up costing your company money because you have to investigate and rectify the error?
These costs could be avoided by using service design, as the approach helps identify the reason for the customer’s dissatisfaction and how it should be resolved from a customer point of view. In addition to the example above, service design can be used to improve the profitability of a service by minimising the processes in the service chain that incur the most costs without producing value for your customer. Service design can also be used to bring the costs down by creating customer-centric services which allow customers to self-serve.
From designing services to building a competitive edge
In addition to developing services, service design can also be used to support a wider transformation on both a strategic and/or systemic level. In these kinds of situations, service design focuses on the company strategy and operating models that support it. At the end of a project like this, the company is able to reap benefits such as genuinely customer-centric guidelines and tools that improve the company's competitiveness. The collaborative nature of service design also increases employees’ commitment and understanding of the company strategy, helping them work better in line with the strategy. Together, these factors build a competitive edge that sets the company apart from its competitors.
At Hellon we believe that happy employees make for happy customers. This applies in particular to the service sector where the majority of the value creation stems from interactions between the company employees and the customer. This is why service design is also applied more and more in the development of employee experience, in which service design is used to improve the employees’ experiences of the company as a workplace. From a business perspective, achieving an excellent employee experience simultaneously decreases staff turnover and recruitment costs. Moreover, companies known for their excellent employee experience attract the best and most skilled candidates when hiring. These factors, in turn, further improve competitive advantage.
Agile and motivating ways of working help you hit your goals
When examining the benefits of service design from a business perspective, companies can increase their competitiveness not only through customer-centric results but also through the agile ways of working that are characteristic of service design. Due to its iterative nature, service design offers a more cost-effective approach than the traditional service development process due to the principle of consulting the customer as early as possible to find out what works and what doesn’t. This agile process allows the design team to create solutions that hit the mark with a higher accuracy, enabling new services to be launched in a shorter amount of time. To support this process, Hellon's experts have developed the ‘Live Lab’, a special method for prototyping services that allows the design team to efficiently develop and test solutions together with the customer at multiple stages of the project.
In addition to agility, service design is characterised by its creative and collaborative nature. Based on our experiences, participating in a service design project is an insightful and inspiring experience for employees. This also allows the company to tap into its employees’ ability to create new ideas and to channel this motivation into developing new and unbeatable services and customer experiences. Together these improve the company's competitiveness by increasing the potential for innovation.
What is the situation at your company?
What does your company do to attract new growth opportunities or to improve your profitability? Do you know what the employee experience is like at your company? If you’d like to learn more about what service design could do for your company, we are happy to support any challenge you might face or provide expertise in ongoing projects.