Improving Customer Experience in Service Based Firms

In this article, we explore how to increase Customer Experience in service-based businesses, namely those operating in Launchpads, Co-Working & maker-spaces. Although Launchpads are a relatively new concept in academia and in Canada, their use has increased 500% since inception 8 years ago. These Launchpads provide support services to both startups and mature businesses, accounting for some 20% of Canadian Gross Domestic Output (Egusa & Stunt, 2017).

In my experience, the first thing that needs to be done to elevate the service offering of these firms is the creation of a system that manages the quality of the product; A Quality Management System of sorts. What this facilitates is the examination of existing operations is examined in closer detail, which is integral for bringing under-performing parts of the business to the microscope.

But how do you define Quality?

There was a study done by Mendes (2013) study involving 600 small businesses in the manufacturing sector each with less than 250 employees in Portugal. The main finding was that in environments where non-competing firms share space in makerspaces or co-working environments, the way Quality is defined moves away from a single definition. This is because each business has its own markets and set of targets to be met, completely independent of neighboring businesses. Actually, the definition would vary so widely across the board that Quality can only be defined by aspects that are common to all businesses. That commonality is providing a service.

The first best practice coming out of this study was that for any business to achieve uniform results through its product/service offering and minimize defects (mistakes/service failures), it must simultaneously and constantly meet and exceed client expectations. For service-based firms, this means the service must be flawless (every single time) and geared to exceed a wide array of client needs.

The second best practice and which works for firms with varying degrees is the customer segmentation practice. What the customer segmentation scheme and criteria they are segmented on, will differ based on the business and performance indicators they are trying to conquer. From my own findings, it is best to deconstruct the customer base and create segments based on the important parts of your service offering that would appeal to each segment. This should allow managers to have a detailed look at the clientele and once it is understood, the service offering can be tailored to each segment.

David Garvin (1987) who is a respected figure in Service Quality, avoids the use of standard frameworks like ISO but instead suggests that Quality is comprised of eight metrics. I have adapted this framework specifically to suit small firms operating in launchpads as follows:

Figure 1: Service Metrics for small firms in Launchpads – Marcus Hinds 2020.

Pitfalls to avoid

The only problem with assessing user expectations, is that they will change several times throughout the life cycle of the business, as it grows, contracts and expands into different markets. As you can see, the Covid-19 Pandemic has changed the very fabric of our society as well which will spill over majorly in how we do business. Systems within the firm must be carefully integrated so that there is overlap, in the event that one business unit is unable to function, another can pick up the slack and cover. Whenever mistakes are made, systems need to facilitate quick and complete recovery as well.

Issues with implementing Quality

Systems within the launchpad must managers can understand how the client’s needs will likely change over time and which services will become more important during that time. The entire firm has to be designed with some overlap in the systems in the first place, which will also aid with service failure recovery. This means that the finance department should be able to cover some of the work of IT department the Operations department and management functions when needed. Overlaps avoid service failures caused by depending on standalone systems. How employees view this structure wil greatly depend on the firm’s culture, which ought to feature strong and progressive leadership. Several management studies have weighed in on this but the most pertinent is the Ogland (2008) study, which suggests that employees must understand the configuration of operations before and after QMS implementation takes place if it is to be successful. Employees must essentially understand what they do, why they do it, and where it fits into the larger picture of the organization.