How crucial is timing for service launches?

The CEO of the Finnish national railways VR, Mikael Aro, was being interviewed on radio - and TV - for the various problems the company has been facing - and causing - lately. It was discussed how VR has become a joke among its customers using trains for daily transportation.

VR´s problems do not seem to disappear. The past two winters, with record amount of snow, caused a multitude of delays. Problems in manning the trains has been another cause for delays or even cancellations. The problems in the new ticketing logic and system is yet another episode nobody really wanted to face. According to Mikael Aro, customers cannot be blamed for unsatisfaction. Who would like to have an unpredictable service on a daily basis, especially when you depend on the train schedules for getting to work or school. And do you really want to face a problem when trying to purchase a simple thing - ticket.

VR being a service organization made me think of two things: what the right moment is for introducing new services, and if there are any differences in introducing services in a monopoly vs operating in a competitive environment.

Timing. It goes without saying that you need to fix the existing problems. But when and how do you take things forward with new service launches? In order to develop and provide a better service experience, companies need to test alternatives in widening and improving the portfolio. But would you not introduce new services gradually to maintain the core experience, supporting your brand. I heard VR had tested the new ticketing system for 6 months. Maybe it was still not enough. Maybe they did not test different customer groups. Different technical alternatives. Who knows. However, the core problem for VR has been availability of the service ie trains not moving when they should. Would it not make sense to fix the availability problem, improve schedules to the promised service level, have one "good" winter and only then go for a next level of changes ie the new ticketing service? Launching a service concept when the customer base is already unsatisfied must be the most challenging timing.

Monopoly. I don´t see any differences how a service introduction would differ for a monopoly. In case of VR, it may rule the national railways but it does not rule transportation. On TV there was a comparison of a flight vs train ticket from Helsinki to Oulu. A flight ticket was comparably much better choice. If you fail, even a monopoly has to face consequences: increased costs, impact to personnel, customers looking for alternatives or even stopping use of the service.

My question is, could VR learn something from another state owned company, Alko? Alko has successfully provided new service concepts to its customers and has most likely one of the best service experiences in the country. Is there a logic that Alko is using when introducing new service concepts and how do they test them among their customers to ensure success of implementation? It is of course different selling wine than moving people 1200km to another location in a heavy snowstorm. But both companies share something in common: a few million Finnish customers who need them and have few alternatives. And don´t we want both companies to do a good job.

Projectizing service quality

"There are no support functions longer."
In a service company - everything is important. I listened to Jesus Belle, our Professor for Service quality management in Haaga-Helia and thought this is bold - and I comply. According to Belle, there are no longer "sales or marketing kingdoms" with everything else as "support functions". In a service organization, everybody and every organization needs to contribute to final customer experience.

Responsibilities must be clear to convert company knowledge into a seamless service experience. Modern budgetting should no longer allocate budgets to functions but rather projects with development objectives across functions. Mr Belle emphasized projectization within any (service) organization. Budgets should be allocated to projects which enforce collaboration internally and strive at (good) customer service.

Such a set-up requires a different service process also internally. Service units require request to deliver.

How is this done in practice? Coverting a support unit to an internal service unit requires converting objectives to projects. For example:
* list your services
* plan them as projects
* evaluate the cost and efficiency
* improve and provide service level
* stick to schedules and budgets allocated
* link budget to projects based on assessment of them.

Services value assessment

According to Jesus Belle (Professor, Services quality, Haaga-Helia eMBA), the total services value equals customer benefits minus sacrifices they do. In that respect, companies need to evaluate which market stages they are in, in comparison to what kind of service quality they must provide for customer satisfaction.

In regards to service quality development, an early market strategy is to understand when quality is on an acceptable level. Companies may experiment through projects to understand the "good enough" level since competition is low and customer perception may be still very positive. Once companies move to growth phase, they need to take decisions on service developments for standardizing and looking for cost efficiencies.

In mature service markets quality expectations are on a totally different level. Customers know what they want. Core quality has become standard and is no longer appreciated. Key elements of service quality development may be modifications and improvements to functionalities or service levels, or price premiums.

In every stage of the market development, companies must have a clear vision of their ultimate service portfolio: what to invest in and what to emphasize in regards to eg: design, customization, training, maintenance, marketing, financing, upgrading, performance monitoring.

In terms of value creation you also need to consider the side benefits. If you invest in new service development and make a loss of providing that, does it generate profit in other business areas and would you otherwise lose a customer altogether?

To summarize, the concept of quality lives and varies. The quality is not a pre-defined level but rather how the customer perceives the quality vs expectations. The service provider has to understand teh stage in which the company operates in (early, growth, mature) adn develop and provide quality as expected.

Media is not social - people are

In our course on social media we discussed why and how social media could be used by companies. We concluded that people´s motivation drives their behaviour on social media sites and therefore companies need to plan what and how they serve in different social media channels. We discussed that in principle same marketing rules apply as in other media - companies look for awareness, preference, purchase and loyalty but how they capture it in social media has to be planned based on people´s online behaviours and values. B-to-b marketing opportunities may be just as attractive as consumer marketing opportunities. It´s also clear that marketing is not the only opportunity within social media. Online channels can also be used for innovation, recruitment or customer service purposes.

But what I started thinking is what is the difference between service organizations and product organizations in regards to social media. If we emphasize the role of internal marketing and communications in service organizations, could social media provide enhanced possibilities for service organizations? In service organizations people are the ones to deliver the service. Their mindset and values need to showcase what value the company delivers. If social media is an optimal forum for collaborating, sharing and networking, could service organizations better embrace their employees for interacting with customers in a variety of ways?

The challenge I see is the barrier media in general creates. It is much more challenging for people publishing content in public than in internal channels. Therefore in service organizations we could utilize the expertise of people and capture it via various media but could create different roles to make most out of it. Some act as facilitators, some act as experts providing content. Could the service process be copied in social media: planning how we interact with customers throughout the whole service process, just doing it virtually?

Knowing and doing added value

It´s been interesting following differences between a service company and a product based company.

In a service company I purchased three items. I was not too happy spending more than 10 minutes at the counter paying three different invoices "because the services had been performed by three people". The service itself was ok but the whole service process was not thoroughly thought of.

In a service organization it is vital all employees know how to add value to customers, in different stages of the service. From that perspective, working in a service organization requires a service minded attitude and interest in strategy and development. And even if the objectives are known and the direction is clear, the challenge is overcoming obstacles and clarifying processes where the hickups are.

Elements of successful implementation are thorough service processes, infrastructure that supports it and relevant communications. The employee performing the service does not alone create the service experience. The experience is the total of all details.