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Related Experiment Videos

Breaking the trade-off between efficiency and service.

Frances X Frei1

  • 1Technology and Operations Management Unit, Harvard Business School, Boston, USA. ffrei@hbs.edu

Harvard Business Review
|November 30, 2006
PubMed
Summary
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Managing customer variability is crucial for service businesses. Companies can effectively influence customer behavior through a three-step process to improve service operations and customer experiences.

Area of Science:

  • Operations Management
  • Service Operations
  • Customer Relationship Management

Background:

  • Customers are key inputs in service production, introducing significant variability.
  • This variability poses a central challenge for service companies aiming for consistency.
  • Customer variability impacts service delivery, operational efficiency, and customer satisfaction.

Purpose of the Study:

  • To identify and manage customer-introduced variability in service operations.
  • To explore strategies for service companies to handle customer variability effectively.
  • To provide a framework for influencing customer behavior to improve service processes.

Main Methods:

  • Analysis of customer-introduced variability types (arrival, request, capability, effort, preference).

Related Experiment Videos

  • Evaluation of accommodation vs. reduction strategies for managing variability.
  • Case study examples (Starbucks, Dell) illustrating variability management techniques.
  • Proposal of a three-step process for influencing customer behavior.

    • Main Results:

    • Customer variability can manifest in multiple ways, requiring tailored management approaches.
    • Strategies like training (Starbucks) and outsourcing with oversight (Dell) can mitigate variability.
    • Influencing customer behavior is key to creating value for both the company and the customer.
    • A structured approach to managing variability leads to better operational and service outcomes.

    Conclusions:

    • Effective management of customer variability is essential for service business success.
    • Service companies must diagnose variability types and choose appropriate strategies.
    • Influencing customer behavior through a structured process enhances service delivery and customer experience.