I care about service design because I come at it as a leader of an organization that design services for our clients. Therefore, it’s in my best interest to know how and why it delivers real value. The more value it creates, the more organization will seek out, use, and pay for our work in service design.
I believe strongly that the approaches and mindset of service design can bring about more human and more empathetic services that connect people and business in better ways. But to forward this potential I focused this presentation hard toward the numbers side to find the spaces where service design has the best economic impact.
10. value
It makes money
systems
Integrated and scalable
people
Humans in the right places
journeys
A few sensible touchpoints
proposition
Low risk—it could fail
13. value
It makes money
systems
Integrated and scalable
people
Humans in the right places
journeys
A few sensible touchpoints
proposition
Low risk—it could fail
19. MARKET SIZING
Using a rough top-down estimate, the size of
budget for service planning and design is BIG.
Annual economic output 1
Wholesale trade, retail trade, transportation, and
public utilities
$0.5 Trillion
Finance, insurance, real estate
$1.5 Trillion
Total annual economic output
$2.0 Trillion
Portion of economic output from mid-and-large
scale firms (50%) 2
$1.0 Trillion
Average margin on services 3
Cost of services sold
Annual investment in planning & design of services 4
Total annual investment in service design
10%
$100 Billion
2.0%
$2 Billion
1 ‘The Role of Services in the Modern U.S. Economy’, U.S. Department of Commerce
2 The U.S. Small Business Administration estimates half U.S. GDP is from small business
3 Conservative round guess
4 The U.S. spend 2.6% of GDP on R&D according to the OECD
*BS
20. MARKET SIZING
Using a rough bottom-up estimate, the size of
spending on service design appears smaller.
Number of U.S. service design agencies 1
Annual agency book of business 2
Total agency revenue for service design
20
$1 Million
$20 Million
Number of in-house service design groups 3
Annual expenses/charge-backs 4
Total in-house expenditures on service design
Annual investment in service design
20
$2.5 Million
$50 Million
$70 Million
1 Estimate based on tally of listing on service-design-network.org and related sites
2 Roughly ten $100K projects per year
3 Gut estimate based on mirroring the agency estimate
4 Gut estimate based on average staff size of 8
*BS
22. MARKET SIZING
$2 Billion
Estimated size of total
dollars spent in U.S. on
the planning and
design of services
$70 Million
Estimated total portion
of these dollars spent
on service design
*BS
23. MARKET SIZING
$2 Billion
Estimated size of total
dollars spent in U.S. on
the planning and
design of services
$70 Million
Estimated total portion
of these dollars spent
on service design
*BS
25. COMPETITION
How’s the rest of this work
getting done?
System Engineers
— Complete unscientific guessing of who’s doing how much
*BS
26. COMPETITION
How’s the rest of this work
getting done?
System Engineers
Operations
Management
— Complete unscientific guessing of who’s doing how much
*BS
27. COMPETITION
How’s the rest of this work
getting done?
System Engineers
Operations
Management
Branding &
Marketing
— Complete unscientific guessing of who’s doing how much
*BS
28. COMPETITION
How’s the rest of this work
getting done?
System Engineers
Operations
Management
Branding &
Marketing
Customer Service
— Complete unscientific guessing of who’s doing how much
*BS
29. COMPETITION
How’s the rest of this work
getting done?
System Engineers
Operations
Management
Branding &
Marketing
Customer Service
“The Organization”
— Complete unscientific guessing of who’s doing how much
*BS
30.
31. COMPETITION
How’s this work
getting done?
System Engineers
Operations
Management
Branding &
Marketing
Customer Service
“The Organization”
Straight-up Service
Designers
— Complete unscientific guessing of who’s doing how much
*BS
33. 362 firms
95% say they are
“customer focused”
80% say they deliver a
“superior experience”
How many of these
firms’ customers agree
that they deliver a
superior experience?
8%
from “Closing the Delivery Gap” by Bain & Company
37. OMG
For every $20 spent on ads for services in the U.S.,
only $1 is spent improving that service.
$40 Billion
$2 Billion
Estimated 2011 U.S. ad spends for top 5
service categories: Local, Financial,
Telcom, Restaurants, and Travel &
Tourism Services
Estimated size of total
dollars spent in U.S. on
the planning and
design of services
photo by Seal Beach AT&T
*BS
39. Service Anticipation Gap
The loss of future potential revenues
and the wasted ad spend when a
service doesn’t meet or exceed the
expectations set with the customer.
40. Service Anticipation Gap
The loss of future potential revenues
and the wasted ad spend when a
service doesn’t meet or exceed the
expectations set with the customer.
SAG =
Ad spend that
attracted
customers who
didn’t engage
+
Potential future
revenues lost
when customer
didn’t engage
41. Overcoming SAG
Increased customer
acquisition and adoption
rates by planning and
designing for service
propositions, sequencing,
and flow
Increased customer
loyalty and advocacy
through user-centered
planning of customer
journeys across
touchpoints and
evidencing of
customer value
43. value
It makes money
systems
Integrated and scalable
people
Humans in the right places
journeys
A few sensible touchpoints
proposition
Low risk—it could fail
44. value
It makes money
systems
Integrated and scalable
people
Humans in the right places
journeys
A few sensible touchpoints
proposition
Low risk—it could fail
Five
Fundamentals
of Service
Design
45. value
It makes money
systems
Integrated and scalable
people
Humans in the right places
journeys
A few sensible touchpoints
proposition
Low risk—it could fail
Current
service design
is underpowered at
two of these
47. value — Where service design misses
EXISTING
CAPABILITIES
NEW
CAPABILITIES
EXISTING
CUSTOMERS
Optimization
Service
Development
NEW
CUSTOMERS
Market
Development
Diversification
— riff off of the Ansoff Matrix, circa 1957
48. value — Why service design sucks at it
EXISTING
CAPABILITIES
NEW
CAPABILITIES
EXISTING
CUSTOMERS
Optimization
Service
Development
NEW
CUSTOMERS
Market
Development
Diversification
— riff off of the Ansoff Matrix, circa 1957
49. value — Why service design sucks at it
EXISTING
CAPABILITIES
NEW
CAPABILITIES
EXISTING
CUSTOMERS
Optimization
Service
Development
NEW
CUSTOMERS
Market
Development
Diversification
— riff off of the Ansoff Matrix, circa 1957
50. value Where a dollar/won of sales goes
RETAIL STORE SALES
89¢
for product
VIRTUAL STORE SALES
labor
marketing
overhead
89¢
for product
labor
marketing
overhead
location
location
profit
profit
*BS
51. value Where a dollar/won of sales goes
RETAIL STORE SALES
89¢
for product
VIRTUAL STORE SALES
labor
marketing
overhead
89¢
for product
labor
marketing
overhead
location
3%
location
profit
profit
PROFIT MARGIN
7%
PROFIT MARGIN
*BS
52. value Where a dollar/won of sales goes
Service design should be tapping new
RETAIL STORE SALES revenue by VIRTUAL STORE SALES
sources of
changing the
labor
labor
economics.
89¢
for product
marketing
overhead
89¢
for product
marketing
overhead
location
3%
location
profit
profit
PROFIT MARGIN
7%
PROFIT MARGIN
*BS
53. value The value virtual stores add
RETAIL STORE
VIRTUAL STORE
100 Stores
25 Stores
500 Customers/store
$150 Average $/customer
200 Customers/store
$75 Average $/customer
$225,000
$26,250
10%
DAILY GROSS PROFIT
DAILY GROSS PROFIT
ADDITION
*BS
54. value The value virtual stores add
RETAIL STORE
VIRTUAL STORE
$225,000
$26,250
DAILY GROSS PROFIT
DAILY GROSS PROFIT
$2,250
$1,050
PER EACH ADDITIONAL STORE
PER EACH ADDITIONAL STORE
*BS
55. value — Where service design should be playing
EXISTING
CAPABILITIES
NEW
CAPABILITIES
EXISTING
CUSTOMERS
Optimization
Market
Optimization
Service
Development
NEW
CUSTOMERS
Market
Development
Diversification
56. value
It makes money
systems
Integrated and scalable
people
Humans in the right places
journeys
A few sensible touchpoints
proposition
Low risk—it could fail
Current
service design
is underpowered at
two of these
57. value
It makes money
systems
Integrated and scalable
people
Humans in the right places
journeys
A few sensible touchpoints
proposition
Low risk—it could fail
Service
design is
extremely
strong at
some of these
80. LEAN
Increasing confidence of adoption
Relative advantage
The degree to which an innovation is perceived as
better than the idea it supersedes
Compatibility
The degree to which an innovation is perceived as
being consistent with existing values, experiences,
and needs of users.
Complexity
The degree to which an innovation is perceived as
difficult to understand and use.
Trialability
The degree to which an innovation may be
experimented with on a limited basis.
Observability
The degree to which the results of an innovation are
visible to others.
83. COMPETITION
How’s this work
getting done?
System Engineers
Operations
Management
Branding &
Marketing
Customer Service
“The Organization”
Straight-up Service
Designers
— Complete unscientific guessing of who’s doing how much
*BS
84. In fact, the service
designer might
not even be the
center of a service
design team
86. BLENDED TEAMS
Staff teams based on the expected outcome.
EXISTING
CAPABILITIES
EXISTING
CUSTOMERS
NEW
CAPABILITIES
Optimization
Service
Development
More
Operations
Savvy
NEW
CUSTOMERS
Market
Development
Diversification
More
Marketing
Savvy
88. THE PITCH
Capture lost revenues from the Service Anticipation Gap
by applying just a portion of the overwhelming ad spends
on the optimization and creation of services.
Awareness
Entry
Engagement
Action
Traditional Ad Spends
Service Investments
Inferences
Highly measurable
Fades quickly
Long-lasting investment
89. THE PITCH
Capture lost revenues from the Service Anticipation Gap
by applying just a portion of the overwhelming ad spends
on the optimization and creation of services.
Awareness
Entry
Engagement
Action
Traditional Ad Spends
Service Investments
Inferences
Highly measurable
Fades quickly
Long-lasting investment