A Framework for Service Design

Despite the growing interest in the design of services, most design approaches used in practice do not provide a comprehensive analysis of the factors that drive successful service design. This paper builds on the design method of the customer journey to propose an analytical framework that characterizes the multi-stage nature of services and treats the customer experience holistically. In this context, the provider decides how much effort to allocate at each step of the service process and how much to charge for the service. We find that these design decisions need to account for nuanced effects related to the nature of customer preferences. Cost, albeit important, cannot solely determine the provider's effort. Moreover, the design is driven by how the experience that customers derive at one step depends on the experience at other steps. These interactions determine whether the provider's efforts at different steps emerge as substitute or complementary.