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Innovation in experiential services–an empirical view

  • Warwick Business School and London Business School

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This report examines innovation in experiential services. These are services where the focus is on the experience of the customer when interacting with the organisation, rather than just the functional benefits following from the products and services delivered. The report is based on a continuing research programme on experiential services at London Business School. In particular it draws on a recent case-based study of eight design agencies and consultancies and nine successful experiential service providers. The report addresses the question of how do experiential service providers innovate, in particular the content of innovation and the process of innovation including organisation for innovation. Studying innovation in experiential services facilitates wider reflection on the subject of service innovation. Readers of this report are enouraged to read thee more setailed analysis in: Zomerdijk L. and Voss C.A., Service Design for Experience-Centric Services, Journal of Service Research, 2010, 13(1) 67-82, available on ResearchGate
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Innovation in
Experiential Services –
An Empirical View
Chris Voss and Leonieke Zomerdijk
June 2007
Chris Voss is professor of Operations
Management at London Business School
and Senior Fellow of the Advanced
Institute of Management Research. He can
be contacted at
Leonieke Zomerdijk is Research Fellow of
the Advanced Institute of Management
Research, working at London Business
School. She can be contacted at
Innovation in Experiential Services – An Empirical View
Chris Voss and Leonieke Zomerdijk
June 2007
This report originally appeared as Chapter 4 in Innovation in Services, DTI
Occasional Paper No. 9, published by the Department of Trade and Industry in
the United Kingdom.
Reference to this report can be made as follows: Voss, C. and L. Zomerdijk
(2007). “Innovation in Experiential Services An Empirical View”. In: DTI (ed).
Innovation in Services. London: DTI. pp.97-134.
The full report can be downloaded at
Hard copies (URN 07/989) can be ordered via the search facility at
This research has been funded by the ESRC, grant RES-331-25-0027, through
the Advanced Institute of Management Research.
Innovation in Experiential Services – An Empirical View
Executive Summary
This report examines innovation in experiential services. These are services
where the focus is on the experience of the customer when interacting with the
organisation, rather than just the functional benefits following from the products
and services delivered. The report is based on a continuing research programme
on experiential services at London Business School. In particular it draws on a
recent case-based study of eight design agencies and consultancies and nine
successful experiential service providers. The report addresses the question of
how do experiential service providers innovate, in particular the content of
innovation and the process of innovation including organisation for innovation.
Studying innovation in experiential services facilitates wider reflection on the
subject of service innovation.
The research found that experiential services are often designed from the
perspective of the customer journey rather than as a single product or transaction;
the service is seen as a journey that spans a longer period of time and consists of
multiple components and multiple touchpoints. The journey perspective implies
that a customer experience is built over an extended period of time, starting
before and ending after the actual sales experience or transaction. During a
customer journey, numerous touchpoints occur between the customer and the
organisation or the brand. These touchpoints need to be carefully designed and
managed. The research shows that innovation takes place at each of these
touchpoints as well as of the overall journey itself.
The customer journey perspective differs from the current models and frameworks
describing service innovation, as it clearly shows the central role of the customer
in innovation and design, as opposed to for example a central role of technology.
In addition, the scope of the journey perspective is much broader than traditional
models, for example it includes aspects such as building anticipation and
facilitating transport to the core experience. Finally, the journey perspective
integrates the common distinction between service product innovation and service
process innovation, as a journey has elements of both.
Another finding from the research is that innovation takes place in five distinct
design areas that directly or indirectly influence the customer experience: the
physical environment, the service employees, the service delivery process, fellow
customers and back office support. Although these areas are relevant to any
service, they generally do not receive the same amount of attention as
experiential service designers pay to them. Examples include sensory design for
the physical environment, stimulating employees to engage with customers, using
fellow customers to make an experience more enjoyable and connecting back
office employees to the front stage experience. There is a large theoretical base
from the service management literature concerning innovation in these areas, yet
linkages with the service innovation literature are sparse.
Innovation in Experiential Services – An Empirical View
With regard to the process of innovation in experiential services, the research
revealed that many innovations were driven by detailed insights into customers.
Both design and consultancy firms and experiential service providers invested a
large amount of time and effort in conducting research leading to insights in
customers’ behaviour, needs and preferences. Common techniques were
traditional market research, empathic research to understand customers at an
emotional level, trend watching and learning from companies in different
industries. This indicates that experiential innovations are typically customer
rather than technology driven.
Another process-related finding from the research is the occurrence of both ‘tight’
and ‘loose’ methodologies in the design and innovation process of experiential
services. Tight methodologies entail a relatively fixed set of steps, activities and
tools and techniques required in the design process that can be used across
projects, whereas in loose methodologies the required steps, activities and tools
and techniques are determined individually for each project. Whilst some
organisations had well-developed and tight methodologies, many successful
innovators did not and preferred a more flexible approach. They feared that tight
methodologies would inhibit the creativity required for experiential service design
and would increase time to market unnecessarily. This suggests that the relatively
tight and rigorous methodologies typically found in product innovations may not
always be applicable to service innovation.
One of the difficulties in innovation in experiential services is predicting the
outcome in financial terms. It can be difficult to measure the impact of a particular
improvement of a customer experience on company performance. Many
companies devoted much effort and used multiple methods to capture the
outcomes of innovation. Common measures included footfall, dwell time, revenue
growth, customer satisfaction and customer loyalty. The difficulty in predicting
financial returns can not only cause an unwillingness to invest in service
innovation, but also make it easy to over-invest and have a great and innovative
service that is actually losing money.
Finally, the research found that although both product and process innovation
were observed, significant innovation came from incremental process innovation.
In addition service innovation was often associated with innovation in business
models. This leads to a typology of service innovation consisting of three areas:
product innovation, process innovation and business model innovation.
Considering part of service innovation as process innovation provides insights into
the problems of studying and measuring service innovation. Process innovations
are embedded in a wider operational process and are frequently incremental
rather than radical. They take place in operational areas, not separate R&D
departments, and activity and expenditure is thus hard to measure. Rather than
product leading process or vice versa, the research indicated that service
innovation in general, not just in experiential services, is an iterative process
where product, process and business model innovation go hand in hand.
Innovation in Experiential Services – An Empirical View
1 Introduction
Service innovation has proved an elusive area for many reasons, including the
intangibility of services, the heterogeneity of services, much innovation being of
processes rather than products and the lack of an identifiable R&D function. Much
research has focused on services where products can clearly be defined (for
example financial services), and where technology is being used to change the
nature of the service or the business. However, as Salter and Tether (2006) have
pointed out, there is an emerging research stream which addresses the particular
nature of services such as intangibility, dependence on people and high levels of
interaction rather than technologies. A significant proportion of services, and
hence their innovation activities, reflect this. The research by Hipp et al. (2000)
reveals a pattern of diversity in innovation behaviour of service firms, which
reflects the diversity amongst service firms. Consequently, they call for more
subtle and differentiated analyses of services and service innovations.
This report investigates innovation in the area of experiential services: services
that focus on the experience customers are having. Innovation is particularly
important for this type of services, as one of the key features of successful
experiences is considered to be continuous renewal or refreshment of the
experience to keep exceeding customer expectations (Pine and Gilmore, 1998).
This report addresses the question: how do experiential service providers
innovate? It mainly focuses on the content and process of innovation. Content
includes the ‘what’ of innovation, addressing the substance of innovations,
whereas process refers to the ‘how’: main steps, tool and techniques and people
The report is based on extensive and ongoing case-based research of companies
that either provide or help design experiential services, both in the UK and the US.
The research is informed by the discipline of service management. An empirical
view of current innovation practice in experiential services is put forward. From
this, conclusions are derived that are relevant for both companies and policy
The remainder of this report is structured as follows:
1 Introduction provides an introduction to the report, experiential services
and the research underlying this report.
2 The Content of Innovation presents observations on service as a journey
and five distinct innovation areas.
3 The Process of Innovation presents observations on the consumer
research underlying service innovations, the methodologies, tools and
Innovation in Experiential Services – An Empirical View
techniques for service innovation and the organisation of the innovation
4 Additional Observations links service innovation to business model
innovation and investigates the role of competition as a driver of innovation,
as well as how companies protect their innovations from copying.
5 Reflections on Service Innovation uses the research on innovation in
experiential services to propose a typology of service innovation that
includes service product innovation, process/system innovation and
business model innovation and links them together in an iterative model.
Experiential services are services where the focus is on the experience of the
customer when interacting with the organisation, rather than just the functional
benefits following from the products and services delivered. Companies in the
leisure and entertainment industries have traditionally focused on the experience
of their customers, as an experience is their main offer, for example skiing, theme
parks and cinemas. However, it can also be argued that every touchpoint that the
customer has with the organisations is an experience, no matter how mundane
the product or service that is being delivered. These experiences can be positive
or negative, and to a greater or lesser extent memorable (Carbone and Haeckel,
Recently companies have begun to see systematically designing and managing
customer experiences as a powerful way of improving service levels and
differentiating from competitors (Pine and Gilmore, 1998). Providing compelling
customer experiences is also seen as an important factor influencing customer
loyalty, for customers are more likely to make repeat purchases and give positive
word of mouth when they had a good experience. Pullman and Gross (2004,
p.551) define experience design as an approach to create emotional connection
with guests or customers through careful planning of tangible and intangible
events. European examples of companies which stress the importance of the
customer experience include: YO! Sushi, first direct, Land Rover with the Land
Rover Experience Centres, the Eden project, the Guinness Storehouse in Dublin
and Die Gläserne Manufaktur (the Transparent Factory) of Volkswagen in
Dresden. Well-known examples and successful pioneers in the US are the
American Girl Stores, the Apple Retail Stores, Build-A-Bear Workshops, Joie de
Vivre Hotels and the Disney theme parks. All of these companies have designed
services with the customer experience in mind.
These examples indicate that experiential services can occur in any industry or
sector, both goods-based and service-based. They can be found in banking,
hospitals, retail, hotels, restaurants, transportation and traditional manufacturing.
Indeed they relate to the service element of all companies.
Innovation in Experiential Services – An Empirical View
This report is based on a continuing research programme in the field of
experiential services at London Business School. Starting in 2003, it has involved
case-based field studies of experiential services, in nearly 100 companies
primarily in the UK and US. Details are given in Appendix 1.
The most recent phase of this research serves as the main data source for this
report. This study involves eight case studies with design agencies and
consultancies that specialise in helping companies design good customer
experiences and nine case studies of experiential service providers. They are
listed in Appendix 1. These were all examples of successful organisations. This
provided the opportunity to study widespread or good innovation practice. Several
companies also had innovation as one of their brand values or are known in their
industry as innovators. A case-based research methodology (Yin, 1994) was
used; interviews were conducted with founders, executives and experienced
designers to investigate process and content issues of experience design and
innovation. As well as interviews, in the design agencies and consultancies
examples of actual projects were studied, and in the experiential service providers
site visits were conducted to observe and experience the customer experience on
As service innovation is an emergent area, case study research is an appropriate
method in this context (Yin, 1994). The case method lends itself to early,
exploratory investigations where the variables are still unknown and the
phenomenon not well understood (Meredith, 1998). The phenomenon can then be
studied in its natural setting, and meaningful, relevant theory can be generated
from the understanding gained through the observation of actual practice. When
building theory from case studies, researchers ordinarily select cases using
replication rather than sampling logic (Eisenhardt, 1989; Voss et al., 2002; Yin,
1994). This means selecting cases that offer the best opportunities to learn and
build or extend theory. There are therefore limits to the generalisability of the
results from case-based research. The observations presented in this report
cannot be used for statistical inference, but point out several key issues and
characteristics of innovation in experiential services.
Innovation in Experiential Services – An Empirical View
2 The Content of Innovation
This section explores the content of innovation in experiential services. It first
examines how experiential services are often seen as a journey, rather than a
product. This influences the types of innovation taking place. It then presents a
framework that captures the different areas in which service innovation occurs
and provides examples of innovations in each area, and finally discusses the
implications for service innovation.
Innovation in services has traditionally been seen in terms of product innovation. It
became clear in the field research that this mindset usually did not match how the
organisations studied saw or managed innovation. The cases indicated that both
design and consultancy firms and experiential service providers shared a common
perspective or metaphor: that of the customer journey. As opposed to a single
transaction or purchase experience that involves a service product and a service
process, the service is seen as a journey that spans a longer period of time and
consists of multiple components and multiple touchpoints. The total customer
experience is the result of every element in this journey. Another way of
describing the customer journey is as a film that consists of multiple scenes.
Typically, a customer journey is considered to start long before the actual
transaction and ends long after the transaction is completed, preferably with
recommendations to other people. Journeys are often cyclical, with the end of one
cycle leading into another. See for example the Walt Disney World Guest
Experience Cycle in Figure 1. Some of the characteristics of taking a journey
perspective on service delivery include:
A customer experience is built over an extended period of time, starting before
the actual sales experience or transaction to include pre and post purchase
The journey consists of numerous touchpoints between the customer and the
organisation or the brand; these touchpoints need to be carefully designed and
Each touchpoint has the potential for innovation.
Several of the design agencies and consultancies that specialise in designing
customer experiences used the journey perspective to analyse current
experiences and design new ones. This often involved mapping customer
journeys in detail. The journey model has its origins in the work on service
blueprinting and service mapping by Shostack (1984), Kingman-Brundage (1992)
and Bitner (1993). Several firms had developed a technique for mapping customer
journeys such as ‘Moment Mapping ®’ (Shaw and Ivens, 2002) and ‘the Brand
Touchpoint Wheel’ (Davis and Dunn, 2002). An example is shown in Figure 2.
Innovation in Experiential Services – An Empirical View
Companies that provided experiential services also frequently used the
perspective of the customer journey. They included both physical aspects, such
as travelling to a service, and non-physical aspects such as building anticipation.
For example, the customer journey was one of the leading design principles for
the Xscape destinations of X-Leisure. The journey starts with finding out about a
destination, and includes getting there, moving through the various stages of the
experience, finding reasons to come back, telling other people and paying repeat
The innovations observed in the study covered a spectrum from creating entirely
new journeys, through changing or adding elements in a journey, to making
existing journeys more comfortable or efficient. In general, the experiential service
providers produced a continuous stream of innovations to improve elements of
existing journeys. A common issue in a customer journey is waiting or queuing.
Another common issue is physically getting to the service location: using
transportation and finding the right place. Several organisations paid a great deal
of attention to signage, parking and public transportation. In a few cases the
companies even added elements that were traditionally considered outside their
boundaries to the customer journey, such as transport to and from the service
location. An example of an extended service journey is the one designed by Virgin
Atlantic for its Upper Class passengers. It is designed to be seamless and
includes a wide range of services at each part of the journey, see Box 1.
Service journey,
Service journey,
Guest Experience Cycle Brand Touchpoint Wheel
Source: Walt Disney World Source: Dunn and Davis (2003)
Point of
Innovation in Experiential Services – An Empirical View
In addition to applying the service as a journey perspective, experiential service
providers and design agencies and consultancies in the field of experiential
services innovated in five distinct design areas:
1. Physical environment (‘stage’)
2. Service employees (‘actors’)
3. Service delivery process (‘script’)
4. Fellow customers (‘audience’)
5. Back office support (‘back stage’)
These five design areas directly or indirectly contribute to a customer’s
experience. In a restaurant for example, the dining experience consists not just of
the quality of the food and drinks but is heavily influenced by the atmosphere and
comfort of the venue, the behaviour of the staff, the presence of other guests, and
the flow of the meal, for example waiting to be served. The areas are often
referred to in theatrical terms, emphasising that a service can be seen as a
performance that involves a stage, actors, a script, an audience and a back stage
area (e.g. Grove et al., 1992). The research reported here shows that companies
innovated in each of these areas to improve existing or develop new customer
experiences. The relationships between these five areas are shown in Figure 3.
The next sections examine each of these areas in turn.
Flying Virgin Atlantic includes more than transatlantic flights. It is designed as a
seamless and experiential journey that starts with booking and ends with
transportation home. Having booked, Upper Class passengers are picked up by
a chauffeur-driven car or LimoBike motorcycle, driven to the airport, go through
a unique Drive Thru Check In process and are dropped off at customs, close to
the entrance to the Virgin Atlantic Clubhouse. The clubhouse has an incredible
range of services from restaurants and a bar through to a massage and
hairdressing salon. At weekends there are activities there, for example a Gibson
guitar clinic, to engage passengers. Onboard the plane in addition to flat-bed
seats there is a bar where passengers can congregate and an in-flight massage
service. At the airport of arrival, passengers can go to an arrival lounge to relax,
have breakfast, shower and have a foot massage, before being escorted to their
final destination. Although the core offer is the transatlantic flight, Virgin Atlantic
recognised the complete journey involved and has innovated at every step.
Innovation in Experiential Services – An Empirical View
Physical environment
The physical environment is the setting in which a service is delivered or
experience is created. The physical environment is considered a key variable
influencing customer perceptions and behaviour and has been studied from the
perspectives of environmental psychology (e.g. Mehrabian and Russell, 1974),
retail atmospherics (e.g. Kotler, 1973; Turley and Milliman, 2000) and
‘servicescapes’ (Bitner, 1992). The environment performs different roles:
accommodating customers and employees, guiding behavioural actions, such as
where to queue, and providing cues about the type of service to be expected. The
companies in this study paid careful attention to the design of physical
environments, such as a cruise ship, aircraft interior or shopping centre.
Innovations regarding the physical environment include designing for the journey
and sensory design.
Innovation: Design for the journey
Physical environments were often designed with the customer journey in mind,
including the ease of getting in and out, how people move around inside to avoid
crowding or congestion and making strong first impressions. An example can be
found at the Xscape destinations in Braehead and Castleford. These destinations
have double-height foyers that are designed to make entry a ‘wow’ experience.
Likewise, the new Arsenal Emirates Stadium designed by HOK Sport Architecture
is designed to generate a strong visual impact when spectators turn the corner
and first see the stadium in full.
Innovation: Sensory design
Another area for innovation in physical environments is sensory design. This is
design that stimulates all five senses: sight, sound, touch, smell and taste.
Deliberately addressing the senses is a powerful way of influencing customers’
Figure 3: Experiential design areas
Back Stage Front Stage Customers
Back office
Innovation in Experiential Services – An Empirical View
emotions and the experience they have. The design agencies and consultancies
in this study agreed on the large opportunities associated with sensory design, but
also on the lack of use in practice. Some of the companies in this study engaged
in sensory design. Excellent examples can be found in the sport stadiums
designed by HOK Sport Architecture and the airport lounges and aircraft interiors
designed by Virgin Atlantic. An example that combines sensory with journey
design is when Virgin Atlantic changed the positions of the galley and the bar on
their aircraft, so that passengers were no longer hit by the smell of food from the
galleys when they boarded the plane, but instead were greeted by the smell of
fresh orange juice. Another example is the entry ticket for the Guinness
Storehouse in Dublin as designed by Imagination. It is a pebble with a drop of
Guinness in it, which doubles as a sensory touchpoint right at the beginning of the
journey and a souvenir.
Service employees
It has long been known that the interaction between customers and the people
delivering the service is a major factor influencing customer experiences. For
example, three of the five dimensions in the SERVQUAL instrument to measure
service quality, described in more detail in section 3, are explicitly related to
employee behaviour: responsiveness, or the willingness to help customers and
provide prompt service, assurance, or the knowledge and courtesy of employees
and their ability to inspire trust and confidence, and empathy, or the caring and
individualised attention the firm provides its customers (Parasuraman et al.,
1988). Most of the experiential service providers in this study saw the role of the
employees in delivering service as the key factor influencing customer
experiences. As a consequence, organisations paid a lot of attention to their front
line employees and the service they are providing. Walt Disney World is a
renowned example of great customer service provided by their cast members, as
are Virgin Atlantic and Royal Caribbean. Two areas for innovation are engaging
with customers and managing the employee experience.
Innovation: Engaging with customers
For several companies in the study it was important for staff to engage with
customers, or build emotional connections with them. This makes the customer
experience more personal, more positive and more memorable. Furthermore, by
connecting with the employees, the customers are connecting with the brand or
the organisation which increases customer loyalty. To that end, several
experiential service providers hired employees based on empathic skills (or
Emotional Intelligence). Empathic skills refer to the ability to perceive and assess
one’s own emotions and those of others and the ability to manage them. For
example, Luminar Leisure recognised the importance of the ‘people element’ for a
pleasant night out and has started to train the front line employees of their Liquid
and Lava & Ignite nightclubs in empathic skills. As part of this training, doormen
are taught to recognise different customer segments and respond to them with a
response tailored to that particular person. In addition, employees are encouraged
to have fun themselves, so that their positive emotions can rub off on customers
via a process called emotional contagion (Pugh, 2001).
Innovation in Experiential Services – An Empirical View
Innovation: Managing the employee experience
A second innovation area related to service employees was the employee
experience. The experiential service providers in this study explicitly saw that one
key to excellent service was satisfied and motivated employees. As a result, they
not only managed the customer experience, but also the employee experience.
For example, management at Walt Disney World has specified four guest
expectations and four cast (employee) expectations. The cast expectations, what
cast members expect from Walt Disney World management, are: (1) Make me
feel special, (2) Treat me as an individual, (3) Respect me and (4) Make me
knowledgeable. Walt Disney World puts a great deal of effort into creating an
environment where employees feel valued and supported so that, in turn, they will
do their job well and take better care of guests. Leadership plays a large role in
establishing this environment. Another example can be found at Royal Caribbean.
Here, the importance of the employee experience is reflected in the quality of
crew food, the design of crew areas on the ships and the availability of
communication tools such as internet access in crew cabins and the entire fleet
being cell phone capable, no matter where a ship is. As a result, these companies
typically get lower employee turnover whilst they pay the same wages as
competitors. This reasoning is consistent with the Service-Profit Chain model,
developed by Heskett et al. (1994). This model links employee satisfaction to
customer satisfaction, proposing that satisfied employees will be more productive
and more loyal and will provide better service value, which will lead to greater
customer satisfaction (see also section 3).
Service delivery process
The service delivery process is another area where companies innovate to
improve the customer experience. A service delivery process is a series of actions
or events that take place to deliver the service. In theatrical terms, the service
delivery process is the script for the service performance, defining the acts,
scenes, intervals and actors involved. The service delivery process for a large part
determines the customer journey or the flow of the customer through the
organisation. The companies in this study innovated in the design of service
delivery processes by managing the start, end and peaks.
Innovation: Managing start, end and peaks
One of the key innovations for experiential services regarded designing the flow of
a service delivery process in terms of its start, end and peaks. This is based on
principles from behavioural and cognitive science regarding how people
experience the passage of time and interpret events after they are over. For
example, customers generally do not remember every single moment of an
experience. Instead, they remember the trend in the sequence of pain and
pleasure, the high and low points and the ending (Chase and Dasu, 2001).
Research shows that positive performance trends lead to more favourable
evaluations and the end of an experience has a greater impact on customer’s
perception than the beginning (Hansen and Danaher, 1999). Furthermore,
Verhoef et al. (2004) found that in addition to average performance, positive
Innovation in Experiential Services – An Empirical View
peaks contribute to customer satisfaction. Such principles can be used to
influence people’s perception of a particular experience or service, making it as
positive as possible. Several of the design agencies, consultancies and
experiential service providers studied employed this reasoning to the design of
service delivery processes. Yet, managing first and last impressions were more
common than managing peaks or trends.
For example, office furniture manufacturer Herman Miller explicitly uses these
principles in its B2B context. When potential customers visit their offices the
company pays much attention to the start of the visit to set the right tone: bringing
people in the right mood, establishing rapport and explaining customers are in
control. They use specifically designed ‘decompression’ rooms for that. An
example of a strong ending to a service delivery process can be found at the
Guinness Storehouse developed by Imagination. Here the final activity is a
complimentary pint of Guinness in the sky bar, the highest point in Dublin, with
360 degrees panoramic views across the city. This ending to the process is
specifically designed to connect with the brand and create a very positive
memory. How cruise line Royal Caribbean manages start, end and peaks is
described in Box 2.
Fellow customers
Experiences are not only influenced by interaction with the service providers, but
also by the other customers present. In theatrical terms other customers form the
audience, and crowding, unruly or unanticipated behaviour can destroy a service
A wide variety of examples involving managing start, end and peaks can be
found at cruise line Royal Caribbean. A cruise’s itinerary and schedule for
entertainment and activities are developed to optimise onboard revenue,
passenger experience and positive memories. Ideally, the first and last day of a
cruise are spent at sea. The first day at sea enables passengers to unwind and
get acquainted with the ship. The last day at sea not only gives passengers the
chance to relax and make the most of what the ship has to offer, but also means
the passengers are in the control of the cruise line, so the company can
influence how passengers spend the last day of their cruise. The entertainment
and activities schedule is not so much designed around peaks. Instead, the
schedule is aimed at providing a constant flow of things to do to keep
passengers active and entertained. In the beginning of the cruise there is more
emphasis on providing information and building anticipation. The entertainment
programme builds towards a crescendo on the second to last night. The last
night is all about the ‘warm and fuzzies’ to reinforce the emotional connection
between the passengers and the crew and the brand. The main tool in this is the
Farewell Show where key events from the past cruise are recapitulated and
several hundreds crew members appear on stage to wave goodbye.
Innovation in Experiential Services – An Empirical View
performance (Grove et al., 1992). On the other hand, socialising or bonding with
other customers can make an experience more enjoyable (Martin and Pranter,
1989). Many services are created while other customers are present. This
particularly applies to situations where customers share the setting
simultaneously, as in the case of restaurants and airline travel. This is enhanced
when they are in close proximity to each other, have to share space or resources
and waiting is involved (Martin and Pranter, 1989). Yet, the role of fellow
customers has received little attention in practice and literature, except for issues
of crowding and social density. This study did not show much evidence of design
agencies and consultancies considering the role of other customers in an
experience. On the other hand, a number of experiential service providers
included fellow customers in their designs and found innovative ways of utilising
the value they could add.
Innovation: Making experience more enjoyable and driving revenue
An example of using fellow customers to improve the experience and drive
revenue can be found at bakery / coffee shop Le Pain Quotidien. Central to the
concept of Le Pain Quotidien is the large communal table in the middle of each
coffee shop. The table fits the theme of eating at a farmhouse and uses space
efficiently. The main feature of the communal table is that it attracts customers
who are by themselves and would like to come in and have a coffee, but do not
want to sit alone. Joining the communal table avoids customers feeling alone. It
also gives the opportunity to chat with other customers, but often the mere fact
that customers do not feel or look alone is enough. As a result, the Le Pain
Quotidien shops are very successful at attracting off-peak business of customers
that shop by themselves.
Another example is the creation of a community around a product or service. A
good example is Harley-Davidson, with their Harley Owners Group (H.O.G.).
H.O.G. was established in 1983 as a company-sponsored enthusiast organisation
in the motorcycle industry, designed to enhance the Harley-Davidson lifestyle
experience and bring the company close to its customers. H.O.G. currently has
over a million members. Benefits include a magazine, road-side assistance, a
touring handbook, events and much more. In addition to this, one of the key
benefits of H.O.G. is the opportunity to meet fellow enthusiasts through the local
chapters or events that are organised nationally. This camaraderie between riders
enhances the experience of owning and riding a motorcycle. From a company
perspective, the bonds between fellow customers are a good way of making
people ride more, because they know people to ride with and have events to go
to. Thus, H.O.G. is also about giving people reasons to ride and put miles on their
motorcycle. This will keep people in the sport and make them spend more on
service, accessories and clothing. In this way, Harley-Davidson deliberately uses
fellow customers to improve the riding experience and drive expenditure.
Back office support
The physical setting, service employees, service delivery process and fellow
customers directly influence a customer’s experience and take place front stage.
Innovation in Experiential Services – An Empirical View
However, there are many things that go on back stage and influence the front
stage performance. Most service organisations have a considerable number of
back office employees that are vital to the customer experience, yet generally do
not interact with customers. As a result, the main innovation related to back stage
areas of service delivery involved connecting back office employees to the front
stage experience.
Innovation: Connecting back office employees to the front stage experience
Several companies argued that in order to deliver great customer experiences the
whole service supply chain should be focused on the customer experience, not
just the front stage parts. Yet, this can be difficult for back office employees that
rarely meet customers and are quite far from the actual experience creation. To
that end, Walt Disney World has developed a system called Role and Purpose.
Role and Purpose emphasises that everybody has a different role in the
organisation, from checking tickets and sweeping the floor to managing
maintenance for example, but all employees have the same purpose: making sure
that every guest has the most fabulous vacation of his or her life. This system
aims to achieve that everyone knows how their work matters in the final outcome.
For example, sweepers know that they are the reason that Walt Disney World is
famous for cleanliness, and they are trained in giving guests directions and
interacting with children, emphasising how their role contributes to the bigger
purpose of a great customer experience.
Another example of creating back office understanding of the front stage
experience can be found at Cirque du Soleil. The Studio, Cirque du Soleil’s
international headquarters in Montreal, is designed around visual contact between
administrative staff and artists. From the offices, the administrative staff can see
into the training studios where artists work out and develop new routines and vice
versa. In this way, the back office employees see what they are contributing
towards and the artists keep in touch with the people supporting them.
Although service innovation includes both product and process innovation, the
design and consultancy firms and experiential service providers in this study often
saw a service as a journey. Innovation can take place at any of the touchpoints in
the customer journey, including pre and post purchase experiences. The
experiential service providers in this study were constantly looking for incremental
innovations aimed at improving the customer journey. From a designer’s and
innovator’s perspective, the customer journey is a powerful focus for analysing
and designing memorable customer experiences.
Innovation in experiential services covers a broad spectrum, taking place in five
distinct areas. The first is the physical environment in which the service is
delivered. In experiential services, physical environments are designed for the
customer journey and deliberately stimulate the five senses. The second is the
service employees that interact with customers. In experiential services, front line
Innovation in Experiential Services – An Empirical View
service employees are key to engaging with customers and building emotional
connections with them. To improve the quality of their work, several companies
manage the employee experience, in addition to the customer experience. Thirdly,
innovations take place in the design of service delivery processes. For example
service delivery processes can be designed to have strong starts and endings and
carefully placed peaks. The fourth area for innovation regards the fellow
customers that are present. They can be a valuable resource in making an
experience more enjoyable through meeting like-minded people. Several
companies have found ways of realising this potential and managed to create
additional revenue following from the linkages between fellow customers. The
final area for innovation is back office support. Some companies developed
systems for connecting back office employees to the front stage experience to
ensure the entire service supply chain is focused on the customer experience.
The customer journey perspective is very different from the current models and
frameworks used for discussing and measuring service innovation. Similarly the
innovation content areas such as using fellow customers or sensory design are
often neglected in current views of service innovation. This is despite there being
a strong theoretical background behind these areas in the field of services
management. As yet, there are few linkages between this literature and the
literature on service innovation.
Innovation in Experiential Services – An Empirical View
3 The Process of Innovation
This section discusses the innovation process in experiential services: the
process from the initial need or desire to innovate to an implementable solution. It
examines the data from the cases on (1) how customer insights drive innovation,
(2) what type of design methodologies are being used, (3) the tools and
techniques that are employed in the design process, (4) how experiential service
providers have organised the innovation and design functions internally and how
design agencies and consultancies collaborate with clients and finally (5) the
issues with and ways of measuring the success of a service innovation. The
section ends with a discussion of implications for service innovation.
One of the most important aspects of the innovation and design process in both
design and consultancy firms and experiential service providers was research.
Consumer research, leading to customer insights, was seen as the basis of
experience design and acted as one of the main drivers for innovation.
Consequently, the organisations in this study invested a large amount of time and
effort in conducting research. Four types of research were commonly carried out:
traditional market research, empathic research, trend watching and learning from
Traditional market research
Traditional market research focuses on finding out what the market is and what
customers want and expect from a company, brand or experience. Both design
and consultancy firms and experiential service providers often employed a
combination of different techniques, such as focus groups and surveys (web
based or off line). Market research was used for segmentation, based on
customers’ demographic and psychographic characteristics. Psychographic
characteristics involve for example people’s motivations to engage in a particular
activity such as shopping, cruising or going out. As one consultancy noted, doing
market research does not necessarily mean a company should do everything the
customer wants. For example it might not be able to afford it, but it should at least
find out. Moreover, several companies mentioned that customers might not even
know what they want, so they did not expect their customers to design their next
Empathic research
Empathic research can be seen as a special kind of consumer research that is
particularly important for designing good customer experiences. It was used by a
number of organisations in this study. Empathic research is not about finding out
what customers want, but about finding out how they ‘work’. It aims to lead to an
understanding of customers at an emotional level, knowing not just what they say
Innovation in Experiential Services – An Empirical View
and do but also what they think and feel. In this way, customers’ latent needs can
be uncovered and, more importantly, it helps to identify what makes them tick.
This is important for developing compelling experiences that say ‘for me’. Several
techniques are available, including asking customers to draw a particular
experience, shadowing them and investigating extreme users. For a project for a
financial start-up, IDEO used a set of empathic research techniques to segment
users of financial services based on their feelings towards their finances. They
then identified a segment of customers with low daily engagement with their
money and a lack of clear long-term goals. This segment was currently not being
addressed in the marketplace, so financial solutions particularly attractive to this
segment were developed.
An example of how Harley-Davidson, a highly customer-focused organisation,
gathers customer insights that drive innovation is shown in Box 3.
Trend watching
In addition to the primary research they do with customers, companies often
engaged in trend watching, or making long-range forecasts about customer
behaviour, needs and preferences. They followed socio-economic or demographic
changes, such as changes in lifestyles or what is happing with the baby boomers
generation. On a more detailed level, they tried to predict how customers will be
spending their time and money, what they would like to be doing, with whom etc.
Royal Caribbean for example, identified that because they are spending less time
as a family in their daily lives, a lot of people nowadays want to spend more time
together as a family when they are on holiday. As a result they added more
family-oriented activities on their ships. They also looked at trends in land-based
gyms to help decide what new features to put in the gyms on their ships, such as
In addition to focus groups, surveys and more empathic research methods,
Harley-Davidson gathers customer insights through riding with its customers.
Employees attend events and rallies and talk to customers, both Harley-
Davidson riders and non-Harley-Davidson riders, to find out what they like about
the brand and what they are currently missing. People in leadership roles are
required to attend at least two events a year and other employees from all
departments (marketing, finance, legal, logistics, production etc.), whether they
ride themselves or not, volunteer to help out at different events throughout the
year, varying from an afternoon to several days. It is not uncommon for Harley-
Davidson employees to go on organised multiple-day trips covering thousands
of miles. From observing and talking to customers at events and during rides,
Harley-Davidson gathers in-depth insights in what motivates them and what their
needs are, even if they do not yet express them. These insights are fed back
into the organisation and form the basis for innovations in the Harley-Davidson
portfolio of products and services. For Harley-Davidson, riding with customers
and sharing the experience is the ultimate way of getting close to them.
Innovation in Experiential Services – An Empirical View
a boxing ring. For Royal Caribbean trend watching is vital, because of the lead
time of new ships and their lifetime. The ships they are working on today are
designed for the voyages they will make fifteen years later. For other companies,
looking into the future was a way of staying ahead of the competition and ensuring
the products and services on offer continue to match customer’s needs.
Techniques for trend watching include talking to experts in particular areas
(culinary, entertainment, lifestyle etc.), reading magazines and newspapers, and
using third-party research focusing on trends.
Learning from others
Although most of the experiential service providers monitored their own industry
and observed competitors from a distance, they did not intend to copy what others
were doing. Many of the cases in this study were leaders in their industry with
regard to the customer experience or were doing something that is unique.
Therefore, they looked outside their own industry for inspiration. For example
Virgin Atlantic and Herman Miller studied luxury hotels to learn about customer
service. X-Leisure saw Selfridges as an inspirational brand and looked to align the
same values of matching the customer experience with marketing and brand. X-
Leisure also got inspiration from the world of theatre. Walt Disney World followed
developments in retail and manufacturing to see how innovations in those
industries can be applied in their world. Cross-industry insights are obtained
through publications in newspapers and magazines and through site visits.
There has been much debate as to whether tight and rigorous methodologies
typically found in product innovation are also essential for service innovation. On
the one hand these are seen as contributing to effective and controlled innovation
processes. On the other hand, it has been argued that services being intangible
require a more creative and less structured approach. This study revealed strong
contrasts within the design agencies and consultancies studied.
In some firms, the design process was seen as requiring a great deal of flexibility
in execution. In other firms, the design process was accompanied by a detailed
step-by-step approach for coming up with a new design for a service or service
delivery process. The first group employ what could be called a ‘loose’
methodology, when the main steps, activities and tools and techniques involved in
the design process are determined for each project individually and on the way.
The second group employ a more ‘tight’ methodology: the main steps, activities
and tools and techniques are known beforehand and do not differ much between
projects. Both design agencies and consultancies with ‘tight’ or ‘loose’
methodologies were passionate about their approach. The firms that advocated a
loose design methodology did so from the perspective that every project is
different and unique and therefore requires a tailored solution. This implies that
the required activities, techniques for gathering insights and conceptual
frameworks need to be chosen specifically for that particular project. Firms with a
Innovation in Experiential Services – An Empirical View
tight methodology used a particular protocol or road map that they had found to
be very effective.
The design agencies and consultancies that were interviewed for this study
differed in size. As organisational size is often associated with increasing degrees
of formalisation and standardisation of procedures, size might explain this
preference for either a tight or loose methodology. However, this was not the
case, for both small and large firms employed tight or loose methodologies. An
alternative explanation might be that for a relatively homogenous customer base,
i.e. all in one industry, tight methodologies would make more sense whereas for
highly diverse customer bases spanning different industries loose methodologies
would be more effective. However, this was not supported by the data, as both
focused and broad firms employed both types of methodologies. Instead, the
different methodologies seem to represent different business models: one aimed
at selling a particular process or approach, the other at developing customised
As with some of the design and consultancy firms, several experiential service
providers stressed the importance of having flexibility in the design process. They
stated that sticking to a fixed routine or fixed group of people inhibits their
creativity, can increase time to market unnecessarily and might not lead to the
best set-up for the job. In one organisation, the design process was considerably
shortened when a good idea could be mocked up into a full-size working
prototype in a number of weeks, skipping some of the interim steps. This way of
working is obviously enabled by an ongoing design thinking process and customer
research efforts to gather insights. In another company, the design processes and
design people involved in service innovation projects were also flexible, because
the company believed that forcing every project in the same mould would become
too stifling from a creative standpoint and it would not get the best thing. The
company emphasised there was not one way to design experiences, it depends
on what it is. Whilst the contrast between tight and loose methodologies was not
as evident as in the sample of design agencies and consultancies, there was clear
evidence that the experiential service providers saw flexibility in the use of
methodologies as important.
The companies in this study employed a wide range of tools and techniques in the
service innovation and design process. Design agency IDEO for example, has
developed a set of 51 Method Cards to inspire design and keep people at the
centre of the design process. The methods are grouped in four categories: Learn,
Look, Ask and Try. Some of the tools and techniques used by the organisations in
this study include the following:
Simulation Several tools are available for simulating aspects of an
experience, including the sensory experience. Such tools were extensively
used by HOK Sport Architecture for the design of sport stadiums. For example,
Innovation in Experiential Services – An Empirical View
they employ software that calculates sight lines, sound reflection and crowd
movement in a stadium.
Prototyping A common step of any product innovation process is
prototyping, or making a representation of a design before the final artefacts
exist. Prototyping is often done to test various aspects of a design,
communicate ideas or features and collect early user feedback. Given the
intangible nature of services, prototyping is more difficult (Vermeulen and Van
der Aa, 2003). This is even more true for prototyping experiences, as they are
not only intangible but also inherently unique and personal. Still, prototyping
was an integral part of IDEO’s design process. Prototypes are developed from
quite early stages in the design process. Early-on they are used to try things
out (‘build to think’), in the same way as in a theatre play actors might try
something out on stage to see whether and how it works. At later stages they
are used to communicate ideas to an audience. Particularly for designing
experiences, it is important prototypes have physical aspects, to get as close
as possible to experiencing the actual experience. Looking at digital 3D
demonstrations or witnessing somebody else’s experience will not give the full
sensory experience end-users will have (Buchenau and Fulton Suri, 2000). A
useful technique in experience prototyping is IDEO’s method ‘bodystorming’:
setting up a scenario and acting out roles, with or without props, focusing on
the intuitive responses prompted by the physical environment.
Experimentation – Experimentation involves trying something on a small
scale before launching it in full. This is perhaps easier to achieve for services
than for products, as the relatively large intangible component means services
can be tested without the need for large capital investments. Several
respondents reported that their company had a culture of trying things out:
new ideas are put into practice for a limited period of time and carefully
monitored. Based on the test results, the innovation is continued, terminated or
adapted. At Walt Disney World, for example, small experiments are set up in
the parks, accompanied by a sign ‘work in progress’, and guests are asked for
feedback. The Head of Development explained that guests and consumers in
general are tolerant of tests, and actually enjoy it, because it shows that
companies are innovating and care about customer feedback.
Knowledge transfer Operating at multiple sites or conducting similar
projects brings about the opportunity to learn from across the organisation. For
example, HOK Sport Architecture could rely on an impressive range of
stadiums to observe what works and what does not and lessons are carried on
from one project to the next. Royal Caribbean currently operates a fleet of 21
ships and often innovations on one ship or the introduction of a new ship is
informed by the experience at the other ships. For example, entertainment
schedules are developed from existing ones and then adjusted for the ship
under consideration. With other resorts in California, Paris, Tokyo and Hong
Kong, Walt Disney World in Florida can build on the creativity and operational
expertise of a worldwide network.
Innovation in Experiential Services – An Empirical View
In most product-based organisations, the majority of innovation and design
activities are allocated to specific organisational roles, such as R&D or product
development departments. For the experiential service providers in this study, this
generally was not the case. Whilst there was considerable variation in the ways in
which the experiential service providers allocated tasks and responsibilities
related to innovation, a number of underlying patterns can be identified. They
include a different structure for designing tangible and intangible elements, the
widespread use of cross-functional teams and a broad base for creativity. Similar
reasoning was found in the way in which design agencies and consultancies
collaborate with their clients in service design projects.
Tangible versus intangible design
In general, services and experiences are made up of tangible and intangible
elements. The experiential service providers in this study often had dedicated
design and product development departments for the tangible elements in the
service or customer experience, but not for the intangible elements. The tangible
elements include the products that are required for or support the service being
delivered, such as the motorcycles of Harley-Davidson, the food at Le Pain
Quotidien and the cruise ships of Royal Caribbean. Most companies had
dedicated design departments, who worked with external consultants, designers
and architects who specialise in a particular area. For the intangible elements,
however, the companies generally did not have dedicated design departments.
Intangible aspects include the service provided by employees, the interaction with
other customers and the service delivery process. Design and innovation of
intangible aspects principally resided in the operational departments, resembling
what Gorb and Dumas (1987) call ‘silent design’: design that is carried out by
individuals who are not called designers and would not consider themselves to be
designers. Several companies made a point of avoiding distinct design
departments for the intangible parts of a customer experience. They argued that
such departments might lose touch with reality and do not have the same
understanding of customers’ needs and wishes as the people who are actually
involved with delivering the service. Therefore, design and innovation were part of
each functional area.
The design agencies and consultancies in this study also emphasised the
importance of including operational people in design teams. They often
collaborated closely with their clients in order to develop appropriate solutions.
They argued that the client knows the business better than the agency does.
Furthermore, a high degree of client involvement increases buy-in and makes
successful implementation more likely. Several firms mentioned that they often
include front line employees in their projects, because of their detailed insight in
the current customer experience and the opportunities for improvement. They
form a great source of information and the firms emphasised the creativity that
can be found inside an organisation, particularly with the people involved in daily
Innovation in Experiential Services – An Empirical View
operations. At the same time, working with front line employees helps the
agencies and consultancies create more essential buy-in.
Cross-functional teams
Experiential design projects are often cross-functional, requiring contributions
from people in operations, marketing, branding, business and technology. In most
experiential service providers the design and innovation process was executed by
multi-disciplinary project teams. The occurrence of multidisciplinary project teams
that work on innovation part-time is consistent with Vermeulen and Van der Aa
(2003). As in the experiential service firms, the design and consultancy firms
emphasised the importance of cross-functional involvement. Yet, as people from
the different functions frequently have never worked together before, they faced
the challenge of overcoming different interests, specialities and backgrounds.
Broad base for creativity
Having dedicated design departments for tangible elements and cross-functional
teams of operational people for intangible elements did not mean, however, that
creative thinking was limited to these roles. Instead, the experiential service
providers emphasised that creative ideas can come from anywhere and anyone in
the organisation. It is by no means restricted to management levels or product
development roles. Some respondents argued that having such a broad base for
creativity was required to remain innovative.
Because of their intangibility and heterogeneity, the quality of services is often
more difficult to establish than the quality of physical goods. This is even more
true for experiential services, as customer experiences are inherently unique and
personal. There are a number of established models for performance
measurement in services. A widely used one is ‘the Service-Profit Chain’
developed by Heskett et al. (1994) that looks at the key drivers of performance in
service organisations and their inter-relationships (see Figure 4). The model links
internal and external service quality to employee satisfaction, customer
satisfaction, customer loyalty and eventually profitability. Each of these links can
be measured and the results suggest actions that can lead to better financial
retention &
Figure 4: The Service-Profit Chain
Innovation in Experiential Services – An Empirical View
Within the Service-Profit Chain an important area is external service value: the
relationship between price and service quality. Service quality is defined as the
discrepancy between consumers’ perceptions of service offered by a particular
firm and their expectations about firms offering such services. The SERVQUAL
framework (Parasuraman et al., 1988) is a widely accepted model of service
quality. It embraces five dimensions:
1. Tangibles – appearance of physical facilities, equipment, personnel, and
communication materials;
2. Reliability ability to perform the promised service dependably and
3. Responsiveness – willingness to help customers and provide prompt service;
4. Assurance – knowledge and courtesy of employees and their ability to convey
trust and confidence;
5. Empathy – the caring, individualised attention the firm provides its customers.
The way quality is measured in services is clearly very different from traditional
manufacturing-based measures of quality.
The experiential service providers studied devoted considerable efforts to
measuring the performance of existing and new services. Current performance
was one of the drivers for service innovation. At Walt Disney World, for example,
things end up on the agenda for two reasons: one is when something is extremely
successful and needs to be advanced and taken to the next level; the other is
addressing a gap between customers’ expectations and the actual experience at
Walt Disney World. Therefore, analysing performance data becomes a crucial
activity. Most companies in this study had an ongoing process for data collection
and analysis, involving large numbers of customers and continuous
measurements. For example, Bluewater measures virtually everything that goes
on in the shopping centre: from weekly sales and footfall (165 clusters of 4
cameras) to how many people walk past a particular promotion and the ratio
between regular and diet soft drinks sold from the vending machines. They also
do regular exit surveys. In this and other companies such data were part of a
feedback loop where information on current performance was fed back to service
providers and service designers for continuous improvement of existing services
and the development of new services.
To justify investments in service innovation, the experiential service providers in
this study often developed business cases, estimating the costs and benefits of
the proposed innovation. One of the difficulties with making business cases for
innovations in experiential services was predicting the outcome in financial terms.
The companies advocated the use of multiple measures, as maximising return on
investment may not necessarily mean maximising what is being delivered to the
customer. The innovation could be seen as part of a holistic customer experience,
having effects across different areas not easily captured by financial measures
Therefore, companies often used additional performance indicators such as
Innovation in Experiential Services – An Empirical View
footfall, dwell time, revenue growth, customer satisfaction, customer loyalty and
specific measures of the quality and outcome of the service. These performance
indicators are not unique for experiential services, but selecting the right set of
indicators for an innovation was considered an art.
This difficulty in predicting the financial returns could have two negative effects.
On the one hand it is easy to over-invest and have a great and innovative service
that loses money. On the other hand, the difficulty in predicting returns can lead to
unwillingness to invest in service innovation.
This section addressed the innovation process in designing and delivering
experiential services. A significant commonality between the organisations in this
study was the fact that many innovations were driven by customer knowledge:
detailed insights into what customers want, need and what makes them tick. This
implies that service innovation in experiential services is primarily customer rather
than technology-driven (Hipp et al., 2003).
In several design agencies and consultancies the service innovation process was
characterised by a relatively tight methodology, whilst other firms promoted
flexibility in activities, frameworks and tools and techniques. This suggests that
the relatively tight and rigorous methodologies typically found in product
innovation are not always applicable to service innovation.
The innovation process was supported by a range of tools and techniques for
service innovation. The intangible nature of services does not preclude the use of
sophisticated techniques for reducing risks and improving efficiency of the
innovation process.
With regard to the organisation for innovation, the research indicates that although
the design of tangible elements typically resides in separate design departments,
the design of intangible elements is typically addressed by cross-functional teams
of operational people. Thus a great deal of innovation is undertaken by people
whose affiliation or job title does not refer to innovation or design.
Measuring the success of service innovations can be difficult, leading to over- or
underinvestment in innovations. The experiential service providers in this study
often made business cases to justify a particular innovation and devoted a lot of
efforts to measuring performance on a daily or weekly basis. They advocated the
use of multiple measures to capture the breadth of a customer experience and
link the innovation to financial performance. Yet, choosing the right set of
performance indicators was still considered a challenge.
Innovation in Experiential Services – An Empirical View
4 Other Observations
In addition to the process and content of service innovation, the research on
experiential services identified a number of other areas relevant to service
innovation: business model innovation; the role of competition as a driver of
innovation and how experiential service innovations were protected from copying
by competitors.
Business models have for a number of years been at the centre of attention in
innovation in IT and e-business innovation. For example in the online music arena
there has been a continuous stream of innovations each trying to find new ways of
capturing value from consumers. Afuah and Tucci (2003, p.4) define business
models as ‘the method by which a firm builds and uses its resources to offer its
customers better value than its competitors and to make money doing so’, being
made up of components, linkages and their dynamics. They subsequently develop
a taxonomy of business models in e-business. Chesbrough and Rosenbloom
(2002) see the function of a business model as embracing the value proposition,
the targeted market segments, the structure of the value chain, the cost structure,
the position of the firm in the value network and competitive strategy for exploiting
the business model. They also extend the application of the business model
concept beyond IT to embrace a wider range of innovations. Business model
innovation can be defined as the discovery of a fundamentally different business
model in an existing business (Markides, 2006).
The research on experiential services revealed that in a number of cases
significant business model innovation was involved. In the UK a good example of
business model innovation was the development of the Travelex £10 Season at
the National Theatre, see Box 4.
BOX 4:
The objective of the Travelex £10 Season at the National Theatre was to extend
and grow audiences by attracting many who would otherwise not come to the
theatre, by selling the majority of seats at a significantly lower cost than before.
However, in order to do this on a financially sound basis, it also required
considerable innovation in the production of plays. Ways had to be found of
producing plays that would work in a large theatre, but at significantly lower cost.
Both new behaviour and buy-in was required from directors and producers. The
innovative approach worked, all the key people bought into the new business
model and the Travelex £10 Seasons have been both artistic, financial and
audience successes with near full houses for the season.
Innovation in Experiential Services – An Empirical View
Another UK example comes from the Xscape destinations run by X-Leisure. They
are experiential service destinations combining a wide variety of activities
including indoor skiing, rock climbing, cinemas and bowling; with retail,
restaurants and bars. This concept, though innovative in its own right, required
substantial business model innovation to become successful. The first Xscape
destination was operated within a retail property business model of build and rent.
The Chief Executive, PY Gerbeau, brought to this a new business model that
included managing it as a destination, building synergy between the brands and
activities, proactively developing a culture of experiential service in all the tenants,
and aggressive marketing and branding. The impact of this included a sharp
upturn in footfall (visitors), increased profitability for the tenants and the knock-on
effect for the owners of higher rents. In addition this business model was seen by
the city as a low risk strategy, even though the city normally considered leisure as
high risk, and thus it reduced the cost of capital for future expansion.
A final example is from the US. When’s online business model led to
their immense growth, many predicted the demise of regular bookshops.
However, the leading chains in the US (Barnes and Noble and Borders) reacted
by rethinking their business model along experiential lines. Today, these stores
have added a wide range of services such as coffee shops, comfortable chairs for
sitting and welcome extended browsing and reading of books in the store. They
have now become what is often known as a ‘third place’ where people can go,
relax and possible meet people. Customers have found this very attractive and as
well as spending more time there, they spend more on books and sales and
profits have risen sharply.
There is much evidence of business model innovation in the whole service sector,
not just in experiential services. For example, whilst most financial service
innovations do not change the business model, some do. The Open Plan banking
model, combining multi-channel delivery with the ability to offset interest across
accounts, developed initially by Woolwich embraced a radical change of business
model. It was so effective that it was one of the main reasons for Barclays
acquiring them and subsequently adopting the Open Plan model. The low-cost
airline model of Southwest Airlines, subsequently adopted by Ryanair, Easyjet
and others is as much a business model innovation as a service product
innovation. Markides (2006) lists business model innovations in banking,
insurance, airlines, brokerage, bookstores and car rental. This indicates that much
of the real impact of innovation in services comes not just from the service itself,
but from exploiting new ideas to create innovation in the business model.
Competition between firms is a common driver for innovation as firms try to stay
ahead of or keep up with their competitors. For most experiential service providers
in this study providing experiential services was a way to distinguish themselves
from competitors and increase market share.
Innovation in Experiential Services – An Empirical View
Most companies monitored their direct competitors’ actions and performance,
often using benchmark studies. The companies commented that they welcomed
competition, because it keeps them on their toes. In many industries competition
leads to a continuous stream of service innovations. This is clearly illustrated by
the airline industry (see Box 5).
In addition to direct competition, the companies typically took a broader
perspective on what is competition. For example, for leisure and entertainment
services, companies saw themselves competing for customers’ time and thus
competing with a wide range of service providers.
In order to capture the benefits of an innovation, companies can try to protect it
from copying by competitors using, for example, patents or secrecy. Service
innovations are generally thought to be easy to imitate (Vermeulen and Van der
Aa, 2003). However, the research did not find much evidence of organisations
seeking to protect the Intellectual Property associated with their innovations.
Some companies claimed that whilst individual elements of the service experience
can be copied, the whole service experience is not easy to replicate. Gupta and
Vajic (2000) argue that copying individual elements of an experience will not
recreate the same experience, because creating an experience depends on how
well the different elements of an experience fit together and on how well they are
adapted in continuing interactions with customers. This is not easily copied.
Several experiential service providers in this study felt their innovations were
partly protected by their design and innovation culture. Most companies had a
culture that was characterised by a thorough understanding of the importance of
good customer experiences, a strong dedication to innovation and much support
in terms of the resources that were devoted to research, design and development.
This enabled them to continuously develop and renew coherent experiences that
fit their particular context.
OX 5:
Business travel on transatlantic flights is one of the most competitive of markets.
This has led to a continuous stream of innovation in all parts of the service
journey and in business models, the main protagonists being BA and Virgin
Atlantic. The stream of major innovations started with BA’s introduction of flat-
bed seats in 1996, but then led on to innovations including a new intermediate
class (Premium Economy and World Traveller Plus), meals served before take-
off to allow passengers to sleep the whole way, better departure lounges, arrival
lounges and services, limousine or bike pick up and delivery, and in-flight
services such as massage. More recently, innovation has come from new
entrants, Eos Airlines and MAXjet, who offer luxury-only transatlantic travel with
more room and further innovations such as suites for on-board business
Innovation in Experiential Services – An Empirical View
Another major element of protection is provided by the tacit knowledge of
managing the service experience. For example X-Leisure incorporates indoor ski-
slopes into their Xscape destinations. To do this profitably has required the
development of extensive tacit knowledge of the design and running of these
slopes and gives the company a competitive advantage and the potential to
export this knowledge. When Woolwich developed the successful Open Plan
banking model, Barclays did not try to copy this innovation. Instead, it took over
Woolwich, partly to acquire the tacit knowledge that made the Open Plan banking
model work.
Innovation in Experiential Services – An Empirical View
5 Reflections on Service Innovation
Studying innovation in experiential services enables us to reflect more widely on
the process of innovation in services. This leads to development of a typology and
an iterative model of services innovation. In addition, the research illustrates the
importance of the use of service language and addressing the heterogeneity of
As many have pointed out, the innovation literature is dominated by product
innovation models. It has also been argued that there are few differences between
the basic processes for developing new products and services (Vermeulen and
Van der Aa, 2003). Research in service innovation has been dominated by
contexts where the innovation can be considered a product, such as financial
services (Vermeulen and Van der Aa, 2003). This research on experiential
services is consistent with Hipp et al. (2003), and questions the view of service
innovation as being just product innovation. Although product innovation was
observed, significant amount of innovation in the services studied came from
major or incremental process innovation around customer journeys. Further,
consistent with Chesbrough and Rosenbloom (2002) and Markides (2006),
considerable services innovation was associated with business model innovation.
In addition, in this area technology played a lesser role than might be expected.
Some innovations were initiated by new technologies, others exploited them, but
many were more complex or not technology dependent.
These observations are consistent with a recent study of services innovation in
Ireland (Forfás, 2006). This presented a three-fold typology of services innovation:
New business models / concepts involve a complete or substantial change
in the way in which revenues and profits are earned. This is often
accompanied by innovations in organisational arrangements in order to
accommodate the changes in the business model.
New customer / delivery interfaces involve changes in the way information
is exchanged between a customer and a service provider.
New service-product offerings is the most analogous to traditional
manufacturing based innovation activity. It involves the introduction of new
The second area is consistent with the service process and service journey
observed in this research, and with systems innovation (Bower, 2003) and
infrastructure innovation (Nightingale, 2003). This leads to a proposed typology
shown in Figure 5.
Innovation in Experiential Services – An Empirical View
Seeing a considerable part of service innovation as process innovation provides
insights into understanding the problems of studying and measuring innovation.
First, process innovation primarily takes place in operational areas not in separate
R&D departments. Innovation activity and expenditure is thus very difficult to
measure. Second, process innovations are difficult to measure, both because they
are embedded in a wider operational process and because they are frequently
incremental rather than radical. Both of these characteristics are shared with
manufacturing innovation.
In manufacturing product innovation is seen as leading process innovation. Barras
(1986; 1990) observed in service innovation product innovation was preceded by
process innovation, and Nightingale (2003) argued that it was enabled by
infrastructural innovation. The observations in this research support this, but also
indicate that there is an iterative process. For example, a new product, such as
all-luxury transatlantic flights mentioned earlier, requires process innovations to
enable it to be successful. In addition, the research indicated that business model
innovation was an important element of service innovation, and frequently went
hand in hand with product and process innovation.
This leads to a model of innovation that links product and process innovation in an
iterative cycle, and links them to business model innovation. This is illustrated in
Figure 6.
This model is consistent with the view on the service innovation process that was
put forward by one of the design agencies in this study. Companies should step
away from the traditional product-based funnel model for innovation where a large
number of ideas is reduced to the last one standing and instead adopt an idea
A typology of services innovation
Source: adapted from Forfás (2006)
Innovation in Experiential Services – An Empirical View
nurturing process, going through cycles of innovation to continuously improve the
‘I think a good innovation is about the idea nurturing process. What one
needs to do, is to go around the circle maybe several times. Even after
you launched a service, you should be doing this, to evolve it. One
needs to go round potentially several times, rather than ‘here’s an idea,
do we kill it or not?’ Companies that innovate well get something out
there that is ‘quite good’, and then evolve it and make it into something
really good. A mistake that many companies make is that you need to
have a ‘killer ap’ every time. You generally only get to know about
wonderful service innovations after it has been evolved and sorted out.’
(Source: Practice lead, Service Design and Innovation, IDEO)
Conducting research into innovation in experiential service innovation leads to
further implications for innovation. The language of managing services is in many
ways very different from the language of managing manufacturing, for example
manufacturing processes are rarely described as customer journeys.
Furthermore, the companies in this study often used metaphors from theatre,
music or film. At Walt Disney World, for example, customers are called guests and
employees are cast members. Bluewater’s visitors are also referred to as guests
and it is the role of the centre to host them. Whilst the language of product
innovation may be similar across services and manufacturing, the language of
process and business model innovation is certainly not. In addition, as Barras
(1986; 1990) has indicated, uncritical use of manufacturing process-based
frameworks may not be appropriate either.
Figure 6: An iterative model of service innovation
Innovation in Experiential Services – An Empirical View
This research, having studied innovation in a context different from much previous
research, indicates that different contexts may lead to different types of innovation
and innovation process. This reflects the heterogeneity of services, and indicates
that there is a need for development of effective typologies of services to reflect
this and to help understand what processes are required in what context.
Despite the heterogeneity of services, there are some generic lessons that can be
learnt from innovation in experiential services. The findings of this research are
consistent with many of the general models proposed by Bessant and Davies
(2007), in particular the reverse product life cycle and customisation. In addition,
as pointed out by Markides (2006), business model innovation is at the heart of
disruptive innovation in organisations. Other service sectors, including the public
service sector, can learn from the techniques used by the organisations in this
study, such as the service journey and touchpoint models and empathic customer
The three modes of innovation described above (product innovation, process
innovation and business model innovation) are not sector specific, but may occur
in any context. Whilst much innovation in services is about product, service
innovation can best be understood through a process innovation and business
model innovation lens. Doing this helps to understand the problems in
measurement of innovation, both of inputs and outputs, and will recognise and
advance the innovations in services currently taking place.
Although the successful organisations in this study did not indicate that they
required government support, for others it could be important. The implications
from this research are that such support should recognise that service innovation
includes process innovation as well as product innovation. Although existing
manufacturing-based models are important, care should be taken to use the
language of service in any support process. Such support should also recognise
existing good practices in service process design. Finally support should also be
about helping organisations exploit their service innovations through creating
innovative and profitable business models.
Innovation in Experiential Services – An Empirical View
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Innovation in Experiential Services – An Empirical View
Appendix 1: Details of Research Studies
This report is based on a continuing programme for research in the field of
experiential services at London Business School. It draws from the following
Study I Trends in the Experience and Service Economy 2004
Study II Experience and the Brand 2005
Study III New Strategies in Experience and Leisure 2005
Study IV Designing for Experience 2006
Study I set out to examine trends in the service economy involving the creation of
experiences and to identify factors associated with business success in this area.
The research involved interviews with executives from a range of organisations
that are delivering experiences, added upon by field data and internal and
external documents. The sample contained 50 organisations in the areas of retail,
entertainment and sport, theme parks, destinations and hotels, largely from the
UK, Europe and US.
Study II was a field study of over 20 organisations, all of which were applying
experience management to support existing businesses, build new ones and
create innovative ways of connecting with customers. The focus was on the
relationship between experience and brands.
Study III focused on innovators and innovations in the experience and leisure
industry. Field research was conducted in a wide range of organisations, primarily
in the UK and US. The data collection methods entailed interviews with managers
from over 50 organisations, site visits to many of their operations and studying
public documents to try to understand the strategies and outcomes of these
Study IV addressed the question how focusing on the customer experience
changes the way services and service delivery processes are designed. It looked
at the process and content of experience design. The study involved eight case
studies of design agencies and consultancies that specialise in experience design
and nine case studies of experiential service providers. They are displayed in
Table A1. The main method of data collection was interviews with founders,
executives or experienced designers. In total, 40 interviews were conducted. They
were aimed at identifying the design processes, principles and practices for
experiential services. In addition, at the design and consultancy firms examples of
actual design projects were studied. The interviews at the experiential service
providers frequently involved a site visit to observe and experience the customer
experience on offer.
Innovation in Experiential Services – An Empirical View
Table A1: Participants in Study IV: Designing for Experience
Design Agencies And Consultancies Experiential Service Providers
Brand Experience Consultancy Bluewater
Beyond Philosophy Harley-Davidson
Gorgeous Group Herman Miller
HOK Sport Architecture Le Pain Quotidien
IDEO (Service Practice) Luminar Leisure (Lava & Ignite / Liquid)
Imagination Royal Caribbean
MindFolio Virgin Atlantic
Prophet Walt Disney World
X-Leisure (Xscape destinations)
More information about these and other research projects can be found at
... Thus, SCs can gain significant value by leveraging service innovation through the development of data-driven services. In this context, the multitude of actors involved in SCs [2,7] provide various physical and digital touchpoints at which interactions with citizens can take place to create and deliver value based on data [8,9]. Integrating these touchpoints at different service levels to bring together resources, such as data, can lead to a holistic perspective of city services towards a superior citizen experience [10,11]. ...
... They provide the link between a customer and a service provider in the creation and delivery of services [9]. Research has recognized the service innovation potential of touchpoints [8]. In SCs, the multitude of interconnected touchpoints supports the transformation from single service encounters to the creation of a holistic citizen experience in the city [10,26]. ...
... Since our goal is to develop a method that contributes to improving the overall citizen experience, the DCJM is based on the customer journey map which is one of the most widely adapted visual methods for service design and linked to the concept of customer experience [38,39]. It is related to the DT concept [11] and used in various research fields, such as service management, service science [8,35], and marketing [50]. The customer journey map can be conceptualized as "the process of experiencing service through different touchpoints from the customer point of view" [37, p. 221]. ...
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... Similarly, modular innovations imply changes to a specific part of a larger system, whereas architectural innovation entails revamping an entire system [16,17]. In the context of services, Voss and Zomerdijk [18] argue that innovation may consider different elements of service, for example, the service environment, the service employee, the service delivery process, customers, or back-office functions. Helkkula, Kowalkowski and Tronvoll [19] further categorize service innovations into four archetypes: output-based, process-based, experiential, and systemic service innovations. ...
... Government-mandated restrictions on movement have forced high-end food service operators to radically change their business models and operational practices, effectively transforming their dynamic capabilities and in doing so giving rise to a plethora of novel service innovations. Contrasting these against conceptualizations of service innovation put forward in previous literature, changes can be observed across several fronts [18]: new ways of delivering service (e.g. ready-to-eat or finish-at-home takeaway or delivery offering), radical changes to the service environment/servicescape (e.g. ...
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COVID-19 lockdown measures have forced hospitality operators to re-configure their dynamic capabilities through innovating operational practices and pivoting traditional business models. The high-end food service sector has undergone a particularly drastic shift towards a new normal. This qualitative study explores factors facilitating innovation at 16 high-end food service organizations in Finland and the UK through semi-structured expert interviews. Three key themes facilitating innovation during COVID-19 lockdowns are identified: 1) Combining high-tech and high-touch through new ways of producing and providing technology-driven service offerings, 2) Prosocial engagement, i.e. working together with multiple stakeholders to bring added value to all parties, not just the business, and 3) Reactivity, i.e. pushing the traditional boundaries of the sector through quick decision-making and constant iteration and refining of processes and procedures. Drawing our empirical findings together, innovation during COVID-19 lockdowns in high-end food service is conceptualized into three phases: React, Refine, and Reflect.
... A survey of the literature reveals that regardless of the service or product a client purchases or receives, they will have a customer experience, which may be positive, negative, or indifferent. In other words, no matter how unremarkable the product or service may seem, all service interactions generate the possibility for all kinds of service experiences for the customers (Voss & Zomerdijk, 2007). ...
... The EXQ model proposes three important outcomes from customer experience, viz., satisfaction, word-of-mouth and loyalty. Existing literature support that customer experience leads to satisfaction (Anderson & Mittal, 2000;Nisar & Prabhakar, 2017;Otto et al., 2020) increase loyalty (Shankar & Jebarajakirthy, 2019;Srivastava & Rai, 2018) and promote word of mouth (Babin et al., 2005;Keiningham et al., 2007;Voss & Zomerdijk, 2007). ...
With a steep decrease in the rate of COVID-19 infection, and a corresponding increase in the number of vaccinated people, countries have begun to re- open borders to foreign travellers, triggering the resumption of aviation services. However, people are still apprehensive, and are avoiding travel, hindering air travel to get back to the pre-COVID era. This paper determines the experience of air travellers’ during the pandemic applying EXQ model. Additionally, it investigates the role of perceived health risk as a mediating variable in an extended EXQ model. We collected data from a sample of 122 air travelers during the pandemic and analyzed it using IBM SPSS. The outcome of this study sheds light on the experiences of pandemic-affected airline passengers, revealing in the process, factors that passengers value much more now than ever before. The findings confirm that perceived health risk significantly mediates the relationship between customer experience and satisfaction.
... Generally speaking, consumers can either have a material purchase or an experiential purchase. A material purchase is one in which money is spent with the primary goal of acquiring a tangible object, whereas an experiential purchase is one in which money is spent with the goal of acquiring a life experience, which is an event or series of events that each person can personally experience (Andrade et al., 2021;Feng et al., 2021;Jin et al., 2015;Ronzoni et al., 2018;Schmitt, 1999;Tao, 2014;Van Boven and Gilovich, 2003;Voss, 2007). In the food industry field, experiential buying is manifested today in sharing space to realize the social and convivial dimension of eating, creating paths that can bring emotions to life, and where some important values can emerge. ...
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Purpose The purpose of this study is to examine the trend toward purchasing locally grown food and evaluate if tourists visiting Hawai'i are willing to pay more for locally produced foods that are more ecologically sustainable. Design/methodology/approach A research questionnaire was developed in order to investigate the attitudes and behaviors of tourists from the continental United States visiting Hawai'i in purchasing locally grown food in Hawai'i. The final sample includes 454 valid survey responses collected via Momentive, a market research services company. Findings According to the findings of this study, there are economic prospects to expand the use of locally cultivated food into the tourists' experience, as well as a willingness for tourists to support these activities financially. The Contingent Valuation study revealed that tourists from the continental United States were ready to pay a higher price to purchase food that is locally grown, signifying that tourists to Hawai'i are willing to aid the local agriculture business by increasing their restaurant/hotel meal bill, which will help Hawai'i become a more sustainable tourist destination. Research limitations/implications While tourists from the United States mainland, which is the “an islands” top tourist market, have agreed with paying extra or an additional fee for locally grown food products, this study might not accurately represent the attitudes and behaviors of international tourists visiting Hawai'i. Future research should focus on the international tourist markets which may have different social norms or cultural differences thus could provide a broader spectrum of the current study's findings. Originality/value The results of this study provided quantitative evidence that tourists from the United States are interested in purchasing locally grown food items in Hawaii in addition to their willingness to pay an additional fee for these locally grown food products at a restaurant or a hotel dining room, thus addressing a gap in the tourism research.
... The innovation of business models is at the heart of disruptive innovation in organizations (Markides, 2006). According to several authors (Afuah, 2014;Voss and Zomerdijk, 2007;Wang et al., 2015) there is a business model innovation when there is a substantial change in the way in which revenues and profits are earned (for one or more businesses). Casadesus-Masanell and Zhu (2013) hold that BMI is mostly about finding new ways to create and capture value for the company's various stakeholders. ...
Leveraging the Behavioral Reasoning Theory, in this paper we study the consumer’s perception of the new subscription-based business models designed to give users access to a catalogue of smartphone apps. Specifically, we employ a PLS-SEM approach to study the data gathered on a sample of 294 mobile apps users in Italy. In particular, we have found that Global Motives are the main predictor of the consumers’ behavioral intention and that context specific reasons, albeit differently, provide the linkages between the consumer values and the global motives without a direct effect on behavioral intention, partially confirming Westaby’s theory.
... Dịch vụ có các đặc tính vô hình và tính không đồng nhất, gồm rất nhiều hoạt động thú vị, phức tạp và thường có tính đổi mới cao (Hollebeek & Rather, 2019;Martínez-Ros & Orfila-Sintes, 2009;Voss & Zomerdijk, 2007). Tính đổi mới của dịch vụ (Service Innovativeness) đề cập đến khả năng công ty phát triển ý tưởng dịch vụ mới và có liên kết chặt chẽ đến đổi mới dịch vụ (Hollebeek & Rather, 2019). ...
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This research examines the impact of service innovation and co-creation on customer experience (emotion experience, well-being, and memorability). A total of 335 responses gathered from tourists were assessed using structural equation modeling (SEM). The results show that service innovation significantly influences co-creation, customers’ emotional experience (pleasure and arousal), and well-being. The findings continue to reveal the positive effect of co-creation on the emotional experience and memorability of the experience. In particular, the customers’ co-creation is associated with customers' well-being. This is an interesting finding. In addition, customers' emotional experience has a positive impact on both well-being and memorability. Furthermore, customers' well-being has a positive link to the memorability of their experience. Some practical and theoretical implications of this outcome to the marketing and tourism industries are discussed.
Higher education has witnessed unprecedented changes in the last two decades – a highly competitive global market, varying nature of work, industry expectations, learning preferences, advancement in technology, and to top it all a pandemic. To sustain and remain competitive Higher Educational Institutions (HEIs) have shown an increased interest in sophisticated marketing practices, a heightened focus on building brands, creating brand experiences, and perfecting service quality. Around the same time period, services marketing as a field advanced with the works of Vargo and Lusch (2004 Vargo, Stephen L, and Robert F Lusch. 2004. “Evolving to a New Dominant Logic for Marketing.” Journal of Marketing 68 (1): 1–17.[Crossref], [Web of Science ®] , [Google Scholar], “Evolving to a New Dominant Logic for Marketing.” Journal of Marketing 68 (1): 1–17) on service-dominant-logic, and Verhoef et al (2009 Verhoef, Peter C., Katherine N. Lemon, Ananthanarayanan Parasuraman, Anne Roggeveen, Michael Tsiros, and Leonard A. Schlesinger. 2009. Customer Experience Creation: Determinants, Dynamics and Management Strategies.” Journal of Retailing 85 (1): 31–41.[Crossref], [Web of Science ®] , [Google Scholar], Customer Experience Creation: Determinants, Dynamics and Management Strategies.” Journal of Retailing 85 (1): 31–41) on customer experience (CX) catapulting the field into directions of value co-creation, experience, and excellence. There have been, however very limited attempts to view HEIs from a service or experience lens. From a research perspective, this gap can be attributed to silos in research and deficient cross-functional literature. Service research views services either specific to a business sector (banking, retail, hospitality, etc.) or generically, while education literature tends to focus on the curriculum, teaching, and learning aspects of higher education ignoring the business, service, and experience aspects. Institutions also continue to debate about students as customers, or have a narrow focus on programs and deliverables and remain agnostic about the end-to-end experience. This work attempts to provide insights to business schools using frameworks and methods applied in services and customer experience research, treating business education as a complex service and participants in executive education as co-creators of value.
Dienstleistungsmarketing steht für die umfassende Konzeption der Planung und Umsetzung, bei der alle Aktivitäten des Dienstleistungsanbieters konsequent und strukturiert auf die aktuellen sowie zukünftigen Erfordernisse der relevanten Märkte ausgerichtet werden, in dem Bestreben, die Bedürfnisse der Kundinnen und Kunden zu befriedigen und gleichzeitig die unternehmerischen Ziele zu erreichen (Weis, 2015).
This study explores the physical comfort factors from two generations of Age towards the preferable coffee shop. The study will evaluate the factors that contributed to the physical components in a coffee shop and categorized them into groups of clusters. The measurement was taken from the questionnaire distributed to 121 respondents of 18 to 29 years old and 109 respondents of 30 to 49 years old compared to generations. The method applied to achieve the objective was Exploratory Factor Analysis (EFA) using SPSS 25 with Principle Component Analysis (PCA). The findings indicated common and different factors for both generations regarding physical comfort factors about a coffee shop. The constructs derived from 21 items have been clustered into four factors: Facility, Atmosphere, Layout, and Decoration. The group of 18 to 29 years old has selected the various numbers of tables and seats as their highest factor of physical comfort while the group of 30 to 49 years old has chosen the cleanliness as a priority of physical comfort factor. The common factors for both generations were Facility and Layout. This study contributes to understanding the factors of physical comfort in a coffee shop in the design industry and service marketing business.
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A detailed managerial approach to dramatizing the service experience is presented in this article. The drama metaphor is explored and a link is developed between the drama metaphor and the services marketing mix. The drama metaphor, the services marketing mix and numerous industry examples provide a base for two strategic models and related guidelines for services managers. Contributions and cautions for using the drama perspective are offered.
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Executive summary When it comes to repeat business, some managers are clueless. Customers always get more than they bargain for, because a product or service always comes with an experience. By "experience," we mean the "takeaway" impression formed by people's encounters with products, services, and businesses—a perception produced when humans consolidate sensory information. We constantly filter a barrage of clues, organizing them into a set of impressions—some of them rational, some emotional. These impressions can be very subtle-even subliminal-or extremely obvious. They may occur by happenstance or by purposeful design. They may exist as isolated episodes or as managed suites. Collectively, they become an experience. Experience clues may be either performance—or context-based. Performance clues relate to the function of the product or service e.g., the bank did or did not dispense the right amount of cash or the razor did or did not give a close, smooth shave. But over and above the performance of the service, context clues are telegraphed by the appearance of the ATM (or the demeanor of the teller); by the decor, smell, cleanliness, and privacy of the location; by the legibility of the print on the receipt; and by a host of other signals. Similarly, the clues generated by the way the razor shaves are complemented by clues sent out by its look, smell, feel, and sound as well as from the people and things in the environment when a customer inquires about, buys, pays for, uses, and maintains it. Unmanaged, these clues may cancel each other out and leave no net impression on the customer, or worse, induce a strong net negative perception.
In exemplary service organizations, executives understand that they need to put customers and frontline workers at the center of their focus. Those managers heed the factors that drive profitability in this service paradigm: investment in people, technology that supports frontline workers, revamped recruiting and training practices, and compensation linked to performance. They also express a vision of leadership in somewhat unconventional terms, referring to an organization's "patina of spirituality" and the "importance of the mundane." In this article, Heskett, Jones, Loveman, Sasser, and Schtesinger take a close look at the links in the service-profit chain, which puts hard values on soft measures so that managers can calibrate the impact of employee satisfaction, loyalty, and productivity on the value of products and services delivered. Managers can then use this information to build customer satisfaction and loyalty and assess the corresponding impact on profitability and growth. Describing the links in the service-profit chain, the authors explain that profit and growth are stimulated by customer loyalty; loyalty is a direct result of customer satisfaction; satisfaction is largely influenced by the value of services provided to customers; value is created by satisfied, loyal, and productive employees; and employee satisfaction, in turn, results from high-quality support services and policies that enable employees to deliver results to customers. By completing the authors' service-profit chain audit, companies can determine not only what drives their profit but how they can sustain it in the long term.
This paper explores the role of the business model in capturing value from early stage technology. A successful business model creates a heuristic logic that connects technical potential with the realization of economic value. The business model unlocks latent value from a technology, but its logic constrains the subsequent search for new, alternative models for other technologies later on-an implicit cognitive dimension overlooked in most discourse on the topic. We explore the intellectual roots of the concept, offer a working definition and show how the Xerox Corporation arose by employing an effective business model to commercialize a technology rejected by other leading companies of the day. We then show the long shadow that this model cast upon Xerox's later management of selected spin-off companies from Xerox PARC. Xerox evaluated the technical potential of these spin-offs through its own business model, while those spin-offs that became successful did so through evolving business models that came to differ substantially from that of Xerox. The search and learning for an effective business model in failed ventures, by contrast, were quite limited.
This article deals with the effects of inconsistent performance during the service encounter on judgments of service quality and purchase intentions. The service management literature has emphasized strong starts and consistent performance throughout the encounter, asserting, for example, that the service bookends should be performed at the same level of quality. In this study, the authors found that an improvement in performance during the encounter produced more favorable evaluations than when there was a decline in performance or when there was consistent but average performance. The results here also indicate that overall judgments of quality and purchase intentions are driven more by the performance of the final event in the encounter than by the initial event regardless of the trend in performance. The managerial implication is that the beginning of the encounter might not be as important as previously thought and that a buildup to a strong ending results in higher perceived service quality.