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The basics of service design (Guide part 1)

April 29, 2021

Service design, or design thinking, is often linked with terms such as innovation (process), change, and improvement. But what exactly is it? And why is it important? In this article, we will explore some of the principles of service design, as well as the positive impacts it can have on your customers’ lives and the performance of your business. Learn more about the principles of service design and the impact it can have on your business.


What is a service? What is a product?

Many people focus on the differentiation between products and services, between intangible and tangible goods, and on the fact that a service can not be stored like traditional products.

While these differences might be useful in other contexts, in the context of service design we define anything that a company offers as their services - no matter if this is tangible or not. Whether we call it physical and digital products, services or goods - in the end the customers do not care. They pay organizations in order to get an experience in return. The goal of service design is to make sure this experience lives up to, or even exceeds the customer’s expectations and meets their needs.

What is service design?

There are many different definitions of service design. Within various contexts, agencies, organizations and countries we can see different labels being used for more or less the same thing. One great advantage of not having a commonly agreed definition is the freedom for service design approaches to change and adapt over time. Just like design in general, service design is constantly evolving. This allows it to adapt to various use cases and seamlessly integrate with like-minded approaches such as “lean” or “agile” – be it in management, in software development, or many other fields and disciplines.

We don’t care if you call what we’re doing service design, design thinking, experience design, UX or CX design. In many ways, these labels continue to build up new silos of what design is, and what it is not. Rather, our attention should focus on breaking down silos within organizations. In this article, we’ll call it service design, but please feel free to adopt whichever nomenclature you prefer.

In general, service design is a mindset, process, toolset and a collection of methods striving to create delightful experiences for people, be they customers, users, employees, citizens or whomever you focus on and any combination of these. Therefore, it constantly shifts between the different zoom levels of an experience: from an overall end-to-end perspective, to the experience of tiny details.

“Service Design is a practical approach to the creation and improvement of the offerings made by organizations. [...] It is a human-centered, collaborative, interdisciplinary, iterative approach which uses research, prototyping, and a set of easily understood activities and visualization tools to create and orchestrate experiences that meet the needs of the business, the user, and other stakeholders.”
Marc Stickdorn, CEO of Smaply in the book "This is Service Design Doing", p. 27

The boundaries between physical products and services are blurring and, in most cases, one doesn’t exist without the other. We need to think in systems and understand the ecosystem in which services and physical products operate. Service design is rooted in participatory and human-centered design.

Most people make the mistake of thinking design is what it looks like. People think it’s this veneer — that the designers are handed this box and told, ‘Make it look good!’ That’s not what we think design is. It’s not just what it looks like and feels like. Design is how it works.
Steve Jobs

Principles of service design

In their book This is Service Design Doing, our co-founders, Marc Stickdorn and Jakob Schneider, collected six key characteristics of the service design approach.

These six principles of service design doing are:

  1. Human-centered: Consider the experience of all the people affected by the service.
  2. Collaborative: Stakeholders of various backgrounds and functions should be actively engaged in the service design process, e.g. in a design thinking workshop.
  3. Iterative: Service design is an exploratory, adaptive, and experimental approach, iterating toward implementation..
  4. Sequential: The service should be visualized and orchestrated as a sequence of interrelated actions.
  5. Real: Needs should be researched in reality, ideas prototyped in reality, and intangible values evidenced as physical or digital reality.
  6. Holistic: Services should sustainably address the needs of all stakeholders through the entire service and across business.

Another important part of service design is the language that is used; for an intro to the most important terms and vocabulary, have a look at this service design glossary.

Why is service design important?

Many organizations have simply lost sight of their customers’ experience and what it is like to receive services and interact with their organization. At the forefront of what makes service design important is its capacity to help organizations refocus and see their service delivery from the perspective of their customers.  

By deeply understanding the experience of people who engage with their services, organizations are in a better position to make service innovation decisions that improve both customer satisfaction and business outcomes.

Benefits of service design

Through taking a systematic approach to service design, organizations are able to reap the following  benefits:

  • Having better insights that lead to innovative and improved methods for service delivery, which in turn  are more useful, usable and enjoyable for customers.
  • An understanding of customer pain points when receiving services.  
  • A heightened level of focus for solving the right problem - by reducing assumptions and framing chosen problems in the right manner.
  • Reduced inefficiencies within organizations by helping to choreograph service delivery in streamlined ways.
  • Decreased assumptions when it comes to making decisions that balance business and customer needs.
  • A more holistic and collaborative approach for solving business challenges that involves many different stakeholder groups.
Link to the next part of the guide – the service design process

Business impact of service design

People often ask about the business impact of implementing service design in their company. To be honest, that is not easy to measure. Sure - if you look at the entire market, you can see correlations between how design-led a company is and its success:

By 2016, 89% of companies expect to compete mostly on the basis of customer experience

vs. 36% four years ago.

— Gartner Research, 2015

Over the last 10 years, design-led companies outperform the S&P by an extraordinary 211%.

— DMI, 2013

240% ROI, i.e. with an investment of £180,000, the client saved £435,000.

— TOUCHPOINT 2/2: “The Bottom Line”, 2013

77% decrease in waiting time resulting in a drop of abandonment rates from 14% to 5.7%.

— Service Design Award, 2019

41% more complaints resolved, time taken to resolve a complaint reduced by 63%.

— Service Design Award, 2018

The problem about this data is that it's always a correlation and not a causality. This makes it hard to argue against a very critical person who  might agree until a certain point, but only sees the possibility to invest into service design for very successful companies.

We often use KPIs with measurements to understand whether we are decreasing or increasing in the long run. We are picking one moment in time and aggregating all the data to just one value and analyzing how it develops. That also has implications. But the question remains: Can we actually link improvements to one particular project? Perhaps customer satisfaction in general is too vague, too big to make direct relationships with one specific project.

Therefore, we try to be more concrete and talk about measuring the outcome of a project. When implementing service design, we aim to improve customer satisfaction as well as  employee satisfaction. There is actually an academic model behind that: it is called the confirmation–disconfirmation paradigm.

We compare expectations with experiences – if they match, customers or employees are satisfied. If the expectation is high and the experience fails to meet this, customers will be dissatisfied. If the experience is greater than what customers expect, they can be very satisfied and perhaps even delighted.  

When we measure customer satisfaction it is always a comparison of these different values.

Visualization of expectations, experiences and the customer satisfaction along a customer journey.
When measuring customer satisfaction it is always a comparison of expectations, experiences and satisfaction.

Hence, to increase customer satisfaction we can work both on the experience side and on the expectation side. Some companies are doing that strategically – increasing satisfaction through decreasing the expectation instead of increasing the quality of the experience.

At every moment of the customer journey we are actually comparing our expectation with our experience. The result of this comparison is the emotional journey - a lane that we typically add to a journey map.

Service design vs. designing a service

The traditional understanding of designing something - be it a product or a service - focuses mostly on the aesthetics, what a product or service looks or sounds like (e.g. the front-end or the usability of a service).

While this is one important component of service design, service designers are more deeply involved in finding out whether a service works, fulfills a certain need and creates value. Service design not only considers how a service is experienced, but also how that service is delivered and whether it should exist or not.

Hence, service design goes far beyond the visible. The core of service design is to challenge and reshape everything - from operations to the business model of an organization.

And now, what's next?

Knowing about the basics, it's time to learn more about the service design process in the second part of our service design guide!