Question

Name the five types of customer-introduced variability and discuss options that let companies offer a high level of accommodation at low cost or reduced variability without damaging the service experience. Provide your rationale and at least one source.

Answer 1

Customer-introduced variability is the result of involvement of customers in the service delivery process by deviating the company's regular processes and bringing in unexpected requirements in the process.

There are five types of customer-introduced variability -

1) Arrival variability - All customers do not want the service at the same time. Customers opt for the service based on their convenience and necessity but are never concerned on the company's readiness to provide the service. This is counter-productive for the company but they need to deal with it by managing their resources and costs efficiently.

2) Request variability - Customers have different requests and requirements which the company might not be able to deliver with its current process. Here, few customers' requests need to be taken on case-by-case basis to provide them the requested service. But, it is a big challenge for the companies to deal with.

3) Capability variability - Variability might also occur because of the customers' ability to perform or supervise certain tasks. Some customers might be very quick in their tasks and very particular in their observations whereas some might require a lot of handholding. This results in lack of predictability in the service to be offered.

4) Effort variability - Depending on the interest the customer takes to ensure he/she gets the desired service quality, the variability might differ. If a customer puts in more effort, the quality of service might be good though it becomes costly for the company. If the customer decides to stay away, the quality of the service might suffer.

5) Subjective preference variability - Same level of service might be appreciated by one customer and dismissed by another. It depends on the specific customer's preference. This variability is highly unpredictable.

It is possible though rare to offer high level of accommodation at low cost without damanging the service experience. Below are the options for the same -

i) If the company tries to target customers on the variability types i.e. most of the customers induce certain type of variability, it becomes easy for the company to accommodate without compromising quality.

ii) Company has designed its processes too flexible to accommodate variabilities. For every customer query, there is an answer -

Rationale and Source -

Dell and Asian Paints are examples of providing customized products based on customers' preferences without higher costs. Dell has designed its parts and they kept taking assembling the laptops and desktops based on the customers' configuration requirements. Similarly, Asian paints have offered wide variety of blends based on the customer requirement of color, durability etc of the paints.

In service industry, South West Airlines has provided the best customer service which took into consideration a wide range of customer preferences.

Document source - Breaking the Trade-Off Between Efficiency and Service - HBR case