F R A N C E S X .

F R E I |
S ENI OR AS SOCI ATE DEAN FOR FACULTY PL ANNI NG & RE CRUI TI NG
UPS FOUNDATI ON PROFE SSOR OF SERVI CE MANAGEMENT

SOLDI ERS FI ELD | BOSTON, MA 02163 | Ph 617. 495. 7968 | Fx 617. 496. 4066 | f f r ei @hbs. edu | GEORGE F. BAKER FOUNDATI ON
July 21
st
, 2014
It was a pleasure and a privilege to speak at the SPNM Program last week and look forward to presenting again
next year. I have attached the slides from my presentation and would be grateful if you didnt distribute this
file or post it elsewhere.

If I can be helpful to you as you think through how to bring these ideas to life, please dont hesitate to reach
out.

Warm Regards,





1
Page 1
1 Frances X. Frei
Uncommon Service
Commerce Bank Case Study
2 Frances X. Frei
Responding to Focus
Specific things to specific people
Customers
Employees
Products
All things to all people
3 Frances X. Frei
Incumbent Response: 4 Stages of Strategic Grief
Dismissal of new entrant as non-threat
Sadness at defection of profitable customers
Relief at realization that only one segment is attacked
Dread as larger threat reveals itself
Specific things to specific people
Customers
Employees
Products
All things to all people
4 Frances X. Frei
What Happens When Focused Firms Enter?
Customers
Employees
Products
2
Page 2
5 Frances X. Frei
Successful Incumbent Response
Service model
Shared services
Human resource processing
Executive training
Finance
Purchasing
IT

{economies of scale}
{economies of experience}
Multi-Focused Firm
6 Frances X. Frei
Multi-Focused Examples
Service model
Shared services
Service model
Shared services

Yum! Brands Omnicom

General Electric
Service model
Shared services

7 Frances X. Frei
Multi-Focused Organization
Service model
Shared services
Service
Offering
Employee
Mgmt System
Funding
Mechanism
Customer
Mgmt System
Service
Offering
Employee
Mgmt System
Funding
Mechanism
Customer
Mgmt System
8 Frances X. Frei
The Four Service Truths
You cant be good at
everything
Its not your
employees fault
Someone has to pay
for it
Service
Offering
Employee
Management System
Funding
Mechanism
Customer
Management System
You must manage
your customers
Create value for customers, employees, and shareholders.
3
Page 3
9 Frances X. Frei
Commerce Bank: Hard-Coded Tradeoffs
Convenient
service
Better customer
interactions
Spending money
on service features
creates
permits
Lower deposit
rates
permits
Limited product
set
Hire for attitude
&
Train for service
creates
Service
Offering
Employee
Mgmt System
Funding
Mechanism
Customer
Mgmt System
10 Frances X. Frei
Commerce Bank Attribute Map
Convenience
Customer
interactions

Product range
Price
1 2 3 4 5

Relative Performance of Firm

Most important
to target market
Least important
to target market
Service
Offering
Employee
Mgmt System
Funding
Mechanism
Customer
Mgmt System
11 Frances X. Frei
Low prices
Friendly service
Frequent
departures
On-time arrival
Fast transport
Convenient airports
Extensive network
On-board
amenities
Southwest Attribute Map
Most important
to SWA target
market
Least important
to SWA target
market
1 2 3 4 5
SWA
Full-
service
airline
The bus
Relative Performance of Firm
Service
Offering
Employee
Mgmt System
Funding
Mechanism
Customer
Mgmt System
12 Frances X. Frei
Wal-Mart Attribute Map
Low prices
Selection across
categories
Rural convenience
Reliable prices
Merchandise
quality
Suburban
convenience
Selection within
categories
Sales help
Ambiance
Mom & Pop
Sears
1 2 3 4 5
Wal-Mart
Relative Performance of Firm
Most important
to Wal-Mart
target market
Least important
to Wal-Mart
target market
Service
Offering
Employee
Mgmt System
Funding
Mechanism
Customer
Mgmt System
4
Page 4
13 Frances X. Frei
1 2 3 4 5

1 2 3 4 5

versus
Service
Offering
Employee
Mgmt System
Funding
Mechanism
Customer
Mgmt System
The Choice
14 Frances X. Frei
Hygiene Factors
Service
Offering
Employee
Mgmt System
Funding
Mechanism
Customer
Mgmt System
15 Frances X. Frei
Classic Map #1. Need a Wedge
Quality of
installation
Low Price

Responsiveness

Courteous &
Professional
Pro-active
follow-up
1 2 3 4 5

Relative Performance of Firm

Most important
to target market
Least important
to target market

*
*
*
*
*
16 Frances X. Frei
Classic Map #2. Wasted Wedge
Quality of
installation
Low Price

Responsiveness

Courteous &
Professional
Pro-active
follow-up
1 2 3 4 5

Relative Performance of Firm

Most important
to target market
Least important
to target market

*
*
*
*
*
5
Page 5
17 Frances X. Frei
Classic Map #3. Wasted Profit
Quality of
installation
Low Price

Responsiveness

Courteous &
Professional
Pro-active
follow-up
1 2 3 4 5

Relative Performance of Firm

Most important
to target market
Least important
to target market

*
*
*
*
*
18 Frances X. Frei
Identify Funding Mechanism
Charge customers extra for it - in a palatable way
Convenient
service
Spending money
on
service features
creates
permits
Lower deposit
rates
Service
Offering
Employee
Mgmt System
Funding
Mechanism
Customer
Mgmt System
19 Frances X. Frei
Progressive Insurance
Insurance Economics
Firms lose money on insurance - make money investing pre-paid
premiums
Customers are extremely price sensitive
Progressive Insurance
Progressive spends more on service features, yet the company
makes more on insurance.
Framing : operational savings framed as value-added service
Service
Offering
Employee
Mgmt System
Funding
Mechanism
Customer
Mgmt System
20 Frances X. Frei
Identify Funding Mechanism
Make service improvements that also reduce cost
Spending MORE
on Service
A BETTER
Service
Experience
creates
permits
Service
Offering
Employee
Mgmt System
Funding
Mechanism
Customer
Mgmt System
Spending LESS
on Marketing
Customers RAVE
about Service results permits
6
Page 6
21 Frances X. Frei
Funding Mechanism
Service
Offering
Employee
Mgmt System
Funding
Mechanism
Customer
Mgmt System
Can self-service lead to service excellence?
Yes, if
readily available
full service
alternative
Self-service
22 Frances X. Frei
J ob Design Common Culprit
Employee
Sophistication
Operational
Complexity
time
level
Service
Offering
Employee
Mgmt System
Funding
Mechanism
Customer
Mgmt System
23 Frances X. Frei
Which Behaviors?
Service
Offering
Employee
Mgmt System
Funding
Mechanism
Customer
Mgmt System
24 Frances X. Frei
Further Explanation