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Service Design Innovation and why it is gaining importance

Service Design Innovation has become increasingly popular in the last decade to continuously improve existing service offerings and create completely new offerings. Read this article to find out exactly what it means and why it is becoming increasingly important.

Service Design Innovation is the creative application of design thinking methods to the development of services.

What is Service Design Innovation?

Service design innovation is the creative application of design thinking methods to the development of services. Just as products are designed in product design, concepts for services are developed in service design. Either existing services can be improved or completely new services can be created.

  • Customer-centric: Service Design Innovation focuses on understanding customer needs to make  service user-friendly, competitive and relevant to customers. The focus is on the customer experience.
  • Holistic: Service design is based on the assumption that the entire organization is involved in the process. The focus is therefore not only on the touchpoint visible to the customer, but also on internal company processes and employees that are important for the functioning of the service. 
  • Interdisciplinary: Customers and employees work together in interdisciplinary, heterogeneous teams. The team gets deeply involved with the problem and experiments with new solutions.

Service Design designs services in the interest of the customer and at the same time takes entrepreneurial interests into account by involving its own employees. This makes it possible to offer innovative services of the highest quality, for which the customer is prepared to dig deep into his pocket.

Service design is an iterative process

Service Design Innovation is based on an iterative design thinking process in which employees from different departments work together with customers at the forefront. The process includes a variety of methods:

  1. Research: Qualitative and quantitative research methods to understand employees and customers in the context of the service.
  2. Ideation: Creative and human-centered idea-finding methods.
  3. Prototyping: Methods for service prototyping to test new ideas quickly and cost-effectively before investing a lot of money in their development.

A service design innovation process begins with research to find out what type of service potential customers would prefer. Based on this research, interdisciplinary teams create ideas and design the first service design. Prototypes are built and tested for usability, functionality, cost, market response, etc. Only if these tests are positive will the new service be implemented.

Why is service design innovation gaining in importance?

Service Design Innovation can be used to design services that address previously unmet customer needs and open up new business areas, sustainably differentiate the company from the competition and increase customer loyalty.

1. Customers want inspiring service experiences

Emotional customer experiences are becoming increasingly important. Customers' expectations of the customer experience of services are increasing due to the growing possibilities and fast-moving product and service cycles. A Gartner study from 2014 shows that 89 percent of the companies surveyed recognize the importance of customer experience as a competitive advantage. However, Bain & Company revealed an "80/8 Delivery Gap" in the study "Closing the Delivery Gap": They found that 80 percent of the companies surveyed believe that they deliver an above-average customer experience, while only 8 percent of the customers share this view. There is therefore still scope in many companies to improve and innovate services.



2. Differentiation from the competition

Today, products are often interchangeable. The markets are saturated. Defining and establishing unique selling propositions is therefore more important than ever for companies today. Service Design Innovation helps companies to develop outstanding service offerings, to sustainably differentiate themselves from the competition and to open up new customer groups. To illustrate this with an example: If two shops are next to each other and both offer the same products at the same price, the quality of the service is the reason why customers prefer one of the two shops.

3. Increased customer loyalty

Customer retention is highly dependent on the perceived experience of a service - including availability, accessibility and service level. Service is the only consistent loyalty driver in all industries. Good service will bring customers back and strengthen loyalty to a brand, while poor service will drive customers to the competition. Service Design tries to understand where companies have customer service problems and how services can make a positive difference for customers and companies, and then design solutions that add real value.

Conclusion: Service Design Innovation

People want to be inspired and expect a smooth process when they use the services of a company. In order to create customer-oriented service design innovations and get the right feeling for the market, it is not enough to work together with creative agencies and brand ambassadors. Companies must know the customer perspective in their service offerings and enable their employees to work efficiently. Service design concepts can help companies achieve this goal.


Daniel Zapfl

With his comprehensive experience in holistic innovation management, Daniel brings valuable insights and best practices from various industries to your innovation project. He boldly and disruptively challenges conventional ways of thinking. As a TRIZ-certified sparring partner, Daniel will support you with creative solution-finding in a reliable and structured manner. More critical than the most discerning customer, he always has an eye on the big picture.

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