Want FREE Templates on Organization, Change, & Culture? Download our FREE compilation of 50+ slides. This is an exclusive promotion being run on LinkedIn.

Flevy Management Insights Case Study
Customer-Centric Strategy for Wellness Centers in North America

There are countless scenarios that require Service Design. Fortune 500 companies typically bring on global consulting firms, like McKinsey, BCG, Bain, Deloitte, and Accenture, or boutique consulting firms specializing in Service Design to thoroughly analyze their unique business challenges and competitive situations. These firms provide strategic recommendations based on consulting frameworks, subject matter expertise, benchmark data, best practices, and other tools developed from past client work. Let us analyze the following scenario.

Reading time: 9 minutes

Consider this scenario: The organization is a network of wellness centers focused on holistic health services, facing challenges in Service Design and customer experience.

Competition has intensified, leading to a 20% decline in customer retention rates and a noticeable decrease in new client acquisition. Additionally, the rapid adoption of digital health platforms by competitors presents an external threat, further complicating the organization's position in the market. Internally, the lack of a unified service delivery model and outdated technological infrastructure hamper the organization's ability to offer personalized and efficient wellness services. The primary strategic objective is to redefine the service delivery model to enhance customer experience and leverage digital transformation to regain market share.

Understanding the intricacies of Service Design and the role of digital transformation is critical in addressing the strategic challenges faced by a network of wellness centers in North America. A closer look into the organization's struggles reveals potential root causes such as an outdated service delivery model and insufficient use of technology in creating personalized wellness experiences. These issues not only impact customer satisfaction but also hinder operational efficiency and market competitiveness. The leadership is concerned that without a strategic overhaul, the organization might continue to lose ground to more agile and technologically adept competitors.

Market Analysis

The wellness industry is experiencing rapid growth, fueled by increasing consumer interest in health and wellness. This growth is further accelerated by the adoption of digital health technologies, which are reshaping consumer expectations and service delivery models.

Examining the competitive landscape reveals:

  • Internal Rivalry: High, with a mix of traditional wellness centers and emerging digital platforms competing for market share.
  • Supplier Power: Moderate, due to the availability of numerous service providers and wellness professionals.
  • Buyer Power: High, as consumers have a wide range of choices and high expectations for personalized service.
  • Threat of New Entrants: High, particularly from digital health platforms offering innovative and convenient wellness solutions.
  • Threat of Substitutes: Moderate, with alternative health and fitness options vying for consumer attention.

Emerging trends include the integration of digital health technologies, a shift towards personalized wellness plans, and increased consumer demand for holistic health approaches. These trends are leading to significant changes in the industry:

  • Adoption of digital health platforms: Offers the opportunity to enhance service personalization and efficiency but requires substantial investment in technology.
  • Increasing demand for holistic wellness services: Provides an avenue for differentiation but necessitates comprehensive service redesign and training.
  • Consumer expectation for personalized experiences: Calls for leveraging data analytics for customized service offerings, posing both a technological challenge and opportunity.

Learn more about Data Analytics Competitive Landscape Market Analysis

For a deeper analysis, take a look at these Market Analysis best practices:

Market Analysis and Competitive Positioning Assessment (45-slide PowerPoint deck)
Customer Development Model (CDM) (28-slide PowerPoint deck)
Introduction to Market Analysis (36-slide PowerPoint deck)
Building a Market Model and Market Sizing (22-slide PowerPoint deck)
Market Research Method (109-slide PowerPoint deck)
View additional Service Design best practices

Are you familiar with Flevy? We are you shortcut to immediate value.
Flevy provides business best practices—the same as those produced by top-tier consulting firms and used by Fortune 100 companies. Our best practice business frameworks, financial models, and templates are of the same caliber as those produced by top-tier management consulting firms, like McKinsey, BCG, Bain, Deloitte, and Accenture. Most were developed by seasoned executives and consultants with 20+ years of experience.

Trusted by over 10,000+ Client Organizations
Since 2012, we have provided best practices to over 10,000 businesses and organizations of all sizes, from startups and small businesses to the Fortune 100, in over 130 countries.
AT&T GE Cisco Intel IBM Coke Dell Toyota HP Nike Samsung Microsoft Astrazeneca JP Morgan KPMG Walgreens Walmart 3M Kaiser Oracle SAP Google E&Y Volvo Bosch Merck Fedex Shell Amgen Eli Lilly Roche AIG Abbott Amazon PwC T-Mobile Broadcom Bayer Pearson Titleist ConEd Pfizer NTT Data Schwab

Internal Assessment

The organization has established a strong brand in holistic wellness but is challenged by outdated service delivery models and lack of technological integration.

SWOT Analysis
The strengths of the organization include a well-established brand and a loyal customer base interested in holistic wellness approaches. Opportunities lie in adopting digital technologies to enhance service personalization and expanding services to meet the growing demand for holistic health solutions. However, weaknesses such as outdated technological infrastructure and inconsistent service delivery models pose significant challenges. External threats include the rapid rise of digital wellness platforms and increasing market competition.

VRIO Analysis
The brand reputation and holistic service approach are valuable and rare, offering a competitive edge. However, the organization's technological capabilities are neither rare nor costly to imitate, highlighting a need for strategic investment in digital transformation. Organizing resources towards this direction can help sustain the competitive advantage.

Capability Analysis
Success in the wellness industry requires innovation, customer-centric service design, and technological agility. The organization possesses strong knowledge and a loyal base but must enhance its capabilities in digital engagement and service personalization to meet evolving market demands and remain competitive.

Learn more about Digital Transformation Competitive Advantage Service Design

Strategic Initiatives

Based on the insights from the market analysis and internal assessment, the leadership has outlined the following strategic initiatives to be pursued over the next 24 months :

  • Digital Transformation of Service Delivery: Implementing an integrated digital platform to offer personalized wellness plans and virtual services, aiming to improve customer engagement and operational efficiency. This initiative is expected to create value by meeting the growing consumer demand for digital health services. It will require investment in digital infrastructure and training.
  • Service Design Redefinition: Revamping the service delivery model to ensure a consistent and holistic customer experience across all touchpoints. This initiative intends to enhance customer satisfaction and loyalty, creating value through increased retention rates. Resources needed include training programs and a cross-functional team dedicated to service design.
  • Market Expansion through Strategic Partnerships: Forming partnerships with complementary service providers and digital platforms to broaden service offerings and reach. This initiative aims to tap into new customer segments and generate additional revenue streams. It will necessitate strategic partnership management and marketing efforts.

Learn more about Customer Experience Customer Satisfaction Market Analysis

Service Design Implementation KPIs

KPIS are crucial throughout the implementation process. They provide quantifiable checkpoints to validate the alignment of operational activities with our strategic goals, ensuring that execution is not just activity-driven, but results-oriented. Further, these KPIs act as early indicators of progress or deviation, enabling agile decision-making and course correction if needed.

What you measure is what you get. Senior executives understand that their organization's measurement system strongly affects the behavior of managers and employees.
     – Robert S. Kaplan and David P. Norton (creators of the Balanced Scorecard)

  • Customer Retention Rate: Measures the effectiveness of the new service design and digital transformation initiatives in retaining customers.
  • Digital Engagement Metrics: Tracks customer interaction with the new digital platform, providing insights into adoption rates and areas for improvement.
  • New Customer Acquisition Rate: Evaluates the success of market expansion and strategic partnerships in attracting new clients.

These KPIs will offer valuable insights into the impact of strategic initiatives on customer engagement, market position, and financial performance, guiding further strategic adjustments.

For more KPIs, take a look at the Flevy KPI Library, one of the most comprehensive databases of KPIs available. Having a centralized library of KPIs saves you significant time and effort in researching and developing metrics, allowing you to focus more on analysis, implementation of strategies, and other more value-added activities.

Learn more about Flevy KPI Library KPI Management Performance Management Balanced Scorecard

Service Design Best Practices

To improve the effectiveness of implementation, we can leverage best practice documents in Service Design. These resources below were developed by management consulting firms and Service Design subject matter experts.

Service Design Deliverables

These deliverables represent the outputs across all the strategic initiatives.
  • Digital Transformation Roadmap (PPT)
  • Service Design Redefinition Plan (PPT)
  • Strategic Partnership Framework (PPT)
  • Customer Engagement Improvement Model (Excel)

Explore more Service Design deliverables

Digital Transformation of Service Delivery

The digital transformation initiative was significantly supported by the application of the Technology Acceptance Model (TAM) and the Blue Ocean Strategy. TAM, developed by Fred Davis in 1989, has been instrumental in assessing how users come to accept and use a technology. It was pivotal for this initiative as it provided insights into the factors influencing wellness center clients' acceptance of the new digital platform. Following the principles of TAM, the organization undertook several steps:

  • Conducted comprehensive surveys to gauge customers' perceived usefulness and ease of use of the proposed digital health services.
  • Implemented a pilot phase for the digital platform, collecting data on user engagement and satisfaction to refine and improve the platform's features.

The Blue Ocean Strategy, coined by W. Chan Kim and Renée Mauborgne, guided the organization in creating uncontested market space, making the competition irrelevant. By integrating digital health solutions into traditional wellness practices, the organization ventured into a relatively untapped market segment. The implementation process included:

  • Identifying underserved needs within the wellness industry that could be addressed through digital services.
  • Developing unique digital wellness programs that combined traditional holistic practices with modern technology, thus creating a new market space.

The results of implementing these frameworks were transformative. The organization successfully launched its digital platform, which was well-received by clients, leading to increased engagement and higher satisfaction rates. Moreover, by creating a new niche in the wellness market through its digital offerings, the organization saw a significant increase in customer acquisition, setting a new benchmark in the industry.

Service Design Redefinition

For the initiative focused on redefining service design, the organization applied the Service Blueprint and the Value Proposition Canvas. The Service Blueprint, a detailed diagram that visualizes the service delivery process, was crucial for understanding and improving the customer experience. This framework helped the team to:

  • Map out the entire customer journey, identifying all touchpoints and the frontstage and backstage activities associated with each.
  • Analyze the current service delivery process to pinpoint bottlenecks and areas where customer satisfaction could be compromised.

The Value Proposition Canvas, developed by Alexander Osterwalder, was utilized to ensure that the redesigned services precisely addressed customers' needs and pain points. The organization followed these steps:

  • Engaged in workshops with staff and customers to identify the most valued aspects of the wellness experience and areas for improvement.
  • Redesigned service offerings to better align with the customer profiles and needs identified through the Value Proposition Canvas.

The application of these frameworks led to a more streamlined and customer-centric service delivery model. The redefined services significantly enhanced customer satisfaction and loyalty, evidenced by improved retention rates and positive feedback. The organization's ability to closely match its services with customer expectations set a new standard in personalized wellness experiences.

Learn more about Value Proposition Customer Journey

Market Expansion through Strategic Partnerships

In pursuing market expansion through strategic partnerships, the organization leveraged the Ansoff Matrix and Strategic Alliances Framework. The Ansoff Matrix helped in identifying growth strategies by mixing market and product development opportunities, guiding the organization to:

  • Evaluate existing and potential markets for expansion, focusing on those with high synergy potential for the wellness services offered.
  • Assess new service development opportunities that could be realized through partnerships, enhancing the organization's market offering.

The Strategic Alliances Framework facilitated the formation of mutually beneficial partnerships with entities that could provide complementary services or access to new markets. The organization implemented this framework by:

  • Conducting a thorough analysis of potential partners, focusing on those with aligned values and strategic objectives.
  • Developing clear partnership agreements that outlined the objectives, roles, and expectations of each party, ensuring a shared vision for success.

The strategic initiatives to expand the market through partnerships resulted in the organization entering new geographical areas and demographic segments, significantly increasing its customer base. Additionally, the collaboration with partners led to the introduction of innovative wellness programs, further solidifying the organization's position as a leader in holistic health services.

Additional Resources Relevant to Service Design

Here are additional best practices relevant to Service Design from the Flevy Marketplace.

Did you know?
The average daily rate of a McKinsey consultant is $6,625 (not including expenses). The average price of a Flevy document is $65.

Key Findings and Results

Here is a summary of the key results of this case study:

  • Implemented a digital platform that improved customer engagement and satisfaction, leading to a 25% increase in digital service adoption.
  • Enhanced customer retention by 15% through the redefined service delivery model, aligning services more closely with customer expectations.
  • Expanded market reach and customer base by entering new geographical areas and demographic segments through strategic partnerships.
  • Introduced innovative wellness programs via partnerships, contributing to a 20% increase in new customer acquisition.
  • Streamlined service delivery processes, reducing operational inefficiencies and improving the customer journey.

The strategic initiatives undertaken by the organization have yielded significant positive outcomes, notably in customer engagement, retention, and market expansion. The successful implementation of a digital platform has not only increased digital service adoption but also positioned the organization favorably in a competitive market that increasingly values digital health solutions. The redefinition of the service delivery model has enhanced customer satisfaction and loyalty, as evidenced by the improved retention rates. Strategic partnerships have effectively broadened the organization's market reach and introduced innovative wellness programs, contributing to a notable increase in new customer acquisition. However, the results also highlight areas for improvement, particularly in fully leveraging data analytics to further personalize services and in optimizing the integration between digital and traditional service offerings. The initial resistance to digital adoption among some customer segments suggests a need for more targeted change management strategies.

Recommendations for next steps include focusing on deepening the integration of digital and traditional wellness services to provide a seamless customer experience. This could involve further investment in technology to leverage advanced data analytics for personalized service offerings. Additionally, ongoing training and development for staff on digital platforms and customer service excellence should be prioritized to ensure consistent delivery across all touchpoints. Exploring further strategic partnerships, especially in emerging wellness technologies, could also offer new avenues for innovation and market differentiation. Finally, a continuous feedback loop from customers should be established to adapt and refine services in alignment with evolving customer needs and expectations.

Source: Customer-Centric Strategy for Wellness Centers in North America, Flevy Management Insights, 2024

Flevy is the world's largest knowledge base of best practices.

Leverage the Experience of Experts.

Find documents of the same caliber as those used by top-tier consulting firms, like McKinsey, BCG, Bain, Deloitte, Accenture.

Download Immediately and Use.

Our PowerPoint presentations, Excel workbooks, and Word documents are completely customizable, including rebrandable.

Save Time, Effort, and Money.

Save yourself and your employees countless hours. Use that time to work on more value-added and fulfilling activities.

Read Customer Testimonials

Additional Flevy Management Insights

Download our FREE Strategy & Transformation Framework Templates

Download our free compilation of 50+ Strategy & Transformation slides and templates. Frameworks include McKinsey 7-S Strategy Model, Balanced Scorecard, Disruptive Innovation, BCG Experience Curve, and many more.