Customer and Frontline Employee Influence on New Service Development Performance

Service firms recognize the key role that product and process innovation play in building and sustaining competitive advantage in the marketplace. This empirical study tests a model of new service development (NSD) that enhances performance outcomes by prescribing specific roles for customers and frontline employees in the NSD process. Findings are based on in-depth managerial interviews and survey data collected from 160 organizations across a variety of service sectors. The results support hypotheses that customer and frontline employee participation in specific stages of the NSD process indirectly affects sales performance and project development efficiency outcomes. Positive effects are mediated by the new service success factors of service marketability and launch preparation. To produce successful new services, firms should involve customers in the design and development stages to help identify market opportunities, generate and evaluate new service ideas, define desired benefits and features of the potential service, and provide extensive feedback for product and market testing. Frontline employees are less effective than previously thought as a source of new service ideas. Firms should instead focus on incorporating those personnel in the full launch stage to effectively promote and deliver the new service.