The short version:
Service design encompasses distinctive foundational business model issues as well as the comprehensive, end-to-end journey, whereas experience design addresses the design choices that affect direct interactions people have, physical or virtual, along that journey. In other words, service design is trying to solve ecosystem-level problems and experience design generally is trying to solve interaction-level problems.
But, obviously, there’s more nuance when you’re in the trenches.
The longer, more nuanced version (Tock vs. OpenTable):
Sitting down to write this post, I was reminded of an episode of The Tim Ferriss Show podcast, which featured Nick Kokonas, co-owner and co-founder of The Alinea Group of restaurants (Alinea, Next, The Aviary, Roister, The Aviary NYC) and founder and CEO of Tock, Inc., a reservations and CRM system for restaurants. His discussion of the thinking that gave birth to Tock is a perfect example of service design versus experience design. This may be best exemplified by the question he asked himself, which was (I’ll paraphrase): “Why do restaurant reservations have to work the way they do?” The question encompasses much more than the specifics of the design of the digital product or experience. It begs exploration of the motivations, rewards and journeys on both sides of the transaction, customer and restaurant.
In the case of Tock, attempting to answer that initial question led Kokonas to the core insight: traditional phone-based reservation systems relied on a transactional model that was so opaque that the two parties involved were continually lying to each other in an attempt to achieve their desired outcome. Customers were often lying about the size of their parties to claim what openings were available, or because there was no monetary risk involved, making reservations at multiple restaurants as they were planning their outings, resulting in empty seats and lost revenue at the restaurants. Restaurants were overbooking reservations to compensate for the uncertainty, resulting in extended wait times (“We’re running a bit behind this evening. Please have a seat at the bar and we’ll call you when your table is ready.”).
Through an experience design lens, solving this problem had been already attempted by OpenTable. They created an online analog of the phone-based process that ultimately gave those existing bad behaviors, as they say in Silicon Valley, scale. In that sense, it was an effective experience design exercise. It certainly reduced friction and was, by most assessments, a better experience for both parties within the bounds of the transaction as it stood. Looking at it through a service design lens, however, OpenTable hadn’t addressed fundamental issues and resulting pain points within the service model itself.
In creating Tock, Kokonas wanted to address at least two of the most pressing structural issues: improving transparency and reducing wait times for customers and removing uncertainty and maximizing yield for restaurants. In regard to the former, Tock delivered two basic innovations. First, was the transparency of restaurant inventory. Instead of customers calling an establishment and asking if a specific time and party size might be available, they could see the full inventory of available tables (and in some cases see how pricing varied throughout the week), and, by putting down a non-refundable deposit, guarantee the availability of that table at the exact time booked.
For the restaurants, the system delivered a more certain reservation—customers who’ve paid a deposit are more likely to follow through. But it also provided a novel approach to yield management—transparent variable pricing. When customers booked a reservation for Alinea, they could see at a glance what dates were available for a party of their size and what price differences were for different packages.
In the interview on the podcast, Kokonas likened the feature to purchasing tickets for a baseball game. The seats in the third row just behind the dugout on a Saturday are priced differently than upper deck on a Tuesday. Everyone understands and can see the difference when purchasing and can select among various choices based on what matters to them.
A distinction that makes all the difference:
Service design and experience design are often two sides of the same coin. In the end, both are a means to make an engagement or transaction more customer-centric and satisfying. And any project centered around either may involve some form of the other.
I hope we have illustrated, however, that there is a distinction. In one shorthand, it would be fair to say, changes in service design have a greater effect on the overall cost (positive and negative) of the engagement or transaction, whereas experience design has a greater effect on customer confidence along the way.
In any case, both modes of thinking are critical to ensuring your business remains customer-centric and competitive.