Benefits of Aesthetic Design as an Element of New Service Development*

Abstract

The goal of this research is to investigate the benefits that may be gained from using aesthetic design in new service development. The research is performed in two phases. In the first phase, case research examining the use of aesthetic design in 16 new service development projects in new technology‐based firms is used to determine the objectives underlying managers' decisions to use aesthetic design in new service development. The results of the case research suggest that the objectives underlying managers' decisions to use aesthetic design in new service development are attracting new customers, creating and fostering a positive image of their firm in their market, retaining existing customers, and doing so at lower cost. In the second phase, the results of the case research are used to generate hypotheses that are tested using longitudinal survey data collected in 98 new technology‐based firms. The findings suggest that by and large the benefits expected by managers are realized. The practitioner implications of this research are that new technology‐based firms that emphasize the use of aesthetic design in new service development can expect to have a greater proportion of sales from new customers, be less dependent on a few large customers, be more successful in entering new markets, have a more favorable firm image, and enjoy higher turnover growth from existing customers and higher profits than comparable firms not using aesthetic design. The data do not provide support for the hypothesis that firms using aesthetic design in new service development will have customers that are less inclined to switch their allegiance to competitors, whereas it does support the hypothesis that firms using aesthetic design will enjoy higher turnover growth from existing customers than others. This could indicate that, although firms cannot expect to retain customer loyalty based on aesthetic design, they can expect to earn greater revenues from customers who do remain loyal if they emphasize aesthetic design.