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Chapter 10Building Customer Loyalty Through Services Quality

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Objectives

1. To examine the concept of customer loyalty with service providers

2. To examine the concept of service quality 3. To discuss how customers evaluate service

quality4. To discuss the role of service guarantees in

relation to quality5. To examine the design of effective service

guarantees and their payoff

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Introduction

• Customer delight occurs when customer expectations are significantly exceeded.

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Introduction (cont’d)

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What is Service Quality?

• Service quality from the provider’s perspective means the degree to which the service’s features conform to the organization’s specifications and requirements; from the customer’s perspective it means how well the service meets or exceeds expectations.

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What is Service Quality? (cont’d)

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How Customers EvaluateService Quality

• Service quality is more difficult to evaluate than goods quality

• Service quality perceptions result from a comparison of consumer expectations with actual service performance

• Quality evaluations are not made solely on the outcome of a service; they also involve evaluations of the process of service delivery

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How Customers EvaluateService Quality (cont’d)

• SERVQUAL is a scale designed to measure customer perceptions of service quality along five key dimensions:

• Reliability • Assurance• Tangibles • Responsiveness• Empathy of the service provider

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How Customers EvaluateService Quality (cont’d)

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Why and When toGuarantee a Service

• A service guarantee is a promise to compensate customers if the service delivery fails to meet established standards

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What Makes an ExtraordinaryService Guarantee?

• Unconditional• Easy to understand and communicate• Meaningful• Simple to invoke• Easy and quick to collect on (Hart,1988)

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How to Design aService Guarantee

• Three major decisions:– Degree of explicitness– Scope of what is covered– Conditions of coverage