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Service Quality

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What is service quality?

Q is conformance to specifications Q is the degree to which customer

expectations are satisfied Q means doing it right the first time Q is the fair exchange of price and value Q is consistent attention to detail Q is the philosophy of the organization to

excell

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What is service quality?

Quality

Design Conformance

Strategic Tactical

Fitness for use

A budget hotel that conforms to design requirements is a quality hotel. Luxury ≠ quality

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The quality challenge

Subjectivity in the customer’s perception of quality– Customer’s perception of quality can be based

on one or a small number of features of the service package

– The rating of the service will vary by individual

– Quality is often judged in relation to price

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The quality challenge

Simultaneous production and consumption– Multiple customer contact points

– Each customer contact is called a moment of truth.» You have the ability to either satisfy or dissatisfy them when

you contact them.

» A service recovery is satisfying a previously dissatisfied customer and making them a loyal customer.

– Customer may disrupt Q for other customers

– Difficult to measure

– Difficult to correct mistakes

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Dimensions of Service Quality

Reliability: Perform promised service dependably and accurately. Example: deliver newspapers at same time each day.– Doing it right the first time.

– The firm honoring its promises

Responsiveness: Willingness to help customers promptly (timeliness). Example: avoid keeping customers waiting for no apparent reason.

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Dimensions of Service Quality Assurance: Ability to convey trust and

confidence.– Competence: required skills– Credibility: believability, honesty

Empathy: Ability to be approachable. Example: being a good listener.– Courtesy: politeness, respect– Communication: informing the customer in a language

they can undertsand Tangibles: Physical facilities and facilitating

goods. Example: cleanliness.

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Perceived Service Quality

Word of mouth

Personal needs

Past experience

Expectedservice

Perceivedservice

Service Quality Dimensions

ReliabilityResponsiveness

AssuranceEmpathyTangibles

Service Quality Assessment1. Expectations exceeded PS>ES (Quality surprise)2. Expectations met ES~PS (Satisfactory quality)3. Expectations not met PS<ES (Unacceptable quality)

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Gaps in Service Quality

Word -of-mouthcommunications

Personal needs Past experience

Expected service

External communications to consumers

Perceived service

Service delivery (includingpre- and post-contacts)

Translation of perceptions intoservice quality specifications

Management perceptions of consumer expectations

GAP 5

GAP 3

GAP 2

GAP 1 GAP 4

Customer

Provider

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Gaps in Service Quality

GAP 1: management doesn’t understand customer expectations– improve market research– Reduce levels in hierarchy– Communicate with contact employees

GAP 2:lack of mngt committment to Q; infeasibility of meeting expectations– Set goals– Standardize service delivery

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Gaps in Service Quality

GAP 3: service performance gap; due to lack of teamwork, insufficient training, wrong employee selection, wrong job design.

GAP 4: discrepancy between service delivery and expectations of customers formed through advertising etc.– Exaggerated promises– Lack of info provided to contact personnel

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Gaps in Service Quality

GAP 5: discrepency between customers’ expected service and percieved service.

Measuring service quality (reliability, responsiveness, assurance, empathy, tangibles)– SERVQUAL instrument to measure the 5

dimensions of service quality» First part measures expectations» Second part measures perceptions

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Scope of Service Quality

Content: are standard procedures being followed?

Process: is the sequence of events logical and well coordinated? (Check lists, drill practices)

Structure: are physical facilities and organizational design adequate? (personnel + equipment)– Doctors’ practice: X-ray, lab, ratio of nurses to

doctors)

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Scope of Service Quality

Outcome: the end result; quality of output. Is the customer satisfied?– Number of customer complaints

– infection rate per 1000 surgeries

– Satisfaction of employees with their own performance

Impact: long range effect of service on customer – Police – security

– Health – life expectancy, infant mortality rate

– Education – literacy rate

– Commerce – number of items sold

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Quality Service by Design

Q cannot be inspected into a product or service

Q cannot be added on

Q must be designed into the service

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Quality Service by Design

Quality in the Service Package

Taguchi Methods (Robustness)

Poka-yoke (fail-safing)

Quality Function Deployment

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Quality in the Service Package

Explicitly define in measurable terms what constitutes conformance requirements for each element of the service package.

Philip Crosby’s definition: ‘conformance to requirements’

Example: quality requirements in budget hotel

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Taguchi Methods

Genichi Tagushi: robust design to ensure proper functioning under adverse conditions.

Q is achieved by consistently meeting design specifications

Budget hotel example: use computer to notify housekeeping; uniform treatment of guests, consistent preparation of rooms.

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Poka-Yoke - Failsafing

Shigeo Shingo: errors happen not because of incompetence but because of ‘lack of attention’

So, use in-process mechanisms to foolproof rather than inspection

Poka-Yoke for customer as well as service provider

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Classification of Service FailuresServer Errors

Task: Doing work incorrectly (french-fry scoop, checklist)

Treatment:Failure to listen to customer (enter customer eye-color)

Tangible:Failure to clean facilities

(mirror for employees, automatic spell-check)

Customer ErrorsPreparation:

Failure to bring necessary materials (filling forms)

Encounter:Failure to follow instructions (height bar at Disney, frame for carry-on luggage)

Resolution:Failure to learn from experience (tray-return stands, trash cans at exit; beep from computer)

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Quality Function Deployment

House of quality translates customer satisfaction into measurable specifications for service design

1. Establish aim: assess competitive position

2. Determine customer expectations

3. Determine service elements

4. Determine strength of relationship between service elements (roof)

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Quality Function Deployment

5. Determine assocation between customer expectations and service elements (0-9)

6. Weigh the service elements

7. Rank service element improvement difficulty

8. Assess competition

9. Strategic assessment and goal setting

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House of Quality

Importance

Relative

1 2 3 4 5 Customer Expectations

Reliability

Responsiveness

Assurance

Empathy

Tangibles

Comparison with Volvo Dealer

Weighted score

Improvement difficulty rank

O O

O Weak

Medium

* Strong

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9

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Att

itude

Ca

paci

ty

Info

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Equ

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ent

8

7

7

6 6

5 5

5

5

4

4

3 3

3

3

2

2 2

2

+

_

+

Customer Perceptions

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+ +

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o

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+ Volvo Dealer

Service Elements

Relationships

127 82 63 102 65

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Achieving Service Quality

Cost of Quality (Juran)

Service Process Control

Statistical Process Control (Deming)

Unconditional Service Guarantee

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Costs of Service Quality

Failure costs Detection costs Prevention costs

External failure: Process control Quality planning

Customer complaints Peer review Training program

Warranty charges Supervision Quality audits

Liability insurance Customer comment card Data acquisition and analysis

Legal judgments Inspection Preventive maintenance

Loss of repeat service Supplier evaluation

Recruitment and selection

Internal failure:

Scrap

Rework

Recovery:

Expedite

Labor and materials

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Service Process Control (feedback mechanism)

Resources

Identify reasonfor

nonconformance

Establish measure of performance

Monitorconformance torequirements

Take corrective

action

Service concept

Customer input

Customer output

Service process

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Control Chart of Departure Delays

60

70

80

90

100

Pe

rce

nta

ge

of

flig

hts

on

ti

me

expected

Lower Control Limit

1998 1999

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Unconditional Service Guarantee: Customer View

Unconditional (L.L. Bean, no questions asked) Easy to understand and communicate (free pizza

if late delivery) Meaningful (Domino’s Pizza, rebate if late

delivery) Easy to invoke (no forms, Toys R Us price

guarantee) Easy to collect (on the spot)

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Unconditional Service Guarantee: Management View

Focuses on customers (British Airways) Sets clear standards (FedEx by 10:30 am) Guarantees feedback (agency rings

customer the next day) Promotes an understanding of the service

delivery system (identify fail points before setting guarantees)

Builds customer loyalty

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Customer Satisfaction

All customers want to be satisfied.

Customer loyalty is only due to the lack of a better alternative

Giving customers some extra value will delight them by exceeding their expectations and ensure their return

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Expressing Dissatisfaction

Dissatisfactionoccurs

Action

No Action

Public Action

Private Action

Seek redress directly from the firm

Take legal action

Complaint to business, private,or governmental agencies

Stop buying the product or boycott the seller

Warn friends about the productand /or seller

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Customer Feedback and Word-of-Mouth

The average business only hears from 4% of their customers who are dissatisfied with their products or services. Of the 96% who do not bother to complain, 25% of them have serious problems.

The 4% complainers are more likely to stay with the supplier than are the 96% non-complainers.

About 60% of the complainers would stay as customers if their problems was resolved and 95% would stay if the problem was resolved quickly.

A dissatisfied customer will tell between 10 and 20 other people about their problem.

A customer who has had a problem resolved by a company will tell about 5 people about their situation.

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Number of People Told Based on Level of Dissatisfaction

average number of people told

0

5

10

15

20

25

30

Slight

diss

Annoyed Very

annoyed

Ext

annoyed

Abs

furious

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Action Taken Based on Level ofDissatisfaction

0

20

40

60

80

100

Slightlydiss

Annoyed Veryannoyed

Extannoyed

Absfurlous

Tell friends

Complain

Make a fuses

Not use again

Dissuade others

Complain against

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Approaches to Service Recovery Case-by-case addresses each customer’s complaint

individually but could lead to perception of unfairness (persistent vs reasonable complainers).

Systematic response uses a protocol to handle complaints but needs prior identification of critical failure points and continuous updating. Consistent and timely.

Early intervention attempts to fix problem before the customer is affected, or notifies customer.

Substitute service allows rival firm to provide service but could lead to loss of customer.