improving service quality in america -10

8/7/2019 improving service quality in america -10

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' Academy of M ana gem ent Executive, 1994 Vol. 8 No. 2

Improving service quality inAmerica: Lessons learnedLeonard L. Berry, A. Pa rasu ram an, and Valarie A. Zeithaml

Executive Overview Delivering excellent service is a winning strategy. Quality service sustainscustomers' confidence and is essential for a competitive advantage. Yet manycompanies are struggling to improve service, wasting money on ill-conceivedservice programs and undermining credibility with management rhetoric notbacked up with action. Are there guidelines to help managers chart aservice-improvement strategy for their organizations? We think so. In this articten lessons from an extensive ten-year study of service quality in America arepresentedlessons that we believe apply across industries and are essential tothe service-improvement journey.

Excellent service is a profit strategy because it results in more new customers,more business with existing customers, fewer lost customers, more insulationfrom price competition, and fewer mistakes requiring the reperformance ofservices. Excellent service can also be energizing because it requires thebuilding of an organizational culture in which people are challenged to performto their potential and are recognized and rewarded when they do.Service is a key component of value that drives any company's success. To thecustomer, value is the benefits received for the burdens enduredsuch asprice, an inconvenient location, unfriendly employees, or an unattractive servifacility. Quality service helps a company maximize benefits and minimizenon-price burdens for its customers.Over the last ten years, we have been studying service quality in America,'focusing primarily on these questions:

What is service quality?How can service quality best be measured?What is the nature of customer expectations for service and what are thesources of these expectations?What are the principal causes of service-quality deficiencies?What can organizations do to improve service quality?

In this article, we focus on the last question, presenting lessons learned that wbelieve are essential for improving service quality.Lesson One: ListeningThe downtown Chicago Marriott hotel had been open for fifteen years before itmanagement discovered that sixty-six percent of all guest calls to thehousekeeping department were requests for irons and/or ironing boards. Withthis discovery, the hotel manager decided to put irons and ironing boards in alguest roomsa $20,000 investment. The problem was where to find the $20,000

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Berry, Parasuraman, and Zeithaml

The solution was in the following year's capital budget: $22,000 was earmarkedto replace black and white television sets with color sets in the bathrooms ofconcierge-level guest rooms. With no evidence that guests ever requested colortelevision sets for the bathroom, the manager purchased the irons and ironingboards instead.

Although this story has a happy ending, many like it do not. One of the mostcommon service-improvement mistakes that companies make is to spend moneyin ways that do not improve service. Aside from being wasteful, such spendinghurts the credibility of the service-improvement cause. When invested moniesdo not produce results, there is little incentive to spend more.

One of the mostcommonservice-impro vem en tmistakes thatcompanies make is tospend money in waysthat do not improveservice.

Quality is defined by the customer. Conformance to company specifications isnot quality; conformance to the customer's specifications is. Spending wisely toimprove service comes from continuous learning about the expectations andperceptions of customers and noncustomers. Customer research reveals thestrengths and weaknesses of a company's service from the perspective of thosewho have experienced it. Noncustomer research reveals how competitorsperform on service and provides a basis for comparison. Important expectationsfor the service that competitors fulfill better offer an agenda for action.Companies need to install an ongoing service research process that providestimely, relevant trend data that managers become accustomed to using indecision making. Companies need to build a service quality informationsystem, not just do a study. Conducting a service quality study is analogous totaking a snapshot. Deeper insight and a sense for the pattern of change comefrom a continuing series of snapshots taken from many angles.Table 1 illustrates the concept of ongoing research through a portfolio ofresearch approaches. This table is meant to convey the concept of systematiclistening and not to offer definitive guidance on what a service qualityinformation system should entail. The goal is to become a "listening company;"the specifics of how will vary from company to company.Lesson Two: ReliabilityOur research suggests five broad service dimensions that customers use ascriteria to judge service quality. The dimensions are not mutually exclusive, yetthey provide a framework helpful in understanding what customers expect fromservice providers. The five dimensions are:

RELIABILITY:(32%)RESPONSIVENESS:

ASSURANCE:(19%)

EMPATHY:(16%)

TANGIBLES:(11%)

The ability to perform the promised servicedependably and accurately.The willingness to help customers and provide prompservice.The knowledge and courtesy of employees and theirability to convey trust and confidence.The caring, individualized attention provided tocustomers.The appearance of physical facilities, equipment,personnel, and communication materials.

Of these five dimensions of service quality, reliability is the most important. Ineach of our thirteen customer surveys, respondents rated reliability as thesingle most important feature in judging service quality. When we asked more3


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Academy of Management Executive

Table 1Building a Service Quality Information SystemType of R esearch Frequency Purposes

Customer complaintsolicitation

Post-transactionsurveysCustomer focusgroup interviews

"Mystery shopping"of service providers

Employee surveys

Total market servicequality surveys

Continuous Identify dissatisfied custom ers to attem ptrecovery; identify most commoncategories of service failure for remedialaction.Continuous Obtain customer feedback while serviceexperience is still fresh; act on feedbackquickly if negative patterns develop.

Monthly Provide a forum for custom ers to suggestservice-improvement ideas; offer fast,informal customer feedback on serviceissues.Quarterly Measure individual employee servicebehavior for use in coaching, training,performance evaluation, recognition andrewards; identify systemic strengths andweaknesses in customer-contact service.Quarterly Measure internal service qua lity; identifyemployee-perceived o bstacles toimproved service; track employee moraleand attitudes.Three times Assess company's service performanceper year compared to competitors; identifyservice-improvement priorities; trackservice improvement over time.

tha n 1900 custo me rs of five large , well-known U .S. com pa nie s to allo cat e a totaof 100 poin ts acros s the five service dim ens ion s, w e found thirty-two perc ent ofthe points were placed on rel iabi l i ty (see percentages in parentheses for eachdimension). Reliabili ty is the core of quality service. Litt le else matters tocustomers when a service is unrel iable. When a f i rm makes frequent mistakesin delivery, when it doesn't keep its promises, customers lose confidence in thef i rm's abi l i ty to do what i t promises dependably and accurately. Fr iendl inessfrom the staff and sincere apologies do not compensate for unreliable service.Although most customers appreciate an apology, the apology does not erase thmemory of that service. If a pattern of service failure develops, customersconclude the firm cannot be counted on, friendly and apologetic or not.As Exhibit 1 show s, com panies are mo re def icient on rel iabi l i ty th an on a nyother dimension. Deficiencies are greatest on the service dimension mostimportant to customers. Companies perform the best on the least importantdimension of tangibles, suggesting an opportunity for refocusing efforts onimproving service reliabili ty.Some managers bel ieve that i t i s not pract ical to t ry to el iminate mistakes. Thisat t i tude is problematic for i t does not chal lenge managers to boldness andcreat ivi ty in improving the service dimension most important to customers. Acom pan y with 100,000 weekly tran sac tion s, an d with a 98 perc ent reliabili tyrate , sti l l undermines the confidence of 2,000 customers each week.Hard Rock Cafe, an immensely successful restaurant and retai l chain withlocations throughout the world, follows religiously the service tenet of "doublechecking" to minimize errors. The tenet is: Be careful and don't make a mistake

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Exhibit 1. Perceived Service Quality*

AboveExpectation

BelowExpectation

- 2 . 0 0

Reliability Resp onsive ness Assurance Empathy TangiblesDimen sions of Service Quality

MostImportantLeastImportant

* Based on a five-company study, service quality was determined by measuring customer expecta -tions for the service and customer perceptions of the company a gain st these expectation s. If percep-tions of the company we re below the customer's expectations, the difference wa s scored ne gatively .The larger the minus score, the lower the company's service qu ality.

in the first place. If a mistake does oc cur, correct it before it reaches thecustomer. Hard Rock Cafe Orlando implements double checking through two"extra" people in the kitchen. One is stationed inside the kitchen and the otherat the kitchen counter. The inside person reviews everything that is going on,looking for signs of undercooked or overcooked meals, wilting lettuce, etc. Thecounter person, or "expediter," checks each prepared plate against the orderticket before the plate is delivered to the table. While this system is an addedexpense, it has worked well for this restaurant which on a busy day will serve6,000 meals to customers who may have waited in line for a table for an hour ormore.Preston Trucking Company, a Maryland-based firm selected in the late 1980s asone of America's ten best companies to work for, nurtures service reliabilityvalu es in a different way. Preston ha s each em ployee sign a service excellencestatement. Posted in each Preston facility, the statement reads in part:

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Once / make a comm itment to a customer o r another associate, I promise tofulfill it on time. 1 will do what I say w hen I say 1 will do it. . . . I understandthat one claim or one mistake is one error too many. I promise to do my job rigthe first time and to continually seek impro vem ent.Lesson Three: Basic ServiceRelated to the lesson of reliability is the lesson of basic service. America'sservice customers want the basicsthey expect fundamentals , not fanciness ;performance, nof empty promises. In all of our customer research, we have yetto f ind any evidence of extravagant customer expectat ions. Comments fromfocus group interviews illustrate the lesson of basic service.

Automobile Repair Customers: Be Compefenf ("Fix it right the first time");Explain Things ("Explain why you need the suggested repairsprovide anitemized list"); Be Respectful ("Don't treat me like a dumb female").Hotel Customers: Provide a Clean Room ("Don't have a deep-pile carpet thacan't be completely cleaned . . . you can literally see germs down there");Provide a Secure Room ("Good bolts and peephole on door"); Treat me like aGuest ("It is almost like they're looking you over to decide whether or notthey're going to let you have a room"); Keep your Promises ("They said theroom would be ready, but it wasn't at the promised time").Equipment Repair Customers: Share my Sense of Urgency ("Speed ofresponse. One t ime I had to buy a second piece of equipment because of thhuge down time with the first piece"); Be Competent ("Sometimes you arequoting stuff from their instruction manuals to their own people and theydon't even know what it means"); Be Prepared ("Have all the parts ready").Automobile Insurance Customers: Keep me informed ("I shouldn't have tolearn about insurance law changes from the newspaper") ; Be on my Side ("Idon't want them to treat me like I am criminal just because I have a claim");Fai r Play ("Don't drop me when something goes wrong"); Protect me fromCatastrophe ("Make sure my estate is covered in the event of a majoraccident"); Provide Prompt Service ("I want fast settlement of claims").

Clearly, none of these comments would suggest the inf lated, unreasonably highexpectat ion levels that some execut ives at t r ibute to today's customers.De Mar, a plumbing, heat ing, ai r condi t ioning and refr igerat ion company inClovis, California, grew from just over $200,000 ann ua l re ven ue to $3.3 millionin approximately s ix years by ident i fying and then responding to customers 'most sal ient expectat ions. Customers wanted t imely service in emergencies andDe Mar responded by providing 24-hour-a-day, seven-day-a-week service. DeMar also guarantees same-day service for customers requir ing i t . Customerswanted accura te cos t es t imates and De Mar answered by guarantee ing i t sest imates before the work is done.The Ritz-Carlton Hotel Com pany , a 1992 Baldrige Aw ard winn er, h as ca ptu redi ts essent ial service s t rategy in a small plast ic card given to al l employees.Considered to be part of the uniform, the card contains the company's servicecredo and i ts motto: "We are Ladies and Gentlemen Serving Ladies andGentlemen." I t also l is ts the Ritz-Carl ton Basicstwenty prescr ipt ions, such as"Any employee who receives a customer complaint 'owns ' the complaint ." De

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It is tempting toblame poor quality onfhe people deliveringservice but frequentlythe real culprit is poorservice system design.

Mar and Ritz-Carlton epitomize the lesson of basic service. Both companieshave determined the fundamentals of service that are most important to theircustomers, and are highly focused on delivering these fundamentals well.Lesson Four: Service DesignReliably delivering the basic service customers expect depends in part on howwell various elements function together in a service system. These elementsinclude the people who perform the specific services in the service chain, theequipment that supports these performances, and the physical environment inwhich the services are performed. Design flaws in any part of a service systemcan reduce quality. It is tempting to blame poor quality on the people deliveringservice but frequently the real culprit is poor service system design.Often, it is in the details that service system designs are flawed: clothing storedressing rooms with only one hook (or sometimes, no hooks) instead of theminimum two hooks required for take-off and try-on clothing; hotel rooms withsuch poor lighting that guests are discouraged from any night-time activityrequiring visual acuity; computer-generated billing statements that areimpossible for customers to understand.Service map ping is one way to improve service system d esign . A service m ap isa visual definition of a service system, displaying each subprocess in thesystem in the sequ ence in which it appe ars. In effect, the service map depictsthe chronology an d pattern of performances that m ake up a service. If draw nexplicitly, it answers the question s: "What is the service?" and "How does itwork?"A service map should not be confused with architectural draw ings: an architectworks in spac e. A service is a performance and the service system design erorchestrates the service over time. By mapp ing the deta ils of the service systemby transforming a series of intangible processes into a tangible picture, theservice system becomes more amenable to management control and designimprovement.^Two important components of service mapping are "lines of visibility" and "failpoints." The line of visibility in a service map separates those processes thatare visible to the customer from those that are not. Interconnecting"above-the-line" and "below-the-line" service processes explicates the effect thelatter has on the former. Fail points are the processes in the service systemmost vulnerable to failure. Identifying fail points can lead to system redesign,corrective subprocesses, special staff training, or additional inspection.Employees from different parts of the service chain can work with a mappingspecialist to create a service map. It is slow, laborious, painstaking work. Themethodology is to draw increasingly detailed pictures of the service system(what happens first, what happens next, and so on) and then ask: "Is there abetter way?" The objective is to redesign the service system to be simpler, morereliable, more efficient, more responsive, or improved in some other way.Customer input is critical in service mappingfirst to estab lish improvementpriorities and then to react to proposed new service designs.A temporary employment company, one of the nation's largest, improved itsservice system designs by combining service mapping and time and motionstudies. It learned that its account representatives spent too little time

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In effect, compan iesthat do not respondeffectively to customercomplaints compoundthe service failure:they iail the customertwice.

interacting with customers because of convoluted operating procedures,frequent interruptions, and outdated technology. The company streamlined itsprocedures and installed more efficient technology.Delivering quality service is in part a design challenge. The lesson of servicedesign involves developing a holistic view of the service while managing thedetails of the service. Both perspectives deepen managers' understanding of thservice, making it easier to fit it to customers' ex pectation s.Lesson Five: RecoveryWhen a service problem occurs, the customer's confidence in the firm hangs inthe balance. The company can make things better with the customerat leastto some extentor make things worse.Frequently, service companies make things worse. They do not encourage theircustomers to resolve their problems an d set up roadblocks for those w ho try todo so. They do not put sufficiently trained personnel, or enough of them, inproblem-resolution positions. They do not give employees the authority to solvemost problems immediately. They do not invest in the communication andinformation systems that would support the problem-resolution service.Three possibilities arise when a customer experiences a service problem: thecustomer complains and is satisfied with the company's response, the customercomplains and is not satisfied with the company's response, or the customerdoes not complain to the company and remains dissatisfied.Our research consistently shows that companies receive the most favorableservice quality scores from customers experiencing no recent service problemswith them, and, by far, the worst scores from customers whose problems werenot resolved satisfactorily. In effect, companies that do not respond effectivelyto customer co mplaints compound the service failure; they fail the customertwice.Many dissatisfied customers do not complain directly to the company to av oida confrontation, or beca use they perceive no convenient way to comp lain, or donot believe complaining will do much good. Customers' reluctance to complaineven when they are faced with serious problems has been well documented.^Companies can overcome some of this reluctance and improve recovery servicein three ways:1. Encourage customers to complain and ma ke it easy for them to do so.Man agers w ho wish to improve problem-resolution service must overcome thecommon customer perception that companies don't really care when thingsgo wrong. Many firms rely exclusively on reactive recovery strategies inwhich customers must initiate contact. Comment cards available in theservice facility and toll-free telephone numbers are examples of reactivesystems. These approaches are useful but they preclude customers unwillingto take the first step. Thus, proactive strategies, in which the company makesthe first contact, should be considered. Customers checking out of the HarveyHotel in Piano, Texas, may be approached by a "Lobby Lizard," a member ofmanagement, who asks: "How can we do better?" This proactive feedbackmethod gives management the opportunity to recover with an unhappy guestand provides ideas for service improvement.

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Quick responsedemonstrates that thecustomer's concern isthe company'sconcern.

2. Respond quickly and personally. Companies often take too long torespond to unhappy customers, and then respond impersonally. Byresponding quickly, a firm conveys a sense of urgency. Quick responsedemonstrates that the customer's concern is the company's concern. Byresponding personally, with a telephone call or a visit, the firm creates anopportunity for dialogue with the customer an opportunity to listen, as kquestions, explain, apologize, and provide an appropriate remedy. NorthCarolina's Wachovia Bank has a "sundown rule"the bank must establishcontact with an unhappy customer before sunset on the day the complaint isreceived.3. DeveJop a problem resolution system. Service employees need specifictraining on how to deal with angry customers and how to help customerssolve service problems. In some cases, they need access to informationsystems that will tell them more about the customer, the situation causingthe problem, and possible solutions. When American Express card holderstelephone the company's toll-free number listed on their monthly statement,they speak to a highly trained customer service representative with theauthority to solve eighty-five percent of the problems on the spot.

The lesson of recovery is taking the long view of restoring the customer'sconfidence in the company. How a company handles recovery service speaksvolumes to customers and employees alike about the company's true values.Lesson Six: Surprising CustomersC u s t o m e r s j u d g e t h e d i m e n s i o n s of r e s p o n s i v e n e s s , a s s u r a n c e , e m p a t h y a n dt a n g i b l e s d u r i n g t h e s e r v i c e d e l i v e r y p r o c e s s ; h e n c e , t h e s e a r e p r o c e s sd i m e n s i o n s . R e l i a b i l it y , j u d g e d f o ll o w i n g t h e s e r v i c e , is a n o u t c o m e d i m e n s i o n .A l t h o u g h r e l i a b i l i ty is t h e m o s t i m p o r t a n t d i m e n s i o n in m e e t i n g c u s t o m e r s 's e r v i c e e x p e c t a t i o n s , t h e p r o c e s s d i m e n s i o n s e s p e c i a l l y a s s u r a n c e ,r e s p o n s i v e n e s s , a n d e m p a t h y a r e m o s t i m p o r t a n t i n e x c e e d i n g t h e m .C o m p a n i e s a r e s u p p o s e d t o b e r e l i a b l e ; t h e y a r e s u p p o s e d t o p r o v i d e t h ese rv i ce t hey p rom ise t o p rov ide , t h u s , i t i s d i ff icu l t for f irms t o ex ce edc u s t o m e r s ' e x p e c t a t i o n s b y b e i n g r e l i a b l e . T h e p r o c e s s d i m e n s i o n s o f s e r v i c e ,h o w e v e r , p r o v i d e t h e o p p o r t u n i t y t o surprise c u s t o m e r s w i t h u n c o m m o ns w i f t n e s s , g r a c e , c o u r t e s y , c o m p e t e n c e , c o m m i t m e n t , o r u n d e r s t a n d i n g . T h eopp or tu n i t y i s p re sen t t o go bey ond w h a t i s exp ec t e d . In e f fec t, ex ce ed ingc u s t o m e r s ' e x p e c t a t i o n s r e q u i r e s t h e e l e m e n t o f s u r p r i s e , a n d t h e b e s to p p o r t u n i t y fo r s u r p r i s i n g c u s t o m e r s is w h e n s e r v i c e p r o v i d e r s a n d c u s t o m e r si n t e r a c t .A n e x a m p l e of s u r p r i s i n g c u s t o m e r s c o m e s f ro m C o n t i n e n t a l C a b l e v i s i o n , ac a b l e t e l e v i s i o n s y s t e m i n S t . P a u l , M i n n e s o t a . C o n t i n e n t a l h a s p r o g r a m m e d ac h a n n e l c a l l e d "T V H o u s e C a l l s " i n w h i c h a r e p r e s e n t a t i v e d e m o n s t r a t e s , l i v e,t h e s o l u t io n to a s u b s c r i b e r ' s p r o b l e m w h i l e t h a t c u s t o m e r i s w a t c h i n g .C u s t o m e r r e a c ti o n h a s b e e n e x tr e m e l y p o si t iv e . A c o m p a n y s p o k e s m a n s a y s :" P e o p l e a r e a b s o l u t e l y a s t o u n d e d . Y o u c a n a l m o s t s e e j a w s d r o p p i n g a t t h eo the r end o f t he phone w hen t hey expe r i ence t h i s . ' "*C o m p a n i e s m u s t s e e k e x c e l l e n c e o n b o t h t h e o u t c o m e an d p r o c e s s d i m e n s i o n sof se rv i ce to de ve l op a rep u t a t i on fo r t ru ly ou t s t an d in g se rv i c e . Exce l l en t se rv i cr e l i a b i l i t y a l l o w s a c o m p a n y to c o m p e t e . T h e a d d i t i o n of e x c e l l e n t p r o c e s ss e r v i c e c r e a t e s a r e p u t a t i o n fo r s u p e r i o r s e r v i c e q u a l i t y . T o r e a c h t h e s e h e i g h t sc o m p a n i e s m u s t c a p i t a l i z e o n o p p o r t u n i t i e s t o s u r p r i s e t h e i r c u s t o m e r s .M a n a g e r s s h o u l d c o n s i d e r t h i s q u e s t i o n : " W h a t i s t h e ' w o w ' f a c t o r i n o u rs e r v i c e ? "

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Lesson Seven: Fair PlayCustomers expect service companies to treat them fairly and become resentfuland mistrustful when they perceive otherwise. Fairness underlies all thecustomers' expectations. C ustomers expect service companies to keep theirpromises (reliability), to offer honest communication materials and clean,comfortable facilities (tangibles), to provide prompt service (responsiveness), tobe competent and courteous (assurance), and to provide caring, individualizedattention (empathy). Fairness is not a separate dimension of service but, rathertouches the very essence of what customers expect.The intangibility of services heightens customers' sensitivity to fairness issues.Because services are performances rather than objects, they are difficult forcustomers to evaluate prior to purchase. Customers cannot try on services for fiand feel; there are no tires to kick such as in buying an automobile. Customersusually must buy the service to actually experience it. Thus, they must trust aservice company to deliver on its promises and conduct itself honorably.Some services are difficult for customers to judge even after they have beenperformed and therefore trust plays a big role. Were all the repairs on theautomobile necessary? Did the maintenance crew follow protocol in preparingan aircraft for flying? Did the marketing research firm conduct all of thespecified interviews? As important as the lesson of fair play is for services ingeneral, we believe it is even more important for these services becausecustomers are at such an information disadvantage with the service provider.Service companies need to make special efforts to be fair and to demonstratefairness. Companies can use customer research to generate feedback on thefairness of their practices, actual and contemplated. Firms can attempt tocommunicate more openly, creatively, and regularly with customers and otherstakeholders about what they do and why they do it. Companies candemonstrate fairness by improving access to relief when problems occur.A potentially powerful strategy for demonstrating fairness is the serviceguarantee. If customers are dissatisfied with the service, they can invoke theguarantee and receive consideration for the burden they have endured. Whenexecuted well,^ service guarantees can symbolize a company's commitment tofair play with customers, facilitate competitive differentiation, and force theorganization to improve service quality to avoid the cost and embarrassment offrequent payouts.Roasters and Toasters, a gourmet coffee and baked goods cafe, promotes itsguarantee on menus and wall posters: "Uniquely exceptional and outstandingfood and service or it's on the house." The customer defines outstanding. Thecafe claims a 95 percent customer retention r ate. H ampton Inn offers th e n ight'sstay free to customers who are dissatisfied with the hotel's service. Any hotelemployee can implement the guarantee. The guarantee allows Hampton Inn totrack customer com plaints and make the n ecessary improvements. Hotelemployee retention has improved, and nearly nine out of ten guests who invokethe guarantee indicate that they will stay at Hampton Inn again.The lesson of fair play concerns the company's underlying value system. Doesmanag ement place stakeholders' trust over short-term earnings? Doesmanagement ask the question "Is it fair?" not just the question "Is it legal?"

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ream invoivemenf canbe rejuvenating,inspirational, and fun.

Managers interested in del iver ing excel lent service must also be interested inbeing fai r to customers.Lesson Eight: TeamworkService work is f requent ly demanding and s t ressful . Having many customers toserve, such as on a full airl ine fl ight or in a busy bank office, can be mentallyand physical ly exhaust ing. Some customers are unpleasant , cross , or worse.Control over the service is often dispersed among different organizational unitsthat function without cooperation, frustrating contact employees' abili ty toeffectively serve their customers. It is common for employees to be so stressedby the service role that they become less car ing, less sensi t ive, less eager top l ea s e .The presence of service "teammates" is an important dynamic in sustainingservers ' mot ivat ion to serve. Coworkers who support each other and achievetogether can be an ant idote to service burnout . Team involvement can berejuvenat ing, inspirat ional , and fun. Our research shows convincingly thatservice-performance short fal ls are highly correlated with the absence ofteamwork.Service team building should not be left to chance. The chain of internalservices required to offer the end service normally spans multiple functions.Companies must act ively work at foster ing teamwork across these funct ions, nojust within them. This may involve frequent meetings of the functions and othercommunica t ions ; shared per formance goa l s , measurements , and rewards ; andcross-training employees in various facets of the service chain.A more fundamen tal appro ach is organizing into cross-funct ional team s inwhich service providers from different parts of the service chain are grouped toserve a common set of customers. Lakeland Regional Medical Center inLakeland, Flor ida, has used this approach qui te successful ly by organizingbedside care around teams of mult iski l led pract i t ioners . These teams arecomprised of "care pairs"a regis tered nurse and a cross- t rainedtechniciansupported by special ized assis tance as needed. Care pairs work incare teams with other care pairs across shif ts to serve the same physician 'spat ients throughout the pat ients ' hospi tal s tay. Care pairs provide up to ninetypercent of pre- and post-surgical services for four to six patients at a t ime.Intensively t rained, and supported by a computer terminal in each pat ient 'sroom, the care pair 's range of funct ions includes preadmission test ing andinformat ion services , admit t ing, char t ing, charging, room cleanup, pat ientt ransportat ion, physical therapy, respiratory care t reatments , and performanceof ECG procedures.Lake land's mana gem ent refers to the new organizat ion al approa ch as the"pat ient-focused model ." Management bel ieves the key to the model 's successwith patients and service providers is the continuity of care facili tated by thecare team concept . Management can direct ly compare the classical andpat ient-focused models because only par t of the hospi tal has been converted tothe new system thus far. The data are striking. In a classical setting, theaverage Lakeland patient sees fifty-three different personnel in a four-day stay.In the patient-focused environment, the average patient sees thirteen staffmembers . For seventy-one of seventy- two pat ient sat isfact ion measures ,pat ients in the rest ructured environment ranked their experiences equal to orbetter than patients in the classical environment. For forty-nine of the

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Improving serviceinvolves undoingwhat exists as muchas creating whatdoesn't.

seventy-two measures, the results are statistically significant.^ When forty-fourof the staff members involved in the original pilot project were surveyed, theyreported improvements in job stress, quality of work life, perceptions of qualityof care, and overall job satisfaction.^Lesson Nine: Employee ResearchEmployee research is as important to service improvement as customerresearch, for three reasons. First, employees are themselves customers ofinternal service, and thus are the only people who can assess internal servicequality. Because internal service quality affects external service quality,measuring internal service quality is essential. Second, employees can offerinsight into conditions that reduce service quality in the organization.Employees experience the company's service delivery system d ay after day.They see more than customers see and they see it from a different angle.Employee research helps reveal why service problems occur, and whatcomp anies m ight do to solve these problems.^ Third, employee research servesas an early-warning system. Because of employees' more intensive exposure tothe service delivery system, they often see the system breaking down beforecustomers do.First Chicago is an ardent practitioner of employee research. In addition toholding regular focus group interviews with employees, the bank systematicallysurveys them. In a recent year the first quarter's survey included questions suchas: "Do you have what you need to do your job?" and "Does the equipm entwork?" The second quarter survey involved employees' attitudes toward thebank's services, prices, and communications. The third quarter surveyconcerned employees' perceptions of internal service qu ality. The fourth qua rtesurvey covered employees' satisfaction with their immediate supervisors andsenior management. Employees rated managers on issues such as whether theydiscussed work priorities, appreciated extra effort, and were visible. The bankalso operates an employee telephone hotline called "2-Talk" that is answered inthe Consumer Affairs Department. Employees are encouraged to call 2-Talkwhenever they receive poor service themselves, witness service problems, orhave service-improvement ideas . The lesson of employee research relates directly to several other lessons. Whenthe product is a performance, it is especially important that c om panies listen tothe performers. This listening behavior should result in improved service systemdesign. Listening to employees and addressing their concerns promotesteamwork between management and service personnel.Lesson Ten: Servant LeadershipImproving service involves undoing what exists as much as creating whatdoesn't. Delivering excellent service requires a special form of leadership wecall "servant leadership." Servant leaders serve the servers, inspiring andenabling them to achieve. Such leaders fundamentally believe in the capacityof people to achieve, viewing their own role as setting a direction an d astandard of excellence, and giving people the tools and freedom to perform.Because these leaders believe in their people, they invest much of theirpersonal energy coaching and teaching them, challenging them, inspiring themand, of course, listening to them.The late Sam Walton, who built Wal-Mart Stores into the largest retail chain inAmerica, was the quintessential servant leader. Walton devoted considerable

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t ime to visit ing his stores, l istening to the sounds of the business, removingimpediments to improvement , and communicat ing the company's vis ion toWal-Mart associates .We do not have hard data to support our bel ief that servant leadership is theengine that moves organizat ions toward service excel lence. Yet , ten yearsstudying the subject of service quality convinces us i t is so. Interviews with staffat Lakeland Regional Medical Centerfrom senior ma nag em ent to care pa irpersonnelare indicat ive of the evidence we have accumulated on theimportance of servant leadership in service improvement .Members of the Pat ient Focused Development Team, a middle-managementgroup responsible for helping to dr ive Lakeland's rest ructur ing, were asked toidentify the keys to the effort 's success. One member answered: "Topmanagement role-modeled it for us. They spent a lot of t ime developing thevision and working i t out ." Another member responded: "Management hasrel inquished control and power. They know that we know what to do." A thirdmember added: "Management provided the educat ion to support the change.They ar t iculated what the rest ructur ing was and was not ."Without the energizing vision of leadership, without the direction, inspiration,and support , the direct investments in service- improvementin technology,systems, t raining, and research, for exampledo not produce ful l benefi t .A Final PerspectiveBy now it shou ld be clear that our ten lesso ns are not mutu ally exclu sive an dthat they must be viewed in a hol is t ic mann er . To that end, we ha ve constructed

Exhibit 2. A Service Quality Ring

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in Exhibit 2 a service quality ring to capture the se in terrelation ships . Listeningis positioned on the outer ring because listening has an impact on all the othelessons. Identifying the basics of service, improving service system design,recovering from service shortfallsthese and other essentials of service qualitinvolve listening behavior. Reliability is pictured in the center, becausereliability is the core of service quality. Little else m atters to customers whenthe service is unreliable. The sequence of the lessons is purposeful. The servicsystem should be designed to deliver the basic service excellently. Recoveryservice usually provides an opportunity to surprise customers and todemonstrate fair play. Teamwork, employee research, and servant leadershipare critical factors in an organization's emotional readiness to deliver qualityservice.

Endnotes ' Details of our research are presented in fivemonographs publ ished by the Market ingScience Institute, C amb ridge, MA (Reports No.84-106, 86-108, 87-100, 90-122, and 91-113). Theauthors gratefully acknowledge the MarketingScience Institute for supporting the research onwhich this article is based. Our researchprotocol has been to explore issues throughqualitative research, model what we find, andthen use quantitative research to testrelationships in the model. Thus far, in fiveresearch phases, we have conducted 28customer focus group interviews in multiplecities, thirteen customer surveys, and a casestudy of one of America's largest banks. Wehave also done personal interviews, focusgroup interviews, and surveys with serviceemployees and managers. We have nowconducted research in a dozen service sectors,including automobile repair, automobileinsurance, property and casual ty insurance,hotels, securities brokerage, and truck andtractor rental/leasing.^ J. Kingman -Brundage. "Blueprinting for theBottom Line" in Service Excellence: Marketing'sImpact on Performance (Chicago: AmericanMarketing Association, 1989), 26. This volumecontains five papers on service blueprinting/mapping for readers interested in pursuing thissubject.^ J. Anton, "Why It Pays to Solicit Cu stom erComplaints," Te/emarteting, 7(5) November1988. Technical Assistance Research Programs(TARP), a consulting firm specializing in thestudy of customer complaints, has shown that31 percent of customers facing an ave rag e

potential loss of $142 due to defective productsor services stil l did not complain.

" S. Applebaum, "The Solution Channel,"Cabievision, July 29, 1992, 26.^ For an excellent d iscuss ion of thecharacteristics of an effective serviceguarantee, see C.W.L. Hart, "The Power ofUncondi tional Service Guara ntees ," HarvardBusiness Review, 66(4) July -Au gu st 1988, 54-62Also see C.W.L. Hart, Extraordinary Guarant(New York: American Management Associatio1993).^ Unpubl ished da ta provided by LakelandRegional Medical Center, Lakeland, Florida.' To read m ore abou t this research a nd tolearn more about the background of thepatient-focused model of health-care deliverysee P.M. Watson, et al., "Operat ionalRestructuring: A Patient-Focused Approach,"Nursing Administration Quarterly, 1G{1) Fall1991, 45-52. In our research with employees, we haveused with great success two key quest ions aspart of a broader group of questions: 1. What the biggest problem you face day in and dayout trying to deliver a high quality of service your customers? 2. If you were president of thcompany for one day, and could make only odecision to improve quality of service, whatdecision would you make? Answers to thes etwo quest ions can be especial ly valuable instarting or revitalizing a service-improvementeffort for the questions cut through surfaceissues to expose ser ious service impedimentsthe organizat ion.^ To read more abou t First Ch icago 'sapproach to employee research, see L. Coopeand B. Summers, G et t ing Started in Quality(Chicago: The First National Bank of Chicago,1990).

About the Authors Leonard L. Berry, who received his Ph.D. from Arizona State University, holds the JCPenney Chair Retailing Studies, is a professor of marketing, ahd is director of the Center for Retailing Studies atTexas A&M University. He is a former na tional presiden t of the Am erican Marketing Association. Hresearch interests are services marketing, service quality, and retailing strategy. He is the author ojournal articles and books, including Marketing Services: Competing Through Quality (The FreePress, 1991), which he wrote with A. Parasuraman.A. Parasuraman received his D.B.A. from Indiana University and is Federated Professor of Retailinand Marketing Studies at Texa s A&M University. His research interes ts include service-qu alitymea surem ent an d improvem ent, and serv ices marketing strateg y. In 1988 he wa s selected a s one o

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Berry, Parasuraman, and Zei thaml

the "Ten Most Influential Figures in Quality" by the editorial board of The Quality Review,co-published by the American Quality Foundation and the American Society for Quality Control. Hehas published in leading marketing journals, and is the author of a college textbook. MarketingResearch (Addison-Wesley, 1991).Valarie A. Zeithaml received her D.B.A. from the University of Maryland. She is the principal inPartners for Service Excellence, and was previously on the faculty at Duke University and TexasA&M University. Her research in terests include services mark eting an d co nsumer percep tions ofprice and quality. Her articles have appeared in leading marketing journals. She is co-author (withLeonard Berry and A. Parasuraman) of Deliveiing Quality Service: Balancing Customer Perceptionsan d Expectations (The Free Press, 1990).

Executive CommentaryDennis Adsit, Bull HNOver the last few years, the primary focus of service quality improvement effortsat Bull HN has been on what Berry, et al., term "service design" and "employeeresearch." Working these areas has yielded a number of key lessons.Seivice Design. We targeted our handling process for analysis, completing whatis referred to as a "service map" of our work procedures. The hopelesslyentangled picture that resulted left little doubt that we had to streamline thiscritical process. We then embarked on the daunting task of changing theprocess as well as upgrading the various information systems that support it.In this initial part of my commentary, I would like to pass along the lessonslearned in managing the transition period, the time period during which servicemap results are being addressed. The first lesson has to do withcommunication; basically, you can never do too much.Through letters and face-to-face meetings, we told our customers we would beinvesting considerable time and effort as well as dollars in upgrading ourservices. We promised them that as a result they would see some changes intheir interactions with us when the job wa s finished. With respect to employees,we involved a cross-functional, multilevel team from the time we began theplanning of the redesign to the final implementation. We kept employees notinvolved in the planning team informed through videos and various writtencomm unications. In these com munications, w e played it by the book, focusingprimarily on the visionhow the new service delivery process would look andthe benefits it would hold for customers. We even talked about the changes theimprovements would bring about in the ways employees did their jobs. Alongwith these aspects of our vision statement, we detailed the rationale behind thechanges anticipated.Despite our good intentions and hard work, we ran into problems throughout thetransition period. Chief among them was our inability to completely insulateour customers from drops in the level of service quality during the transition.When customers called in, they sometimes experienced long hold times, or theygot disconnected and had to call back because we had "dropped" their calls. AsBerry, et al., point out, when this kind of unreliability occurs, your relationshipwith your customers is in jeopardy. Good communication w ith your em ployeesis essential at this time; they can buffer the impact.

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