Service Quality

Learning Objectives Describe the five dimensions of service quality. Use the service quality gap model to diagnose

quality problems for a service firm. Illustrate how Taguchi methods and poka-yoke

methods are applied to service design. Construct a statistical process control chart. Develop unconditional service guarantees. Plan for service recovery.

Moments of Truth

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.

Dimensions of Service Quality

Reliability: Perform promised service dependably and accurately. Example: receive mail at same time each day.

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

Dimensions of Service Quality

Assurance: Ability to convey trust and confidence. Example: being polite and showing respect for customer.

Empathy: Ability to be approachable. Example: being a good listener.

Tangibles: Physical facilities and facilitating goods. Example: cleanliness.

Perceived Service Quality

Word of mouth

Personal needs

Past experience

Expectedservice

Perceivedservice

Service Quality Dimensions

ReliabilityResponsiveness

AssuranceEmpathyTangibles

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

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

Quality Service by Design

Quality in the Service PackageBudget Hotel example

Taguchi Methods (Robustness)Notifying maids of rooms for cleaning

Poka-yoke (fail-safing)Height bar at amusement park

Quality Function DeploymentHouse of Quality

Classification of Service Failures

Server ErrorsTask:

Doing work incorrectly

Treatment:

Failure to listen to customer

Tangible:

Failure to clean facilities

Customer ErrorsPreparation:

Failure to bring necessary materials

Encounter:

Failure to follow instructions

Resolution:

Failure to learn from experience

Service Fail-safingPoka-Yokes (A Proactive Approach)

Keeping a mistake from becoming a service defect.

How can we fail-safe the three Ts?

Task

TangiblesTreatment

Have we compromised one of the 3 Ts?

Achieving Service Quality

Cost of Quality (Juran)

Service Process Control

Statistical Process Control (Deming)

Unconditional Service Guarantee

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

Service Process Control

Resources

Identify reasonfor

nonconformance

Establish measure of performance

Monitorconformance torequirements

Take corrective

action

Service concept

Customer input

Customer output

Service process

Control Chart of Departure Delays

60

70

80

90

100

Per

cen

tag

e o

f fl

igh

ts o

n t

ime

expected

Lower Control Limit

1998 1999

n

pppUCL

1(3

n

pppLCL

1(3

Unconditional Service Guarantee: Customer View

Unconditional (L.L. Bean) Easy to understand and communicate

(Bennigan’s) Meaningful (Domino’s Pizza) Easy to invoke (Cititravel) Easy to collect (Manpower)

Unconditional Service Guarantee: Management View

Focuses on customers (British Airways) Sets clear standards (FedEx) Guarantees feedback (Manpower) Promotes an understanding of the service

delivery system (Bug Killer) Builds customer loyalty

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 insure their return

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

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.

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

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

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

individually but could lead to perception of unfairness.

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

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

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

Making Customers into Champions easy

Walking wounded Champions

Could complain but don’t; Active in providing

not happy but repurchase British Airways with

information on quality

of its services; loyal

Remain Loyal

Defect

Missing in action Detractors

Defected; Defected;

non-complaining vocally critical

not easy

don’t complain complain

Propensity to contact British Airways

How

eas

y cu

stom

ers

feel

it is

to

cont

act B

riti

sh A

irw

ays

Topics for Discussion How do the dimensions of service quality differ

from those of product quality? Why is measuring service quality so difficult? Illustrate the four components in the cost of

quality for a service of your choice. Why do service firms hesitate to offer a service

guarantee? How can recovery from a service failure be a

blessing in disguise?

The Complaint Letter

Briefly summarize the complaints and compliments in Dr. Loflin’s letter.

Critique the letter of Gail Pearson in reply to Dr. Loflin. What are the strengths and weaknesses of the letter?

Prepare an “improved” response letter from Gail Pearson

What further action should Gail Pearson take in view of this incident?