Appreciation of Service Quality Concept

David L Jones, Ph.D.Associate Professor

School of Hotel & Tourism ManagementThe Hong Kong Polytechnic University

Whatever it was that got you where

you are today is not sufficient

to keep you there

What We Will Cover

• What makes services different?• What do we mean by service

quality?• How do we know if we are

delivery service quality?• How is the Asian Wave

influencing service quality?• How do we bring East and West

together in service leadership?

Service Definition

Any activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of

anything.

Services Attributes & Characteristics

Services versus Goods• Intangibility

• Heterogeneity/Variability

• Inseparability– Simultaneous Production and

Consumption

• Perishability

TangibleDominant

IntangibleDominant

SaltSoft Drinks

DetergentsAutomobiles

Cosmetics

AdvertisingAgencies Airlines

InvestmentManagement

ConsultingTeaching

Fast-foodOutlets

Fast-foodOutlets

Tangibility Spectrum

Industrialized

Goods

Industrialized

Services

Differentiated

Goods

Customized

Goods

Differentiated

Services

Customized

Services

Undifferentiated Goods/Services Bundles

Differentiated Goods/Services Bundles

Customized Goods/Services Bundles

TANGIBLITY

DEGREE OF CUSTOMIZATION

LowLow

High

High

Bell’s Goods/Services Classification

Implications of Intangibility

Services cannot be inventoriedServices cannot be patentedServices cannot be readily

displayed or communicatedPricing is difficult

Shangri-la in Hong Kong

Kowloon Shangri-la

Island Shangri-la

Mandarin Oriental

What is the Difference?

Implications of Heterogeneity

Service delivery and customer satisfaction depend on employee actions

Service quality depends on many uncontrollable factors

There is no sure knowledge that the service delivered matches what was planned and promoted

Service Triangle

Implications of Simultaneous Production and ConsumptionCustomers participate in and

affect the transactionCustomers affect each otherEmployees affect the service

outcomeDecentralization may be

essentialMass production is difficult

Implications of Perishability

It is difficult to synchronize supply and demand with services

Services cannot be returned or resold

Services Marketing Mix

• Physical Evidence • People – Employees and

Customers• Process

Zeithaml & Bitner 1996

PEOPLE PHYSICAL EVIDENCE

PROCESS

Employees

Facility design Flow of activities

Customers Equipment Number of steps

Communicating culture and values

Signage Level of customer involvement

Employee research Employee dress

Other tangibles

Expanded Marketing Mix for Services

Evidence of Service from the

Customer’s Point of View

People

Process PhysicalEvidence

Contact employees Customer him/herself Other customers Operational flow

of activities Steps in process Flexibility vs.

standard Technology vs.

human

Tangible communication

Servicescape Guarantees Technology

Defining Service Quality

Service Quality

The totality of features and characteristics of a product or

service that bear on its ability to satisfy stated or implied needs.

Service Quality

• The customer’s judgment of overall excellence of the service provided in relation to the quality that was expected.

• Service quality assessments are formed on judgments of:– Outcome quality– Process quality– Physical environment quality

Customer Assessment of Service Quality

Dimensions of Service Quality

• Tangibles• Reliability• Responsiveness• Assurance• Empathy

Tangibles• Appearance of physical facilities,

equipment, personnel and communication materials

• Before, during and after• “Servicescape”

Reliability• Ability to perform the promised

service dependable and accurately

• Most significant• Promises

– Personal– Organizational– Common expectations

• Service Delivery Systems

Social Media Review Networking

Sites

Responsiveness• Willingness to help customers

and provide prompt service• Finding out what the customer

really needs by when• Customer waits

– Fast food – 5 minutes– Fine dining – 30 minutes

• Service Recovery Systems

30

Assurance• Competence

– Possession of the required skills and knowledge to perform the service

– Product and Company Knowledge• Courtesy

– Politeness, respect, consideration and friendliness of contact personnel

• Credibility– Trustworthiness, believability, honesty of the

service provider

Reassurance Factor

• Product knowledge• Company knowledge• Listening skills• Problem-solving skills

Empathy• Caring, individualized attention the firm

provides its customers

• Access– Approachability and ease of contact

• Communication– Keeping customers informed in language

they can understand, and listening to them

• Understanding the customer– Making the effort to know customers and

their needs• Empathy vs. Sympathy

Attributes of the Dimensions

Providing service as promised Dependability in handling customers’

service problems Providing services at the promised time Performing services right the first time Maintaining error-free records

Keeping customers informed as to when services will be performed

Prompt service to customers Willingness to help customers Readiness to respond to customers’

requests

RELIABILITY

RESPONSIVENESS

Employees who instill confidence in customers

Making customers feel safe in their transactions

Employees who are consistently courteous Employees who have the knowledge to

answer customer questions

ASSURANCE

Giving customers individual attention Employees who deal with customers in a

caring fashion Having the customer’s best interest at heart Employees who understand the needs of

their customers Convenient business hours

EMPATHY

Modern equipment Visually appealing facilities Employees who have a

neat, professional appearance

Visually appealing materials associated with the service

TANGIBLES

Which Dimension of Service Quality is Most Important to You in Evaluating a Restaurant?

A. TangiblesB. ReliabilityC. ResponsivenessD. AssuranceE. Empathy

Which Dimension of Service Quality is Most Important to You in Evaluating a Hotel?

A. TangiblesB. ReliabilityC. ResponsivenessD. AssuranceE. Empathy

RATER• When you deliver a customer’s order

on time, you show reliability• When you smile and tell a customer, “I

can help you with that” – and do – you build customer assurance

• And when time to make yourself and your work area more presentable, you are paying attention to tangibles

• When you are sensitive to an individual customer’s need when solving a problem, you show empathy

• When you notice a customer puzzling over a decision and offer help and information, you show responsiveness

Does Service Quality Lead to Profits?

Key Drivers of Service Quality, Customer Retention, and Profits

Key Drivers

ServiceEncounter

ServiceEncounter

ServiceEncounter

Customer Retention

BehavioralIntentions

Profits

ServiceEncounter

Service Encounters

ServiceQuality

Hotel Service Delivery Systems

Process – Reliability/Assurance

Ritz Carlton

Ladies and Gentlemen Serving Ladies and

Gentlemen

The Gold Standards of Quality Service

VALUES AND OPERATING PHILOSOPHY

GOLD STANDARDSCredo

Motto

3 Steps of Service

12 Service Values

Employee Promise

A perspective on thinking…

ATTITUDE

BEHAVIOR

FEELINGS

THINKING

The Gold Standards of Quality Service

Mandarin Oriental - DELIGHT• Our mission is to delight our guests and the word delight is the perfect

acronym for everything that Mandarin Oriental represents.• Distinctive

– A unique collection of individual hotels and resorts from the elegant charm of 19th century London to the futuristic architecture of Miami’s art deco style. Mandarin Oriental hotels and resorts are unique in style and design. Each property has its own distinctive flair and charm, while guests are assured unparalleled warmth and hospitality in every destination.

• Exotic– The magic of the orient, with a sense of place. Reflective of local culture and style, each hotel has a strong

sense of place while oriental touches provide a warm and inviting atmosphere. • Lively

– A place with energy and momentum. Creating experiences of exceptional quality, Mandarin Oriental hotels and resorts are vibrant, popular places from which to enjoy the best in life.

• Imaginative– Innovative designs and services to excite and entertain. Chic and spacious with innovative architecture,

interiors and original art, Mandarin Oriental welcomes guests with impeccable surroundings and creative spaces.

• Guest-centred– A service that’s personal, passionate and surprising. With our oriental beginnings, highly personalized

service comes naturally to us all. Our aim is to delight and surprise you on every occasion, and to constantly welcome you back to the warmth that is Mandarin Oriental.

• Harmonious– Caring service combined with special touches. We welcome you with the utmost in personal attention and

create a harmonious and holistic environment to ensure total relaxation and enjoyment. Distinctive charm and hospitality is provided in elegant and immaculate surroundings.

• Time giving. – A place which gives time to enjoy, relax and reflect. Gaining cultural insights to an ancient Lanna

kingdom, languishing by a pool in Florida, watching the breakers in Bermuda, Mandarin Oriental aims to give you the time to experience life and all its pleasures.

Shangri-la Guiding Principles• We will ensure leadership drives for results. • We will make customer loyalty a key driver of our

business. • We will enable decision making at the customer

contact point. • We will be committed to the financial success of our

own unit and of our company. • We will create an environment where our colleagues

may achieve their personal and career goals. • We will demonstrate honesty, care and integrity in all

our relationships. • We will ensure our policies and processes are

customer and employee friendly. • We will be environmentally conscientious and provide

safety and security for our customers and our colleagues.

Service Recovery Systems

Process – Responsiveness/Empathy

If you were working at the front desk of hotel and a guest checking out complained that they couldn’t

sleep last night because of the noise in the hall from other guests there with a convention, what would

you do?

A. Apologize and indicate you’ll tell the manager

B. Offer them a complaint form to fill out

C. Offer them a 10% discount on the room rate

D. Tell them you will have a free night stay coupon sent to them for their next visit

E. Make the room complimentary for last night

Learn from R

ecovery E

xperiences

Act

Qui

ckly

Treat Customers Fairly

Fail-safethe Service

Cultivate Relationships

with Customers

Encourage and Track

Complaints

Provid

e Ade

quat

e

Explan

ation

s

Lear

n fro

m L

ost

Custo

mer

s

ServiceRecoveryStrategies

Service Recovery Strategies

The Service Recovery Process

Teach the Importance of Service Recovery

Identify Service Problems

Resolve Problems Effectively

Improve the Service System

The Importance of Customer Satisfaction

• The average business does not hear from 96% of its unhappy customers

• For every complaint received, 26 customers actually have the same problem

• The average person with a problem tells 9 or 10 people– 13% tell more than 20

The Importance Of Customer Satisfaction

(cont.)• Customers who have their complaints

resolved tell an average of 5 people• Complainers are more likely to do

business with you again than non-complainers– 54-70% if the complaint is resolved at all– 95% if the complaint is resolved quickly

Which Approach Do You Typically Take to Bad Service?

A. Do nothing, stay with current provider

B. Do nothing, change providersC. Complain to managementD. Complain to family and friendsE. Complain to service person

Service Problem Reactions

• Complain and it gets resolved

• Complain and it isn’t resolved

• Dissatisfied and don’t complain

Unhappy Customers’ Repurchase Intentions

82%

54%

19%

9%

Complaints Resolved Quickly

Complaints Resolved

Complaints Not Resolved

Unhappy Customers Who Don’t Complain

Unhappy Customers Who Do Complain

Percent of customers who will buy again after a major complaint (over $100 in losses)

Source: Adapted from data reported by the Technical Assistance Research Program.

Disney’s Process

Disney’s Empowerment

Process for Customer

Complaints

Disney Service Recover

y Actions

The Benefits Of Customer Satisfaction

• Positive word-of-mouth • Purchase more frequently• Less likely to be lost to

competitors• Insulated from price competition• Positive work environments

So What Is Different in Asia?

Process and People

Asian Wave:The Service Difference

Process

Shangri-la PhilosophyHas It Changed?

BEFORE NOW

Shangri-La

Hospitality

from

Caring

People

Shangri-la Commitment• Unique characteristics

encapsulated by Asian Hospitality. Our commitment to providing guests with distinctive Asian standards of hospitality and service from caring people remains our major point of differentiation from our peers and the very cornerstone of our reputation as a world-class hotel group.

• “Pride without arrogance”

Understanding Guest Expectations

What Dimensions Have We Addressed?

A. TangiblesB. ReliabilityC. ResponsivenessD. AssuranceE. Empathy

Understanding the Lifetime Value of the Customer

• Lifetime value view, not transaction view – Chinese Guanxi

• Revenue and profits by average customer over a lifetime by segment

• Increase average purchase, frequency of visit, life

• Assurance?

Advantages of Developing

a Relationship• Increase in frequency of purchases• Increase in number of products

purchased• Reduce price competition• Gain referrals from loyal customers• Often easier to serve loyal customers• Reduce costs–4-7 times as much to

create a customer

If you were working at the front desk of hotel and a guest checking out complained that they couldn’t

sleep last night because of the noise in the hall from other guests there with a convention, what would

you do?

A. Apologize and indicate you’ll tell the manager

B. Offer them a complaint form to fill out

C. Offer them a 10% discount on the room rate

D. Tell them you will have a free night stay coupon sent to them for their next visit

E. Make the room complimentary for last night

Asian Wave:The Service Difference

People

Asian Principles“3 Plus 1 Factor”

• Respect for Elders• “Face”

– Giving It • Work Before Self

– Importance of the status of working for a hotel

• Plus Factor: Educational Sponges

Development of Service Culture

Business

HomeEducationalInstitutions

Society

Service LeadershipCharacteristics

Bringing East and West Together

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Qualities of Service Leaders

• Service Vision– Focus on details– Bond with customer– Words and behavior– Vision vs. Idealism

• Belief in Others– Capacity of others to achieve– Not bosses, acting as a coach

• Love of the Business– Pass it on to others– Passion for service

• Integrity– Doing the right thingBerry 1995

Love of Business –How You Can Show It

• Customers are the reason we are here• Sell customers what they want and what fits• Emphasize quality of the product• Be on the floor• Make customers part of the operation• Know you menu and services offered• Show quality in everything• Always smile• You sell yourself. Customers come back

because of they are friends• Promote the restaurant 24 hours

75

Winning People to the Vision

• They understand the purpose of their work.• They feel they are members of an important

group.• They have a sense of ownership of their

work.• They have high self-esteem.• They have management support.• They have resources – the time, tools,

training – to do the job they are being asked to do.

• They have the information about what is going on, what they are doing, and how well they are doing it.

Nurture Service Leadership

Promote Right People

• Footprints-in-the-sand test– Past experience predicts future

• Stand for something test– Vision of future

• Outside leadership test– Volunteer organizations

Service Quality is a Global Issue

The Possession of Facts is Knowledge,

the Use of Them is Wisdom

Thomas Jefferson

To Be Fond Of Learning Is Near To Wisdom

Confucius

Thank You