Chapter 06 Service Quality

McGraw-Hill/Irwin Service Management: Operations, Strategy, and Information Technology, 6e Copyright © 2008 by The McGraw-Hill Companies, Inc. All Rights Reserved.

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.

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Perceived Service Quality

Word of

mouth

Personal

needs

Past

experience

Expected

service

Perceived

service

Service Quality

Dimensions

Reliability

Responsiveness

Assurance

Empathy

Tangibles

Service Quality Assessment

1. Expectations exceeded

ES<PS (Quality surprise)

2. Expectations met

ES~PS (Satisfactory quality)

3. Expectations not met

ES>PS (Unacceptable quality)

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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.

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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.

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Service Quality Gap Model

Customer

Perceptions

Customer

Expectations

Service

Delivery

Service

Standards

Management

Perceptions

of Customer

Expectations

Managing the

Evidence

Conformance Service Design

Understanding

the Customer

Customer Satisfaction

GAP 5

Customer /

Marketing Research

GAP 1

Conformance

GAP 3

Communication

GAP 4

Design GAP 2

Service Quality Gap Model

6-6

Measuring Service Quality

is challenge because customer satisfaction is determined by intangible factors.

Contains many psychological fetures (ambiance of a restaurant)

Has an impact on a person’s future quality of life (healthcare)

Multiple dimensions of service quality are captured in the SERVQUAL instrument.

..\ServQual_Forms.doc

Quality Service by Design

Quality in the Service Package Budget Hotel example

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

Quality Function Deployment House of Quality

6-8

Classification of Service Failures

Server Errors

Task:

Doing work incorrectly

Treatment:

Failure to listen to customer

Tangible:

Failure to wear clean uniform

Customer Errors

Preparation:

Failure to bring necessary materials

Encounter:

Failure to follow system flow

Resolution:

Failure to signal service failure

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House of Quality

Importance

Rela

tive

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

9

9

9

Tra

inin

g

Att

itude

Ca

pacity

Info

rmatiio

n

Equip

ment

8

7

7

6 6

5 5

5

5

4

4

3 3

3

3

2

2 2

2

+

_

+

Customer Perceptions

o

+

+

+

o

o

o

o

+

o

o

o

o

o

o Village Volvo

+ Volvo Dealer

Service Elements

Relationships

127 82 63 102 65

1

* *

6-10

Achieving Service Quality

Cost of Quality (Juran)

Statistical Process Control (Deming)

Unconditional Service Guarantee

6-11

Costs of Service Quality (Bank Example)

Failure costs Detection costs Prevention costs

External failure: Process control Quality planning

Loss of future business Peer review Training program

Negative word-of-mouth Supervision Quality audits

Liability insurance Customer comment card Data acquisition and analysis

Legal judgments Inspection Recruitment and selection

Interest penalties Supplier evaluation

Internal failure:

Scrapped forms

Rework

Recovery:

Expedite disruption

Labor and materials

6-12

Control Chart of Departure Delays

60

70

80

90

100P

erc

en

tag

e o

f o

nti

me

flig

hts

expected

Lower Control Limit

1998 1999

n

pppUCL

1(3

n

pppLCL

1(3

6-13

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)

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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 by making expectations explicit

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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 insure their return

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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 problem 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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Walk-Through-Audit

Service delivery system should conform to customer expectations.

Customer impression of service influenced by use of all senses.

Service managers lose sensitivity due to familiarity.

Need detailed service audit from a customer’s perspective.

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Service Recovery Framework

Patronag

e

Loyalty

Satisfaction

Retention

Severity

Of

Failure

Perceived

Service

Quality

Psychological

-empathy

-apology

Tangible

-fair fix

-value add

Psychological

-apology

-show interest

Follow-up

Service

Recovery

Tangible

-small token

Service

Recovery

Expectations

Service

Recovery

Customer

Loyalty

Service

Guarantee Speed of

Recovery Frontline

Discretion

Service

Failure

Occurs

Provider

Aware

of

Failure

Fair

Restitutio

n

Pre-recovery Phase Immediate Recovery Phase Follow-up Phase

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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.

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Topics for Discussion

How do the five 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.

Why do service firms hesitate to offer a service guarantee?

How can recovery from a service failure be a blessing in disguise?

6-21