Chapter 06Service Quality

McGraw-Hill/IrwinService 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.

6-2

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.

6-3

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.

6-4

Perceived Service Quality Word of

mouthPersonal

needsPast

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)

6-5

Service Quality Gap Model

Customer

Perceptions

Customer

Expectations

Service

Delivery

Service Standards

ManagementPerceptions 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

Quality Service by Design

Quality in the Service PackageBudget Hotel example

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

Quality Function DeploymentHouse of Quality

6-7

Classification of Service Failures

Server ErrorsTask:

Doing work incorrectlyTreatment:

Failure to listen to customer

Tangible:Failure to wear clean uniform

Customer ErrorsPreparation:

Failure to bring necessary materials

Encounter:Failure to follow system flow

Resolution:Failure to signal service failure

6-8

Achieving Service Quality

Cost of Quality (Juran)

Statistical Process Control (Deming)

Unconditional Service Guarantee

6-9

Costs of Service Quality(Bank Example)

Failure costs Detection costs Prevention costsExternal 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

6-10

Control Chart of Departure Delays

60

70

80

90

100P

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nta

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of

on

tim

e fl

igh

ts

expected

Lower Control Limit

1998 1999

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6-11

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)

6-12

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 explicit6-13

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

6-14

Customer Feedback andWord-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.

6-15

Service Recovery Framework

Patronage

LoyaltySatisfactionRetention

SeverityOf

Failure

PerceivedServiceQuality

Psychological-empathy

-apology

Tangible -fair fix-value add

Psychological-apology-show interest

Follow-upService

Recovery

Tangible-small token

ServiceRecoveryExpectations

ServiceRecovery

CustomerLoyalty

ServiceGuarantee

Speed of Recovery

FrontlineDiscretion

ServiceFailure Occurs

ProviderAware

ofFailure

Fair Restitutio

n

Pre-recovery Phase Immediate Recovery Phase Follow-up Phase 6-16

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.

6-17

Clarification of some terms:Clarification of some terms:

Service WinnerService Winner – customers have choices – dimension – customers have choices – dimension that won the customer overthat won the customer over

Service SuccessService Success – delivered at or above the expected – delivered at or above the expected level of service (may even be a level of service (may even be a SurpriseSurprise))

Service LoserService Loser – Failure to deliver at or above the – Failure to deliver at or above the expected level of service (sometimes called a expected level of service (sometimes called a Service Service FailureFailure))

Service RecoveryService Recovery – what – what mightmight the service provider the service provider do after a Failuredo after a Failure

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Service Failure Service Recovery