Perceptions, Gap Model, & Service Quality

Customer Perceptions of Service

Customer Perceptions Customer Satisfaction Service Quality Service Encounters: The Building Blocks for Customer Perceptions

Productivity

Importance of Productivity and Quality for Service Marketers

Increase margins to permit larger marketing budgets Lower prices to develop market , compete better, Raise profits to invest in service innovation

-_ May impact service experience (must avoid negatives)

May require customer involvement, cooperation

Quality
Gain competitive advantage, maintain loyalty. Increase/enhances value (may permit higher margins) Improve profits

Perceptions
Perceptions are always considered relative to expectations. Because expectations are dynamic, evaluations may also shift over time - from person to person and culture to culture. What is considered quality service or the things that satisfy customers today may be different tomorrow.

Pl .remember discussion of quality and satisfaction is based on : customers perception of service - and not some predetermined objective criteria of what service is or should be.

Perceptions- Expectations(in Service encounters).ppt

Satisfaction versus Service Quality

Pl. remember :

Perceived Service = Customer Satisfaction + Service Quality

Satisfaction vs Service Quality

Quality:
Service quality focuses specifically on dimensions of service. (empathy , assurance, tangibility , responsiveness , reliability)

Satisfaction:
Whereas satisfaction is generally viewed as a broader concept. Satisfaction is more inclusive : it is influenced by perceptions of service quality ,product quality , price as well as personal and situational factors.
Based on this view,perceived service quality is a component of customer satisfaction.

Customer Perceptions of Quality and Customer Satisfaction

Empathy

Assurance
Tangibility Reliability Responsive ness

Service Quality

Situational Factors

Product Quality

Customer Satisfaction

Customer Loyalty

Price

Personal Factors

Transactions versus Cumulative Perceptions

Customers will have perceptions of single, transaction encounters as well as overall perceptions of a company based on all their experiences. For e.g. a bank customer will have a perception how he was treated in a particular encounter with an employee at a branch and will form perception of that particular transaction based on elements of the service experienced during that specific transaction .That perception is at very micro, transaction-specific level.

That same bank customer will also have overall perceptions of the bank based on all his encounters over a period of time.
These experiences might include : Multiple in-person encounters at the bank branch, Online banking experiences and Experiences using the bank ATMs across many different cities.

Perceived Service
Quality:
Service quality focuses specifically on dimensions of service. (empathy , assurance, tangibility , responsiveness , reliability).

Quality of service is the degree of conformance of all the relevant features and characteristics of service to all aspects of the consumers needs limited by the price and delivery he/she will accept.
Quality can be viewed from two perspectives : Internal quality : based on conformance to specifications. External quality : based on customer perceived quality.

(will come back on Quality shortly)

What is Customer Satisfaction ?

Perceived Service
Satisfaction:

Satisfaction = Needs + Expectations

Whereas satisfaction is generally viewed as a broader concept. Satisfaction is more inclusive : it is influenced by perceptions of service quality ,product quality , price as well as personal and situational factors. Hence Satisfaction is Dynamic, Moving target that may evolve over time , Influenced by a variety of factors. Customer Satisfaction (based on Service encounetrs).ppt Customer satisfaction measures how well customers expectations are met.

Definitions:

Satisfaction

Satisfaction is most commonly described in terms of the disconfirmation approach, viewed as the variation between a customers pre purchase expectations and post purchase perceptions of the actual service performed (Oliver, 1980).

Satisfaction is dependent upon the customers subjective perception and evaluation of service performance rather than the organizations objective standards of quality (Greenwell et al., 2002a).
Service providers who meet or exceed expectations are more likely to have satisfied customers (Rust, Zahorik, & Keiningham, 1995).

Perspectives on Service Quality

Transcendental: Product-Based: User-Based: ManufacturingBased:
Quality = excellence. Recognized only through experience

Quality is precise and measurable

Quality lies in the eyes of the beholder Quality is conformance to the firms developed specifications Quality is a trade-off between price and value

Value-Based:

Transcendental View: This view of quality is synonymous with innate excellence, a mark of uncompromising standards and high achievement, e.g. Rolls Royce car, Rolex watches, in other words are the best possible This approach inherits a danger that it confuses quality with grade, We always use the term good quality or bad quality without really having a clear idea of what it is that defines our concepts of quality of products and services. Consumers usually presume expensive products means high quality or high grade .The grade and quality of a service and product are quite different . Grade refers to product standards And is reflected in the specifications of the product and quality refers to the extent to which a product or service is and does what it claims to be and do. Product Based View: This approach views quality as a precise and measurable variable .Thus it can be argued that difference in quality reflects difference in the ingredients or attributes of the product or service. Quality reflects the quantity of ingredients or attributes a product or service contains. As attributes are considered costly to produce ,the higher quality goods will be expensive. Manufacturing based View: In manufacturing based approach the focus is on the supply side and is considered primarily with engineering and manufacturing practices .This approach is summed up by a phase-conformance to design specifications .The product may not be the best in the world but is regarded as good quality if it is manufactured or delivered precisely to its design specifications. Value based View: The value based approach is defines in terms of costs and prices. Value is the quality you get for the price to pay .A consumer may buy a product with lower specifications if the price is low. User based View: The user based approach starts with a premise that quality lies in the eyes of beholder. According to this approach ,the goods that best satisfy the consumer preferences are believed to be of high quality. This approach equates quality with maximum satisfaction. This is a subjective and demand oriented perspective .This approach is useful ,as it recognizes that different customers have different needs.

What determines Customer Satisfaction?

Personal Factors & Situational Factors viz:
Specific product or service features
i.e.Product/service quality

Consumer emotions
i.e. The customers mood or emotional state

Attributions for service success or failure Perceptions of equity or fairness Other consumers, family members, and coworkers

Product & Service features: e.g. in hotel selection:

Pool area, access to golf facilities, restaurants , room comfort, privacy, helpfulness and courtesy of staff , room price and so on. Companies determine satisfaction level of customers through Focus groups -i.e. what important attributes /features are for their service and then measure perceptions of those features as well as overall service satisfaction.

Consumer Emotions :also affect satisfaction of product and services.

Emotions can be stable, preexisting emotions. When person is in happy stage of life ( e.g.in vacation or in water rafting adventure) or when person is in bad mood then person have negative feelings.

Attributions: the perceived causes of events-influence perceptions of satisfaction, when customers

have been surprised by an outcome (the service is either much better or worse than expected),the customers tend to look for reasons and their assessment can influence their satisfaction for e.g. if a customer of weight loss organization fails to lose weight ( reasons can be in control or out of control of customer) Travel agency mis-happenings-customers introspection can lead to the reasons in control or out of control of company/customer

Equity or Fairness:
Customers ask themselves: have I been treated fairly with other customers? Did other customers get better treatment , better price or better quality services?

Other Consumers , Family members and Co workers:

Consumers satisfaction is also influenced by other people e.g. satisfaction with a family trip; In a business meeting, satisfaction with anew service or technology or New CRM program will be influenced not only by individuals personal experience but also by what others say about it in the company.

Relationship between Customer Satisfaction and Loyalty in Competitive Industries

Source: James L. Heskett, W. Earl Sasser, Jr., and Leonard A. Schlesinger, The Service Profit Chain, (New York, NY: The Free Press, 1997), p. 83.

Resuming Quality discussions

Service Quality
The customers 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 interaction quality physical environment quality

Service Quality
Customers also form perceptions of quality during the service transaction - how effectively and efficiently the service was delivered and the speed and convenience of completing the transaction
Customers evaluate support activities that occur after the transaction, that is post-sale services.

Definitions of Service Quality

Service quality can also be defined according to both the what and how a product or service is delivered. Gronroos distinguishes between technical quality and functional quality. Technical Quality is concerned with the outcome of the delivered product or service.

cont..

Definitions of Service Quality cont

Customers use service quality attributes such as reliability, competence, performance, durability, etc. to evaluate technical quality. Functional Quality has more to do with how the technical quality is transferred to the consumer. Service quality attributes such as responsiveness and access would be important in helping the customer judge the functional quality of the service encounter.

Grnroos' Perceived Service Quality model

Service Marketing System (in Service Encounters).ppt

Grnroos' Perceived Service Quality model

Technical quality has been described by Grnroos (1983) as the skills and tasks which need to be performed and are those which can be reduced to a job description. Functional quality however is more difficult to define in precise terms as it includes human relations, behavioural and interpersonal aspects of the services personnel's role. In other words, as shown in Figure, technical quality and functional quality describe the what and how a service is performed.

Cardinal Principles of Service Quality

Listening precedes action Reliability is key Flawless execution of the basics Pay attention to service design Perform service recovery well Surprise customers Practice fair play Promote teamwork Internal service begets external service Adapted from Zemke, Ron (2002)
(Cardinal: of foremost importance ; paramount)

The Service Offering

Service quality can also be judged by considering the various spheres or thresholds of the service offering as presented in Figure The 3 Service Levels. The core benefit is the most fundamental level for which the service offering stands for, that is, what the consumer is actually seeking. Cont.

The Service Offering

The core benefit represents basic reasons why people buy, such as hunger, safety, convenience, confidence, status, self-esteem, and so on. Gronroos uses the term service concept to indicate the core of a service offering, such as offering a car rental as a solution to a short-term transportation need.

The 3 Service Levels

SATISFIERS

HYGIENE FACTORS

CORE BENEFIT

The 3 Service Levels

SATISFIERS

HYGIENE FACTORS

Core Benefit what the customer is actually seeking- utility, satisfaction

Hygiene Factors -- minimally

CORE BENEFIT

acceptable service attributes; NOTE: failure to provide these will lead to dissatisfaction--these will not delight the customer however

Satisfiers -- service attributes that

truly differentiate and exceed customerss expectations--satisfiers have the potential to create high cust. satisfaction

Service Quality Challenges

Defining quality for services is more difficult than for products because of the intangible, variable nature of service characteristics.

Unlike product quality, consumers frequently lack the necessary information to evaluate service quality. cont.

Service Quality Challenges cont.

Quality Perceptions Search quality and experience quality are more

applicable to determining product quality With services, however, consumers are usually limited to using credence quality to evaluate the experience, relying solely on the overall credibility of the service provider. Service Continuum Another challenge presented in assessing service quality arises when viewing services along a continuum ranging from pre-sale to post-sale activities

Continuum of Services

Pre-sale Services

Transaction Services

Post-sale Services

Broad Dimensions of Service Quality i.e.Determinants of Quality

Reliability perform promised service dependably and accurately. Responsiveness - willingness/readiness to provide prompt service.

Competence - possess knowledge and skill to perform the service.

Access - approachability and ease of contact of service personnel. Courtesy - politeness, consideration, and friendliness of service personnel. cont

Broad Dimensions of Service Quality

Communication - keeping customers informed; listening to customers Credibility - trustworthy, believable, honest Security - freedom from danger, risk, or doubt

Understanding/knowing customer - knowing customers needs

Tangibles - physical evidence of service

Parasuraman, A. Zeithaml, V., and Berry, L. (1985).

Eight Dimensions of Product Quality By David Garvin

Performance operating characteristics (speed, comfort, ease of use, and so on); for multiple performance features, the relative importance of each Features extras, add-ons, or gimmicks that enable a customer to somewhat customize a product Reliability the likelihood that the product will perform as expected and not malfunction within a given time period Conformance the degree to which the product satisfies or conforms to pre-established standards Durability the length of time, or extent of use, before the product deteriorates and must be replaced; durability is a function of the product's operating environment and reliability Serviceability the speed, ease, and convenience of getting or making maintenance work or repairs and the courtesy and competency of service people Aesthetic the look, sound, smell, feel, or taste of the product based on personal taste; though subjective, some aesthetic judgments tend to be common Perceived Value subjective opinions about the product based on images or attitudes formed by advertising and/or the reputation of the producer

Mapping Service Quality

Parasuraman and his colleagues found that service quality is a measure between service perceptions as well as expectations.

Service quality stems from a comparison of what a consumer feels a service firm should offer (desires or wants) versus their perception of what the service firm actually does offer.
Ensuring good service quality involves meeting or exceeding consumers expectations

Seven Service Quality Gaps

Customer needs and expectations

CUSTOMER

1. Knowledge Gap
Management definition of these needs

MANAGEMENT

2. Standards Gap
Translation into design/delivery specs

3. Delivery Gap
Execution of design/delivery specs

4. I.C.Gap

Advertising and sales promises

5. Perceptions Gap
Customer perceptions of product execution

6. Interpretation Gap
Customer interpretation of communications

7.

Service Gap
Customer experience relative to expectations

Knowledge Gap: is the difference between what service provdiers believe customers expect and customers actual needs and expectations Standards Gap: is the difference between management s perceptions of customer expectations and the quality Standards established for service delivery. Delivery gap: is the difference between specified delivery standards and the service providers actual performance on these standards Internal Communications Gap: is the difference between what the companys advertising and sales personnel think are the products features, performance and service quality level and what the company is actually able to deliver. Perceptions Gap: is the difference between what is, in fact ,delivered and what customers perceive they received(because they are unable to assess service quality accurately) Interpretation gap: is the difference between what a service providers communication efforts ( in advance of Service delivery)actually promises and what a customer thinks was promised by these communication Service Gap: is the difference between what customers expects to receive and their perceptions of the service that is actually delivered.

Prescriptions for Closing Service Quality Knowledge : Learn what customers expect--conduct research, dialogue, Gaps (Table 14.3) feedback
employees, equipment, customers

Standards: Specify SQ standards that reflect expectations Delivery: Ensure service performance matches specs--consider roles of
Internal communications: Ensure performance levels match marketing
promises

Perceptions: Educate customers to see reality of service delivery Interpretation: Pretest communications to make sure message is clear and
unambiguous.

SERVQUAL : Gap Analysis

1. Research gap customer expectations<->mgt. perceptions 2. Planning & design gap mgt. perceptions<->service specifications 3. Implementation gap service specifications<->service delivery 4. Communication gap service delivery<->external communication 5. Reality gap customer expectations<->the experience

Measuring & Improving Service Quality

Seven Quality Tools

The Seven Tools
Histograms, Pareto Charts, Cause and Effect Diagrams, Run Charts, Scatter Diagrams, Flow Charts, Control Charts

Hard & Soft Quality Measures

(Hard for Low contact services & Soft for high contact services)

Hard and Soft Measures of Service Quality

Hard measures refer to standards and measures that can be counted, timed or measured through audits
typically operational processes or outcomes e.g. how many trains arrived late?

Soft measures refer to standards and measures that cannot easily be observed and must be collected by talking to customers, employees or others e.g. SERVQUAL, surveys, and customer advisory panels. Control charts are useful for displaying performance over time against specific quality standards.

SERVQUAL

Used to operationalize the gaps influencing customer perceptions

SERVQUAL is a 21-item instrument that measures both expectations and customer perceptions of the service encounter.
Scale reflects the respondents Zone of Tolerance or the range of the companys performance between acceptable and desired service levels.

Benefits of SERVQUAL
Can serve as an effective diagnostic tool for uncovering broad areas of a companys service quality shortfalls and strengths. The SERVQUAL scale is offers the potential to determine the relative importance of the 5 major service quality dimensions-- Reliability, Responsiveness, Assurance, Tangibles, and Empathy -- and to track service quality performance over time. The scale serves as a suitable generic measure of service quality, transcending specific functions, companies, and industries.

The Five Dimensions of Service Quality

Empathy Assurance Tangibles
Reliability
Caring, individualized attention the firm provides its customers. Knowledge and courtesy of employees and their ability to inspire trust and confidence. Physical facilities, equipment, and appearance of personnel. Ability to perform the promised service dependably and accurately.

Responsiveness

Willingness to help customers and provide prompt service.

SERVQUAL Attributes
EMPATHY

RELIABILITY

Giving customers individual attention Employees who deal with customers in a caring fashion Employees who understand the needs of their customers Convenient business hours

Providing service as promised Dependability in handling customers service problems Performing services right the first time Providing services at the promised time Maintaining error-free records

ASSURANCE

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

Keeping customers informed as to when services will be performed Prompt service to customers Willingness to help customers Readiness to respond to customers requests

TANGIBLES

Modern equipment Visually appealing facilities Employees who have a neat, professional appearance Visually appealing materials associated with the service

E-Service Quality
E-S-QUAL is defined as the extent to which a website facilitates efficient and effective shopping , purchasing and delivery.
Through exploratory focus groups and empirical data collection and analysis, research identified seven dimensions that are critical for core service evaluation(four dimensions) and service recovery evaluation( three dimensions) Four core dimensions that customers sue to judge websites at which they experience no questions or problems are as follows:

Efficiency: The case and speed of accessing and using the site. Fulfillment: the extent to which the sites promise about order delivery and item
availability are fulfilled.

System availability: the correct technical functioning of the site Privacy: The degree to which the site is safe and protects customer information
Three dimensions that customers use to judge recovery service when they have problems or questions

Responsiveness: The effective handling of problems and retrurns through the site Compensation: The degree to which the site compensates customers for problems Contact: The availability of assistance through telephone or online representatives.

Control Chart:
Hard Measures of Service Quality

Control charts to monitor a single variable Service quality indexes Root cause analysis (fishbone charts) Pareto analysis

Control Chart fort departure delays:

%age of Flights Leaving within 15 Minutes of Schedule
100% 90% 80% 70% 60%
J F M A M J J A S O N D

Month
(Hard Measure)

Composition of FedExs Service Quality Index (SQI)

(SKI measures daily the occurrence of 12 different activities that are likely to lead to customer dissatisfaction)

Failure Type
1. Late Delivery Right Day 2. Late Delivery Wrong Day 3. Tracing request unanswered 4. Complaints reopened 5. Missing proofs of delivery 6. Invoice adjustments 7. Missed pickups 8. Lost packages 9. Damaged packages 10. Aircraft Delays (minutes) 11. Overcharged (packages missing label) 12. Abandoned calls

Weighting Factor
1 5 1 5 1 1 10 10 10 5 5 1

No of = Incidents

Daily Points

Total Failure Points (SQI) =

(Hard Measure; SQI has become a power tool now- pronounced as SKI)

XXX,XXX

Tools to Address Service Quality Problems

Fishbone diagrams:

A cause-and-effect diagram to identify potential causes of problems.

Pareto charts:
Separating the trivial from the important. Often, a majority of problems is caused by a minority of causes i.e. the 80/20 rule.

Blueprinting:
A visualization of service delivery. It allows one to identify fail points
in both the front stage and backstage.

Cause & Effect Analysis-Fish Bone Diagram Group of managers and staff brainstorm all possible reasons that might cause a specific problem. the resulting factors are then categorized into one of the five groupingsEquipment Manpower Material Procedures And other on a cause and effect chart, popularly known as Fish bone diagram.

Cause & Effect Chart for Airline Departure Delays

Facilities, Equipment
Arrive late Oversized bags

Front stage Personnel

Procedure

Customers

Delayed check-in Gate agents Aircraft late to procedure cannot process fast gate enough Mechanical Acceptance of late Failures passengers Late/unavailable airline crew Late pushback

Delayed Departures Other Causes

Weather Air traffic

Late food service

Late baggage Late fuel

Late cabin cleaners

Poor announcement of departures Weight and balance sheet late

Materials, Supplies

Backstage Personnel

Information

Blue Printing
A well constructed blue print enables us to visualize the process of service delivery by depicting the sequence of front stage interactions that customer experience as they encounter service providers, facilities and equipment together with supporting backstage activities, which are hidden from customers and are not part of their service experiences. Blue prints can be used to identify the potential Fail Points, at which failures are most likely to occur.

Blue prints help us to understand how failures at one point ( such as an incorrect entry of an appointment date) may have a ripple effect later in the process ( the customer arrives at the doctors office and is told that the doctor is unavailable)

Fail Points
Blueprints also give managers the opportunity to identify potential process fail points
These are points where there is significant risk if things going wrong and diminishing quality.

Building a Service Blueprint

Other uses of Blueprints

With this knowledge managers can design procedures to avoid their occurrence or prepare contingency plans or do both.

Service Blue print Components

Waiting points for customers can also be pin pointed. Standards an be developed for executing each activity, including : Times for completion of a task
Maximum wait time between tasks and

Scripts to guide interactions between staff members and customers.

Example: Overnight Hotel Stay

Analysis of Causes of Flight Departure Delays

All stations, excluding Chicago-Midway Hub
11.7% 23.1% 8.7% 4.9 % 19% 9.5% 33.3% 33.3%

15.3% 15.4% 23.1%

23.1%

11.3%
15%

53.3%
Washington Natl.

Newark

Late passengers Waiting for pushback Waiting for fueling

Late weight and balance sheet Late cabin cleaning / supplies Other

Poka Yokes
Poke Yoke or mistake proofing means taking steps to ensure errors or abnormalities can't occur. It can involve using checklists, quality checks, part or tool design, machine modification, setting tolerance limits and so forth.

There are three types of Pokayoke: 1 - Contact type: The use of shape, dimensions or other physical properties to detect the contact or noncontact of a particular feature. E.g. Things only fitting one way 2 - Constant number type: If a fixed number of actions or movements are not made an error sign is triggered. eg: completing data entry fields when taking an order 3 Performance sequence type ensures steps are performed In the right order eg, the use of a checklist for pre-flight checks or completing forms In a logical way. Poka yokes are either: . Shut out type -so preventing an error being made. -. Attention type -highlighting that an error has been made. 'Shut-out' is clearly preferable to 'Attention' as it prevents waste and doesn't rely on the error signal being noticed. The ideal PokaYokes are: inexpensive simple and easy to implement specific to the need developed by every employee

Poka Yoke design

Return on Quality (ROQ)

ROQ approach is based on four assumptions:
Quality is an investment Quality efforts must be financially accountable Its possible to spend too much on quality Not all quality expenditures are equally valid

Implication: Quality improvement efforts may benefit from being related to productivity improvement programs

When Does Improving Service Reliability Become Uneconomical?

100%
Satisfy Target Customers Through Service Recovery Optimal Point of Reliability: Cost of Failure = Service Recovery Satisfy Target Customers Through Service Delivery as Planned

Service Reliability

D Investment

Small Cost, Large Improvement

Large Cost, Small Improvement

Assumption: Customers are equally (or even more) satisfied with the service recovery provided than with a service that is delivered as planned.

Service Profit Chain

Researchers have proposed a link between employee satisfaction, customer satisfaction and firm profitability, known as the service profit chain (SPC)

The SPC represents an integrative framework for understanding how operational investments into service quality are related to customer satisfaction perceptions and how these translate into profits
Improving quality also leads to other desirable outcomes, such as customer satisfaction

The Service Profit Chain

Internal Service Delivery -Employees Service Concept

External --Customers
Service Value Outcomes
C/S, Loyalty

Employee Value

Service Value

Profits

-- Workplace design -- Process Tools -- Rewards/Recognition

-- Higher reliability -- Lower costs

--- Lifetime Value --- Retention --- Referrals

Growth

Adapted from Heskett, Sasser, and Schlesinger (1997).

Service Encounter

The Service Encounter

is the moment of truth occurs any time the customer interacts with the firm can potentially be critical in determining customer satisfaction and loyalty types of encounters:
remote encounters, phone encounters, face-to-face encounters

is an opportunity to:
build trust reinforce quality build brand identity

A Service Encounter Cascade for a Hotel Visit

Check-In Bellboy Takes to Room Restaurant Meal Request Wake-Up Call Checkout

A Service Encounter Cascade for an Industrial Purchase

Sales Call Delivery and Installation Servicing Ordering Supplies Billing

Critical Service Encounters Research

GOAL:
understanding actual events and behaviors that cause customer dis/satisfaction in service encounters

METHOD:
Critical Incident Technique

DATA:
stories from customers and employees

OUTPUT:
identification of themes underlying satisfaction and dissatisfaction with service encounters

Common Themes in Critical Service Encounters Research

Recovery:
employee response to service delivery system failure

Adaptability:
employee response to customer needs and requests

Coping:
employee response to problem customers

Spontaneity:
unprompted and unsolicited employee actions and attitudes

Recovery
DO
Acknowledge problem Explain causes Apologize Compensate/upgrade Lay out options Take responsibility

DONT
Ignore customer Blame customer Leave customer to fend for him/herself Downgrade Act as if nothing is wrong Pass the buck.

Adaptability
DO
Recognize the seriousness of the need Acknowledge Anticipate Attempt to accommodate Adjust the system Explain rules/policies Take responsibility

DONT
Ignore Promise, but fail to follow through Show unwillingness to try Embarrass the customer Laugh at the customer Avoid responsibility Pass the buck

Spontaneity
DO
Take time Be attentive Anticipate needs Listen Provide information Show empathy

DONT
Exhibit impatience Ignore Yell/laugh/swear Steal from customers Discriminate

Coping
DO
Listen Try to accommodate Explain Let go of the customer

DONT
Take customers dissatisfaction personally Let customers dissatisfaction affect others

Figure 5.7

Evidence of Service from the Customers Point of View

Operational flow of activities Steps in process

Contact employees Customer him/herself Other customers

People

Flexibility vs. standard

Technology vs. human

Process

Physical Evidence

Tangible communication Servicescape

Guarantees
Technology
Source: From Managing the Evidence of Service by M. J. Bitner from The Service Quality Handbook, eds. E. E. Scheuing and W. F. Christopher (1993), pp. 358-70.

Website

Efficiency, Effectiveness, and Productivity

Efficiency: comparison to a standard--usually time-based (e.g.,
how long employee takes to perform specific task)
Problem: focus on inputs rather than outcomes
May ignore variations in quality or value of service

Effectiveness: degree to which firm is meeting its goals

Cannot divorce productivity from quality/customer satisfaction

Productivity: financial valuation of outputs to inputs

Consistent delivery of outcomes desired by customers should command higher prices

Measuring Service Productivity

Traditional measures of service output tend to ignore variations in quality or value of service
That is, they focus on outputs rather than outcomes, and stress efficiency but not effectiveness.

Firms that are more effective in consistently delivering outcomes desired by customers can command higher prices. Furthermore, loyal customers are more profitable. Measures with customers as denominator include:
profitability by customer capital employed per customer shareholder equity per customer

Questions to Ask When Developing Strategies to Improve Service Productivity

How to transform inputs into outputs efficiently? Will improving productivity hurt quality? Will improving quality hurt productivity? Are employees or technology the key to productivity? Can customers contribute to higher productivity?

Operations-driven vs. Customer-driven Actions to Improve Service Productivity

Operations-driven strategies Customer-driven strategies
Control costs, reduce waste
Set productive capacity to match average demand

Automate labor tasks

Upgrade equipment and systems

Change timing of customer demand Involve customers more in production Ask customers to use third parties

Train employees
Leverage less-skilled employees through expert systems

Backstage and Front stage Productivity Changes: Implications for Customers

Backstage improvements can ripple to the front stage and affect customers
e.g., new printing peripherals may affect appearance of bank statements.

Front-stage productivity enhancements are especially visible in high contact services.

Some may just require passive acceptance by customers Others require customers to change their scripts and behavior.

Overcoming Customers Reluctance to Accept Changes in Environment and Behavior

Develop customer trust Understand customers habits and expectations Pretest new procedures and equipment Publicize the benefits Teach customers to use innovations and promote trial Monitor performance, continue to seek improvements

Six Sigma Methodology to Improve and Redesign Customer Service Processes

Process Improvement
Define Measure Analyze

Improve

Control

Identify the problem Define requirements Set goals Validate problem/process Refine problem/goal Measure key steps/inputs Develop causal hypothesis Identify root causes Validate hypothesis Develop ideas to measure root causes Test solutions Measure results Establish measures to maintain performance Correct problems if needed

Process Design/Redesign

Identify specific or broad problems Define goal/change vision Clarify scope & customer requirements Measure performance to requirements Gather process efficiency data Identify best practices Assess process design Refine requirements Design new process Implement new process, structures and
systems

Establish measures & reviews to maintain performance Correct problems if needed