Chapter 4 09/07/2012

Chapter

Customer Perceptions of Service

Customer Perceptions
Customer Satisfaction

Service Quality
Service Encounters: The Building Blocks for

Customer Perceptions

4-2

Objectives for Chapter 4: Consumer Perceptions of Service

Provide a solid basis for understanding what influences customer perceptions of service and the relationships among customer satisfaction, service quality, and individual service encounters.
Demonstrate the importance of customer satisfactionwhat it is, the factors that influence it, and the significant outcomes resulting from it.

4-3

Objectives for Chapter 4: Consumer Perceptions of Service

Develop critical knowledge of service quality and its five key dimensions: reliability, responsiveness, empathy, assurance, and tangibles. Show that service encounters, or the moments of truth are the essential building blocks from which customers form their perceptions.

The customer is . . .
Anyone who receives the companys services, including:
external customers (outside the organization, business

customers, suppliers, partners, end consumers)

internal customers (inside the organization, e.g., other

departments, fellow employees)

4-5

Customer perceptions
How customer assess whether they have experienced

quality service and whether they are satisfied

Perceptions are always considered relative to

expectations.
A discussion of quality and satisfaction is based on

customers perceptions of the service- not some predetermined objective criteria of what service is or should be.

Transaction versus Cumulative Perceptions

The customers will have perception on single,

transaction-specific encounters as well as overall perceptions of a company based on all their experiences.
Isolated encounters are the building blocks for overall,

cumulative experience evaluations.

Understanding perceptions at the transaction-specific

level is critical for diagnosing service issues and making immediate changes.

Customer Satisfaction
is the customers evaluation of a product or service in

terms of whether that product or service has met the customers needs and expectations.
Satisfaction and quality are different. Satisfaction is viewed as a broader concept, while

service quality is a component of customer satisfaction.

Customer Satisfaction can mean

Contentment, pleasure, delight, ambivalence

Customer Perceptions of Quality and Customer Satisfaction

4-9

Factors Influencing Customer Satisfaction

Product quality Service quality Personal factors Situational factors Price

4-10

Factors Influencing Customer Satisfaction (continued)

Specific product or service features
eg. Resort hotel-pool, restaurants, room comfort

Consumer emotions
If you are happy, your mood will influence how you feel about the services you experience.

 Attributions for service success or failure

e.g. A customer of a weight-loss organization will search for the causes of the success/ failure before determining her satisfaction with the service.

Perceptions of equity or fairness

Am I treated fairly compared with other customers?

Other consumers, family members, and

coworkers

Outcomes of Customer Satisfaction

Increased customer loyalty

Positive word-of-mouth communications

Increased revenues Increased return to shareholders

4-13

ASQI and Market Value Added

A relationship between market value added and satisfaction.

4-14

Relationship between Customer Satisfaction and Loyalty in Competitive Industries

4-15

Top Box Scores A Higher Standard

Overall Satisfaction with XYZ (% of customers) Definitely Will Repurchase from XYZ Definitely Would Recommend XYZ

TOP BOX
Very Satisfied

(64%)

=96%
44-point drop

=91%
55-point drop

All Customers

SECOND BOX
Somewhat Satisfied

=52%

=36%

(29%)

BOTTOM 3 BOXES
Neutral to Very Dissatisfied

(7%)

=7%

=4%
4-16

Source: Technical Assistance Research Bureau (TARP), 2007.

What is Service Quality? The Customer Gap

Expected Service

Customer gap
Perceived Service

Service quality is the customers judgment of overall

excellence of the service provided in relation to the quality that was expected.
4-17

Service Quality
Service quality assessments are formed on judgments

of:
outcome quality interaction quality physical environment quality

4-18

 E.g. a legal service

Outcome quality- how the court case was resolved Interaction quality- the lawyer's timeliness in returning phone calls, his empathy for the client Physical environment quality- the dcor and surroundings
E.g. restaurant

Outcome quality - food Interaction quality - how the food is served Physical environment quality - the dcor and surroundings

The Five Dimensions of Service Quality

Reliability
Ability to perform the promised service dependably and accurately. Knowledge and courtesy of employees and their ability to inspire trust and confidence. Physical facilities, equipment, and appearance of personnel. Caring, individualized attention the firm provides its customers. Willingness to help customers and provide prompt service.
4-20

Assurance
Tangibles

Empathy Responsiveness

SERVQUAL Attributes
RELIABILITY

EMPATHY

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

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

RESPONSIVENESS

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

ASSURANCE

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
4-21

Reliability
Absolutely, positively has to get there.

Geek Squads Focus on Responsiveness

http://www.youtube.com/watch?feature=endscreen&NR=1&v=WAqnrluv3j w http://www.youtube.com/watch?v=oCRPI-1dHQw&feature=related

4-23

How Customers Judge the Five Dimensions of Service Quality

4-24

Empathy
Southwest airline commercials
http://www.youtube.com/watch?v=S3zMI6fOg8o

Exercise to Identify Service Attributes

In groups of two, choose a services industry and spend 10 minutes brainstorming specific requirements of customers in each of the five service quality dimensions. Be certain the requirements reflect the customers point of view.
Reliability: Assurance: Tangibles: Empathy: Responsiveness:
4-26

Service Encounter:
The building blocks for customer perceptions is the moment of truth occurs any time the customer interacts with the firm can potentially be critical in determining customer satisfaction and loyalty

4-27

The Service Encounter

types of encounters:
remote encounters, phone encounters,

face-to-face encounters is an opportunity to: build trust reinforce quality build brand identity increase loyalty

A Service Encounter Cascade for a Hotel Visit

4-29

A Service Encounter Cascade for an Industrial Purchase

Sales Call

Delivery and Installation

Servicing

Ordering Supplies Billing

4-30

Service Encounters: An Opportunity to Build Satisfaction and Quality

http://www.youtube .com/watch?v=UG 39pqO6giI

4-31

Common Themes in Critical Service Encounters Research

Recovery:

Adaptability:

employee response to service delivery system failure

Coping:

employee response to customer needs and requests

Spontaneity:

employee response to problem customers

unprompted and unsolicited employee actions and attitudes

4-32

Recovery
Employee is required to respond in some way to consumer complaints and disappointments.

4-33

Adaptability
Customers judge service encounters quality in terms of the flexibility of the employees and the system.

Customer perceives that something special is being done for her individual needs.
4-34

Spontaneity

4-35

Coping
The behavior required of employee to handles problem customers encounters.

4-36

Technology-Based Service Encounters

Themes for satisfying self-service technologies (SSTs) The technology solved an intensified need The technology was better than the alternative The technology did its job Themes for dissatisfying SSTs The technology itself failed The process failed The technology was poorly designed The customer did not use the technology properly
4-37

Homework: due next week

Read Technology Spotlight on page 100. Visit Amazon.coms website.

Visit a traditional bookstore. How would you compare the two experience? Compare and contrast the factors that most influenced you satisfaction and perceptions of service quality in the two different situations. When would you choose to use one versus another?