Service Quality

What is service quality?

Q

is conformance to specifications  Q is the degree to which customer expectations are satisfied  Q means doing it right the first time  Q is the fair exchange of price and value  Q is consistent attention to detail  Q is the philosophy of the organization to excell
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What is service quality?

Quality Design Strategic Fitness for use
A budget hotel that conforms to design requirements is 3 a quality hotel. Luxury quality

Conformance Tactical

The quality challenge

 Subjectivity

in the customers perception of

quality
Customers perception of quality can be based on one or a small number of features of the service package The rating of the service will vary by individual Quality is often judged in relation to price
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The quality challenge

 Simultaneous production and

consumption

Multiple customer contact points 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.

Customer may disrupt Q for other customers Difficult to measure Difficult to correct mistakes
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Dimensions of Service Quality

 Reliability:

Perform promised service dependably and accurately. Example: deliver newspapers at same time each day.
Doing it right the first time. The firm honoring its promises

 Responsiveness:

Willingness to help customers promptly (timeliness). Example: avoid keeping customers waiting for no apparent reason.

Dimensions of Service Quality

 Assurance:

Ability to convey trust and

confidence.
Competence: required skills Credibility: believability, honesty
 Empathy:

Ability to be approachable. Example: being a good listener.

Courtesy: politeness, respect Communication: informing the customer in a language they can undertsand

 Tangibles: Physical

facilities and facilitating goods. Example: cleanliness.

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Perceived Service Quality

Word of mouth Personal needs Past experience

Service Quality Dimensions Reliability Responsiveness Assurance Empathy Tangibles

Expected service

Perceived service

Service Quality Assessment 1. Expectations exceeded PS>ES (Quality surprise) 2. Expectations met ES~PS (Satisfactory quality) 3. Expectations not met PS<ES (Unacceptable quality)

Gaps in Service Quality

Word -of-mouth communications Customer Expected service Personal needs Past experience

GAP 5
Perceived service

Service delivery (including pre- and post-contacts)

External communications to consumers

GAP 1

GAP 3
Translation of perceptions into service quality specifications

GAP 4

Provider

GAP 2
Management perceptions of consumer expectations 9

Gaps in Service Quality

 GAP

1: management doesnt understand customer expectations

improve market research Reduce levels in hierarchy Communicate with contact employees

 GAP

2:lack of mngt committment to Q; infeasibility of meeting expectations

Set goals Standardize service delivery
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Gaps in Service Quality

3: service performance gap; due to lack of teamwork, insufficient training, wrong employee selection, wrong job design.  GAP 4: discrepancy between service delivery and expectations of customers formed through advertising etc.
 GAP

Exaggerated promises Lack of info provided to contact personnel

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Gaps in Service Quality

5: discrepency between customers expected service and percieved service.  Measuring service quality (reliability, responsiveness, assurance, empathy, tangibles)
 GAP

SERVQUAL instrument to measure the 5 dimensions of service quality

First part measures expectations Second part measures perceptions
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Scope of Service Quality

 Content:

are standard procedures being followed?  Process: is the sequence of events logical and well coordinated? (Check lists, drill practices)  Structure: are physical facilities and organizational design adequate? (personnel + equipment)
Doctors practice: X-ray, lab, ratio of nurses to 13 doctors)

Scope of Service Quality

 Outcome: the

end result; quality of output. Is the customer satisfied?

Number of customer complaints infection rate per 1000 surgeries Satisfaction of employees with their own performance

 Impact: long

range effect of service on customer

Police security Health life expectancy, infant mortality rate Education literacy rate Commerce number of items sold
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Quality Service by Design

Q

cannot be inspected into a product or service  Q cannot be added on Q must be designed into the service

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Quality Service by Design

 Quality

in the Service Package Methods (Robustness) (fail-safing)

 Taguchi

 Poka-yoke  Quality

Function Deployment
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Quality in the Service Package

 Explicitly

define in measurable terms what constitutes conformance requirements for each element of the service package.  Philip Crosbys definition: conformance to requirements  Example: quality requirements in budget hotel

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Taguchi Methods
Tagushi: robust design to ensure proper functioning under adverse conditions.  Q is achieved by consistently meeting design specifications  Budget hotel example: use computer to notify housekeeping; uniform treatment of guests, consistent preparation of rooms.
 Genichi
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Poka-Yoke - Failsafing
 Shigeo

Shingo: errors happen not because of incompetence but because of lack of attention  So, use in-process mechanisms to foolproof rather than inspection  Poka-Yoke for customer as well as service provider

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Classification of Service Failures

Server Errors
Task: Doing work incorrectly (french-fry scoop, checklist) Treatment: Failure to listen to customer (enter customer eye-color) Tangible: Failure to clean facilities (mirror for employees, automatic spellcheck)

Customer Errors
Preparation: Failure to bring necessary materials (filling forms) Encounter: Failure to follow instructions (height bar at Disney, frame for carry-on luggage) Resolution: Failure to learn from experience (tray-return stands, trash cans at exit; beep from computer)

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Quality Function Deployment



1. 2. 3. 4.

House of quality translates customer satisfaction into measurable specifications for service design Establish aim: assess competitive position Determine customer expectations Determine service elements Determine strength of relationship between service elements (roof)
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Quality Function Deployment

5. Determine assocation between customer expectations and service elements (0-9) 6. Weigh the service elements 7. Rank service element improvement difficulty 8. Assess competition 9. Strategic assessment and goal setting
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House of Quality
Relationships

*
O O O

trong edium eak

Informatiion

raini ng

ttitude

Capacit

Im p

ort

uipment

R l ti
ervic e lements

Customer erc eptions o Village Volvo

+ Volvo Dealer

tomer ilit

pect tions 9 7 6 9 7 8

Reli

+
9 6 o

Responsi eness ssur nce mpat angi les

+
o o o

+ + +

+
o Comparison wit Vol o Dealer o o o o

_
eighted score Improvement difficult rank 7 8

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Achieving Service Quality

 Cost

of Quality (Juran) Process Control Process Control (Deming) Service Guarantee

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 Service

 Statistical

 Unconditional

Costs of Service Quality

Failure costs
External failure: Customer complaints Warranty charges Liability insurance Legal judgments Loss of repeat service Internal failure: Scrap Rework Recovery: Expedite Labor and materials
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Detection costs
Process control Peer review Supervision Customer comment card Inspection

Prevention costs
Quality planning Training program Quality audits Data acquisition and analysis Preventive maintenance Supplier evaluation Recruitment and selection

Service Process Control (feedback mechanism)

ustomer input Service concept ustomer output

Resources

Service process

Take corrective action Identify reason for nonconformance

Monitor conformance to requirements

Establish measure of performance

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Control Chart of Departure Delays

Percentage of flights on tim e 100 90
Lo er expected ontrol Limit

80 70 60
1 1

p (1  p UC ! p  3 n

p (1  p C ! p 3 n
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Unconditional Service Guarantee: Customer View

 Unconditional (L.L.

Bean, no questions asked)  Easy to understand and communicate (free pizza if late delivery)  Meaningful (Dominos Pizza, rebate if late delivery)  Easy to invoke (no forms, Toys R Us price guarantee)  Easy to collect (on the spot)
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Unconditional Service Guarantee: Management View

 Focuses

on customers (British Airways)  Sets clear standards (FedEx by 10:30 am)  Guarantees feedback (agency rings customer the next day)  Promotes an understanding of the service delivery system (identify fail points before setting guarantees)  Builds customer loyalty
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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 ensure their return
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Expressing Dissatisfaction
Public Action Action Dissatisfaction occurs
Seek redress directly from the firm Take legal action Complaint to business, private, or governmental agencies

Private Action
Stop buying the product or boycott the seller

No Action

Warn friends about the product and /or seller 31

Customer Feedback and Wordof-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 problems 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. 32

Number of People Told Based on Level of Dissatisfaction

ave age 30 25 20 15 10 5 0
Slight diss A nnoyed V ery annoyed Ext annoyed A bs furious

be

f pe p e

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Action Taken Based on Level of Dissatisfaction

100 80 60 40 20 0
Slightly diss Annoyed Very annoyed Ext annoyed Abs furlous Tell friends Co plain Ma e a fuses Not use again Dissuade others Co plain against

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Approaches to Service Recovery

 Case-by-case addresses each customers complaint

individually but could lead to perception of unfairness (persistent vs reasonable complainers).  Systematic response uses a protocol to handle complaints but needs prior identification of critical failure points and continuous updating. Consistent and timely.  Early intervention attempts to fix problem before the customer is affected, or notifies customer.  Substitute service allows rival firm to provide service but could lead to loss of customer. 35