GAP ANALYSIS

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Gap analysis generally refers to the activity of studying the differences between standards and the delivery of those standards. For example, it would be useful for a firm to document differences between customer expectation and actual customer experiences in the delivery of medical care. The differences could be used to explain satisfaction and to document areas in need of improvement. However, in the process of identifying the gap, a before-and-after analysis must occur. This can take several forms. For example, in lean management we perform a Value Stream Map of the current process. Then we create a Value Stream Map of the desired state. The differences between the two define the "gap". Once the gap is defined, a game plan can be developed that will move the organization from its current state toward its desired future state. Another tool for identifying the gap is a step chart. With the step chart, various "classes" of performance are identified—including world-class status. Then, current state and desired future state are noted on the chart. Once again, the difference between the two defines the "gap". The issue of service quality can be used as an example to illustrate gaps. For this example, there are several gaps that are important to measure. From a service quality perspective, these include: (1) service quality gap; (2) management understanding gap; (3) service design gap; (4) service delivery gap; and (5) communication gap.

Service Quality Gap.

Indicates the difference between the service expected by customers and the service they actually receive. For example, customers may expect to wait only 20 minutes to see their doctor but, in fact, have to wait more than thirty minutes.

Management Understanding Gap.
Represents the difference between the quality level expected by customers and the perception of those expectations by management. For example, in a fast food environment, the customers may place a greater emphasis on order accuracy than promptness of service, but management may perceive promptness to be more important.

Service Design Gap.
This is the gap between management's perception of customer expectations and the development of this perception into delivery standards. For example, management might perceive that customers expect someone to answer their telephone calls in a timely fashion. To customers, "timely fashion" may mean within thirty seconds. However, if management designs delivery such that telephone calls are answered within sixty seconds, a service design gap is created.

Service Delivery Gap.
Represents the gap between the established delivery standards and actual service delivered. Given the above example, management may establish a standard such that telephone calls should be answered within thirty seconds. However, if it takes more than thirty seconds for calls to be answered, regardless of the cause, there is a delivery gap.

Communication Gap.
This is the gap between what is communicated to consumers and what is actually delivered. Advertising, for instance, may indicate to consumers that they can have their cars's oil changed within twenty minutes when, in reality, it takes more than thirty minutes.

IMPLEMENTING GAP ANALYSIS
Gap analysis involves internal and external analysis. Externally, the firm must communicate with customers. Internally, it must determine service delivery and service design. Continuing with the service quality example, the steps involved in the implementation of gap analysis are:

• • • • •

Identification of customer expectations Identification of customer experiences Identification of management perceptions Evaluation of service standards Evaluation of customer communications

The identification of customer expectations and experiences might begin with focusgroup interviews. Groups of customers, typically numbering seven to twelve per group, are invited to discuss their satisfaction with services or products. During this process, expectations and experiences are recorded. This process is usually successful in identifying those service and product attributes that are most important to customer satisfaction. After focus-group interviews are completed, expectations and experiences are measured with more formal, quantitative methods. Expectations could be measured with a one to ten scale where one represents "Not At All Important" and ten represents "Extremely Important." Experience or perceptions about each of these attributes would be measured in a similar manner. Gaps can be simply calculated as the arithmetic difference between the two measurements for each of the attributes. Management perceptions are measured much in the same manner. Groups of managers are asked to discuss their perceptions of customer expectations and experiences. A team can then be assigned the duty of evaluating manager perceptions, service standards, and communications to pinpoint discrepancies. After gaps are identified, management must take appropriate steps to fill or narrow the gaps.

THE IMPORTANCE OF SERVICE QUALITY GAP ANALYSIS
The main reason gap analysis is important to firms is the fact that gaps between customer expectations and customer experiences lead to customer dissatisfaction. Consequently, measuring gaps is the first step in enhancing customer satisfaction. Additionally, competitive advantages can be achieved by exceeding customer expectations. Gap analysis is the technique utilized to determine where firms exceed or fall below customer expectations.

Customer satisfaction leads to repeat purchases and repeat purchases lead to loyal customers. In turn, customer loyalty leads to enhanced brand equity and higher profits. Consequently, understanding customer perceptions is important to a firm's performance. As such, gap analysis is used as a tool to narrow the gap between perceptions and reality, thus enhancing customer satisfaction.

PRODUCT APPLICATIONS
It should be noted that gap analysis is applicable to any aspect of industry where performance improvements are desired, not just in customer service. For example, the product quality gap could be measured by (and is defined as) the difference between the quality level of products expected by customers and the actual quality level. The measurement of the product quality gap is attained in the same manner as above. However, while service delivery can be changed through employee training, changes in product design are not as easily implemented and are more time consuming. Gap analysis can be used to address internal gaps. For example, it is also applicable to human resource management. There may be a gap between what employees expect of their employer and what they actually experience. The larger the gap, the greater the job dissatisfaction. In turn, job dissatisfaction can decrease productivity and have a negative effect on a company's culture. Ford Motor Co., for example, utilized gap analysis while developing an employee benefit program. While management may believe it has a handle on employee perceptions, this is not always true. With this in mind, Ford's management set out to understand employee desires regarding flexible benefits. Their cross-functional team approach utilized focus groups, paper and pencil tests, and story boards to understand employee wants and needs. Their team, consisting of finance, human resources, line managers, benefits staff, and consultants, identified gaps in benefit understanding, coverage, and communications. As a result of gap analysis, Ford implemented a communications program that gained employee acceptance. Gene Brown Revised by Gerhard Plenert

FURTHER READING:

Chakrapani, Chuck. The Informed Field Guide for Tools and Techniques: How to Measure Service Quality and Customer Satisfaction. Chicago: American Marketing Association, 1998. Frost, Julie. "Narrowing the Perception Gap: A Study in Employee Benefit Communications." Compensation & Benefits Management 14, no. 2 (1998): 22–28. Fuller, Neil. "Service Quality Control." Supply Management 3, no. 19 (1998): 48. Parasuraman, Valerie Z., and Leonard L. Berry. "SERVQUAL: A Multiple-Item Scale for Measuring Customer Perceptions of Service Quality." Journal of Retailing 64, no. 1 (1988): 12–40. Plenert, Gerhard. The eManager: Value Chain Management in an eCommerce World. Dublin, Ireland: Blackhall Publishing, 2001. ——. International Operations Management. Copenhagen, Denmark: Copenhagen Business School Press, 2002.

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User Contributions:
1

karthikeyan
Jan 6, 2007 @ 2:02 am

This gives basic understanding of the topic.good procedure to be followed to measure gap analysis nay be given in detail

Read more: Gap Analysis - organization, advantages, manager, school, company, business, Implementing gap analysis, The importance of service quality gap analysis, Product applications http://www.referenceforbusiness.com/management/ExGov/Gap-Analysis.html#ixzz0bAPUCt7B

Measurement
Before we begin to create tools to measure the level of satisfaction, it is important to develop a clear understanding of what exactly the customer wants. We need to know what our customers expect from the products and services we provide. Customer expectations are the customer-defined attributes of your product or service you must meet or exceed to achieve customer satisfaction.1 Customer Expectations are of two types - Expressed and Implied. Expressed Customer Expectations are those requirements that are written down in the contract and agreed upon by both parties, for example, product specifications and delivery requirements. Supplier's performance against these requirements is most of the times directly measurable. Implied Customer Expectations are not written or spoken but are the ones the customer would 'expect' the supplier to meet nevertheless. For example, a customer would expect the service representative who calls on him to be knowledgeable and competent to solve a problem on the spot. There are many reasons why customer expectations are likely to change over time. Process improvements, advent of new technology, changes in customer's priorities, improved quality of service provided by competitors are just a few examples. The customer is always right. Supplier's job is to provide the Customer what he wants, when he wants it. Customer Satisfaction is customers' perception that a supplier has met or exceeded their expectations. It is therefore important to periodically update our knowledge of customer expectations. Top What constitutes Satisfaction? We cannot create customer satisfaction just by meeting customer's requirements fully because these HAVE to be met in any case. However falling short is certain to create dissatisfaction. Major attributes of customer satisfaction can be summarized as:
      Product Quality Product Packaging Keeping delivery commitments Price Responsiveness and ability to resolve complaints and reject reports Overall communication, accessibility and attitude

We cannot begin to address the customer satisfaction issue we define the parameters and measures clearly. It may be easier to track supplier's performance against stated requirements of quality and timeliness because there is documentary evidence. Some indication of whether a supplier is meeting the requirements can also be obtained from data on scrap rates, PPM, complaints database, sales improvements, repeat orders, customer audit reports etc. It is far more difficult to measure the level of performance and satisfaction when it comes to the intangible expectations.

Top What are the Tools? Customer expectations can be identified using various methods such as        Periodic Contract Reviews Market research Telephonic Interviews Personal visits Warranty records Informal discussions Satisfaction Surveys

Depending upon the customer base and available resources, we can choose a method that is most effective in measuring the customers' perceptions. The purpose of the exercise is to identify priorities for improvement. We must develop a method or combination of methods that helps to continually improve service. Top Customer Satisfaction Surveys Formal survey has emerged as by far the best method of periodically assessing the customer satisfaction. The surveys are not marketing tools but an information-gaining tool. Enough homework needs to be done before embarking on the actual survey. This includes:       Defining Objectives of the survey Design Survey Approach Develop Questionnaires and forms Administer survey (email, telephone, or post) Method of Compiling data and analysing the findings Format of the Report to present the findings

There is no point in asking irrelevant questions on a customer satisfaction questionnaire. The basic purpose is to find out what we are doing right or wrong, where is the scope for improvement, where do we stand vis-à-vis other suppliers, how can we serve the customer better? A Customer satisfaction Measurement Survey should at least identify the following objectives    Importance to Customers (Customers' Priorities). Customers' perception of supplier's performance. Your performance relative to customers' priorities. Priorities for Improvement.

Survey forms should be easy to fill out with minimum amount of time and efforts on customer's part. They should be designed to actively encourage the customer to complete the questions. Yet they must provide accurate data to monitor improvements in the supplier's performance. The data should also be sufficiently reliable for management decision-making. This can be achieved by incorporating 'objective' type questions where customer has to 'rate' on scale of say, 1 to 10. For repeated surveys, you could provide the rating that was previously accorded by the

customer. This works like a reference point for the customer. Space should always be provided for the customer's own opinions. This enables them to state any additional requirements or report any shortcomings that are not covered by the objective questions. Normally, we deal various personnel at various levels in the customer's organizationthe buyer, user, receiving inspector, finance and purchase persons etc. Surveying a number of respondents for each customer gives a complete perspective of customer satisfaction. It may be necessary to device a different questionnaire for each of them. Respondents must be provided a way to express the importance they attach to various survey parameters. Respondents should be asked to give a weighting factor, again on a rating scale of say, 1 to 10, for each requirement. This gives a better indication of relative importance of each parameter towards overall customer satisfaction and makes it easier for suppliers to prioritize their action plans by comparing the Performance Rating (Scores) with Importance Rating (Weighting). The questions are grouped together in a common parameter such as Product Quality, Delivery Performance, or Field Sales Performance. A typical examples can be: Survey Parameter - Product Performance Questions: Provide rating on a scale of 1 - 10 on the following: - Consistency of Product Quality. - Technical Performance of Product. - Suppliers Quality Systems. - Overall performance of the Product. Survey Parameter - Competitor Performance Questions: Rate our performance on a scale of 1 - 10, as compared to your best vendor - Adherence to Delivery schedule - Quality of product - Cost of product It is often found that there is a dismal response from the customers. A recent study showed that only 15% of the customers to whom customer satisfaction surveys were sent gave a feedback. One of the reasons for this could be a poorly conceived survey. Defining a simple survey having less number of descriptive questions and more of objective type can increase the feedback rate. Electronic mailing of survey questionnaire is a very good option as the customer can fill out the questionnaire quickly rather than sitting with the suppliers representative disturbing his busy schedule. This can - where necessary - be backed up by a gentle reminder or a personal visit. Top Analysis The customer's requirements must be translated and quantified into measurable targets. This provides an easy way to monitor improvements, and deciding upon the attributes that need to be concentrated on in order to improve customer satisfaction. We can recognize where we need to make changes to create improvements and determine if these changes, after implemented, have led to increased customer satisfaction. Two major factors that can be determined from the survey data are: 1. Performance Matrix (Your performance relative to customers priorities) and

2. Satisfaction Index (Customers Satisfaction over a period of time). Performance Matrix: The average of the weightings and the scores given by the customer for each parameter is plotted on a Scatter graph. This Graphical representation is easy to understand without any great knowledge of statistics. With the data obtained, the average Weighting (importance) on x-axis Vs average Scores (performance) on y-axis can be plotted for each parameter. From this Scatter Plot the supplier can find out at a glance, the areas where there is scope for improvement, highlighted, where possible by using the Traffic Signal analogy.
High Weighting, High Score On Target

High Weighting, Low Score Underperformance Low Weighting, High Score Overkill Low Weighting, Low Score Supplier can afford to score low in that area Performance Matrix

Satisfaction Index (CSI) The Customer Satisfaction Index represents the overall satisfaction level of that customer as one number, usually as a percentage. Plotting this Satisfaction Index of the customer against a time scale shows exactly how well the supplier is accomplishing the task of customer satisfaction over a period of time. Since the survey feedback comes from many respondents in one organization, the bias due to individual perception needs to be accounted for. This can be achieved by calculating the Satisfaction Index using an importance weighting based on an average of 1.

Calculate the average of all the weightings given by the customer. Divide the individual weightings by this average to arrive at the weighting on the basis of average of 1. Customer's higher priorities are weighted more than 1 and lower priorities less than 1. The average of the Customers Importance Scores are calculated and each individual score is expressed as a factor of that average. To understand the calculations consider following example: The following table shows the Weightings & Scores assigned on a scale of 1 - 10 by the Customer.
Parameter P P1 P2 P3 P4 P5 Weighting A 7 5 9 3 6 Average = 6.00 Score B 8 4 8 3 4 Average = 5.40 Weighting (avg. of 1) C 1.17 0.83 1.50 0.50 1.00 Weighting (avg. of 1) * Score D = B *C 9.24 3.33 12.00 1.50 4.00 CSI = 6.01

A = Average Weighting assigned by all respondents for each parameter B = Average Score assigned by all respondents for each parameter Avg. Weighting = (7 + 5 + 9 + 3 + 6) / 5 = 6 C = Weighting based on avg. of 1 = Individual Weighting / avg. Weighting D = Weighted Score = Score * Average Weighting = B * C Satisfaction Index CSI = Average of (Weighted Scores) CSI = (9.24 + 3.33 + 12 + 1.5 + 4.0) / 5 = 6.01 Since the scale used was 1 - 10, CSI = 60.10%
Parameterwise Satisfaction Index plotted over Time

Thus Customer Satisfaction can be expressed as a single number that tells the supplier where he stands today and an Improvement plan can be chalked out to further improve his performance so as to get a loyal customer. Top Conclusions It is far less costly to keep existing customers than to win new ones. Loyal customers buy more products and help bring in more business by recommending your product to others. So if customer loyalty is the goal, then the supplier's efforts should begin with the knowledge of what constitutes value to his customers and the market. A supplier should always keep on improving so as to achieve a greater profitability. This can be achieved by knowing the market well, i.e. understanding exactly what the customer wants. By discovering what the customer wants, the supplier can begin to understand how his products and services provide value for his customers. A simple tool is to take customer satisfaction surveys and analyze the customer feedback. This gives the supplier an insight on where he lacks in delivering his products or services and where is the scope of improvement. References: 1. Handbook of Customer Satisfaction Measurement / Nigel Hill. ISBN 0-56607766-3. 2. What Do Customers Value? - Bob Gardner (Quality Progress - November 2001)

3. Various discussions on Customer Satisfaction on Marc Smith's Elsmar Cove
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