Service Level Quality- standards, measures,

monitoring and enhancing: An Overview

Submitted By
Mr. CHIRAG AJIT PATIL
HPGD/OC18/0481
SPECIALIZATION: OPERATIONS

WELINGKAR INSTITUTE OF MANAGEMENT DEVELOPMENT &

RESEARCH
Year of Submission: Oct, 2020

1
 ACKNOWLEGEMENTS

“It is not possible to prepare a project report without the assistance

and encouragement of other people. This one is certainly no exception.”

The success of this final report is the outcome of the valuable

suggestions provided by the concerned without whom the report could not
be completed. I would like to express my sincere gratitude to my Institute
for giving me an opportunity to do this project work and also providing me
the valuable inputs for preparing the final report.

I am thankful to my sister who is the staff of HDFC bank for helping

me in completion of this project and providing me with some customer
feedback forms which helped me in understanding the concept of service
quality.

Last but not least, I would like to thank my parents who supported
and encouraged me at each step of my project work. I admit that co-
operation and morality are keywords to success.

(Chirag Ajit Patil)

Place: Mumbai

Date: Oct, 2020

 APPENDIX – I

CERTIFICATE FROM THE GUIDE

This is to certify that the Project work titled Service level Quality- standards,
measures, monitoring and enhancing: an overview is a confide work carried out by
Mr,Chirag Ajit Patil Admission No. HPGD/OC18/0481, a candidate for the Post
Graduate Diploma examination of the Welingkar Institute of Management under my
guidance and direction.

SIGNATURE OF GUIDE: Due to Covid-19 unable to

get the stamp.

Place: Mumbai

Date: Oct, 2020

 UNDERTAKING BY CANDIDATE

I declare that project work entitled Service level Quality- standards, measures,
monitoring and enhancing: an overview is my own work conducted as part of my
syllabus.

I further declare that project work presented has been prepared personally by me and it
is not sourced from any outside agency. I understand that, any such malpractice will
have very serious consequence and my admission to the program will be cancelled
without any refund of fees. I am also aware that, I may face legal action, if I follow such
malpractice.

Signature of Candidate
Chirag Patil
 INDEX

PART-I

1. INTRODUCTION TO SERVICE QUALITY

2. OBJECTIVES OF SERVICE QUALITY
3. FACTORS INFLUENCING CUSTOMER SATISFACTION AND CUSTOMER LOYALTY
4. CUSTOMER RETENTION THROUGH QUALITY IMPROVEMENT
5. DEFINING SERVICE QUALITY
6. SERVICE QUALITY DIMENSIONS
7. MEASURING SERVICE QUALITY USING SERQUAL
8. THE GAPS MODEL OF SERVICE QUALITY
9. THE SERVICE-PROFIT CHAIN
10. SETTING QUALITY STANDARDS
11. DELIVERY OF HIGH QUALITY SERVICE
12. RESEARCHING SERVICE QUALITY CONTENTS

PART-II
13. SERVICE QUALITY OF HDFC BANK
14. INTRODUCTION TO BANKING
15. COMPANY PROFILE
16. SERVICE QUALITY
17. LITERATURE REVIEW
18. RESEARCH METHODOLOGY
19. LIMITATION OF THE STUDY
20. DATA ANALYSIS AND INTERPRETATION
21. CONCLUSION
22. RECOMMENDATION
 INTRODUCTION TO SERVICE QUALITY

It is a combination of two words, Service and Quality where we find emphasis on the availability
of quality services to the ultimate users. The term quality focuses on standard or specification
that a service generating organization promises. We can’t have a clear-cut boundary for quality.
Scientific inventions and innovations make the ways for the generation of quality. More
frequency in innovations, less gap in the process of quality up-gradation.

Like the goods manufacturing organizations even the service generating organizations are
found instrumental in promoting research and devising something new that makes the services,
schemes distinct to the competitors and creates profitable market opportunities to capitalize on.
It is against this background that in the developed countries, the process of innovation is found
more frequent.

The created quality shapes the boundary of expectations since the users tasting the sweetness,
of world-class services expect the same from other organizations. The expectations pave the
avenues for satisfaction or dissatisfaction. If we succeed in fulfilling the expectations of users,
they are found satisfied and the satisfaction makes the ways for increasing the market share.

It is right to mention that the service quality satisfaction is the outcome of the resources and
activities expanded to offer service against the expectations of users from the same. It is also
opined that the service quality can be broken into technical quality and functional quality.

For the purpose of improving the levels of the quality of services that we offer. The service
generating organizations are required to identify the reasons entailed behind mounting
dissatisfaction amongst the users and to activate appropriate measures (technical or functional)
to minimize it.

The technical measures draw our attention on the inventions and innovations in the field of
technologies that help to improve the quality of services. It focuses on the use of technology or
prefer to have a technology-driven service.
The functional measures gravitate our attention on improving the quality of services offered by
the employees, which pave ways for style of functioning, work culture, formulation of a profitable
package, behavioral profile of employees or so.

The frequency in the process of technological innovations vis-a-vis the growing influence of
high-performer employees develop technology-driven and user-friendly service with a new
quality.

The functional quality of employees can be improved by strong emphasis on behavioural areas
such as attitudes, service-mindedness, accessibility, interpersonal relations, appearance, and
commitment. It is right to say that poor quality of services or service failures are not designed
into the system by the choice of the senior management.

The aforesaid facts make it clear that the perception of service quality keeps on changing and
the governing factors are use of new generation of technologies, development of quality people
and an attitudinal change in the boardrooms.

The top management and the senior executives bear the responsibility of shaping the
perception of service quality by promoting the use of sophisticated technologies and increasing
the number of personally- committed employees. This makes it essential that the service
generating organizations prefer to practise the principle of making things happen which focuses
on quality generation.
 OBJECTIVES OF SERVICE QUALITY

The subject of service quality has aroused considerable recent interest among business people
and academics. Of course, buyers have always been concerned with quality, but the increasing
competitive market for many services has led consumers to become more selective in the
services they choose. Conceptualizing the quality for services is more complex than for goods.
Because of the absence of tangible manifestations, measuring service quality can be difficult but
there are possible research approaches.

Understanding just what dimensions of quality are of importance to customers is not always
easy in their evaluation process. It is not sufficient for companies to set quality standards in
accordance with misguided assumptions of customers expectations. A further problem in
defining service quality lies in the importance which customers often attach to the quality if the
service provider is distinct from its service offers – the two cannot be separated as readily as in
the case of goods.

Factors influencing Customer Satisfaction and Customer Loyalty

Customers of the organization are those who buy the products or services provided by the
organization. In other words, customers are stakeholders of the organization who afford
payment in exchange for the offer provided to them by the organization with the aim of fulfilling a
need and to maximize satisfaction. Sometimes the term customer and consumer are confusing.
A customer can be a consumer, but a consumer is a customer is not necessary.

The success of the organization depends on the satisfaction of its customers. For a successful
organization, customers come always ‘first’ and then the profit. An organization, which is
successful in satisfying its customers, remains in the top position in the market. The
organization, which considers the customer satisfaction as the key component in its marketing
strategy, expands its market value and market base. Customer satisfaction is a measure of how
products and services of the organization meet customer expectation. If the product or service
performance falls short of the expectations, the customer is dissatisfied. On the other hand, if
performance matches expectation, the customer is satisfied. If performance exceeds
expectations, the customer is highly satisfied which is generally referred to as customer delight.

Customer satisfaction is not a matter of morals but of common sense. If customers are not
satisfied, they find another organization which satisfies their needs, and what satisfy a customer
is the quality of the products and services. Hence, it is essential that the organization develops a
relationship with all its customers to ensure that they feel that their needs are important to the
organization and are being met. After all, a satisfied customer becomes a loyal customer.

Customer satisfaction is a term which needs considerable attention and interest of the
organization because of its importance as a key element of the organizational strategy, and goal
for the organizational activities especially in the present day competitive environment. Customer
satisfaction is fulfilling of the customers needs and their goal is met when the products and the
services of the organization is providing a pleasurable level of fulfillment and emotional
response. Satisfaction of the customers with the products and services of the organization is
considered as the most important factor leading towards the competitiveness and success of
the organization. It is critical for the organization, as it has an impact on the profits.

Customer satisfaction is defined as the customer’s response to the evaluation of the perceived
discrepancy between prior expectations and the actual performance of the products or services
after their consumption. The satisfaction is in relation to the customer’s feelings of pleasure or
disappointment which results from comparing the product’s perceived performance or outcome
with the expectations. In addition, the satisfaction is the pleasure derived by the customer from
the consumption of the products and or services offered by the organization. It indicates the
state of being happy with the organization.

It is an important factor for the organization to understand the satisfying of the customers about
what they need and want. Pleasurable means that fulfillment increases pleasure or reduces
annoyance or anxiety. Fulfillment is determined by the customers expectations. Moreover, if the
perceived performance of the products and services does not meet customer expectations, the
likely result is dissatisfaction. The level of satisfaction or dissatisfaction is reflected from
perceptions and attitudes from previous experiences, and can also influence the purchase
intentions of the customers.

Customer satisfaction is actually how customer evaluates the ongoing performance of the
organization. It is the customer’s reaction to the state of satisfaction, and customer’s judgment
of satisfaction level. The ability of the organization to create high degree of satisfaction is crucial
for product differentiation and developing strong relationship with customers. Customer
satisfaction is very important in the present day competitive environment.

Customer satisfaction makes the customers loyal to the organization. It helps the organization to
build long and profitable relationships with their customers. Though it is expensive to generate
satisfied and loyal customers but that proves profitable in a long run for the organization. Hence,
it is in the interest of the organization that it concentrates on the improvement of the quality of
the products and services and charge appropriate fair price in order to satisfy the customers
which ultimately helps in retaining the customers.

It is a normal phenomenon that the products and services offered by the organization and the
price it charges actually determine the level of satisfaction among its customers, than any other
measure. Customer’s involvement is also important as when a customer considers the product
important and invests time to seek information then it ultimately enhances the satisfaction
level. Customer satisfaction is a significant element in the marketing of the products and
services for the organization since understanding and satisfying customers’ needs and wants
can cause increased market share from repeat purchases and referrals. Overall contentment felt
by the customer results from the ability of the product and service to fulfill the customer’s
desires, expectations and needs in relation to the product and service.

Customer satisfaction is rated highly as a strategic end in and of itself, as it affects customer
retention and organizational profits directly. The satisfaction can influence the organization by
repurchase, purchase of more products, positive word of mouth by sharing of the positive
experiences with others, and willingness of customer to pay more for the organizational
products and services. The organization is likely to lose market share and customers besides
getting bad publicity, if it fails to satisfy customers as effectively and efficiently as its competitors
are doing.
There is a positive correlation between quality and customer satisfaction. Satisfied customers
are bound to come back if they are impressed by the product and service the first time round. In
fact they are bound to spread the word round by telling their friends and relatives about the
particular product or service which has impressed them thus realization of accumulation of many
customers and in the long run customer satisfaction. For this reason, it is important for the
organization to spend more resources to nurture and sustain customer loyalty by increasing the
number of satisfied customers.

In the present day environment, customer satisfaction has assumed greater importance than
before. The globalization of competition, saturation of markets, and development of information
technology have enhanced customer awareness and created a situation where long-term
success is no longer achieved through optimized product price and qualities. Instead, the
organization is to build its success on a long-term customer relationship. It can cost as much as
six times more to win a new customer than it does to keep an existing one. Also, it is possible
for the organization to increase profit substantially, if it is successful in reducing the migration of
its customers. The increase and retention of loyal customers has become a key factor for the
organization for its long-term success.

However, as the organization management tries to implement the concept of customer

satisfaction or retention of the customer in the organization, employees working with customers
are to regard customer satisfaction as the goal and objective of the organization. The
employees interacting with customers are in a position either to increase customer satisfaction,
or put it at a risk. Employees in such positions are hence to have the skills to respond effectively
and efficiently to the customer needs.

Customer satisfaction brings many benefits. Satisfied customers are not price sensitive, buy
additional products, are less influenced by competitors, and stay longer with the organization.
Although customer satisfaction is important, it is not necessary for the organization that all the
customers are equally satisfied. There can be many customers whose satisfaction is less
important, such as those the organization is not able to serve or who are not profitable. On the
other hand, there are customers whose satisfaction is crucial for the survival of the organization,
and hence the goal is always to be to satisfy these customers.

The organization is to be aware of how well or badly its customers are treated. It is quite often
that the customers rarely complain, and when someone does, it is generally too late to retain
that customer. One important component in the concept of satisfaction is the complaint
management. It has been found that encouraging customers to complain has increased their
satisfaction, and this has especially in the case of the most dissatisfied customers. The
complaint management not only results in customer satisfaction, but also leads operational
improvement and improved financial performance for the organization.

In order to effectively gain an advantage over competitors, customer satisfaction is to be

measured and evaluated regularly. Identification and measurement of the factors affecting
satisfaction level are relevant due to the fluctuating nature of the highly competitive market. With
insight on consumer satisfaction levels, the organization is in a position to maintain the growth
and gain a larger market share in comparison to its competitors.
 Customer loyalty

Customer satisfaction and loyalty represent a top priority of the organizational success and
profit. Satisfaction does not automatically lead to loyalty it needs a step by step process. Steps
are described as customers going through different phases such as awareness, exploration,
expansion, commitment, and dissolution. Customer loyalty can be considered to be a by-product
of customer satisfaction. The satisfaction of organizational customer leads to customer loyalty.
Customer loyalty increases significantly when satisfaction accomplishes a certain level and at
the same time customer loyalty declines automatically if the satisfaction level drops to a certain
point. Moreover, highly satisfied customers are tending to be more loyal than the customers who
are merely satisfied. Overall, it is clear that there is a significant positive relationship between
customer satisfaction and customer loyalty. Customer loyalty leads to an increase in both sales
and profitability.

It is worth noting that customer satisfaction is not the only one in building relationship strength
but environmental factors such as market concentration can also affect the longevity of the
relationship. Hence, in the present day environment, there is an increasing interest in
relationship strategies where the focus is evidently on building customer satisfaction and loyalty.
Further, the priority goal of the organization is profitability and one way to achieve this is to gain
and maintain loyal customers. If the organization invests resources to enhance customer loyalty
without focusing on profitability, it can lead to failure in the long run.

Customer loyalty, the main consequence of customer satisfaction, has been defined and
measured in many various ways. In one of the definition, the customer loyalty is defined as a
deeply held guarantee to re-buy or re-patronize a favoured product or service consistently in the
future, despite issue influences and marketing efficiency having the potential to cause changing
behaviors. In another definition, the customer loyalty is the relationship a customer maintains
with the seller after the first transaction. Customer loyalty is also considered to be the general
feeling of satisfaction felt by a customer as a result of purchase encounters and it need not be
based on previous transactional experience.

Customer loyalty becomes important the organization when it results in purchase behaviour.
Firstly, it is much less expensive to retain current customer than it is to seek new ones.
Secondly, loyal customers are more likely to mention past service experiences positively than
non-loyal customers, creating a potential for word-of-mouth advertising at no extra cost to the
organization. Lastly, it secures the relationship between customer and service provider which
means loyal customers spend more time and money with the organization.

The development of the customer loyalty has four-phases namely :

(i) cognitive loyalty which means that the product attribute information valuable to the
consumer intimates that one product is preferable to its alternatives,
(ii) affective loyalty which means that a liking or positive attitudes toward the brand has
developed on the basis of cumulatively satisfying usage occasions,
(iii) conative loyalty (behavioural intension) which means that the customer’s expressed
future buying intension, and
(iv) action loyalty which means the motivated intensions in the previous loyalty states is
converted into actions.
Customer loyalty has several distinct dimensions. The forerunner of customer loyalty is
customer satisfaction, and the consequence of customer loyalty is the organizational
performance. Using this perspective, customer loyalty is perceived as future intention-to-
repurchase and commitment which reflects the cognitive and satisfaction associated with
loyalty.

The relationship between customer satisfaction and loyalty is shown in Fig 1.

Fig 1 Relationship between customer satisfaction and loyalty

Factors affecting customer satisfaction

Customer satisfaction is very important for the organization since it is a vital consideration to
create and keep a competitive advantage in the present day competitive environment. There are
some well establish determinants which influences the customer satisfaction such as
expectations, disconfirmation of expectations, performance, affect, and equity.

Customers are said to be satisfied when actual performance outcome exceeds expectation
(positive disconfirmation), and dissatisfaction arises when expectation exceeds performance
outcome (negative disconfirmation). As the assessment of satisfaction is expected to be based
on a wide areas of matters, there can be possibly numerous factors of customer satisfaction as
the extent underlying satisfaction measurements are inclusive rather than precise.
Further, there can be variations in the purchasing criteria among various customers consisting
of diverse groups. Some customers can treat reliability and the product brand loyalty to be key
factors, while some other customers can treat organizational image and quality as vital. In
addition, the frequency, reliability, convenience and responsiveness are service quality variables
which are considered important in customer satisfaction. Quality is normally considered as
consistently doing the right first time. It is a complex process to measure consumer perception
of service quality.

Customer behaviour refers to the selection, purchase, and consumption of products and
services for the fulfillment of the customer requirements. There are different phases involved in
customer behaviour. Initially, the customer finds the needs and then goes for the selection and
budgets the commodities and takes the decision to purchase. Product quality, price, service,
customer emotion, personal factors, situational factors, a perception of equity or fairness,
product features are some of the factors which influence the customer satisfaction. On the other
hand, several factors like mentioned in the Fig 2 influence the purchasing behaviour of the
customer.

Fig 2 Factors influencing the purchasing behaviour of the customer

Customer satisfaction is measurable, but it is dynamic and can evolve over time and it is
influenced by a variety of factors. There are a large number of factors which can have influence
on the customer satisfaction. Also, the quality of the products and services and the marketplace
has storing relationship to the customer satisfaction. Some of the factors which are considered
very important in general perspective and which can impact positively or negatively on customer
satisfaction are described below.
Factors which impact on customer satisfaction can be divided into two broad categories
namely :

(i) supplier behaviour, and

(ii) supplier’s product and service performance.

Supplier behaviour includes how the management and employees of supplier behave with the
customers. Factors indicate supplier’s response, service and compliant handling are dependent
on the attitude and skills of the supplier’s human resource. The supplier behaviour belongs to
the product itself that depends on the capabilities of the supplier and the skills of its employees.
It shows the engineering and technology developed or acquired by the supplier.

There are some aspects of products and services which worry a customer. For example,
efficiency and performance can affect customer satisfaction in a way that if a product is having a
defect which cause break downs during its use or it requires expert attention more frequently
and hence it can create a kind of irritation for the customer apart from the financial loss.

Some of the common factors (both human and product related) which can impact on
customer satisfaction are given in Fig 3.
Fig 3 Customer satisfaction influencing factors

Customer satisfaction is influenced both by the human related factors consisting of

(i) response,
(ii) service,
(iii) commitment adherence,
(iv) complaint management system,
(v) customer importance,
(vi) orientation, and attitude and the product related factors consisting of –
(i) performance,
(ii) efficiency
(iii) management requirement,
(iv) life span,
(v) price,
(vi) appearance,
(vii) customer friendly features,
(viii) quality,
(ix) technology, and
(x) trouble free operation.

Customer satisfaction is generally altered by perceived value. Even satisfied customers are
unlikely to be as a customer in for a long time if they feel that they are not getting the best value
for the money they are spending. The perceived value directly affect satisfaction due to the
perception of the utility received. Perceived value is conceived as the consumer’s evaluation of
the utility of perceived benefits and perceived sacrifices.

Another set of influencing factors for the customer satisfaction include

(i) previous experience,

(ii) personal recommendation,
(iii) personal needs,
(iv) marketing communications, and
(v) level of the involvement in the purchase.

Various studies have shown that customer satisfaction depends upon expectations and
expectations shape satisfaction, so these studies explain these factors which ultimately impact
on customer satisfaction.

The above mentioned five factors are the key factors which influence a customer expectations.
It also suggests that most important of these factors are the customers past experience of the
services and what other people say about it. It is revealed that satisfaction is very high when
information content of the market communications is enriched and when the customers
knowledge of the product is enhanced by the communication.
Efficiency and fulfillment is closely linked with the service quality. Hence, for efficiency and
fulfillment the service quality is needed to be analyzed from different aspects. Such an analysis
normally indicates that the requirement fulfillment has relatively great effect on the customer
satisfaction. Efficiency and fulfillment both have positive effects on the customer satisfaction.

Saying about customer satisfaction with respect to quality, it has been expressed as whether it
is products or services, depends upon the service quality customers require and what has been
promised with them to deliver to. Without a doubt, the customer’s overall satisfaction with a
particular level of service and perceptions of service quality are interrelated and in many cases
highly correlated.

Normally, it is not possible for an organization to be able to put all appropriate features in the
products and services. There are always being some positive and negative features in the
product and human behaviour which can affect customer satisfaction. The higher the positive
feeling, the more satisfied a customer feels. The organization is required to figure it out to
increase this positive feeling. It is to identify the factors generating positive feelings and make a
strong attempt to strengthen them. At the same time, it is also to look for the negative factors
and try to eliminate them in order to enhance customer satisfaction.

The factors which satisfy the customers or the factors which impact the customer satisfaction
strongly are not easy to predict. It is, thus, necessary to target some customers and then work
out factors which seem important and address them appropriately.
 CUSTOMER RETENTION THROUGH QUALITY IMPROVEMENT:

The focus of the modern marketers has shifted away from a one-time sale to making repeated
sales to the same customer. Increasing attention is being paid to medium and long term
perspectives, rather than just the short-term perspective. This has been a major revolution in
thinking in the field of marketing.

Customer retention usually pays dividends by way of:

Lifetime value of the customer. If the customer remains loyal to the company, naturally, the
repeated purchases represent a cumulative value which is quite substantial compared to any
single transaction.

Reduced costs. It costs much more to acquire a new customer than to retain an old customer.
Therefore, the focus of marketing has shifted away from the goal of mere customer acquisition
to customer retention in order to substantially reduce marketing costs. Benefit from wider
opportunities to market more products and services to customers who are already loyal to you.
The key differentiator between customer retention is customer satisfaction. Satisfaction results
when the customer feels that the value of a service received by him is substantially higher than
the price he paid for acquiring the service. Customer satisfaction can be largely attributed to the
quality of the service or product. Thus, delivery of high quality service is crucial to the high
service value perception. When the major marketing goal of a company is customer retention,
the quality of service delivery is, undeniably, the key differentiator.
 DEFINING SERVICE QUALITY

Quality is an extremely difficult concept to define in a few words. At its most basic, quality has
been defined as conforming to requirements .This implies that organizations must establish
requirements and specifications; once established, the quality goal of the various function of an
organization is to comply strictly with these specifications.

There are two principals for Service Quality-

Technical quality refers to the relatively quantifiable aspects of a service which consumers
receive in their interactions with a service firm. Because it can easily be measured by both
customer and supplier, it forms an important basis for judging service quality.

Examples of technical quality include the waiting time at a supermarket checkout and the
reliability of train services. This, however, is not the only element that makes up perceived
service quality. Because services involve direct consumer-producer interaction, consumers are
also influenced by how the technical quality is delivered to them.

Functional quality cannot be measured as objectively as the elements of technical quality. In

the case of the queue at a supermarket checkout, functional quality is influenced by such factors
as the environment in which queuing takes place and consumers perceptions of the manner in
which queues are handled by the supermarket’s staff. An important role for a service firm’s
corporate image in defining customers’ perception of quality, with corporate image being based
on both technical and functional quality.

Service quality is a highly abstract construct, in contrast to goods where technical aspects of
quality predominate. Many conceptualizations of service quality therefore begin by addressing
the abstract expectations that consumers hold in respect of quality.

Consumers subsequently judge service quality as the extent to which perceived service delivery
matches up to these initial expectations. In this way, a service which is perceived as being of
mediocre standard may be considered of high quality when compared against low expectations,
but of low quality when assessed against high expectations.

Analysis of service quality is complicated by the fact that production and consumption of a
service generally occur simultaneously, with the process of service production often being just
as important as the service outcomes.
eg- If a buyer of manufactured goods only encounters the traditional marketing mix variables of
a manufacturer, i.e. the product, its price, its distribution and how these are communicated to
him or her. Usually production process are unseen by consumers and therefore cannot be used
as a basis for quality assessment. By contrast, service inseparability results in the production
process being an important basis for assessing quality.

A further problem in understanding and managing service quality flows from the intangibility,
variability and inseparability of most services which results in a series of unique buyer-seller
exchanges with no two services being provided in exactly the same way. It has been noted that
intangibility and perceived risk ness affects expectations, and in one study of a long-distance
phone service, a bookstore and a pizza shop service, it was concluded that intangibility had
some role in service quality expectations. Managing customers’ expectations can be facilitated
by means of managing the risks a consumer perceives when buying a particular service.
 SERVICE QUALITY DIMENSIONS

Service quality is a perception of the customer. Customers, however, form opinions about
service quality not just from a single reference but from a host of contributing factors. Service
marketers need to understand all the dimensions used by customers to evaluate service quality.

There are eight dimensions of service quality applicable to both goods and services.

1) Performance
2) Features
3) Reliability
4) Conformance
5) Durability
6) Serviceability
7) Aesthetics
8) Perceived quality or prestige.

Important one's are discussed below-

a. Reliability:

This dimension is have the highest influence on the customer perception of quality. It is the
ability to perform the promised service dependably and accurately.

Example- Sahara Airlines, a domestic air carrier within India, has been striving to protect
itself as a reliable airline. It hopes to differentiate itself from other airlines Indian Airlines. To
protect this reliability, Sahara Airways has a scheme of full refund plus a coupon of Rs
3,000 to every passenger on delay of flights by more than 59 minutes.When service delivery
fails the first time, a service provider may get a second chance to provide the same service
in the phase called ‘Recovery’. The expectations of the customer are usually higher during
the recovery phase than before because of the initial failure. Thus, the service provider is
likely to come under greater scrutiny, thereby increasing the possibility of customer
dissatisfaction. The reliability dimension, which ensures timely delivery time after time, helps
the service provider to meet the customer expectations fully at the lowest level of service
expectation.

b. Responsiveness:

It is the willingness of the service firm’s staff to help customers and to provide them with
prompt service. The customers may have queries, special requests, complaints, etc. In fact,
each customer may have problems of his or her own. While the front-end employee may
have been trained or equipped to deliver standardized services, the customers want them to
go beyond this limit. It is the willingness to help the customer or willingness to go that extra
distance that is responsiveness.
Example: A customer calls room service to find out if they would pack a Jain lunch.
It is not the hotel’s normal policy to cook such specialty and customized meals. However,
the customer being very religious minded would be very pleased if the hotel could pack it for
him to carry and eat. This may impose some strain on the kitchen. However, the hotel may
be rewarded in two different ways if it agreed to provide the meal. The customer would be
very pleased with the service and is very likely to recommend the hotel to his friends and
acquaintances. In addition, the hotel could charge extra commensurate with the extra
efforts. He is unlikely to mind paying more.The second aspect of responsiveness is speedy
response to a customer request. When response is delayed customers usually loses
interest. Many sales representatives respond on the phone, ‘I will call you back’. The call is
never returned. The customer draws his or her own conclusion about the quality of service
he is likely to receive in the future.

c. Assurance:

It defined as the ability of the company to inspire trust and confidence in the service delivery.
It refers to knowledge and courtesy of the service firm’s employees and their ability to inspire
trust and confidence in the customer toward the company. This dimension is considered vital
for services that involve high risk as customers may not be able to evaluate all the
uncertainties involved in the process by them.

Example: Medical services requiring complex uncommon procedures, sales / purchase of

financial securities, investment issues, legal affairs, etc. demand this service quality
dimension. There are property developers/builders who provide a list of previous buyers of
flats or apartments to potential buyers. The evaluation of construction services is beyond
technical capabilities of most buyers. However, the prospective customers are free to call
the previous customers. When prospective customers hear from them about the company
and its satisfactory delivery, they feel assured and develop a more positive attitude towards
the company.

d. Empathy:

It refers to the caring, individualized attention the service firm provides each customer.
When service provider puts himself in the shoes of the customers, he may see the
customer’s viewpoint better. When customers feel that the provider is making his best effort
to see their viewpoint, it may be good enough for most.

Example: a lady customer with a young child arrives slightly late at the check-in counter and
requests the agent for a seat along the aisle and near the toilet. Even if all such seats have
already been taken up, the agent and the airline may make even effort to request another
passenger to exchange seats and meet the customer demand. The lady passenger would
be delighted if her request could be honored despite the last minute checking in, and even if
she does not get such a seat, she would be grateful for their effort.
e. Tangibles:

It refers to physical facilities, equipment, and appearance of a service firm’s employees. The job
of the tangible and physical evidence of a service is multifunctional. When a patient in the
waiting room of a clinic sees the doctor’s certificate, he becomes aware of the quality of service
he is about to receive. If a dental clinic provides patients with clean rubber footwear and freshly
laundered bibs or coats before the actual servic

e, the patients and their accompanying relatives or friends will be impressed. A dentist dressed
in a spotless white coat is likely to impress, them even further. Tangibles provide the customer
proof of the quality of service.

MEASURING SERVICE QUALITY:

When evaluating service quality, consumers examine five dimensions: tangibles, reliability,
responsiveness, assurance and empathy.

Using SERVQUAL to Measure Service Quality :

The SERVQUAL instrument was based on the premise that service quality is the difference
between customers’ expectations and their evaluation of the service they received.

The first part of the questionnaire asks customers to indicate the level of service they would
expect from a firm in a particular industry.
The second part of the questionnaire asks customers to evaluate the service performed by a
specific service firm.

Gap Theory is the method for calculating service quality that involves subtracting a
customer’s perceived level of service received from what was expected.

SERVQUAL uses 21 questions to measure the five dimensions of tangibles, reliability,

responsiveness, assurance and empathy. Through SERVQUAL, firms can measure customers’
evaluations of their service performance.
For example, if customers consistently give firm low scores for one dimension, such as
reliability, then the firm’s management can take steps to improve that particular dimension of
their service offering.

Problems with SERVQUAL:

Although SERVQUAL is an excellent instrument for measuring service quality, managers must
be aware of potential problems with the instrument, as well as with the gap theory methodology
on which it is based. An understanding of these problems may prevent service companies from
misinterpreting the results and developing inappropriate marketing plans.
 The SERVQUAL instrument has three potential problems:

First, SERVQUAL measures customers’ expectations of the ideal firm in a particular service
industry. This may or may not be relevant to the capabilities of a particular service firm or the set
of service firms available to a consumer.

For example, consumers may indicate that physicians should provide their services at the time
they promised. Seldom do patients see the doctor at the scheduled time. No one likes waiting
after their appointment time, yet, because of excess demand, patients will continue to wait.

The second problem with SERVQUAL is its generic nature. Since its not industry specific, it
does not measure variables that may be important for a particular industry.

For example, in the airline business, on-time arrival is a very important dimension to travelers,
but SERVQUAL does not measure travelers’ perceptions of this variable.

The third problem with SERVQUAL deals with the gap theory methodology used for measuring
the level of service quality. Measuring consumer expectations after a service has been provided
will bias consumers’ responses. If customers had a positive experience at Blockbuster, they will
tend to report lower scores for their expectations, so there is a measurable gap between what
they expected and the actual service they received.

Correct Use of Gap Theory:

Managers can use the gap theory methodology for measuring service quality performance if
precautions are taken to reduce the problems just discussed. If SERVQUAL is used, the
instrument should be modified to apply to the specific industry for which it is being used.
Additional variables should be added that are relevant and important to customers. When
interpreting the results, managers must remember that respondents are comparing their firm
with the ideal firm in the industry. To prevent biases from interfering with the gap scores,
consumer expectations should be measured prior to the service and service perceptions after
the service. Because consumers are affected by advertising and word-of-mouth
communications, the time between measuring expectations and measuring the quality of service
received should be relatively close.

THE GAPS MODEL OF SERVICE QUALITY:

The Customer Gap:

The difference between customer perceptions and expectations. Customer perceptions are
subjective assessment of actual service experience customer perceptions and customer
expectations play an important role in service marketing. Customer expectations are the
standards if or reference e point of performance against which service experiences are
compared, and often formulated in terms of what a customer believes should or will happen.
For example,
when you visit a fast-food restaurant you expect a certain level of service, one that is
considerably different from the level you would expect in an expensive restaurant.

The sources of customer expectations consist of marketer –controlled factors as well as factors
that the marketer has a limited ability to affect (innate personal needs, word-of-mouth
communications, competitive offerings).
In a perfect world, expectations and perceptions would be identical: customers would perceive
that they receive what they thought they would and should. In practice these concepts are often,
even usually, separated by some distance. Broadly, it is the goal of service marketing to bridge
this distance. The assumptions appears to be that services , if not identical to goods, are at
least similar enough in the consumers mind that that they are chosen and evaluated in the same
manner.

The gaps model is useful as it allows management to make an analytical assessment of the
cause of poor service quality. If the first gaps are great, the task of bridging the subsequent
gaps becomes greater, and indeed it could be said that in such circumstances quality service
can only be achieved by good luck rather than good management.

GAPs model of service quality.

Gap 1: Not knowing what Customers Expect:

Not knowing what customers expect is one of the root causes of not delivering to the customer
expectations gap 1 is the difference between customer expectations of the service and company
understanding of those expectations. Examples abound - foreign banks were right in thinking
that customer expectation in terms of ambience was not being met. So they brought in some
good ambience and more presentable executives and thought they had bridged the gap. But
what they did not understand was that the customer was taking note of the lack of ambience
because there was a wait when he was twiddling his thumbs and looking around for a place to
sit. In other words, he was really complaining about the lack of speed and ease of operations.
Result: Fancy ambience and higher cost attached to the same slow and indifferent service -
albeit by better looking personnel in better surrounds. Private sector banks understood the
problem a mite better
- but they too slipped up as business grew. They lost out on sustainability of the service promise.

Example:
A contractor using an electrical subcontractor for the first time may expect the subcontractor to
use a certain grade of wire conduit in all of their construction sites they subcontractor, however,
may think the contractor wants to use the lowest grade to keep the cost down. Unless the
contractor clearly delineates his expectations, he will probably be dissatisfied because the
subcontractor did not do what was expected.
The reverse may also occur. Management can provide a service they think customers expect
without conforming customer expectations. Although on the surface this sounds good because
customer expectations will probably be exceeded, there are two dangers. First, if customer
expectations are consistently exceeded, in time, these expectations will rise to meet the service
being provided.
Example: If customers do not expect their cars to be vacuumed and cleaned inside when the oil
is changed at Quik Lube, then at first they will be pleased with this extra touch. But the next time
they use Quik Lube, their expectations increase and after a few times of receiving this special
touch, it will become a permanent part of their expectations. Failure to vacuum and clean the
interior of the car will then result in a negative gap since the vacuuming and the cleaning of the
interior becomes something customers expected.
The second danger is that the firm may be spending money on providing services that the
customers do not expect or perhaps even care about, thus yielding a negative impact on profit.

Causes of Gap One:

No direct interactions with customers. When people with the authority and responsibility for
setting priorities do not fully understand customers’ service expectations, they may trigger a
chain of bad decisions and suboptimal resources allocations that result in perceptions of poor
service quality.

One example of displaced priorities stemming from an inaccurate understanding of customers’

expectations is spending far too much money on buildings and appearance of a company’s’
physical facilities when customers may be much more concerned with how convenient,
conventional and functional the facilities are. The service providers see themselves as
indifferent or superior to customers
.
This typically happens in government-run services such as railways or postal departments where
they would not want to know what customer desires.

• Unwillingness to ask customers about expectations: Service providers may think that they
know what is best for their customers. This is the patronizing attitude towards the customers. In
today’s changing organizations, the authority to make adjustments in service delivery is
delegated to empowered teams and front line people.
For example, when AT&T asked its long-distance operators to improve their service to
customers, the team identified key customer segments and conducted its own customer
research to determine expectations. Gap one was closed without involving management as it is
traditionally defined.

• Unprepared ness to address the expectations: The service provider may be aware of the
Shortfalls but may be unprepared to address the issue in the mistaken belief that the customers
may be tolerant or that the lapse is unlikely to loss of customer patronage. Another trend related
to Gap One involves current company strategies to retain customers and strengthen
relationships with them. The term relationship marketing is used to describe this approach,
which emphasizes strengthening the bonds with existing customers. When customers have
strong relationships with their customers, gap 1 is less likely to occur.

• Lack of market segmentation to understand the needs are such segment:

Market segmentation is the grouping of customers sharing similar requirements, expectations
and demographic or psychographic profiles. Segmentation is usually done to understand the
needs of customers more elaborately or distinctly. While segmentation has been used by
marketers for decades, it may be more critical today than any other time. Customers are no
longer satisfied by homogenous products and services for the mass market; now, more than
ever before, they seeking and buying services that fit their unique configuration of needs. If the
needs are not precisely understood due to lack of segmentation, quality perception is likely to be
poor.
Strategies for Reducing Gap One:
Service firms have four strategies available to them to reduce the size of gap one. These
strategies are:

1) Communicating with the customers

2) Conducting marketing research
3) Encouraging upward communication in the organization
4) Decreasing the number of layers of management.

By talking to customers, management will learn what buyers expect in terms of service quality
and how they feel about the service they received. Contact and communication between
customers and management is common in small business because the owner is often the
service operator.Buyer may not always be honest in their communication with management of
service firm. To ensure open, honest communication, service firm can use marketing research,
which can either be performed by third parties or, in case of large cooperation, by the marketing
department.

To be effective, the marketing research much focus on service quality issues and consumer
expectations of the service.For firms where management is separated from the customer
contact personnel, upward communication is vital in reducing the size of Gap One.
Service contact personnel must be encouraged to communicate with management in an open,
non threatening environment.

To be effective, upward communication must be requested by top management. Ideas for

improvement should not only be sought from service contact personnel, but employees should
be rewarded for productive ideas.As the layers of management increase, the chances of
management having a correct understanding of what customer want in terms of service quality
became more difficult. Many service firms, therefore, are seeking means to reduce the number
of management layers. For much small business, service quality is the major issue in the
selection of their telecommunications provider.

Formal and informal methods to capture information about customer expectations can be
developed through market research. Techniques involving a variety of traditional research
approaches must be used to stay close to the customer, among them customer visits, survey
research, complaint systems, and customer panels.

More innovative techniques such as quality function deployment, structured brainstorming, and
service quality gap analysis are often needed.Many marketers are achieving success with niche
marketing – targeting segments of customers and developing services and strategies that fit
their needs better than other companies’ offerings. Other marketers are embracing the concept
of mass customization – creating services for a large group of customers that can be
customized or appear to be customized through technological innovations.Technology affords
companies the ability to acquire and integrate vast quantities of data on customers that can be
used to build relationships. Frequent flyer travel programs conducted by airlines, car rental
companies, and hotels are among the most familiar programs of this type. Relationship
marketing is distinct from transactional marketing, the term used to describe the more
conventional emphasis on acquiring new customer rather than on retaining them. When
companies focus too much on attracting new customers, they may fail to understand the
changing needs and expectations of their current
customers.

Gap Two: Not Selecting the Right Service Designs Standards

Accurate perceptions of customers’ expectations are necessary, but not sufficient, for delivering
superior quality service. Another prerequisite is the presence of service designs and
performance standards that reflect those accurate perceptions. A recurring theme in service
companies is the difficulty executives, managers, and other policy-setters experience in
translating their understanding of customers’ expectations into service quality specifications.

Gap 2 is the difference between the company understanding of customer expectations and
development of customer driven service designs and standards. Customer driven standards are
different from the conventional performance standards the most services company establish in
that they are based on pivotal customer requirements that are visible to and are measured by
customers. They are operation standards set to correspond to customer expectations and
priorities rather than to company concerns such as productivity or efficiency.Example: In the
billing division in debit cards, companies charge a hefty interest rate on outstanding amounts.
They however fail to check with the department that handles inflow of payments and updating of
outstanding amounts. Often, a cheque is sent in on the due date and a statement with the
finance charge sent out on the same date. The customer is hopping mad as he has paid up on
due date, the debit card company claims that interest starts ticking on due date. Everyone has a
valid reason, but the situation is a mess.In many of these cases, one observes a reluctance to
tackle the problem head-on and a lack of commitment to providing quality service.

Causes of Gap Two:

1) Absence of customer-driven standards of service quality.

The standards for quality improvement or planning should be clearly those which are desired by
the customers rather than those set by only the service provider. Thus, the involvement of the
end user/ customer in the goal setting process is crucial to its success.

• Absence of formal quality control goals.

It is not enough to say that quantification is not possible and, therefore, formal goals cannot be
set for services delivery. Even subjective assessment may be vital in setting the standards.

• Vague or undefined service design.

The service design may have been running traditionally for a number of years without any
alterations, or it may have been borrowed form some other concept. Defining the service would
go a long way towards determining the standards of customer satisfaction. Poor service design
may also be a result of failure to connect service design to service positioning.

• Resource constraints.

A service firm may understand and even want to deliver services desired by the customers but
is unable to because of resource constraints.

Example, a local air conditioner dealer knows that customers want quick repairs. However,
demand for both services in springs and early summer will exceed the firm’s capacity to provide
the service. The no of technician available to repair AC is limited and the number of hours they
can work is limited. Because of personnel constraints these services cannot meet customer
expectations for quick service during the peak demand time

• Market Conditions.

The most competitive market condition impacting this gap is known as competitive parity, a
situation where competitors produce almost identical quality goods and services. To prevent a
competitor from capturing additional market share, companies often match a competitors
offering. In some cases, firms translate customer expectations into matching competitive
offerings rather than meeting the wants of their customers. If this is done there will be a gap
between what firms know customer expect and service pacifications, or what the firm actually
provides.

For example, an airline may know that passengers want more leg room in the airplane but they
do not translate this in service specification. They do not put the seats further apart since other
airlines are not doing it and to do so would reduce the potential passengers load. A second
market condition affecting gap two is monopoly markets such as cable television services,
utilities, and basic telephone services. Each operates with a virtual monopoly with no
competitors. These firms may understand certain needs and expectations of their patrons but
may not translate them to service specifications unless required to do so by a government
agency supervising them. Their rationale for permitting this situation may be that the cost of
meeting customer expectations is higher than the additional revenues that could be generated if
the change were made.

• Management Indifference.

Management may talk about providing high quality service, but in actual practice they may offer
only the minimum level of service that will suffice. The goal is not to provide customer
satisfaction but to avoid customer dissatisfaction. In the short run, this philosophy may succeed
and may even generate greater revenues because more customers can be served. But in the
long run, customers will switch to competitors who provide better service. Management
complacency is a problem in many corporate owned service facilities because of the pressure to
generate short term profits.

• Inadequate service leadership:

Perception of infeasibility to Inadequate management commitment.

Strategies for Reducing Gap Two:

To reduce the size of gap two, service firms must have the commitment of top management.
Many mission statements have references to the firm being committed to providing customers
with high level of service quality. However, in actual practice, firm often emphasis on cost
reduction, gross sales, and net profit rather than a high level of quality.

There are two reasons for the discrepancy between mission statements and actual practice.
First is the difficulty of measuring service and the ease of measuring costs, sales and profit.
Second the current reward system is often based on non-service criteria.
Most managers are promoted and rewarded for generating greater sales, increasing net profits,
reducing costs, not for enhancing service quality.
If service firms are going to get serious about providing high quality service, they must start with
a commitment by management. Not only must management be committed to providing a high
level of service, they must also set an example for their employees. Managers who talk service
but fail to deliver an example of good service are not committed.

Reduction of this gap requires setting service quality goals. These goals must be set with the
customer, the service contact provider and management in mind. Customer contact employees
must understand management’s perspective and the need to generate a profit. In exchange,
management must understand what is possible and what is not in terms of operations.
Service contact personnel can provide their supervisors with valuable input into the best
process for achieving service quality goals.To be effective, the goals must be customer
oriented. The service quality standards must be what customers want and desire. Including in
the goal setting process is advantageous to both management and service contact personnel.
Task standardization will also reduce the size of gap two. Standardization can be achieved
through hard technology (substituting machines or computers for people) or soft technology
(improving work methods). Both methods are designed to standardize the operation and provide
a uniform delivery of the service to customers, reducing the gap between management
perception of consumer expectations, and the translation of those expectations into service
quality specifications.Example: Hard technology can be used to completely replace the human
provider as in case of ATMs or it could be used to improve the consistency of service, as in the
case of the diagnostic computer used by auto mechanics and the automatic scrubbing
machines used by cleaning the service.

Example: The standardized employee training procedure used by McDonald’s, the prepackaged
tours offered by many travel agencies, and the buffet used by pizza Hut. By standardizing the
training McDonald’s strives to ensure that all employees use the same procedure in preparing
food for their customers. No matter where one buys a McDonalds hamburger, it will look and
taste the same. The same concept applies to prepackaged tours offered by travel agencies and
a lunch buffet offered by Pizza Hut.

Closing gap two by demonstrating strong leadership commitment and by setting by setting
customers’ performance standards—has a powerful positive impact on closing the customer
gap. Leadership plays a pivotal role in providing service excellence.
Strategic measurement systems are also necessary to close this gap. While company
measurement has historically been the bailiwick of finance and accounting, management
strategies now call for the addition of key marketing indicators in the overall measurement
program. To achieve competitive superiority in an era when satisfying a customer is a priority,
companies need measurement systems that incorporate and align measures of customer
perceptions and satisfaction with pivotal operational and performance indicators. Sam Walton of

Wal-Mart is hailed as a service leader worldwide. His service philosophy to spur on his people
and organization is as follows:

• Realize that customer service is the key.

• Design for comfort and convenience.
• Provide one-stop shopping.
• Customize
• Invert the organizational chart so that the customer is on the top and the management is at the
bottom.
• Empower the sales staff.
• Provide servant leadership - Wal-Mart's managers are servants to the needs of their
employees and customers.
• Recognize that the customer is always right.
While Sam Walton's philosophy may appear simplistic, it was his adherence to these very
principles that led to the soaring growth of Wal-Mart in the 1990's, when others were retrenching
and cutting down on costs.

Gap Three: Not Delivering to Service Standards

Gap 3 is the discrepancy between developments of customer driven service standards and
actual service performance by company employees. Even when guidelines exist for performing
services well and treating customers correctly, high quality service performance is not a
certainty.

Standards must be backed by appropriate resources (people, systems, technology) and also
must be supported to be effective —that is, employees must be measured and compensated on
the basis of performance along those standards. Thus, even when standards accurately reflect
customers’ expectations, if the company fails to provide support for them—if it does not
facilitate, encourage, and require their achievement—standards do no good. When the level of
service delivery performance falls short of the standards, it falls short of what customers expect
as well. Narrowing Gap 3, by ensuring that all the resources needed to achieve the standards
are in place reduce the gap.

Another problem associated with the bridging of provider gap 3 is that of dealing with
franchisees, agents, retailers and brokers. Because quality in service occurs at the moment of
truth i.e. at the point of interaction between the service provider and the customer, control over
the service encounter by the company is crucial, yet it is rarely possible. When one NIIT
franchisee falls short of set educational standards, it reflects on the company as a whole. When
food at one outlet of Birdy's , McDonald's or Croissants etc is below quality standards, the image
of the entire chain is tarnished. For this, the firm needs to develop systems to either control or
motivate these intermediaries to meet company goals.Primary causes of this gap are variable
and inseparable nature of services. Because most services are performed by people, the quality
of service is highly dependent upon well the service provider performs his or her job. If the
service contact personnel provide services as specified, customers are usually satisfied and
their expectations are met, if employees do not provide the service as specified in the service
specifications, customer expectations will not be met and customers will be dissatisfied.

Cause of Gap Three:

 Deficiencies in human resources policies.

 Ineffective Recruitment: The front-end employees involved in services delivery require
certain qualities that enable them to relate to and deal with customers. They require
training to achieve this.
 Role ambiguity and role conflict: these include employees who do not clearly understand
the role they are to play in the company, employees who feel in conflict between
customers and company management, the wrong employees.
 Poor employee-technology job fit
 Inappropriate evaluation and compensation systems
 Lack of empowerment, perceived control, and teamwork.
These factors all relate to the company’s human resource function, involving internal practices
such as recruitment, training, feedback, job design, motivation, and organizational structure.

• Failure to match supply and demand:

when demand for a particular service exceeds the supply capacity, the general tendency is to
shorten the process of the service delivery to speed up the process. Usually, in this case the
quality of the service delivered deteriorates.o Failure to smooth peaks and valleys of demando
Inappropriate customer mixo Over reliance on price to smooth demand.

• Customers not fulfilling roles:

The customer is as much involved in the process of services delivery as the service provider.
Therefore, training the customer to receive the service to derive maximum benefit is essentials.o
Customers lacking knowledge of their roles and responsibilities.o Customers negatively
impacting each other

• Lack of training to the franchisee’s staff:

Whenever service is provided by a franchisee in lieu of the service provider, the front-end
employees of the franchisee require elaborate training to be able to cope with the customer
demands in a standardized and pre-determined manner. Most service companies face and even
more formidable task: attaining service excellence and consistency in the presence of
intermediaries who represent them, interact with their customers, and yet are not under their
direct control. Among the intermediaries that play a central role in service delivery are retailers,
franchisees and dealers.

Strategies for Reducing Gap Three:

A common characteristic of successful service companies is teamwork. A feeling of teamwork is
created when employees see other employees and management as key members of the team.
The lowest-level employee must feel that management; from their immediate supervisor to the
CEO of the company, cares about them and that they are a critical part of the firm’s success.
There must be a spirit of cooperation, not competition, among employees. All of this is achieved
when every employee is involved in the company and committed to providing a high level of
service to customers, to the company, and to other employees.

For instance, Southwest Airlines is often cited as a service provider with excellent teamwork.
If employees are to provide the services according to the job specifications, there must be a fit
between employee skills and job requirements. Firms must hire individuals who have the ability
to perform the job. Once hired, management must be sure each employee has to do the tasks
according the company’s procedures.

Because of technology, many service firms are using machines, tools, and computers to assist
service workers in their job. To perform their job according to company standards, service
employees must have the proper equipment. The equipment needs to be in good condition and
the employees must have the knowledge and training to properly use the technology to enhance
the quality of their work. To diagnose problems with newer automobiles, computerized
diagnostic
equipment is essential. The quality of diagnosis is dependent upon the quality and condition of
the equipment and the ability of the service technician to operate it.

An important factor in reducing gap 3 is the concept of perceived employee control.

When employees are allowed some flexibility and control in the service process, morale is
enhanced, and there is a grater desire to perform the service properly. Flexibility and control
also allow service employees to modify the process to meet the particular needs and desires of
customers. In addition, by having control of the service encounter, the outcome of the service
will become more predictable.

The supervisory control system will have an impact on the size of gap 3. If service employees
are encouraged and rewarded for meeting job specifications, the likelihood of employees doing
the job according to the specifications increases. However, supervisors often tell employees to
follow the correct job specifications but reward or punish employees on other criteria, which is
called role conflict.

Control and flexibility mean service employees will not have to go to other employees and
managers with questions and for permission to modify the service to meet a customers’ unique
request. It is responsibility of the management to reduce the amount of conflict faced by their
service employees. Not only does reducing role conflict aid service employers in meeting the
needs of customers but it will increase job satisfaction, job morale and length of
employment.Role ambiguity refers to employees’ lack of information or understanding of their
job and job requirements. As role ambiguity increases job satisfaction decreases. It also
becomes difficult for employees to perform the necessary job specifications if they lack an
understanding of what these specifications are.

Management often mistakenly assumes employees understand their job when, in fact, service
contact personnel do not have clear understanding of goals and expectations. Although they
have been told what to do, they may not have been told how the service is to be performed.

To reduce role ambiguity, service firms must do the following:

 Provide frequent and clear downward communication from management on what is

expected and how the service is to be performed.
 Provide employees with constructive feedback to help them understand how the service
is to be performed and what management expects.
 Provide employees with product and service knowledge so they can perform their jobs
better.
 Train and retrain employees in the proper method of performing the service.
 Train service contact personnel
 Communicate effectively with customers, with supervisors, and with other employees.

Gap Four:

Mismatch Between Promises and Performance.

Gap Four is the difference between the service delivered to customers and the external
communications made about the service. Promises are made to consumers by a firm’s
advertising, sales promotions, and sales staff. These promises may be explicitly stated or they
may be implied. If the firm does not provide the service that is promised, there is a gap between
what customers expect and the service received.As consumer expectations for a service
increase, the profitability of patronizing the firm will also increase. To increase patronage, firms
are tempted to make promises that may be difficult or even impossible to deliver.
Communication through these channels tends to raise customer expectations and set certain
standards to assess the service in the minds of customers. Any discrepancy between promised
and actual service tends to broaden the customer gap. A recent advertisement by a leading
Pizza chain promised one free pizza with a specified order. On calling in for the offer, one found
that the small print indicated that this offer was valid only at the counter and not on home
delivery orders. Would the outlet have received so many calls if they had indicated this in bold
type? While on the subject of pizzas, one wonders if Domino's manages to keep its promise of
delivering anywhere in 30 minutes - especially in Mumbai traffic. If not, they must be making
heavy losses on free pizzas.

Causes of Gap Four

 Ineffective management of customer expectation.

 Failure to manage customer expectations through all forms of communication:

In addition unduly elevating expectations through exaggerated claims, there are other,
less obvious ways in which external communications influence customers’ service quality
assessments. Customers are not always aware of everything done behind the scenes to
serve them well. One bank executive indicated that customers were unaware of the
bank’s behind-the-counter, on-line teller terminals, which would translate into visible
effects on customer service. By neglecting to inform customers of such behind-the-
scenes efforts, the bank was foregoing an opportunity to favorably influence service
perceptions.

 Failure to educate customers adequately:

In the anxiety to strike a deal or market the service, sales personnel promise more than
what they can ever deliver. Such communication can be either formal or informal.
Usually, customers set the service expectations according to such delivery and price
quotations.• Overpromisingo Overpromising in advertising: During the marketing phase,
the sales force may go beyond the original script to strike the deal.

 Overpromising in personnel selling:

While customers may be lost to competition due to underpromising, they may be lost
due to overpromising as well.

 Overpromising through physical evidence cues.

 Inadequate horizontal communications

 Insufficient communication between sales and operations:

 If during the personal selling phase a commitment was made to strike the deal, it is essential
to convey this message to the other people in the organization, especially the production
team, failing which, they may not be able to keep up with this additional conceded demand.

 Insufficient communication between advertising and operations.

 Differences in policies and procedures across branches or units.

 Pricing of services.

In packaged goods many customers posses enough price knowledge before purchase to be
able to judge whether a price is fair or in line with competition. With services customers often
have no internal reference point for prices before purchase and consumption. Pricing strategies
such as discounting, “everyday prices” and couponing obviously need to be different in services
in cases where the customers have no sense of the price to start with! Techniques for
developing prices for services are more complicated than those for pricing of tangible goods.

Strategies for Reducing Gap Four:

To reduce the size of Gap Four, service firms must address two issues: horizontal
communications and propensity to over promise.

Service contact personnel should have input in the firm’s advertising and promotional to ensure
that messages conveyed to the prospective customers can be operationally performed. The
reverse is also true; service personnel should be informed prior to an advertising or promotional
campaign. In service organizations with field sales representatives, there must be
communication between the salespeople and the personnel performing the service.
Salespeople will often make promises to prospective customers to gain contacts. If promises are
made, the operations department needs to be aware of it so they can ensure the promises will
be delivered.The tendency to over promise increases with pressure to achieve greater profits or
to meet competitive claims. In both cases, severe damage to the firm’s image can occur since it
is unlikely the firm can perform the service as promised.

Customers’ service perceptions may also be enhanced if the company educates them to be
better users of the service. Service companies frequently fail to capitalize on opportunities to
improve customers’ perceptions. As on bank executive observed, “We don’t teach our
customers how to use us well and why we do the things we do.” Effectively coordinating actual
service delivery with external communications therefore narrows provider gap 4 and favorably
affects the customer gap as well.Another function that must be involved in communication is
human resources. For employees to deliver excellent customer service, firms must serve the
employees through training, motivation, compensation and recognition to have a power full
impact on the quality of service the employees deliver.External communications—whether from
advertising, pricing or the tangibles associated with the service – can create a larger customer
gap by raising expectations about service delivery. In addition to improving service delivery,
companies must also manage all communications to customers so that inflated promises do not
lead to higher expectations.

Case: Taj Mahal“Archetypal Drives” of a customer who Visits Taj Mahal:

The study was of the visitors including spouse, family, and group of friends or relatives. The
primary drives of the tourist to this place are the beauty of the place and historical significance.
The facilities sought in the vicinity of the Taj Mahal and basic amenities like safe drinking water ,
clean toilets, small grocers, cafeterias and milk. The sample interviewed was of the opinion that
the Taj Mahal bedecked in moonlight was a picture of delight, and should not be missed.
However, for those who could not make it on that crucial night of the month, similar creations
could be made through a light and sound show. On the full moon night some cultural events
could also be planned and offered. Since the main charm in visiting the city of Agra was the Taj
Mahal, the tourists were keen on knowing the timings and approach to the spot and any rules
that govern visiting this wonder of the world.

External Communication Content on Taj Mahal:

The information provided on the government websites on Taj Mahal is not indicative of the
facilities sought by the tourists. On fundamental information, the prevailing basic amenities in
the vicinity of Taj Mahal are not listed, once in Agra how to reach Taj Mahal is not known. The
visiting hours and weekly offs, if any are not notified. Also people traveling with families must be
provided with information on basic amenities in and around the Taj Mahal. For the bespoke
customer, the historical significance, this is a selling point for Taj Mahal Is not adequately
flaunted. There is neither imagery nor mystic incorporated in the communication content. Taj
Mahal bedecked in moonlight, a much sought after experience is also not adequately
represented. Though there is a mention of the Taj’s beauty on a full moon night but there is no
mention of when the full moon is expected in the next few months. Tourist could be provided
with calendar data of full moon nights along with associated special events. There could be
plans for special shows on full moon night to make experience more memorable. There is no
mention of any light and sound show on any day. Taj Mahal is one of the wonders of the world,
hence providing conservation guidelines for tourists in the communication content is an
expectation.Consumer perception of technical and functional quality model.

THE SERVICE-PROFIT CHAIN:

The increased emphasis on customer satisfaction begs the question whether improvements in
customer satisfaction lead to improvements in the economic performance of firms. Heavy
expenditures and importance attached to customer satisfaction measurement suggest that the
link between customer satisfaction and economic performance is presumed by companies.
Increasing levels of research is going into understanding the nature of the service-profit chain.
There is considerable support for a link between improvements in service quality and
improvements in service quality and improvements in financial performance.

Grant reports that the American Customer Satisfaction Index studies found a positive correlation
between customer satisfaction and stock market returns.
Much of the literature has sort to establish a link between satisfaction and loyalty. Dick and
Basu, in a conceptual paper on loyalty viewed satisfaction as an antecedent of relative attitude
because, without satisfaction, consumers will not hold a favorable attitude towards a brand as
compared to other alternatives available and will therefore not be predisposed to repurchase.
Much of the research into the outcomes of the satisfaction has measured behavioral intentions,
for example, the likelihood of recommending a service or repurchasing it. However, in the light
of increasing levels of competition in most services markets, behavioral intention based on
loyalty generated through good service can easily be broken. This decline has been
attributed to a
number of factors including greater choice and information available to customers, the
‘commoditization’ of several services, and increased levels of competition. Against this, some
researchers have pointed out that much of the evidence to support a link between quality and
financial performance is anecdotal in nature and refuted by analysis of corporate performance. It
is suggested that there is wide spread evidence of managers’ frustration with the inability of
quality improvement to improve organizational performance.

Developments in information technology are offering new insights into the link between quality
and financial performance. Large multiple outlet service organization are increasingly able to
experiment with elements of service quality in test sights and to judge economic performance
over time.

A fast-food restaurant, For example, may implement a new staff payment system or training
program in a number of “experimental” sites and will be able to identify changes in performance
relative to other ‘control’ branches. Some service providers have disaggregated their information
even further by linking service quality questionnaires to features of the service which a
respondent actually received. In this way, individual employees or groups of employees can be
linked to measure of quality. While information technology is opening up new possibilities for
correlating data about inputs and perceived outcomes, the problem of analyzing cross-sectional
data remains. It is very difficult within a research framework to isolate all of the contributors to
customers’ perceptions of quality except those which the researcher is interested in.

SETTING QUALITY STANDARDS

A precise specification of service standards serves a valuable function in communicating

standard of quality which consumers can expect to receive. It also serves to communicate the
standards which are expected of employees. While the general manner in which an organization
goes about promoting itself may give a general impression as to what level of quality it seeks to
deliver, more specific standards can be stated in a number of ways which are considered below.
At its most basic, an organization can rely on its terms of business as a basis for determining
the level of service to be delivered to customers.

These generally act to protect customers against excessively poor service rather than being
used to proactively promote high standards of excellence. The booking conditions of tour
operators, for example, make very few promises about service quality, other than offers of
compensation if delays exceed a specified standard or if accommodation arrangements are
changed at short notice.Generally worded customer charters go beyond the minimum levels of
business terms by stating in a general manner the standards of performance which the
organization aims to achieve in its dealings with customers. In this way, banks publish
characters which specify in general terms the manner in which accounts will be conducted and
complaints handled.
Specific guarantees of service performance are sometimes offered, especially in respect of
service outcomes.

As an example parcel delivery companies often guarantee to deliver a parcel within a specified
time and agree to pay compensation if they fall below this standard. Many of the public utilities
now offer compensation payments if certain specified services are not delivered correctly,
increasingly, service organizations set their service guarantees with reference to benchmarks
established by best-practice companies within their sectors, or in completely different sector.
Many highly specific targets are therefore restricted to internal use where their function is to
motivate and control staff rather than to provide guarantees to potential customers. While the
major banks give their branch managers targets for such quality standards as queuing time for
counter staff and availability of working ATM machines, it does not guarantee a specified level of
service to its customers. Many services companies belong to a trade or professional association
and incorporate the association’s code of conduct into their own service offering.

Codes of conduct adopted by members of professional associations as diverse as car repairers,

undertakers and solicitors specify minimum standards below which service provision should not
fall. The code of conduct provides both a reassurance to potential customers and a statement to
employees about the minimum standards which are expected of them.Contrary to popular belief,
a company operating to ISO 9002 does not guarantee a high level of quality for its service.
Instead, ISO accreditation is granted to organizations who can show that they have in place
management systems for ensuring a consistent standard of quality- whether this itself is high or
low is largely a subjective judgment. Although this standard was initially adopted by
manufacturing industries, it has subsequently found significant use among service companies,
including education, leisure centers and building contractors. Increasingly, industrial purchasers
of services are seeking the reassurance that its suppliers are ISO registered.In the case of
some public sector services which operate in a monopolistic environment, quality standards are
sometimes imposed from outside. In the case of privately owned utilities, the relevant regulating
authority has the power to set the specific targets.

DELIVERY OF HIGH-QUALITY SERVICE.

DEVELOPMENT OF A QUALITY CULTURE:

Organizations, like human beings, develop a unique personality, shaped by interpersonal

relations, the quality of the management and the influence of the leadership upon the
employees, the system in place, and the quality of the employees. High-quality service design
and delivery is not just the function of the front end employees but of all the members of the
organization. The factors that could play a crucial role in the quality of service delivery are many.

A few important factors are discussed below.

HUMAN FACTORS:

It basically includes employee recruitment and selection, training, rewards and motivation. ‘I
shall not deliver substandard service nor shall I let anybody else deliver substandard service’ is
the type of motto to be adopted. For example, some quality conscious automobile companies
have given the right of halting the assembly line to any concerned employee who may have
noticed inadequate or defective components fitted on a vehicle. This quality consciousness is
crucial to long term quality maintenance. In addition, customer feedback on quality issues has to
be an important component of employee evaluation.
SYSTEMS SUPPORT:

It is not employees but also system which tends to produce defects. Thus, organizations have to
put systems in place that ensure high quality services delivery. For example, the computerized
system in the bank has to ensure accurate and timely delivery of the customer bills and
statements.

ORGANIZATIONAL FACTORS:

Organizations with very high number of levels within the structure tend to have very poor
interaction between the front-end employees and the higher echelons within the organization.
The reporting structure and close interaction between the supervisors and the front-end service
delivery employees is very important. A receptionist being a front-end employee may be seen as
the key person for the customer interaction. However if the receptionist is not authorized to ask
the housekeeping unit to improve upon the service when a customer has complained about i t, it
may demotivate the employee, and, in future, the receptionist may not report problems with the
housekeeping unit.

FEEDBACK:

Organizations need to encourage feedback from every employee including the front-end
employees as a part of the quality monitoring system.

Employees have to be told that this feedback is crucial for the organizational success.

1] QUALITY CIRCLES:

Quality circles are groups of non-supervisors and work leaders in a single company department
who volunteer to conduct group activities in order to improve the effectiveness of the work in
their respective departments. Fishbone or Ishikawa diagrams prepared by Ishikawa help to trace
quality complaints to the responsible production process that is the root cause of the problem.
The role of individual employees is very crucial to quality control of services as well as goods
production. This is more so in the case of services where the service is usually delivered in
person by one of the employees. The diagram below is a root cause diagram that enables you
to pinpoint the causes contributing to the delayed departure. In addition, the frequency of each
failure can be measured so that the reasons for poor quality service can be understood and both
short and long- term measures can be instituted to tackle the situation.

2] TOTAL QUALITY MANAGEMENT:

TQM is defined as management of the entire organization so that there is continuous

improvement in all dimensions of process, products, and services that are important to the
customer.

The key aspects of the focus as follows:

• Quality Standards must be customer driven. Every service firm should have both company-
defined and customer-defined standards of quality. The customer-defined standards are
classified as soft and hard standards.

• External and internal customers both need to be addressed. The receptionist could not
perform the best service for the customer without the cooperation from others, including the
housekeeping department. Thus, services to internal customers also have to be given the same
degree of importance as those for external customers.

• Every employee is a quality inspector and is empowered. Each and every employee can stop
the assembly line. Thus, each employee is treated as a quality inspector and is empowered to
take appropriate corrective action.

• Continuous measurement and improvement. It has been the belief of a number of

organizations that the quality improvement needs to be done on a large scale to be effective.
Contrary to this, it has been seen that while it helps to have a major review of the quality of
Japanese goods and services owes much to the continuous measurement and improvement,
even on a small scale. Thus, small tinkering towards quality improvement also contributes
significantly to overall quality improvement due to the cumulative effect.

• Commitment to quality improvement from the top management. Organizational culture is very
crucial to the quality improvement process. In particular, the contribution of top management
and their commitment is also crucial as employees usually emulate the attitudes of the top
management. When the top management is committed to quality improvement, the employees
feel confident that they would enjoy the support of top management even when they have to
make some hard unpalatable decisions leading to short term loses.

The factors that cause the failure of TQM are as follows:

• More rhetoric than real commitment to the development of quality culture. Many times we see
quality statements or organizational objectives displayed prominently at work place.
Surprisingly, most of them are for the visitors or the customers rather than the operating
employees! Thus, they are decorative rather than operative in nature. This does not bring about
the desired changes in the products or services, nor does it bring about an attitudinal change.

• More focus on cost saving than on long-term generation of value for the customers. Some of
the quality control initiatives require capital funds or increases in the variable cost. In the short
run, they may sound like unnecessary costs and therefore not desirable. However, in the long
term, quality improvement would bring about customer satisfaction through greater value
delivery and customer loyalty. These costs will eventually transform themselves into financial
gains.

• Lack of quality initiatives, support, or follow-through actions. The lack of commitment also
could mean no further initiatives or follow up actions. Employees may tend to think that if the
immediate crisis is adverted, there is less compulsion to follow up on the efforts made.
3] HARD MEASURES OF SERVICE QUALITY:

A standard represented by a number gives a concrete idea about the goal and the gap between
the performance and the goal. Thus, this is an ideal way of giving feedback to relevant parties
about the performance.
To understand this hard measure we use the example of the number of buses leaving a bus
terminal.
In the Ishikawa or fishbone diagram, we went into the possible reasons for the delay. Let us
assume that the acceptable standard for the service delivery is a maximum delay of 10 minutes
in bus departure from the announced timetable. We could develop a daily measure of how many
buses left within this 0-10 minute’s interval. We could use percentage of buses that left within 0-
10 minutes delay as a measures of overall timeliness quality. The timeliness index would be the
percentage of buses leaving on time. Visually, both the operating and supervisory personnel
could judge the recent trend, the long-term trend, and whether the performance is satisfactory or
not. If a series of such hard measures could be developed, the task of quality control would be
greatly simplified.

4] PREVENTION OF CUSTOMER DEFECTION:

If the quality of the services extended by the organization is perceived by the customers to be of
high quality, the customer is likely to remain loyal to the service provider.

The perceived level of service, above which this level of satisfaction is achieved, is called
‘adequate level of service’. It has been noted that the switching to another source of service
usually does not occur suddenly. The customers start to use the service of the current provider
less frequently before completely switching over to another provider. Thus, usually, there is
some warning when the correction could be made and the trend reversed. We need to make
use of the tools of computerization and data mining for this purpose.

For example, a frequent flyer program administered by airlines can be used effectively. From the
past data, the company knows about the average number of flights undertaken by an executive
on quarterly basis. Should there be a significant drop in the number of flights flown on this airline
during two successive quarters, it may be worth acting upon a line may be dropped to the
person enquiring about his health and the reasons for the lack of flying, or even requesting a
feedback about the airline performance.The techniques of data mining and data manipulation
can be used effectively to bring out such instances to the attention of the management to plan
suitable action. A stitch in time could thus save nine. While a number of managers would agree
on the value of customer loyalty, they are not prepared to invest resources to ensure continued
patronage. This total commitment to the customer loyalty would ensure long-run success.

5] ROLE OF AUTOMATION IN SERVICE QUALITY DELIVERY:

The factors contributing to poor quality of service include:

• Employees as a source of variation in services delivery

• Customers as a source of variation in services delivery

• Due to intangible nature of services and inability to describe them, good communication with
the customers may be difficult to achieve.In view of these factors, automation can be a way of
delivering high quality services.

The advantages of automation are:

• The role of a service-providing person is greatly reduced or even totally eliminated, thereby
reducing one source of services variation. Thus, when the bank passbook entries are made
directly from a computer through a printer, the role of the person keeping the ledger is greatly
reduced. This ensures accuracy of the work.

• Due to moods, emotions and variations in behavior, customers tend to perceive identical
service delivery at different points to be different. Even the moodiest of the customers, however,
can see the consistency in automated delivery.

• As automation usually means a limited number of alternatives available on a menu, the

customer is unable to ask for an impossible service alternative, thereby avoiding the risk of
failure.

• Automation always provides consistent and standard delivery. While the service may or may
not delight the customer, it would meet the adequate level of service expectation quite easily.
Reliability is one of the most important quality dimensions.

• Usually the cost of automated delivery is considerably less than that of service delivery by an
employee or representative.

A case in point is the ATM. The average cost of cash receipt or payment transaction by a
cashier or teller is Rs 3 to 5 per transaction. A similar ATM transaction costs Rs 0.25. thus, a
considerable saving in operating cost can accrue to the service provider due to automation.•
Automation can produce data about various customer transactions. It can be used as a source
of information about consumer behavior, special interest, etc. This can be used to make
customized offerings to high net-worth customers for mutual benefits.

6] ROLE OF QUALITY AWARDS AND CERTIFICATION:

An offshoot of the commerce department of the United States Government cal -led ‘National
Institute of Standards and Technology’ offers awards each year in three categories-
manufacturing, service and small business-for quality achievements. The award, named after a
US commerce Secretary, was instituted in 1987 to promote excellence in order to meet the
Japanese economic threat successfully.Companies have to nominated themselves and make
detailed submissions about their quality practices and performance. Selected companies are
visited by the examiners for a detailed look at the operations. Thus, two-third points are awarded
for direct measurement of quality and contribution of quality processes. The chosen criteria are
good yardsticks for quality. They represent the entire quality delivery process of services.If a
company receives such a highly prestigious award, it can be used as a vital tool for marketing
the products or services produced by such a firm. The award focuses on management systems
and processes, and even the companies who are not successful in winning the award benefit
enormously by just participating in the award process. The award wakes up a number of
companies and participant managers to the need for TQM. The importance of quality in the
global competition is brought before the participants and they get a blueprint for action that
works.

7] ROLE OF SEGMENTATION IN SERVICE QUALITY IMPROVEMENT:

Segmentation is one of the key techniques used in the current marketing to understand the
customer needs better and then offer products or services that more particularly meets thee
customer needs. In the case of products, the need for segmentation is obviated to some extent
by an elaborate range of products that can be offered simultaneously. Thus, a large number of
alternatives exist for customers to choose from. In the case of services, the number of
alternative services that can be designed to achieve the same end purpose is limited.
For example, if the tourist company normally offers tours to Far East or European Countries, the
number of service alternatives is limited to first class or economy class.If the customer is
provided with unsuitable service not needed or required by a set of customers, their perception
of service quality received is considerably lower. The service provider can adopt a number of
measures to combat this situation.
Specialization in a particular area of service.While there are any number of both public and
private hospitals in India, a very large percentage of them offer extensive services in almost all
the areas of medical care. By specialization in one area, however, a hospital can develop
expertise, reduce costs, and build up a quality reputation which can be unmatched. In Canada,
Dr Shouldice, a pioneer in the technique for surgical correction of hernia (a condition usually
brought about by the weakening of the stomach wall), and his colleagues run a number of
hospitals which surgically treat only hernia. Unlike in the case of other hospitals, the surgery is
mostly performed under local anesthesia, with the patient walking in and out of the operating
theatre with the help of the surgeon. The previously operated patients in their post-operative
stay in the hospital provide moral and spiritual support to the newly admitted patients, which
lead to reduced anxiety and faster recovery.Adoption of modularization.Instead of offering
completely different or distinct services, the company may design add-on modules and offer
them to customers by way of greater variety. Thus, a tour and travel company may offer an add-
on package for children below 3 or between 3 and 12 years of age. The company may offer an
additional stay package at attractive prices, single room supplement for a price, etc. these
modules will effectively meet the demands of the greater segments of the customers more
precisely.Various modules can be combined to produce distinctive services that appeal to
various customers. For example, in Kulu Manali, a large number of hiking alternatives are
available to a tourist. Thus, the tourist can decide on an uphill and/or downhill walk. The tourism
department offers a choice of walk trail for 2 hours, 4 hours, or 6 hours. One can choose either a
bus, funicular railway, chair car, ski lift, or even a post office bus to reach the starting point and
then choose the trail of the selected duration. Even the return arrangement is similarly made by
flexible mode of transport. As a result, tourists return to the area frequently and choose the
modular package best suited to their pockets and levels of energy.

RESEARCHING SERVICE QUALITY:

The development of reliable, easy-to-easy measures of service quality represents a key aspect
of consumer behavior and services marketing research. Indeed, an integral part of any
organization’s attempt to still a ‘quality culture’ is a commitment to a process of ‘continuous
improvement’. To support this a systematic approach to quality measurement is needed. This is
especially true of ‘pure’ services organizations, as unlike their counterparts in the manufacturing
sector they have fewer objective measures of quality by which to judge their production.
There are more three different sets of measures that a company must be concerned with:

• Service performance measures that are primarily internally focused and evaluate the current
performance of the service and ensure that it is continuing to reliably meet the design
specifications.
• Customer measures, on the other hand, which are both internally and externally focused,
aimed at assessing the impact of the service performance on customers.
• Financial measures, which are indicators of the financial health of the organization.

Naturally the correlation between financial and customers will determine the revenue generating
potential of the service, while the relationship between service performance measures and
customer measures will give some indication as to how the service is performing in customers’
eyes.
In turn, this will have a direct bearing on a company’s financial performance and overall market
share.

1] Regular customer surveys:

The incidence of surveys into the level of satisfaction that customers have experienced from
service providers is increasing throughout the service sector. The increasing range of competing
services available and customers’ growing awareness of the fact that they are in receipt of a
service for which they pay a price – whether directly or through taxation – has led them to
expect to be consulted and to express an opinion about the level of satisfaction provided.
Today, members of the public are in constant receipt of literature from a wide range of service
providers asking for comments on the quality of service that they have received. It is probably
true to sat that most large service providers in both private and public sectors have jumped on
this quality bandwagon, although it is often questionable whether the most appropriate methods
are employed to gather the information. Typical application include filling in a questionnaire on
the plane after a holiday or being asked by the local council to fill in a card headed Customer
service enquiry. Such surveys usually ask recipients to relate any complaints that they may
have about the services provided and any comments/suggestions for improving them. The
assumption that most people make is that data from such surveys will be used to take corrective
action where expectations are not reached.

2] Customer panels:

These can provide a continuous source of information on customer expectations. Groups of

customers, who are generally frequent user, are brought together by a company on a regular
basis to study their opinions about the quality of service provided. On other occasions, they may
be employed to monitor the introduction of a new or revised service – for example a panel could
be brought together by a building society following the experimental introduction of a new
branch design format.The use of continuous panels can offer organizations a means of
anticipating problems and may act as an early warning system for emerging issues of
importance. Retailers have been involved in the operation of continuous panels contribute to
monitor their level of service provision as well as letting panels contribute to new product
development research. User
groups also have an important part to play in many of the UK’s recently privatized industries
such as gas, water, electricity and telecommunication. However, the validity of this research
method is quite dependent on how well the panel represents consumers as a whole. There has
been a suggestion that the number of people prepared to become members of panels is not
rising as quickly as firms’ appetite for information. The result has been the emergence of
‘professional’ panel members who may not be representative of service users as a whole.

3] Transaction analysis:

An increasingly popular method of evaluative research involves tracking the satisfaction of

individuals with particular transactions that they have recently been involved in. This type of
research enables management to judge correct performance, particularly customers’
satisfaction with the contact personnel with whom they have interacted, as well as their overall
satisfaction for the service. The research effort normally involves a mail-out questionnaire
survey to individual customers immediately after a transaction has been completed.

For example, the Automobile Association surveys customers who have recently been served by
its breakdown service and many building societies invite customers who have just used their
mortgage services to express their views on the service received via a structured questionnaire.
An additional benefit of this research is its capability to associate service quality performance
with individual contact personnel and link it to reward system.

4] Perception surveys:

These investigations use a combination of qualitative and quantitative research methods. Many
professional services organization have employed such studies in order to develop future
market strategies. Their aim is to achieve a better understanding of how customers view an
organization. In other words, to help the firm itself as clients see it. The initial qualitative stages
of a study involve researchers in identifying the attitudes of clients towards the firm as well as
how the firm is perceived by the community at large. Group discussions and/or in depth
interviews are the vehicles used for assessing the perceptions of people at this stage. In the
quantitative phase of the survey , clients are asked to judge the company’s performance using a
battery of attitude statements. Perception studies of ten include an analysis of the perceptions of
a firm’s employees.

5] Mystery customers:

The use of ‘mystery customer’ is a method of auditing the standard of service provision,
particularly the staff involvement in such provision. A major difficulty in measuring service quality
is overcoming the non-conforming of staff with performance guidelines. This so called service-
performance gap is the result of employees being unable and/or unwilling to perform the service
at the desired level. An important function of mystery customer surveys is therefore to monitor
the extent to which specified quality standards are actually being met by staff.This method of
researching actual service provision involves the use of trained assessors who visit service
organizations and report back their observations. Audits tend to be tailored to the specific needs
of a company and focus on an issue that it wishes to evaluate. The format of the enquiry is
determined jointly by the client and research organization.The constructive nature of this
research technique has to be stressed, as the mystery customer can quite easily be mistaken by
staff as an undercover agent spying on them on behalf of the management. In particular, if the
techniques are applied correctly, they can allow management to know what is really happening
at the sharp end of their business. To be effective mystery shopping surveys need to be
undertaken independently, should be objective and must be consistent. The training of
assessors is critical to the effective use of this research method and should include, for
example, training in observation techniques which allows them to distinguish between a greeting
and an acknowledgement.

6] Analysis of complaints.

Dissatisfaction of customers is most clearly voiced through the complaints that they make about
service provision. For many companies, this may be sole method of keeping in touch with
customers. Complaints can be made directly to the provider or perhaps indirectly through an
intermediary or a watch dog body. Complaints by customers, referring to instances of what they
consider poor-quality service may, if treated constructively, provide a rich source of data on
which to base policies for improving service quality. However, customer complaints are at best
an inadequate source of information. Most customers don’t both to complain, remain dissatisfied
and tell others about their dissatisfaction. Others simply change to another supplier and do not
offer potentially valuable information to the service provider about what factors where wrong
which cause them to leave.In truly market - oriented organizations, complaints analysis can form
a useful pointer to where the process of service delivery is breaking down. As part of an overall
programme for keeping in touch with customers, the analysis of complaints can have an
important role to play. The continuous tracking of complaints is a relatively inexpensive source
of data which enables a company to review the major concerns of customers on an ongoing
basis and hope fully rectifies any evident problems. In addition the receipt of complaints by the
firm enable staff to enter into direct into direct contact with customers and provides an
opportunity to interact with them over their matters of concern. As well as eliciting customers’
views on these issues in particular, complainants can also contribute views about customer
service in general. Many companies have gone to great lengths to make it easy for customers to
complain, for example by creating free phone telephone lines and making comment cards
readily available.

7] Employee research:

Research undertaken among employees can enable their views about the way that services are
provided and their perceptions of how they are received by customers to be taken into account.
Data gathered from staff training seminars and development exercises, feedback from Quality
circles, job appraisal and performance evaluation reports, etc. can all provide valuable
information for planning quality service provision. One way in which formal feedback from staff
can be built into a systematic research program is the operation of a staff suggestion scheme.
The proposals which staff may make about how services could be provided more efficiently
and/or effectively certainly do have an important role to play in moving service quality.Research
into employees’ needs can also identification of policies which improve their motivation to deliver
a high quality f service. Many of the techniques employed to elicit the views of employees as
internal customers are in principle the same as those used in studies of external customers.
Interviews and focus may be used in the collection of qualitative data on employee needs,
wants, motivations and attitudes towards working conditions, benefits and policies.
PART II
A STUDY ON SERVICE QUALITY OF HDFC BANK EXECUTIVE
SUMMARY

Consumers all around the world have become more quality conscious; hence there has been an
increased customer demand for higher quality service. Service operations worldwide are
affected by this new wave of quality awareness and emphasis (Lee 2004). Therefore service
based companies like the banks are compelled to provide excellent services to their customers
in order to have sustainable competitive advantage, especially in the current trend of trade
liberalisation and globalisation.

High success of services depends on the level of satisfaction customers derive from a service.
Sales are directly related to customer satisfaction, sales increase requires improvement in the
quality of service delivery to encourage continuous success. Generally, it is believed that
services which continuously and consistently delight customers make them happy and satisfied.
In such situation, they become loyal customers and will continue to demand the service which in
turn will result in profit and growth of an organisation. Service quality remains critical in the
service industries, as businesses strive to maintain a competitive advantage in the marketplace
and achieving customer satisfaction. The financial services, particularly banks, compete in the
marketplace with generally undifferentiated products; therefore service quality becomes a
primary competitive weapon (USP).

The general objective of this project is to assess the level of service quality delivered at HDFC
bank. The focus was on the Raj bagh branch of HDFC bank located in Srinagar. The outcome
of study will enhance the banks competitive position in the banking industry and ensure its
survival. It helps us to understand what the shortcomings of the bank are and what advantage it
has over its competitors.

The project starts with the brief introduction of the banking industry. The theoretical framework
taken up for the study has been talked about. It mainly consists of service quality of the bank as
the basis of study.

Furthermore, a layout of the study structure has been presented. The method of sampling,
mood of questionnaire has been evaluated. The study is basically of descriptive nature. The
samp le consisted of businessmen, salaried professional housewives and students. The area
taken for study was Srinagar city and the questionnaires were filled by 100 respondents. The
questionnaires were analysed and interpreted to reveal the key findings. Graphical
representation of each questions result has been undertaken. Further a list of suggestions is
provided to supplement the inferences drawn. The limitations faced in the project are also
enumerated. Lastly a list of references and secondary information is appended to validate the
study conducted.
 INTRODUCTION

Bank plays an important role in the economic development of a country. It is a financial

institution that expects deposits and channels those deposits into lending activities either directly
or through capital markets. A bank connects customers which have capital deficits to those
customers’ surpluses. The banking industry in India is facing certain challenges i.e challenges of
quality service, customer satisfaction, customer retention, customer loyalty. Quality service
plays a major role in achieving customer satisfaction and creating brand loyalty in banking
sector.

Provide service with a smile:

The present demanding saving money clients will agree to nothing less. The customer has
come to realize somewhat belatedly that the customer is the king.

Better quality of services provided by the bank has a positive influence on satisfaction of its
customers and it directly contributes to profitability of banking industry.

Good quality of service provides numerous benefits to banking industry like better corporate
image, enhancement in customer satisfaction, cross-selling opportunities, and increased
chances of word to mouth recommendation and facilitates the maintenance of log term and
good customer relationships.

The customer’s choice of one entity over another is determined by reflections of service quality
rather than any other factor in the industry. He/she wants competitive loan rates but at the same
time also wants his loan or credit card application processed in double quick time.

He/ she insists that he be promptly informed of changes in deposit rates and service charges
and he bristles with “customary rage” if his bank is slow to redress any grievance he may have.

He/ she cherishes the convenience of impersonal net banking but during his occasional visits to
the branch he also wants the comfort of personalized human interactions and facilities that
make his banking experience pleasurable.

In short the customer wants financial house that will more than just clear his cheque and
updates his passbook: he/she wants a bank that cares and provides great services.

So does HDFC bank meet these expectations of customers?

What are the customer’s perceptions regarding service quality of the banks?

What are the dimensions of service quality where HDFC bank is performing well?
To find out answer to these questions I undertook some survey forms from my sister who is
working in HDFC bank.

A lot of surveys have been done in the past to understand the aspect of customer satisfaction
and to find out the service quality that customer friendly banks try to offer to clients.

My search is conducted to find out “SERVICE QUALITY OF HDFC BANK” with the help of
SERVQUAL model. The research is conducted on the basis of RATER scale.

History of Indian banking industry

Banking in India originated in the last decades of the 18th century.
The first bank was The General Bank of India, which started in 1786.
Bank of Hindustan was the 2nd bank, which started in 1790; both are now defunct.
The oldest bank in existence in India is the State Bank of India, which originated in the Bank of
Calcutta in June 1806, which almost immediately became the Bank of Bengal.
The period between 1906 and 1911, saw the establishment of banks inspired by the Swadeshi
movement. A number of banks established then have survived to the present such as Bank of
India, Corporation Bank, Indian Bank, Bank of Baroda, Canara Bank and Central Bank of India.
During the First World War (1914–1918) through the end of the Second World War (1939–
1945), and two years thereafter until the independence of India were challenging for Indian
banking.

Post Independence, India observed the emergence of large number of institutions for providing
finance to different sectors of the economy.
The entry activities of private sector and foreign banks were restricted through branch licensing
and regulation norms. Steps taken by Indian Govt. to regulate banking are: Reserve bank of
India was nationalized on January 1, 1949 under the terms of Reserve bank of India. In 1949;
the Banking Regulation Act was enacted. The Banking Regulation Act also provided that no
new bank or branch of an existing bank could be opened without a license from the RBI. No two
banks could have common directors.

The nationalization of banks in India took place in 1969 by Mrs. Indira Gandhi. It nationalized 14
banks. Before the steps of nationalization of Indian banks, only State Bank of India (SBI) was
nationalized. Nationalization of Seven State Banks of India (formed subsidiary) took place on
19th July, 1960.The second phase of nationalization of Indian banks took place in the year
1980. Seven more banks were nationalized with deposits over200 corers. The stated reason for
the nationalization was to give the government more control of credit delivery.
 COMPANY PROFILE

The Housing Development Finance Corporation Limited (HDFC) was amongst the first to
receive an ‘in principle’ approval from the Reserve Bank of India (RBI) to set up a bank in the
private sector, as part of RBI’s liberalization of the Indian Banking Industry in 1994. The bank
was incorporated in August 1994 in the name of 'HDFC Bank Limited', with its registered office
in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank in
January 1995.

As on 31st March, 2018 the authorized share capital of the Bank is Rs. 550 crore. The paid-up
share capital of the Bank as on the said date is Rs501, 29, 90,634/- (2506495317) equity shares
of Rs. 2/- each). The HDFC Group holds 21.67 % of the Bank's equity and about 18.87 % of the
equity is held by the ADS / GDR Depositories (in respect of the bank's American Depository
Shares (ADS) and Global Depository Receipts (GDR) Issues). 32.57 % of the equity is held by
Foreign Institutional Investors (FIIs) and the Bank has 4, 41,457 shareholders.(corporate profile)
(https://www.hdfcbank.com/aboutus/News_Room/hdfc_profile.html)

As of June 30, 2019, the bank's distribution network was at 4,715 branches and 12,260 ATMs
across 2,657 cities and towns. The bank also installed 4.30 Lacs POS terminals and issued
235.7 Lacs debit cards and 85.4 Lacs credit card in FY 2017

HDFC bank comprises of dynamic and enthusiastic team determined to accomplish the vision of
becoming a World-class India bank. HDFC bank’s business philosophy is based on our four
core values – Customer Focus, Operational Excellence, Product Leadership and People. They
believe that the ultimate identity and success of their bank will reside in the exceptional quality
of people and their extraordinary efforts. They are committed to hiring, motivating and retaining
the best people in the industry.

Business Focus

HDFC Bank’s mission is to be a World Class Indian Bank. The objective is to build sound
customer franchises across distinct businesses so as to be the preferred provider of banking
services for target retail and wholesale customer segments, and to achieve healthy growth in
profitability,
consistent with the bank’s risk appetite. The bank is committed to maintain the highest level of
ethical standards, professional integrity, corporate governance and regulatory compliance.
HDFC Bank’s business philosophy is based on five core values: Operational Excellence,
Customer Focus, Product Leadership, People and Sustainability. (HDFC bank limited profile)

Vision Statement:

The bank is committed to maintain the highest level of ethical standards, professional integrity,
corporate governance and regulatory compliance.
HDFC Bank's business philosophy is based on five core values: Operational Excellence,
Customer Focus, Product Leadership, People and Sustainability.

Mission Statement:

 To our share holders, our mission is to optimize returns.

 To our customers, our mission is to provide a caring service by anticipating their
requirements and innovatively satisfying them beyond their expectations.
 To our staff, our mission is to identify their multi-faceted talents, develop, motivate,
recognize and reward them towards fulfilment of the institutional and national housing
vision.
 To the national economy and the industry regulator, we are the key driver and thought
leader, shaping and financing the national housing policy.
 To our natural environment, we enforce sustainable practices across all our activities.

The objective is to build sound customer franchises across distinct businesses so as to be the
preferred provider of banking services for target retail and wholesale customer segments, and
to achieve healthy growth in profitability, consistent with the bank's risk appetite.

BUSINESS STRATEGY

 Increasing market share in India’s expanding banking.

 Delivering high quality customer service.
 Maintaining current high standards for asset quality through disciplined credit risk
management.
 Develop innovative products and services that attract targeted customers and address
inefficiencies in the India financial sector.

PROMOTER

HDFC is India’s premier housing finance company and enjoys an impeccable track record in
India as well as in international markets. Since its inception in 1977, the Corporation has
maintained a consistent and healthy growth in its operations to remain the market leader in
mortgages. Its
outstanding loan portfolio covers well over a million dwelling units. HDFC has developed
significant expertise in retail mortgage loans to different market segments and also has a large
corporate client base for its housing related credit facilities. With its experience in the financial
markets, strong market reputation, large shareholder base and unique consumer franchise,
HDFC was ideally positioned to promote a bank in the Indian environment.

DISTRIBUTION NETWORK

HDFC Bank is headquartered in Mumbai. As of March 31, 2015, the Bank’s distribution network
was at 4,014 branches in 2,464 cities. All branches are linked on an online real-time basis.
Customers across India are also serviced through multiple delivery channels such as Phone
Banking, Net Banking, Mobile Banking and SMS based banking. The Bank’s expansion plans
take into account the need to have a presence in all major industrial and commercial centres,
where its corporate customers are located, as well as the need to build a strong retail customer
base for both deposits and loan products. Being a clearing / settlement bank to various leading
stock exchanges, the Bank has branches in centres where the NSE / BSE have a strong and
active member base.

The Bank also has a network of 11,766 ATMs across India. HDFC Bank’s ATM network can be
accessed by all domestic and international Visa / MasterCard, Visa Electron / Maestro, Plus /
Cirrus and American Express Credit / Charge cardholders.

MANAGEMENT

Mrs. Shyamala Gopinath holds a Master’s Degree in Commerce and is a CAIIB. Mrs. Gopinath
has 39 years of experience in financial sector policy formulation in different capacities at RBI. As
Deputy Governor of RBI for seven years and member of the Board. Mrs. Gopinath had been
guiding and influencing the national policies in the diverse areas of financial sector regulation
and supervision, development and regulation of financial markets, capital account management,
management of government borrowings, forex reserves management and payment and
settlement systems.

The Managing Director, Mr. Aditya Puri, has been a professional banker for over 25 years and
before joining HDFC Bank in 1994 was heading Citibank's operations in Malaysia.
The Bank's Board of Directors is composed of eminent individuals with a wealth of experience in
public policy, administration, industry and commercial banking. Senior executives representing
HDFC are also on the Board.

Senior banking professionals with substantial experience in India and abroad head various
businesses and functions and report to the Managing Director. Given the professional expertise
of the management team and the overall focus on recruiting and retaining the best talent in the
industry, the bank believes that its people are a significant competitive strength.
 TECHNOLOGY

HDFC Bank operates in a highly automated environment in terms of information technology and
communication systems. All the bank’s branches have online connectivity, which enables the
bank to offer speedy funds transfer facilities to its customers. Multi-branch access is also
provided to retail customers through the branch network and Automated Teller Machines
(ATMs).

The Bank has made substantial efforts and investments in acquiring the best technology
available internationally, to build the infrastructure for a world class bank. In terms of core
banking software, the Corporate Banking business is supported by Flex cube, while the Retail
Banking business by Fin ware, both from i-flex Solutions Ltd. The systems are open, scalable
and web-enabled.

The Bank has prioritised its engagement in technology and the internet as one of its key goals
and has already made significant progress in web-enabling its core businesses. In each of its
businesses, the Bank has succeeded in leveraging its market position, expertise and technology
to create a competitive advantage and build market share.

IMPORTANCE OF SERVICE QUALITY

Service quality is considered as the most critical determinant of competitiveness for establishing
and sustaining satisfying relationship with customers. Business firms including banks have
recognized the fact that the only one best way to manage the competition is the quality
differentiation. Advance technology, customer oriented corporate culture, a well designed
service- system and excellent information system are the major factors that decide the superior
quality of service of an organization. Providing excellent service quality and maintaining the high
customer satisfaction is the important issue and the challenge facing contemporary service
industry. Thus Service Quality is an important subject in both public and private sectors
business firms and service industries. Banking sector is not an exception to this. Before
independence the banking system in India was in private sector and in very weak position. To
strengthen the banking system then government established Reserve Bank India (RBI) in 1935
and empowered to regulate banking companies by issue of directive, inspection, amalgamation,
mergers etc. Major action was taken 1949 by passing the Banking regulation Act which was
very important in respect of structural reforms in the banking sector. This act had given
extensive regulatory powers to RBI over the banks in India. Nationalization of banks was
another major step of the government (14 banks on 19th July, 1969 and 6 banks on 15th April,
1980) to constitute the public sector banks. These public sector banks occupied a vital role in
Indian economy in general and banking sector in particular. Government implemented many
social welfare schemes through these banks. Prior to globalization there was very little
competition in the banking sector and the public sector banks played dominating role in terms of
size of assets? Due to changing global scenario, the government recognized the need to
introduce reforms to make banking industry more competitive. Thus, the government had made
policy changes like deregulation of interest rates and dilution of
consortium lending requirement. Moreover, banking sector had been opened up to the private
sector. With this, new banks have been set up in private sector, called as new private sector
banks, foreign banks have entered the Indian banking sector and existing banks in private
sector (old private sector banks) changed their level of operations. All these increased the
competition among the banks and efficiency of the banking industry.

SERVICE QUALITY DIMENSION - SERVICE QUALITY GAP MODEL (SERVQUAL)

The gap model (also known as the "5 gaps model") of service quality is an important customer-
satisfaction framework. In "A Conceptual Model of Service Quality and Its Implications for Future
Research" (The Journal of Marketing, 1985), A. Parasuraman, VA Zeitham and LL Berry identify
five major gaps that face organizations seeking to meet customer's expectations of the
customer experience. SERVQUAL is one the tools used in measuring the quality of services.
According to Buttle (1996), SERVQUAL is for the measuring and managing the quality of
service. Asubeonteng et al (1996) also intimated that the model is used to measure the quality
of service from the customer's point of view. The originators of the model are Parasuraman,
Zeithamal and Berry. It was developed in 1985 but was polished in their subsequent articles
(Parasuraman et al 1988). The main aim of SERVQUAL is to have a standard and a reliable tool
that can be used to measure the quality of services in different service sectors. Originally, those
who developed SERVQUAL introduced ten service quality dimensions or attributes. These are:
1. Tangibles, 2. Reliability, 3. Responsiveness, 4. Competency, 5. Courtesy, 6. Communication,
7. Credibility, 8. Security, 9. Access and 10. Understanding the customer.

Table – 1 Definition of Original Ten SERVQUAL Dimensions

Sl. No. Dimension Definition

1 Tangibles Appearance of physical facilities, equipment personnel and
communication materials.
2 Reliability Ability to perform the promised service dependably and
accurately.
3 Responsiveness Willing to help customers and provide prompt service.

4 Competence Possession of the required skills and knowledge to perform the

service.
5 Courtesy Politeness, respect consideration and friendliness of contact
personnel.
6 Credibility Trustworthiness, believability, honesty of service provider.

7 Security Freedom from danger, risk of doubt.

8 Access Approachability and ease of contact

9 Communication Keeping customers informed in language they can understand

and listening to them.
10 Understanding Making the effort to know customers and their needs
the Customer
However, in the 1988 article, these were pruned to five (Parasuraman et al 1988).

These are, 1. Tangibles, 2. Reliability, 3. Responsiveness, 4. Assurance and 5. Empathy.

Tangibility refers to the physical environment in which the service provider operates. It
comprises the physical facilities available, workers, and equipment and communication
materials. Reliability concerns the ability with which the service organization can deliver the
service dependably and accurately. Empathy on the other hand, is about the special care and
attention given to individual customers when being served. Responsiveness is also the
preparedness of the service provider to assist customers and render as quick of prompt service
as possible. Assurance too is in connection with knowledge and the courteous attitude of staff
and their ability to in still, trust and confidence in customers.

Survival of banks, in heavy competition, depends upon how the banks are providing quality
services to their customers. Service quality is a comparison of expectations with performance.
From the viewpoint of business administration, service quality is an achievement in customer
service. It reflects at each service encounter (Bhatia, Assessment of Service Quality in Public
and Private Sector Banks of India with Special Reference to Lucknow City). A customer's
expectation of a particular service is determined by factors such as recommendations by peers,
personal needs and past experiences. The expected service and the perceived service
sometimes may not be equal, thus leaving a gap.

The service quality model or the 'GAP model' developed by the authors- Parasuraman, Zeithaml
and Berry at Texas and North Carolina in 1985, highlights the main requirements for delivering
high service quality. It identifies 'gaps' that cause unsuccessful delivery of service. Customers
generally have a tendency to compare the service they 'experience' with the service they
'expect'. If the experience does not match the expectation, there arises a gap.

Table – 3 Definition of Service Quality Dimensions

Sl. No. Dimension
1 Tangibles
2 Reliability
3 Responsiveness
4 Assurance
5 Empathy
Source: Zeithmal, Parasuraman and Berry, (1988) Delivering Quality Service, New York,
Free Press, p 26.
Definition
Appearance of physical facilities, equipment personnel
and communication materials.
Ability to perform the promised service dependably and
accurately.
Willing to help customers and provide prompt service.
Knowledge and courtesy of employees and their ability of
convey trust and confidence.
Caring, individualized attention the firm provides its
customers.
 SERVICE QUALITY DIMENSION IN BANKS

Several researchers have suggested that the search for universal conceptualization of the
service quality construct may be futile (Levist, 1981; Lovetock, 1983). The service quality
construct is either industry or context specific (Babakus and Boller, 1992).

The measurement of the service quality construct is multidimensional. In its original structure,
service quality consists of five dimensions (Parasuraman et al., 1988; Carman, 1990; Rust and
Oliver, 1994). These are:

1. The tangibility aspects of the service

2. The reliability of the service provider
3. The assurance provided by the service provider
4. The responsiveness of the service provider; and
5. The service provider's empathy with customers

The included variables to measure the service quality of commercial banks were ranging from
seventeen to fifty seven variables (Narul Islam, 2005; Verma and Vehra, 2000; Sharma and
Mehta, 2004; Elango and Gudep, 2006; Sharma and Sharma, 2007; Bhat, 2004; Levesque and
Gorden, 1996; Bhat, 2005; Zillur, 2005; Gani and Bhat, 2003). In the present study, the included
service quality variables are twenty. (Pacific Business Review International
Volume 9 Issue 11, May 2017)

REVIEW OF LITERATURE
It is relevant to refer briefly to the previous studies and research in the related areas of the
subject to find out and to fill up the research gaps. The following are the some studies
conducted by the eminent authors and practitioners on the area of service quality of banks.
(Dhandabani, 2010) Examined the nature of linkage between service quality and customer
loyalty in Indian retail banking. Study used confirmatory factor analysis to identify the service
quality dimension. The resulted dimensions are Reliability, Responsiveness, Knowledge and
recovery; and Tangibles. The service quality dimensions lead to customer satisfaction and the
customers' satisfaction leads to customer's loyalty. The structural equation model reveals that
there is no significant direct linkage between service quality and customers loyalty. At the same
time, the service quality has a significant indirect impact on customer's loyalty especially through
customer's satisfaction.

(Maya Basant Lohani, 2012) Examined on service quality in selected banks and measured in
five dimensions by using SERVQUAL scale developed by Parasuraman et al (1988 and
revealed that there exist a small perceptual difference regarding overall service quality with the
respective banks. The study of found that banks have more concentration on the tangible factor
like a computerization, physical facilities, etc. to attract the customers.

(Jain, 2012) In their study “Customer Perception on Service Quality in Banking Sector: With
Special Reference to Indian Private Banks in Moradabad Region” try to learn and understand
the
customer perception regarding service quality and to learn and understand the different
dimension of service quality in banks.
(Thakur, 2011) has presented that how service quality and customer satisfaction is related to
customer’s loyalty in Indian Banking sector’s perspective. He found that customer satisfaction is
significantly and positively related with customer loyalty and customer satisfaction is an
important mediator between service quality and customer loyalty. In the last of the study he
have discussed that banking service providers should follow right course of action to win
customer satisfaction by providing better service quality in order to create loyal customer base.
(Desta, 2011) Studied by assessing and measuring the banking service quality perception of the
SBI branch customers; and examining the relationship between service quality, customer
satisfaction and positive word of mouth and found that the expectations of bank customers were
not met and that the largest gap was found in the reliability dimension. This dimension also had
the largest influence on customer satisfaction and overall satisfaction of bank customers had a
positive effect on their word-of-mouth. The study also suggested that input from employees on
what constitutes “service excellence” will be beneficial. The bank need to reassess “what
customers expect from the bank” and provide client specific services. It needs to invest on
employee training programs that will provide employees with an understanding of service culture
and service excellence particularly at front line levels. Employee training programs should focus
on interpersonal communication and customer care factors in order to be able to meet the
customers' need for personalized service.

(Kheng, et al. 2010) studied on the impact of service quality on customer loyalty of the banks
customers in Penang, Malaysia. They opined that a lot of competitive factors in the form of
substitutes are forcing bankers to explore the importance of customer loyalty. Therefore, studies
need to focus on the changing role of the banking system. They also found that improvement in
service quality can enhance customer loyalty.

(Dr. Rupa Rathee, 2014), studied the service quality gaps in banks after nationalization of
commercial banks. With the entry of new generation, tech-savvy, private banks the banking
sector has become too competitive. Gap analysis was applied to find the gaps between
expected and performed service in private banks to find the difference between male and
female perception and expectation. This study provided an insight into which attributes of
service quality in private bank were most important in providing satisfaction to customers and
areas where significant gaps existed. It concluded that the highest gap was found in the
dimension of reliability and empathy and suggested that the banks have to reduce this gap
giving individual personal attention to understand customer specific needs. The customers trust
the public sector banks. These banks have existed in the market for a longer period than the
private sector banks. The reliability factor is a positive factor for these banks. Therefore private
banks should position themselves in the market on the basis of this dimension and promote
themselves aggressively. It becomes imperative for the private sector banks to train their
employees to treat the customers with empathy. Statement of Problem Extensive research has
been done by eminent scholars, academicians and practitioners on service quality in the
banking industry. All these studies have concentrated on urban areas only. No concrete study
found out the perceptions of rural customers about the quality of banks' services in India. There
is a need for an extensive study on the rural customers' perceptions on the service quality in
banking service offered in rural areas. Hence this research study was undertaken.

Mosahab, et al. (2010) presented a research that was conducted in a bank in Tehran, Iran. This
report aimed to determine the quality of services offered by Sepah Bank, and also to study the
relationship between the service quality, satisfaction and loyalty. The results of this research
showed that in all aspects, customers’ expectation, are higher than their perceptions of the
Bank’s
operation, and in fact the quality of offered services is low. Besides, this research findings show
that the customer satisfaction plays the role of a mediator in the effects of service quality on
service loyalty.

Afsar, et al. (2010) worked on the determinants of customer loyalty in the banking sector of
Pakistan. They argued that banking industry needs high interaction with the customers and
that’s why managers must understand the factors which influence the loyalty. They attempted to
find the factors of customer loyalty and their relationships with the banking industry in
developing countries. They examined and found that perceived quality, satisfaction, trust,
switching cost and commitment are the factors which influence the loyalty of the customers.
J. Joshua Selvakumar (2010) studies the impact of Service Quality on Customer Satisfaction in
Public Sector and Private Sector Banks. The study examines the effect of service quality
determinants on the degree of customer satisfaction in public and private banks in India. By
realizing the gap between the perceived and actual service quality, customer satisfaction can be
extremely improved.

Dr. Manasa Nagabhushanam (2010) conducted a research study on service quality of banks in
India. The study encompasses the service quality of all the banks i.e., public sector, private
sector, and foreign banks and measures the attributes on SERVQUAL scale. The study was
conducted to analyze the expected and perceived gap among customers and bankers.
Mukta Dewan and Dr. Sadhana Mahajan (2009) studied the study of the perceived Service
Quality and its Dimensions in Private Sector Banks. The study examines that there was a
significant difference in the perception of service quality and its dimensions for the private sector
bank customers for different categories of demographic factors. The perception of male and
female customers varied significantly for the overall service quality and its dimensions –
reliability, responsiveness, assurance and empathy. It was found that the male customers had a
more positive perception of service quality as compared to the female counterparts.

Maya Basant Lohani and Dr. POOJA Bhatia (2011) studied the Assessment of Service Quality
in Public and Private Sector Banks of India. The study was conducted to ascertain service
quality variations across selected banks by demographic variations and to measure the
customer satisfaction in selected public and private sector banks by analyzing the gap between
expectations and their perceptions of banking services.

Vibhor Jain, Dr. Sonia Gupta and Smrita Jain (2014) studied customer perception of service
quality in banking sector with special reference to India private banks. The study examines to
learn and understand the customer perception regarding service quality and understand the
different dimension of service quality in banks. The customers trust the public sector banks.
These banks have existed in the market for a longer period than the private sector banks. There
is an urgent need for the banking services to reaffirm themselves in view of the cut-throat
competition, which is close on the anvil.

Ms. Nisha Malik and Mr. Chand Prakash Saini (2011) studied Private Sector Banks Service
Quality and Customer Satisfaction by conducting an Empirical Study of two Private Sector
Banks. The aim of proposed study was to find out perception of HDFC and ICICI bank
customers regarding to the service quality parameter and gap analysis of expected and
acknowledged quality parameters, and also revels the relationship between psychographic
factors and satisfaction levels of rural and urban customers.

Akte S. and Ghosh S.K. (2006) examine the gap between expectations and perceptions of
customers in Dhaka city of Bangladesh regarding banking services with a special focus on
SERVQUAL model. The study concludes that in four dimensions like reliability, empathy,
tangibility, assurance, the gap between perceptions and expectations is significant except
responsiveness where it is insignificant means banks do not extent that level of services which
will satisfy the customers expectations. The study also suggests some recommendations to
minimize this gap.

RESEARCH METHODOLOGY

Objective of the Study :

 To examine the Customer satisfaction of HDFC Bank through analysing the essential
dimensions of service quality i.e. (RATER)

 To identify in which service quality dimension the bank is performing sound and which
part needs improvement and suggestions so as to enhance overall service quality.

 To identify the customer grievance if any.

 To help bank to know what customer needs/wants from bank, such that they can
transform themselves accordingly.

Research Design:

I decided to employ blend of exploratory research and descriptive research, as it is concerned

with discovering the general nature of the problem and the variables that relate to it. It turned
out to be descriptive while evaluating customer perceptions related to service quality of HDFC
BANK.

Source of Data:
Primary data
Questionnaire, Personal interview and observations.
Secondary data
Books, Journals, Brochures, Google, Internet & Websites, New Paper Articles etc.

DATA COLLECTION TOOL

Likert scaling is a bipolar scaling method, measuring either positive or negative response to a
statement. The questionnaire consists of two parts. The first part consists of three questions
concerning the demographic information of the respondent such as the name, age, educational
qualifications and income. The second part consisting of 18 questions exploring the
respondent’s perception about the service quality of HDFC. For evaluation of service quality of
HDFC bank service quality dimension of reliability, assurance, tangibility, empathy and
responsiveness is used in order to evaluate the actual service quality of HDFC bank. The scale
use in the study is a 5 point Likert scale which follows the pattern;
1. Strongly disagree
2. Disagree
3. Neither agree nor disagree
4. Agree
5. Strongly agree

Data Collection Method:

Data collection is done mainly through two sources namely primary and secondary. Secondary
source is nothing but utilizing somebody else’s earlier effort and work. Primary source is when
the data collection is done for the first time. I had taken up both secondary database and to
have greater accuracy I decided to go in for collection of primary database.
To tap secondary database I went through the brochures of the companies and even through
the web sites of the company.

To tap the primary database I decided to go in for Survey Method. Various tools can be used to
conduct a survey. These tools are very important to trigger a stimulus, which would bring out
their attitude and ideas. I have used Questionnaire as a tool for the above-mentioned purpose.
A close-ended Questionnaire has been used in this Project to know the satisfaction level of the
customers of the Bank in order to improve the services in the near future.

SAMPLE DESIGN

SAMPLE SIZE: 100

SURVEY AREA: The survey data was collected from the previous years walk in customers filled
survey forms.
SAMPLING TECHNIQUE: The sampling technique used in this research is non probability
sampling and under non probability sampling, judgemental sampling is used.

Limitations of the Study

“100 samples do not reflect the opinion of customers as whole.

The data was collected only by conducting quantitative research method – distributing
questionnaires.

Due of time constraints it is impossible to find the true calculation & there may be possibility of
committing a general error.”
The study is only restricted to a particular location. So, it cannot be taken as a whole
representative of the banking industry.

Many respondents can be baised towards the questions asked and there can be a lot of reasons
for not responding at all.

Some respondents wanted to play safe and used ‘’uncertain’’ as a option which made it difficult
to arrive at a right conclusion.
DATA COLLECTION & ANALYSIS

Q. Gender

Gender Response Response in % (Sample Size

100)
Male 72 72%
Female 28 28%

Gende
r
0

28
% Male
Femal
e

72
%

INTERPRETATION:

From the above table and graph it is seen that

72% respondents are male.
28% respondents are female

Q. Age of the respondent

Age Response Response in % (Sample Size

100)
Under 25 years 18 18%
25 - 49 years 60 60%
49– 55 years 10 10%
55 years and above 12 12%
 Age of the Respondent

12% Under 25 years

18%
10%25 - 49 years
49 -55 years

55 years and above

60%

INTERPRETATION:

From the above table and graph it is seen that

18% respondent’s age are under 25.

60%respondent’s age are 25 to 49 years.
10%respondent’s age are 49 to 55 years.
12%respondent’s age are 55 years and above.

Q. Annual Income

Annual Income Response Response in % (Sample Size

100)
2 Lac 32 32%

2 – 4 Lac 26 26%
 4 – 5 Lac 24 24%

Above 7 Lac 18 18%

Annual Income

2 Lac
18%
2 - 4 Lac
32%
4 - 5 Lac

above 7 Lac
24%

26%

INTERPRETATION:

From the above table and graph it is seen that

32% respondent’s annual income is 2 lakhs.
60% respondent’s annual income is 2 to 4 lakhs.
10% respondent’s annual income is 4 to 5 lakhs.
12% respondent’s annual income is 7 lakhs above.

Q. Occupation

Occupation Response Response in % (Sample Size

100)
Business 42 42%

Retired 10 10%
 Student 8 8%

Salary based 40 40%

Occupation

Business

Retired

40% 42% Student

Salary based

8% 10%

INTERPRETATION:

From the above table and graph it is seen that

42% respondent’s occupation is business.
10% respondents are retired.
8% respondent’s are students.
40% respondent’s are salary based.

Q. Education qualification of the respondent

Education qualification Response Response in % (Sample Size

100)
Under Graduate 14 14%

Graduate 30 30%
 Post Graduate 52 52%

Others 4 4%

Education Qualification of the respondent

Under Graduate
4% 14%
Graduate

Post Graudat

Others
52% 30%

INTERPRETATION:

From the above table and graph it is seen that

14% respondent’s are under graduates.

30% respondent’s are graduates.
52% respondent’s are post graduates.
4% respondent’s are those who have opted other options as their educational qualifications.

I am satisfied with the premises of the bank and it is visually appealing.

Scale Response Response in % (Sample Size

100)
Strongly Disagree 0 0%

Disagree 4 4%

Uncertain 12 12%
 Agree 48 48%

Strongly Agree 36 36%

I am satisfied with the premises of the bank

and it is visually appealing

0%4
% 12%
Strongly Disagree
36%
Disagree
Uncertain Agree
Strongly Agree

48%

INTERPRETATION:

Here analysis show that most of the respondents agreed with this statement. Among the total
respondents 0% strongly disagreed, 4% disagreed, 12% were uncertain, 48% agreed and
36%strongly agreed. After analysis I found that majority of the respondent’s think that HDFC
Bank has the contemporary premises which are visually appealing.

I am satisfied with the technological up-to-date equipment’s of the bank like ATM’S.

Scale Response Response in % (Sample Size

100)
Strongly Disagree 0 0%

Disagree 6 6%
 Uncertain 12 12%

Agree 48 48%

Strongly Agree 34 34%

I am satisfied with the technological up-

to-
date equipment's of the bank like
0%6
ATM'S
% 12 Strongly
34 % Disagree
%
Disagree
Uncertain Agree
Strongly Agree

48
%

INTERPRETATION:

HDFC Bank is having technologically modern fit equipments. From the above statement I found
out that respondent’s 0% strongly disagreed, 6%disagreed, 12%were uncertain, 48%agreed
and 34%strongly agreed. Hence after analysis it is found that most of the customers are
satisfied with the technological up to date equipments.

Q.3.I am satisfied with the way the employees dress up and present themselves.

Scale Response Response in % (Sample Size

100)
Strongly Disagree 4 4%

Disagree 8 8%
 Uncertain 12 12%

Agree 42 42%

Strongly Agree 34 34%

I am satisfied with the the way the

employees dress up and present themselves

4%
8%
Strongly Disagree
34% 12%
Disagree
Uncertain Agree
Strongly Agree

42%

INTERPRETATION:

Majority of the customers believe that the employees dress up formally and neat. The analysis
shows that respondent’s 4% strongly disagreed, 8%disagreed, 12%were neutral, 42%agreed
and 34%strongly agreed. Hence after analysis it is found that most of the customers are
satisfied with the way employees present themselves.

Q.4.I am satisfied with the pamphlets distributed by the bank and they give clear and complete
information.

Scale Response Response in % (Sample Size

100)
Strongly Disagree 10 10%

Disagree 16 16%
 Uncertain 28 28%

Agree 32 32%

Strongly Agree 14 14%

I am satisfied with the the pamphelts

distributed by the bank and they give clear
and complete information

14% 10%
Strongly Disagree
16%
Disagree
Uncertain Agree
32% Strongly Agree

28%

INTERPRETATION:

Materials like pamphlets are well distributed by the Bank. The analysis shows that respondent’s
10% strongly disagreed, 16%disagreed, 28%were neutral, 32%agreed and 14%strongly agreed.
It can be concluded by saying that bank needs to work more on this aspect as many customers
were not agreeing to the fact that they receive any pamphlets. So, they should try to make them
widely available.

Q.5. When the bank staffs promises to do something by a certain time, it is delivered as promised.

Scale Response Response in % (Sample Size

100)
Strongly Disagree 0 0%

Disagree 14 14%
 Uncertain 10 10%

Agree 44 44%

Strongly Agree 32 32%

When the bank staffs promises to do

something by a certain time, it is
delivered as
promised
0% 14%
Strongly
32 Disagree
% 10
%
Disagree
Uncertain Agree
Strongly Agree
44
%

INTERPRETATION:

The analysis shows that among the total respondent’s 0% strongly disagreed, 14%disagreed,
10%were neutral, 44%agreed and 32%strongly agreed. HDFC Bank has proved from my
analysis that if bank staff promises to do something by a certain time, it is delivered as
committed.

Q.6. When I face problems, the bank staff is sympathetic and reassuring.

Scale Response Response in % (Sample Size

100)
Strongly Disagree 8 8%

Disagree 8 8%

Uncertain 10 10%
 Agree 40 40%

Strongly Agree 34 34%

When I face problems, the bank staff

is
sympathetic and reassuring
8%
8% Strongly
34 Disagree
% 10 Disagree
% Uncertain
Agree
Strongly
40 Agree
%

INTERPRETATION:

Employees in the bank are courteous at all. Whenever a customer faces any problem, they
show sincere efforts to solve it. The analysis shows that among the total respondent’s 8%
strongly disagreed, 8%disagreed, 10%were neutral, 40%agreed and 34%strongly agreed.
Hence it can be concluded that employees of the bank are highly reliable and sympathetic.

Q.7. I am satisfied with the way staff responds to my queries.

Scale Response Response in % (Sample Size

100)
Strongly Disagree 0 0%

Disagree 6 6%

Uncertain 4 4%
 Agree 64 64%

Strongly Agree 26 26%

I am satisfied with the way staff

responds to
my queries
0%6%
4%
26 Strongly
% Disagree

Disagree
Uncertain Agree
Strongly Agree

64
%

INTE RPRETATION:

The analysis shows that among the total respondent’s 0% strongly disagreed, 6%disagreed,
4%were neutral, 64%agreed and 26%strongly agreed. Customers of HDFC Bank highly believe
that the employees are able to respond to all the queries put forth.

Q.8. I am satisfied with the way the bank handles my documents and records.

Scale Response Response in % (Sample Size

100)
Strongly Disagree 0 0%

Disagree 6 6%
 Uncertain 4 4%

Agree 54 54%

Strongly Agree 36 36%

I am satisfied with the way the bank handles

my documents and records

0%6% 4%

Strongly Disagree
36%
Disagree
Uncertain Agree

54% Strongly Agree

INTERPRETATION:

HDFC Bank has proved to provide expedite records. The analysis shows that 36% of the
customers think that they are satisfied with the maintenance procedure of their account,
54%agreed, 4%were neutral, 6%disagreed and 0%strongly disagreed with the statement.

Q.9. The bank provides quick services.

Scale Response Response in % (Sample Size

100)
Strongly Disagree 2 2%

Disagree 8 8%
 Uncertain 6 6%

Agree 52 52%

Strongly Agree 32 32%

The bank provides quick

services
2% 8%

6%
32 Strongly
% Disagree

Disagree
Uncertain Agree
Strongly Agree

52
%

INTERPRETATION:

The analysis shows that 32%of the customers think that they are satisfied with the maintenance
procedure of their account, 52%agreed, 6%were neutral, 8%disagreed and 2%strongly
disagreed with the statement. Hence it can be concluded that bank staff tells the customer the
exact timing of providing the services which is observed to be very quick every time.

Q.10. Employees in the bank is never too busy to respond to my request.

Scale Response Response in % (Sample Size

100)
Strongly Disagree 2 2%

Disagree 27 27%
 Uncertain 18 18%

Agree 40 40%

Strongly Agree 18 18%

Employees in the bank is never too busy

to
respond to my request
2%
18%
27% Strongly Disagree
Disagree
Uncertain Agree

40% 18% Strongly Agree

INTERPRETATION:

As per the analysis of the data collected by me, 18% strongly agreed, 40% agreed, 18% were
neutral, 22% disagreed and only 2% strongly disagreed with the statement. Hence, we can
conclude by saying that employees of HDFC Bank manage to provide prompt service.

Q.11. The Employees are willing and ready to help customers.

Scale Response Response in % (Sample Size

100)
Strongly Disagree 0 0%

Disagree 4 4%
 Uncertain 8 8%

Agree 48 48%

Strongly Agree 40 40%

The Employees are willing and ready to help

customers

0%4
8%
%
Strongly Disagree
40% Disagree

Uncertain
Agree
48% Strongly Agree

INTERPRETATION:

Employees in the HDFC bank are willing and ready to help the customers. As per the analysis of
my data it is shown that 40% of the respondents strongly agreed 48% agreed 8% of were
neutral and there was no respondent who strongly disagreed with the statement. This shows
that HDFC bank focuses on maintaining the correct policy and for the establishment of healthy
relationships with the customers.

Q.12.I am satisfied with the bank service of sending timely bank statement and other information
related to my account.

Scale Response Response in % (Sample Size

100)
Strongly Disagree 0 0%
 Disagree 4 4%

Uncertain 12 12%

Agree 50 50%

Strongly Agree 34 34%

I am satisfied with the bank service of

sending timely bank statement and other
information related to my account

0%4
% 12% Strongly Disagree
34%
Disagree
Uncertain Agree
Strongly Agree

50%

INTERPRETATION:

As per the analysis there was no respondent who strongly disagreed with the statement 4%
disagreed 12% were uncertain and 50% agreed and 34% strongly agreed with the fact that they
are satisfied with the bank service of providing timely bank statement and other information
related to their accounts. So we can conclude that the satisfaction level of the customers with
respect to the statement is rated high.

Q.13. The employees of the bank are trustworthy.

Scale Response Response in % (Sample Size

100)
Strongly Disagree 0 0%
 Disagree 0 0%

Uncertain 18 18%

Agree 44 44%

Strongly Agree 38 38%

The employees of the bank are trustworthy

0%
18%
Strongly Disagree
38%
Disagree
Uncertain Agree
Strongly Agree

44%

INTERPRETATION:

As per the findings 38% of the respondents strongly agreed 44% agreed 18% were answered
and 0% disagreed with the statement. It was well observed during the research that the
customers had full faith and trust on the employees because I had personally seen that many of
the customers used to provide sensitive information with ultimate trust.

Q.14. The employees put a lot of effort to retain the customers.

Scale Response Response in % (Sample Size

100)
 Strongly Disagree 0 0%

Disagree 8 8%

Uncertain 10 10%

Agree 44 44%

Strongly Agree 38 38%

The employees put a lot of effort to retain

the customers

0% 8%

10% Strongly Disagree

38%
Disagree
Uncertain Agree
Strongly Agree

44%

INTERPRETATION:

Among the total customers 38% strongly agreed 44% agreed were uncertain and 8% disagreed
with the fact that employs of HDFC bank put a lot of effort to retain the customers. I have
observed that if any of the customers faces any problem and the employees are liable for it, the
employees make sure that they talk in a very positive and polite manner to solve the problem
and in order to retain the customer permanently.

Q.15. I feels safe in doing transactions with the bank.

 Scale Response Response in % (Sample Size
100)
Strongly Disagree 0 0%

Disagree 2 2%

Uncertain 6 6%

Agree 50 50%

Strongly Agree 42 42%

I feels safe in doing transaction with the bank

02%%
6%
Strongly Disagree

42% Disagree

Uncertain
Agree
50% Strongly Agree

INTERPRETATION:

Safeties always have been a major concern for a customer while choosing the right bank. The
customers of HDFC bank feel very safe while doing transactions with the bank. As it is very
evident from the data collected 42% strongly agreed with the statement and 50% agreed with
the statement and there was no respondent who strongly disagreed with the statement.

Q.16. Employees in the bank has the knowledge to answer my questions.

 Scale Response Response in % (Sample Size
100)
Strongly Disagree 0 0%

Disagree 0 0%

Uncertain 12 12%

Agree 62 62%

Strongly Agree 26 26%

Employees in the bank has the

knowledge to
answer my questions
0% 12%
26 Strongly
% Disagree
Disagree
Uncertain Agree
Strongly Agree

62
%

INTERPRETATION:

No doubt all the employees in HDFC bank are very knowledgeable to answer all the queries of
the customers as nowadays banks have made criteria to recruit only trained employees who are
going to be considered as an asset for the company. As per the findings 26% strongly agreed
62% agreed 12% were neutral and 0% disagreed with the statement.

Q.17. The bank gives me individual attention.

 Scale Response Response in % (Sample Size
100)
Strongly Disagree 0 0%

Disagree 6 6%

Uncertain 8 8%

Agree 66 66%

Strongly Agree 20 20%

The bank gives me individual attention

0%6%
20% 8%
Strongly Disagree

Disagree
Uncertain Agree
Strongly Agree

66%

INTERPRETATION:

HDFC bank has been able to provide individual attention to its customers. As per the data
collected it shows that 20% strongly agreed 66% agreed with the statement 8% were neutral 6%
disagreed and 0% strongly disagreed with the statement.

Q.18. The operating hours of the bank is convenient to me.

 Scale Response Response in % (Sample Size
100)
Strongly Disagree 0 0%

Disagree 6 6%

Uncertain 10 10%

Agree 58 58%

Strongly Agree 26 26%

The operating hours of the bank is

convenient to me

0%6
% 10%
26% Strongly Disagree

Disagree
Uncertain Agree
Strongly Agree

58%

INTERPRETATION:
The operating hours of the bank are convenient to the customers. The data collected shows that
58% agree with the statement and 6% disagree with the statement 10% will neutral and 0%
strongly disagreed.

Q.19. The bank staff provides me with the products and services that are best suited to me
.
Scale Response Response in % (Sample Size
100)
Strongly Disagree 0 0%

Disagree 14 14%

Uncertain 26 26%

Agree 40 40%

Strongly Agree 20 20%

The bank staff provides me with the products

and services that are best suited to me

0%
14%
20%
Strongly Disagree

Disagree

26% Uncertain Agree

Strongly Agree

40%

INTERPRETATION:

The data analysis shows that 20% of the respondents strongly agreed 40% agreed 26% were
uncertain 14% disagreed and No respondent strongly disagreed with the statement. Somehow it
has been seen that the bank staff has not been able to provide the correct choice of products
and services to the customers. Hence they should try to fill the gap in order to position right
image of the company in the eyes of the customers.

Q.20. The employees of the bank understand my specific needs.

 Scale Response Response in % (Sample Size
100)
Strongly Disagree 0 0%

Disagree 2 2%

Uncertain 26 26%

Agree 48 48%

Strongly Agree 24 24%

The employees of the bank understand my

specific needs

02
24% %%
26% Strongly Disagree

Disagree
Uncertain Agree
Strongly Agree

48%

INTERPRETATION:

As per the analysis 26% were uncertain and 48% agreed 24% strongly agreed 2% disagreed and
0% strongly disagreed with the fact that employees of the bank understand our specific needs.

Q.21. I am satisfied with the overall service quality of HDFC bank.

 Scale Response Response in % (Sample Size
100)
Strongly Disagree 0 0%

Disagree 0 0%

Uncertain 2 2%

Agree 56 56%

Strongly Agree 42 42%

I am satisfied with the overall service quality

of HDFC bank

02
%%
Strongly Disagree

42% Disagree
Uncertain
56% Agree
Strongly Agree

INTERPRETATION:

The respondents were satisfied with the overall service quality of HDFC bank. As it is quite
evident from the research that 56% of the respondents agreed with the statement 42% strongly
agreed 2% were neutral 0% disagreed and there was no respondent who strongly disagreed
with the statement.

Learnings
  A satisfied customer in 10 years will bring 100 more customers to the company.
 It costs 7 times more to attract a new customer than to serve an old one.
 20% of the company’s loyal customers account for 80% of its revenues.
 The chances of selling to an existing customer are 1 in 2, the chances of selling to a new
customer are 1 in 16.
 Every part of the company’s marketing effort should be geared towards building lifetime
relationships.
 People want to do business with friendly people. To have effective relations a friendly
attitude must permeate in the organization.
 Information technology developments should be positively used to serve the customers.
 The company should always be flexible to bend its rules and procedures in the client’s
favour.
 The company should communicate with its customers even when it is not trying to sell
something.
 The company can communicate and develop stronger customer bonding by providing
financial and social benefits.
 The company should try to know all its customers including their lifestyles, hobbies, likes
and dislikes etc.
 The company should make it a point to deliver more than what is promised.

Conclusion
“Customer satisfaction depends on the performance relative to a expectations. A key premise in
customer satisfaction is understanding the needs and meeting or exceeding the expectations of
customers. Furthermore, this is done while optimally using resources. While most companies
have developed strategies to improve quality and external customer service,” “internal customer
satisfaction is a much neglected component of quality improvement. To this end, it is important
to emphasize that total customer satisfaction can be attained only if all employees devoted to
external customer satisfaction can work together and assist each other to achieve the common
objective, when the internal customer isn't satisfied, Relationships with the external customer
suffer. So, it is suggested to adopt customer oriented approach to keep the internal customer
satisfied and motivated, who in turn will focus their attention and energy upon meeting the
requirements of their customers, thereby maximizing the customer, thereby maximizing the
customer satisfaction.”

Customer satisfaction survey is the process to monitor the satisfaction quotient of their people.
In internal satisfaction surveys therefore tracks the return on your investments in keeping your
people happy, high salaries, a quality culture, a healthy work environment.” The services and
products of HDFC bank have been capturing the customer interest &it has grown substantially
in a short course of time. “
Recommendations
“HDFC Bank can open and expand its branches in rural areas to trap more customers for the
bank.”
“The forthcoming schemes should be sent to the customers along with their quarterly &monthly
statements.”
“Banks would have to find the way to provide door-to-door services for its customers, as it is very
much convenient for any businessman & shopkeeper of any particular area.”
Competitive strategy can be adopted so that the market could be captured.
“Customers generally prefer funding from Loans, therefore more emphasis should be given on
loan provisions.”