PROVIDER GAP 2

PROVIDER GAP 2
⚫Accurate understanding of
customers’ expectations are
necessary, but not sufficient for
delivering superior quality service.

⚫Another important requirement is

the service designs and
performance standards that reflect
those accurate perceptions.
PROVIDER GAP 2
⚫ Managers or executives faces
great difficulty in translating their
understanding of customers’
expectations into service quality
specifications that the employees
can understand and execute.

⚫Provider gap is the difference

between……
PROVIDER GAP 2

Customer

Customer driven
Company Service designs and
standards

Gap 2

Company Perceptions
of
Consumer Expectations
REASONS FOR GAP 2
⚫Gap 2 exists for a variety of reasons:
– Management belief that customers
expectations are unreasonable or
unrealistic.

– Belief that degree of variability inherent

in service defies standardization

– Contend that the demand of service is

too hard to predict or that the
company and its personnel operate
cannot be changed.
REASONS FOR GAP 2
⚫ Because services are intangible, they
are difficult to describe and
communicate.
– Ex. A hospital stay, a golf lesson, a week’s
resort vacation, a one year consulting
assignment, etc.
⚫ It is critical that all people involved
(managers, front-line employees, and
setting back office support staff) be
working with the same concepts of the
new service based on customer needs
and expectations.
TOOLS FOR REDUCING GAP 2
⚫ To avoid gap 2, we need to ensure that
new and existing services are developed
and improved in as careful manner as
possible.

⚫ Will discuss challenges involved in

designing services and some strategies
for effectively overcoming it.

⚫ The quality of service delivered by

customer-contact personnel is critically
influenced by the standards against
which they are evaluated and
compensated.
TOOLS FOR REDUCING GAP 2
⚫ When standards do reflect what
customers expect, the quality of service
is to be enhanced.

⚫ Customer defined service standards, if

developed appropriately, have a powerful
positive impact in closing both provider
gap 2 and customer gap.

⚫ Also, role of physical evidence is very

important in service design and in
meeting customer expectations.
Key factors leading to Gap 2
⚫Poor Service Design
– Unsystematic new-service
development process
– Vague, undefined service design
– Failure to connect service design to
service positioning
Key factors leading to Gap 2
⚫Absence of Customer- Defined
Standards
– Lack of customer defined service
standards
– Absence of process management to
focus on customer requirement
– Absence of formal process for setting
service quality goals.
⚫Inappropriate Physical Evidence
and Servicescape
Service Development and
Design
⚫ Have you ever considered starting
your own service business?
⚫What type of service would it be?
⚫Assuming you understood your
market and potential customers’
needs and expectation, how would
you go about designing the service
to meet those needs?
⚫ A study of 11000 new products launched by 77
manufacturing, service, and consumer
products companies found that only 56% of
new offerings are still surviving after 5 years.

⚫ Failures can be due to number of reasons: no

unique benefit offered, insufficient demand,
unrealistic goals for the new products/service,
poor fit between the new service and others
within the organization’s portfolio, poor
location, insufficient financial backing, etc.
Challenges for Service Design
⚫ Because services cannot be
touched, examined, or tried out,
people frequently resort to words in
their efforts to describe them.
⚫Lynn Shostack, a pioneer in
developing design concepts for
services, has pointed out 4 risks of
attempting to describe for services
in words alone.
Challenges for Service Design
1. Oversimplification: Ex. “to say that
‘portfolio management’ means
‘buying and selling stocks’ is like
describing ‘space shuttle’ as
something that flies’.

1. Incompleteness: In describing
services, people (employees,
managers, customers) tend to omit
details or elements of the service with
which they are not familiar.
Challenges for Service Design
3. Subjectivity: Any one person
describing a service in words will
be biased by personal experiences
and degree of exposure to the
service.

4. Biased Interpretation: No two

people will define “responsive”,
“quick”, or “flexible” in exactly the
same way.
 Stages in New Service
Development- Front-End Planning
1. Business Strategy Development or
Review
– Overall strategic Mission & Vision
2. New-Service Strategy
Development
Markets
Offerings
Current Customers New Customers
Existing Services SHARE BUILDING MARKET
DEVELOPMENT
New Services SERVICE DIVERSIFICATION
DEVELOPMENT
 Stages in New Service
Development- Front-End Planning
3. Idea Generation
– Screen ideas against new service
strategy
4. Concept Development and
Evaluation
– Test concept with customers and
employees
5. Business Analysis
– Test for profitability and feasibility
 Stages in New Service
Development -Implementation
6. Service Development and Testing
– Conduct service prototype test
7. Market Testing
– Test Service and other marketing-mix
elements
8. Commercialization

9. Post-introduction Evaluation
SERVICE BLUEPRINT
⚫ One of the keys to matching service
specifications to customer expectations
is the ability to describe critical service
process characteristics objectively and
to depict them so that employees,
customers, and managers alike know
what the service is, can see their role in
its delivery, and understand all the steps
and flows involved in service process.

⚫ A tool that addresses the challenges of

designing and specifying intangible
service processes.
SERVICE BLUEPRINT
⚫ Manufacturing, construction –have
long tradition of engineering and
design
⚫Car, computer, a toy or shampoo –
have also detailed and concrete
plans, written specifications, and
engineering drawings
⚫Yet services lack concrete
specifications.
SERVICE BLUEPRINT
⚫ A service blueprint is a picture or map
that accurately portrays the service
system so that the different people
involved in providing it can understand
and deal with it objectively regardless of
their roles or their individual points of
view.
Process

Points of Contact

Evidence
Components of Blueprint
Physical
Evidence
Customer
Actions
Line of Interaction
Onstage Contact
Employee Actions
Line of visibility
Backstage Contact
Employee Actions
Line of Internal Interaction

Support Process
Blueprint for Overnight Hotel
Stay Service

Blueprint
CUSTOMER DEFINED
SERVICE STANDARDS
⚫ OPERATIONAL GOALS AND MEASURES
BASED ON PIVOTAL CUSTOMER
REQUIREMENTS THAT ARE VISIBLE
AND MEASURED BY CUSTOMERS.

⚫ THEY ARE OPERATIONS STANDARDS

SET TO CORRESPOND TO CUSTOMER
EXPECTATIONS AND PRIORITIES
RATHER THAN TO COMPANY
CONCERNS SUCH AS PRODUCTIVITY
OR EFFICIENCY.
CUSTOMER DEFINED
SERVICE STANDARDS
⚫These and other customer-defined
standards allow for the translation
of customer requirements into
goals and guidelines for employee
performance.
⚫It can be classified into two major
types:
– “Hard” Customer- Defined Standards
– “Soft” Customer-Defined Standards
“Hard” Customer- Defined Standards

⚫Things that can be counted, timed,

or observed through audits.
– Company: FedEx
• Customer priority: On-time delivery
• Customer-defined standard:
– No. of packages right day but late
– No. of packages wrong day and late
– No. of missed pickups
“Soft” Customer-Defined Standards

⚫ All customer priorities that cannot be

counted, timed or observed through
audits. They are opinion-based
measures that must be collected by
talking to customers, employees, or
others.
⚫ It provides direction, guidance and
feedback to employees in ways to
achieve customer satisfaction and
quantified by measuring customer
perceptions and beliefs.
“Soft” Customer-Defined Standards

⚫Ex:
– Company : GE
– Customer priorities: Interpersonal
skills of operators:
• Tone of Voice, Problem Solving,
Summarizing actions, Closing.
– Customer-defined standards:
• Taking ownership of the call, following
through with promises made, being
courteous and knowledgeable,
understanding the customer’s question
and request.
 PROCESS FOR DEVELOPING
CUSTOMER-DEFINED STANDARDS
1.Identify Existing or Desired Service Encounter Sequence

2. Translate Customer Expectations into Behaviors/Actions

3. Select Behaviors/Actions for Standards

4. Set Hard or Soft Standards

Measure by Measure by
Audits or 5. Develop Feedback Soft
Survey/Feed
Operating Hard back
Mechanisms
Data

6. Establish Measures and Target Levels

PROCESS FOR DEVELOPING
CUSTOMER-DEFINED STANDARDS

6. Establish Measures and Target Levels

7. Track Measures against Standards

8. Provide Feedback about Performance to Employees

9. Update Target Levels and Measures

 PHYSICAL EVIDENCE
AND SERVICESCAPE
⚫Because services are intangibles,
customers often rely on tangible cues,
or physical evidence,
– to evaluate the service before its purchase
and
– to assess their satisfaction with the service
during and after consumption.

⚫Effective design of physical, tangible

evidence is important for closing gap 2.
Elements of Physical Evidence
⚫Servicescape:
– Facility exterior
• Exterior design
• Signage
• Parking
• Landscape
• Surrounding Environment
– Facility interior
• Interior design
• Equipment
• Signage
• Layout
• Air quality/temperature
Elements of Physical Evidence
⚫Other Tangibles
– Business cards
– Stationary
– Billing Statements
– Reports
– Employee dress
– Uniforms
– Brochures
– Internet/Web pages
Guidelines for Physical
Evidence Strategy
⚫Recognize the strategic impact of
physical evidence
⚫Map the physical evidence of
services
⚫Clarify roles of servicescape
⚫Assess and identify physical
evidence opportunities
⚫Be prepare to update and
modernize the evidence
⚫Coordinate cross-functionally