Service Quality

What is Service? The New View

• Service includes every interaction between any customer and
anyone representing the company, including:
Dealers

Web site and

any e-channel Salespeople
Interaction

Billing and Customer Receptionists

Accounting and
Personnel Schedulers

Service Management
Employees and Executives

SSA 1
 Service Characteristics

perishability variability

intangibility inseparability

Services

Comparing goods and services

SSA 2
 Implications of Intangibility
• Services cannot be ___________

• Services cannot be easily ___________

• Services cannot be _______________

________________

Implications of Perishability
• It is difficult to synchronize supply and
demand with services

• Services cannot be ___________

SSA 3
 Implications of Heterogeneity
• Service delivery and customer satisfaction
depend on _________________________

• Service quality depends on many

___________

• There is no sure knowledge that the service

delivered matches what was planned and
promoted

Implications of Simultaneous
Production and Consumption
• Customers participate in and affect the
transaction

• Customers affect each other

• Employees affect the service outcome

• Decentralization may be essential

• ___________ is difficult

SSA 4
 Tangible and Intangible Products

• Goods: tangible or physical product.

– a computer, automobile, etc.
• Services: intangible or non-physical product.
– an insurance policy, eating at a restaurant .

Differences between
goods and services
Goods Services
Can be touched and felt with 5 senses Usually non material
Transfer of ownership at the point of No transfer of ownership
purchase
Can be resold Cannot be resold
Can be stored Cannot be stored
Produced before consumption Produced and consumed simultaneously
More standardized Tailor-made
Can be seen and tested prior to purchase Does not exist prior to sale thus cannot be
tested
Indirect contact between producer and Direct contact between consumer and
consumer producer

SSA 5
 Services Defined
A service is
any activity or benefit
that one party can offer to another
which is essentially ___________ and
does not result in the ___________ of anything.

Source: Kotler 1996, p.646

Services are…
• Actions performed for the benefit of others;
• Almost always accompanying purchased goods
and/or physical products;
• All economic activities whose output is not a
physical product
• Increasingly associated with information and
knowledge-based products
• Delivered under contract or agreement by a
service organization
• Contained within a “service encounter”.

SSA 6
 A service is
a purposeful activity carried out for the benefit of a known target

The
organization

Service Goals Service Expectations

Customers’ view of the service

Examples of a service interface:

•A retail store;
•Automatic teller machine (ATM);
•Internet or intranet portal or
search engine service;
Service •Car parking attendant - for
organization payment;
•Airport information desk;
•Reception at a hotel;
•A customer service desk or help
desk .

SSA 7
 Service encounter
"MOMENT OF TRUTH“ represents any episode where a customer
comes into contact with any aspect of an organization and may get
an impression of the quality of service.
• A service encounter may occur practically at
any time and any place. In an encounter the Service
customer typically perceives whomever, or encounter
whatever they are interfacing with, as
representing the organization.
• Line of visibility: the points at which a
service encounter happen, and the elements
of a service and the organization visible to The
the customer. organization
• Most customers do not think about a service
or an organization outside of a service
encounter unless encouraged to do so by a
marketing effort or campaign. Service
encounters are opportunities to make a
good impression.

Why Service Encounters Matter

• Every encounter is an opportunity for the firm to satisfy the
customer, to reinforce the value of its offerings, and to sell
the customer on the benefits of a long-term relationship
• Service encounters immediately impact customer
satisfaction and also shape longer-term factors like
intention to return, likelihood of communicating positively
about the service, and customer loyalty
• Customers need to have as many as twelve positive
experiences with a service provider in order to overcome
the negative effects of one bad experience
• The expense of acquiring customers and their potential
lifetime value means that losing a customer because of a
negative encounter can have staggering cost.

SSA 8
 Why customers are more profitable
over time – loyal customers

Aspects of services important to

service quality and customer satisfaction
Service
Product

Provider
Service Delivery
Customer
Process

Customer-Provider
Interaction

SSA 9
 Service Product
• refers to the attributes of the service output
or the service items provided to the
customers.
• For example,
– in restaurant service, the service product includes
meals, use of dining utensils, tables, and chairs,
music played if needed, etc.
– In healthcare service, the service product includes
diagnosis, treatment, and care items.

Service Delivery Process

• refers to the process that delivers or maintains
the service products for customers.
• For example,
– in a car rental center, the service process includes
all steps needed to rent a car to renters. These
steps include collecting the driver’s license and
credit card, checking car availability, filling and
printing the contract, obtaining customer
signature, delivering the car key and contract to
the customer, locating the car, and so on.

SSA 10
 Customer-Provider Interaction
• refers to the interaction between customers
and service providers. The quality of this
interaction will greatly influence customer
satisfaction.
• For example,
– in the car rental business, the representative
should greet customers politely, ask customers
their preference of cars, and patiently explain all
the options.

Service Customer –
Service Service
Features Example Delivery Provider
type Product
Process Interaction
Front room Important,
and back Backroom is usually
Service factory room, high Restaurant Meals similar to happens
equipment factory during the
requirement whole process
Front room Important,
Has multiple
and back usually
Pure service Diagnosis, steps, varies
room, highly Hospital happens
shop treatments from customer
customized during the
to customer
service whole process
Large facility, Purchasing&
Usually
large variety of Variety of shipping,
Retail service happens at
goods, Supermarket goods, nice inventory
store checkout and
customer self layout management,
in-store help
service checkout
Telephone Advice,
Call center Call routing,
Phone service interaction, no reservation, Very important
phone system
face to face order

SSA 11
 Service quality
• Service quality involves a comparison of
EXPECTATIONS with PERFORMANCE.

Customer Service
encounter

Deliverables
Service
provider

Service
request

Service quality
• Service quality stems from a comparison of
what a customer feels a service organization
should offer (desires, wants, expectations)
versus
their perception of what the organization
actually does offer

• Ensuring good service quality involves meeting

or exceeding consumers’ expectations

SSA 12
 Determinants of Service Quality
Word-of- Personal Past
Advertising
mouth Needs Experience

Determinants of Service Quality

Expected Service
• Reliability
• Responsiveness Perceived
• Competence Service
• Access Quality
• Courtesy
• Communication Perceived Service
• Credibility
• Security
• Understanding/Knowing the
Customer
• Tangibles
Source Parasuraman et al. (1985), A Conceptual Model of Service Quality

Tangibles
• Physical evidence of the service
– appearance of physical facilities,
– tools and equipment used to provide the service
– appearance of personnel, and communication
materials.
– Other customers in the service facility

SSA 13
 Reliability
• The ability to perform the promised service
dependably and accurately.
– Service is performed “right at the first time”
– The company keeps its promises
• accuracy in billing;
• Keeping records correctly
• performing the service at the designated time.

Responsiveness
• The willingness and/or readiness of
employees to help customers and to provide
prompt service.
• Timeliness of service:
• mailing a transaction slip immediately
• setting up appointments quickly

SSA 14
 Competence
• Possession of the required skills and
knowledge to perform the service
– Knowledge and skill of the contact personnel
– Knowledge and skill of the operational support
personnel
– Research capability of the organization

Access
• Approachability and ease of contact
– Service is easily accessible (e.g. telephone lines
are not busy, they don‘t put you on hold)
– Waiting time to receive service is not extensive
(e.g. at a bank)
– Convenient hours of operation
– Convenient location of service facility

SSA 15
 Courtesy
• Politeness, respect, consideration, and friendliness of
contact personnel.
– consideration for the consumer’s property
– clean and neat appearance of public contact
personnel

Communication
• Informing the customers in a language they
can understand and listening to them. It may
mean that the company has to adjust its
language for different consumers
– Explaining the service itself,
– Explaining how much the service will cost,
– Explaining the tradeoffs between service and cost
– Assuring the consumer that the problem will be
handled

SSA 16
 Credibility
• trustworthiness, believability, honesty. It
involves having the customer‘s best interest at
heart
– Company name,
– Company reputation,
– Personal characteristics of the contact personnel

Security
• Freedom from danger, risk or doubt
– physical safety (Will I get mugged at the ATM?);
– financial security (Does the company know where
my stock certificate is?)
– confidentiality ( Are my dealings with the
company private?)

SSA 17
 Understanding/ Knowing the customer
• Making effort to understand the customer’s
needs.
– Understanding customer’s specific needs
– Providing individualized attention
– Recognizing the customer

The Five Dimensions of

Service Quality
Dimension Determinants
Tangibles Tangibles
Reliability Reliability
Responsiveness Responsiveness
Assurance Communication
Credibility
Security
Competence
Courtesy
Empathy Understanding/ Knowing the customer
Access

SSA 18
 The Five Dimensions of
Service Quality
Ability to perform the promised service
Reliability dependably and accurately.

Assurance Knowledge and courtesy of employees and their

ability to inspire trust and confidence.

Tangibles Physical facilities, equipment, and appearance of

personnel.

Empathy Caring, individualized attention the firm provides

its customers.

Responsiveness Willingness to help customers and provide prompt

service.

Service quality for DVD rental

You want to watch a good movie in the comfort of your home and you
go to the video rental store that is just a few-minutes walk away
• As you walk in, you see previews of the latest movies on a giant
screen
• All the latest movies are available in large quantity on the shelves.
• Someone is available to tell you whether the movie you’re
considering is appropriate to watch with your family/friends.
• The clerk at the counter smiles as you approach and greets you
cheerfully and personally ‘Welcome Mrs. /Mr. XXX’’
• In less than five minutes you are on your way home to a pleasant
evening.
• On your way to the office/school early the next morning, you
return the DVD through a 24-h drop box.

Reliability Assurance Tangibles Empathy Responsiveness

SSA 19
 Gaps Model of Service Quality

Source: Parasuraman et al, 1985

Definition of Gap Analysis

• … formal means to identify and correct gaps
between ________________ levels and
________________ levels of performance

• … used by organizations to analyze certain

processes of any division of their organization

SSA 20
 Provider Gap 1
CUSTOMER

Expected Service

Perceived
Service

COMPANY

Gap 1:
The Listening Gap Company
Perceptions of
Consumer
Expectations

Key Factors Leading to Provider Gap 1

SSA 21
 Provider Gap 2
CUSTOMER

COMPANY Customer-Driven
Service Designs and
Standards
Gap 2: The Design and Standards Gap
Company
Perceptions of
Consumer
Expectations

Key Factors Leading to Provider Gap 2

SSA 22
MHN516 12/15/15

Provider Gap 3
CUSTOMER

COMPANY Service Delivery

Gap 3: The Performance Gap

Customer-Driven
Service Designs and
Standards

Key Factors Leading to Provider Gap 3

SSA 23
 Provider Gap 4
CUSTOMER

Gap 4: The Communication Gap

External
COMPANY Service Delivery
Communications
to Customers

Key Factors Leading to Provider Gap 4

SSA 24
 The Customer Gap - Gap 5

Gap 5 and Customer Satisfaction

Gap 5 = f(Gap1, Gap2, Gap3, Gap4)

• Customer satisfaction is
measured inversely by the gap
between expectations and
perceptions: the greater the gap,
the lower the customer
satisfaction.

SSA 25
 Key Factors Leading
to the Customer Gap

Customer Customer
Gap Expectations

§ Provider Gap 1: Not knowing what customers expect

§ Provider Gap 2: Not selecting the right service designs and standards

§ Provider Gap 3: Not delivering to service standards

§ Provider Gap 4: Not matching performance to promises

Customer
Perceptions

The Gaps Model of Service Quality

• The Customer Gap

• The Provider Gaps:
– Gap 1 – The Listening Gap
• not knowing _______________________
– Gap 2 – The Design and Standards Gap
• not having _________________________
– Gap 3 – The Performance Gap
• not delivering ______________________
– Gap 4 – The Communication Gap
• not matching _______________________
• Putting It All Together: Closing the Gaps

Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

SSA 26
 The Gaps Model of Service
Quality
• The Customer Gap
• The Provider Gaps:
– Gap 1 – The Listening Gap
• not knowing what customers expect
– Gap 2 – The Design and Standards Gap
• not having the right service designs and standards
– Gap 3 – The Performance Gap
• not delivering to service standards
– Gap 4 – The Communication Gap
• not matching performance to promises
• Putting It All Together: Closing the Gaps

Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

Ways to Use Gap Analysis

• Overall Strategic Assessment:
– How are we doing overall in meeting or exceeding
customer expectations?

– How are we doing overall in closing the four

company gaps?

– Which gaps represent our strengths and where

are our weaknesses?

SSA 27
 Ways to Use Gap Analysis
• Specific Service Implementation
– Who is the customer? What is the service?

– Are we consistently meeting/exceeding customer

expectations with this service?

– If not, where are the gaps and what changes are

needed? (Examine gaps 1-4 for this particular
service.)

Gaps in service quality to be improved

• Not understanding the needs of the customer.
• Being unable to translate the needs of the customer
into a service design that can properly address them.
• Being unable to translate the design into adequate
service specifications or standards that can be
implemented.
• Being unable to deliver the services in conformity with
specifications.
• Creating expectations that cannot be met i.e., gap
between customer expectations and actual service
delivery.

SSA 28
 To deliver a high quality service
we need to improve
Service design
a. Service product design
b. Service facility design
c. Service process design
Service delivery
a. Service delivery process
b. Service encounter environment
c. Customer-provider interaction

Approaches to improve Service Quality

• Blueprinting
• Moving the line of visibility and line of
accessibility
• QFD
• Failsafing
• Quality tools
• ….

SSA 29
 Service Blueprinting
• A tool for simultaneously depicting the service
process, the points of customer contact, and
the evidence of service from the customer’s
point of view.

Service Blueprint Components

Physical evidence
Customer Actions
line of interaction

Visible Contact Employee Actions

line of visibility

Invisible Contact Employee Actions

line of internal interaction

Support Processes

SSA 30
 Blueprint for Overnight Hotel Stay Service

SSA 31
 Blueprint for Express Mail Delivery Service

Building a Service Blueprint

SSA 32
 Application of Service Blueprints
• New Service Development
– concept development
– market testing
• Supporting a “Zero Defects” Culture
– managing reliability
– identifying empowerment issues
• Service Recovery Strategies
– identifying service problems
– conducting root cause analysis
– modifying processes

Blueprint for ABC Hair Salon Failpoint

• Des k • Stylist Chair

• Uniforms • Chairs • Hair Products • Form of Payment
• Parking Lot • Computer • Tables • Mirror (Credit Card, Cash, Check)
Physical • Outside Building • Phone • Magazines • Cape • Receipt
Evidence • Signs • Inside Layout • Décor (Plants) • Stylist Utensils • Products Purchased (if any)
• Landscaping • Products for Sale • Products for Sale (Brush, dryer, ect.) • Plus evidence in “Customer Informs
Receptionist of Arrival”

Customer Customer Customer Customer Customer

Customer Describes Customer
Customer Calls and Informs Waits in Takes a Customer
Arrives at Desired Pays for
Places an Receptionist Waiting Seat at Leaves
Salon Style Service
Appointment Of Arrival Room Station

Line of Interaction F
F

Dresser Applies Receptionist

Onstage Receptionist Dresser Shampoos
Interprets Color Accepts
Takes Takes to Cuts and
Desired To Payment
Name Station Styles Hair
Contact Person Style Hair and Thanks

Line of Visibility F

Receptionist Receptionist Receptionist

Receptionist Dresser Receptionist
Confirms Finds Informs
Backstage Books Mixes Files
Appointment Customers Dresser of
Appointment Color Payment
With Dresser Name Arrival
Line of Internal Interaction

Dresser Writes
Verify Clean Down Prices
Support Take
Customer Stations To Enter Into
Process Inventory
Name In (Sweep Computer
Of Color
Computer Hair)

SSA 33
 Blueprints Can Be Used By:
• Service Marketers • Human Resources
– creating realistic Management
customer expectations:
• service system design – empowering the human
• promotion element:
• job descriptions
• selection criteria
• Operations • appraisal systems
Management
– rendering the service as • System Technology
promised: – providing necessary tools:
• managing fail points
• training systems • system specifications
• quality control • personal preference databases

Benefits of Service Blueprinting

• Provides a platform for innovation.
• Recognizes roles and interdependencies among functions,
people, and organizations.
• Facilitates both strategic and tactical innovations.
• Transfers and stores innovation and service knowledge.
• Designs moments of truth from the customer’s point of view.
• Suggests critical points for measurement and feedback in the
service process.
• Clarifies competitive positioning.
• Provides understanding of the ideal customer experience.

SSA 34
 Common Issues in Blueprinting
• Clearly defining the process to be blueprinted
• Clearly defining the customer or customer segment
that is the focus of the blueprint
• Who should “draw” the blueprint?
• Should the actual or desired service process be
blueprinted?
• Should exceptions/recovery processes be
incorporated?
• What is the appropriate level of detail?
• Symbology
• Whether to include time on the blueprint

Moving the line of visibility and the

line of accessibility
• The line of visibility divides what takes place in
view of the customer from what takes place in
the back-office. Impressive results can be
achieved by letting customers see what was
previously hidden from them.
• moving the line of accessibility is not only to
let customers see the back-office, but to open-
it altogether.

SSA 35
 QFD
• The house of quality is a powerful tool for countering the inherent
risk of listening solely to experts who are convinced they know
what is good for the customer. Starting with customers’ perceptions
is a good way to avoid a blind focus on technical quality
• QFD is a systematic approach to help designers in going from the
‘whats’ to the ‘hows’.
• The ‘whats’ are the dimensions of the service important to the
customer. The ‘hows’ are aspects of service design and delivery that
service providers must know in order to be able to do their job.
• The major output of the technique is a set of service standards and
targets for all-important aspects of the service and the SDP. These
are the ‘settings’ for the major service design and process design
parameters that maximize customer satisfaction and competitive
advantage.

Failsafing
• Fail-safe describes a device or feature which,
in the event of failure, responds in a way that
will cause no harm or at least a minimum of
harm to other devices or danger to personnel.
• Poka yoke eliminate product/service defects
by preventing, correcting, or drawing
attention to human errors as they occur. (e.g.
Height bar at an entertainment park)
• Service FMEA

SSA 36
 Approaches to improve conformance
quality
• Guaranteeing
• Mystery shopping
• Recovering
• Setting standarts and measuring
• Statistical process control
• Customer involvement

Guaranteeing
• Offering a compensation in case of a failure of
not providing standarts. (e.g.McDonalds
serving time <= 90 seconds)
• The use of service guarantees makes the
service standard clear to the customer and
provides an immediate feedback mechanism
for the service provider.
• When the customer claims his guarantee, the
service provider knows a failure has occurred

SSA 37
 Mystery shopping
• the use of paid or volunteer "shoppers" to report
their service experiences, provides service quality
feedback to management.
• Tax and Brown (1998) state that only 5 to 10
percent of dissatisfied customers will complain to
the service provider or management after a
service failure; the rest will complain only to
friends or family (leading to negative good will for
the service) or simply switch to another service
provider.

Recovering
• Once a service failure has occurred, the
response of the service provider (service
recovery) will greatly impact the customer's
perception of service quality.
– Detection
– Correction
– Learning

SSA 38
 Setting standards
• Service companies need ways to crystallise,
simplify, communicate and control the
implementation of their choices regarding
quality. Service standards refer to these choices.
• A service standard is a guide to which servers
constantly refer to determine whether they are
providing the right level of service.
– ‘no customer should wait more than thirty seconds
before a first contact is made’
– ‘all customers asking for the location of a product
must be accompanied to the location and not simply
directed to it’.

Customer involvement
• Customer involvement is a service delivery
strategy that holds great potential for
improving both quality and productivity.
• Active customers value the added control of
the service encounter that active participation
may give them.
• Self-serve service stations provide a good
example of this.

SSA 39
 Measuring Service Quality

SERVQUAL

How Customers Judge the Five Dimensions of

Service Quality

SSA 40
 SERVQUAL* - Assessing customer
perceptions of service quality
• SERVQUAL is a concise multiple-item scale
with good reliability and validity that service
organizations can use to better understand
the service expectations and perceptions of
consumers and, as a result, improve service.

* (Parasuraman, Zeithaml & Berry , 1988)

SERVQUAL dimensions
• Reliability: Ability to perform the promised service dependably
and accurately
• Responsiveness: Willingness to help customers and provide
prompt service
• Tangibles: Physical facilities, equipment, and appearance of
personnel
• Assurance: Knowledge and courtesy of employees and their
ability to inspire trust and confidence
• Empathy: Caring, individualized attention the firm provides its
customers

SSA 41
 Measuring Service Quality Using
SERVQUAL - Bank

SERVQUAL – cont.

SSA 42
 SERVQUAL – cont.

SERVQUAL Scores - Bank

STEPS TO OBTAIN UNWEIGHTED SERVQUAL SCORE
Step 1. Calculate the Gap Score each of the statements (Gap Score = Perception – Expectation).
Step 2. Obtain an average Gap Score for each dimension by assessing the Gap Scores for each of
the statements that constitute the dimension and dividing the sum by the number of
statements making up the dimension.
Step 3. In the TABLE 1 transfer the average dimension SERVQUAL scores (for all five dimensions)
from the SERVQUAL instrument. Sum up the scores and divide it by five to obtain the
unweighted measure of service quality.
STEPS TO OBTAIN THE WEIGHTED SERVQUAL SCORE
Step 1. In Table 2 calculate the importance weights for each of the five dimensions constituting
the SERVQUAL scale. (The instructions are provided along with the table).
Step 2. In Table 3 enter the average SERVQUAL score for each dimension (from Table 1) and the
importance weight for each dimension (from Table 2). Then multiply the average score for
each dimension with its importance weight.
Step 3. Add the weighted SERVQUAL scores for each dimension to obtain the overall weighted
SERVQUAL score.

SSA 43
 SERVQUAL Scores – cont.

SERVQUAL Scores – cont.

SSA 44
 SERVQUAL Scores – cont.

SSA 45
 Application of Servqual
• Periodically track service quality trends. Use in conjunction with other
forms of service quality measurement.
– A retailer would learn a great deal about its service quality and what needs to
be done to improve it by administering both SERVQUAL and an employee
survey three or four times a year, plus systematically soliciting and analyzing
customer suggestions and complaints.
– A retailer can also use SERVQUAL to assess its service performance relative to
its principal competitors.

• assess a given firm's quality along each of the five service dimensions by
averaging the difference scores on items making up the dimension. Can
serve as an effective diagnostic tool for uncovering broad areas of a
company’s service quality shortfalls and strengths

• The scale serves as a suitable generic measure of service quality,

transcending specific functions, companies, and industries

SSA 46