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Improving Service Quality and Productivity

Slide ©2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

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What is Service Quality? The Customer Gap

Customer Gap

Service quality is the customer’s judgment of overall excellence of the service provided in relation to the quality that was expected.
Services Marketing 5/E

Slide ©2004 by Christopher Lovelock and Jochen Wirtz

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 Service quality assessments are formed on judgments of:  outcome quality  interaction quality  physical environment quality Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 14 .Service Quality  The customer’s judgment of overall excellence of the service provided in relation to the quality that was expected.3 .

reasons: improving productivity is important to marketers for several 1. Lower costs either mean higher profits or the ability to hold down prices. improved customer service & supplementary services. giving those firms the option of spending more than the competition in marketing activities.4 . Firms with lower costs also generate higher margins.Integrating service quality & productivity strategies • Similarly. It helps to keep costs down. Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 14 . The company with the lowest costs in an industry has the option to position itself as the low-price leader –usually a significant advantage among price-sensitive market segments. 2.

Cont……….5 . Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 14 . • Carefully integrating quality & productivity improvement programs will improve the long-term profitability of the firm. • Thus. 3.. & productivity is the financial costs incurred by the firm . In broad terms. improved features & innovative delivery systems. primarily in the form of price. Improving productivity generates the opportunity to secure the firm’s longterm future through investments in new service technologies & in research to create superior new services. which may subsequently be passed on to the customers. quality focuses on the benefits created for the customer’s side of the equation. quality & productivity are twin paths to creating value for both customers & companies.

6 .Perspectives on Service Quality Transcendental: Quality = excellence. Recognized only through experience Product-Based: Quality is precise and measurable User-Based: ManufacturingBased: Quality lies in the eyes of the beholder Quality is conformance to the firm’s developed specifications Quality is a trade-off between price and value Value-Based: Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 14 .

Serviceability.Contrasting Quality components in Manufacturing & Services Manufacturing-Based components of quality: 1.how long the product continues to provide value to the customer 6.Probability of malfunction or failure 4.speed. 2. Performance. 7. 5.ability to meet specification Durability.7 . courtesy.how the product appeals to any or all the users. Aesthetics. Conformance.Primary operating characteristics Features Reliability. 3. competence & ease of having problems fixed. Services Marketing 5/E Slide ©2004 by Christopher Lovelock and Jochen Wirtz 14 .

accurate performance Responsiveness.8 .appearance of physical elements   Reliability. courtesy credibility security  access  communication  understanding of customer Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 14 .promptness & helpfulness      Assurance  Empathy competence.Service-based components of quality  Tangibles .dependable.

9 .How Customers Judge the Five Dimensions of Service Quality Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 14 .

10 . respondents are subsequently asked record their perceptions. Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E to 14 . • Using those same characteristics. the scale contains 21 perception items & a series of expectation items. • It is based on the premise that customers can evaluate a firm’s service quality by comparing their perceptions of its service with their own expectations. • SERVQUAL is seen as a generic measurement tool that can be applied across a broad spectrum of service industries. • Respondents complete a series of scales that measure their expectations of companies in a particular industry on a wide array of specific service characteristics. In its basic form.Capturing the customer’s perspective of service quality • To measure customer satisfaction with different aspects of service quality Zeithmal developed a survey research instrument called SERVQUAL. reflecting the five dimensions of service quality.

& each statement is accompanied by a seven-scale ranging from “strongly agree=7” to “strongly disagree=1”. • SERVQUAL Questions Note: For actual survey respondents. Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 14 . responsiveness.11 . Only the end points of the scale are labeled. hospitals. reliability. assurance. there are no words above the numbers 2 & 6 Tangibles: • Excellent banks (refer to cable TV companies.The SERVQUAL Scale • The SERVQUAL scale includes 5 dimensions: tangibles. & empathy. Within each dimension are several items measured on a seven-point scale from strongly agree to strongly disagree for a total of 21 items. instructions are also included. or the appropriate service business throughout the questionnaire) will have modern looking equipment.

Cont………….. Reliability • When excellent banks promise to do something by a certain time.g. • When customers have a problem. they will do so. • The physical facilities at excellent banks will be visually appealing. excellent banks will show a sincere interest in solving it.12 . • Excellent banks will perform the service right the first time Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 14 . brochures or statements) associated with the service will be visually appealing in an excellent bank. • Employees at excellent banks will be neat in appearance • Materials (e.

Cont…………..13 . • Excellent banks will provide their services at the time they promise to do so • Excellent banks will insists on error-free records Responsiveness • Employees of excellent banks will tell customers exactly when service will be performed • Employees of excellent banks will give prompt service to customers • Employees of excellent banks will always be willing to help customers • Employees of excellent banks will never be too busy to respond to customer requests Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 14 .

Cont……………. Assurance • The behavior of employees of excellent banks will instill confidence in customers • Customers of excellent banks will feel safe in their transactions • Employees of excellent banks will be consistently courteous with customers Empathy • Excellent banks will give customers individual attention • Excellent banks will have operating hours convenient to customers • Excellent banks will have employees who give customers personal attention Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 14 .14 .

performance & service quality level & what is actually delivered Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 14 .15 .The GAP Model: A Conceptual tool to identify & correct service quality problems Gaps in Service Design & Delivery • Gaps are the difference between what customers expected & what they perceived was delivered.  The knowledge gap is the difference between what service providers believe customers expect & customers’ actual needs & expectations  The standards gap is the difference between management’s perceptions of customer expectations & the quality standards established for service delivery  The delivery gap is the difference between specified delivery standards & the service provider’s actual performance on these standards  The internal communications gap is the difference between what the company’s advertising & sales personnel think are the product’s features.

the ultimate goal in improving service quality is to close or narrow this gap.Cont……………  The perceptions gap is the difference between what is.6 & 7 represents external gaps between the customer & the organization.3 & 4 are internal gaps occurring between different functions & departments within the organization • Gaps at any point in service design & delivery can damage relationships with customers. Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 14 . in fact. The service gap is the most critical. hence. delivered & what customers perceive they have received (because they are unable to accurately evaluate service quality)  The interpretation gap is the difference between what a service provider’s communication efforts( in advance of service delivery) promise & what a customer thinks was promised by these communications  The • Gaps service gap is the difference between what customers expect to receive & their perceptions of the service that is delivered. 1.16 .5. Gaps 2.

C.17 . Delivery Gap Execution of design/delivery specs 4. Knowledge Gap Management definition of these needs MANAGEMENT 2. Interpretation Gap Customer interpretation of communications 7. Perceptions Gap Customer perceptions of product execution 6. Service Gap Customer experience relative to expectations Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 14 . I.Seven Service Quality Gaps Customer needs and expectations CUSTOMER 1.Gap Advertising and sales promises 5. Standards Gap Translation into design/delivery specs 3.

Prescriptions for Closing Service Quality Gaps 1. customer panels etc.18 . compliant analysis. Learn what customers expect Understand customer expectations through research. Increase direct interactions between managers & customers to improve understanding • • 2. • Establish the right service quality standards Ensure that top management displays ongoing commitment to quality as defined by customers • • Train managers in the skills needed to lead employees to deliver quality service Measure performance & provide regular feedback Services Marketing 5/E Slide ©2004 by Christopher Lovelock and Jochen Wirtz 14 .

Keep customers informed during service delivery & also debrief them at the end 6.Cont…………… 3.19 . Pretest communication materials to a sample of customers in advance Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 14 . Ensure that the communication promises are realistic • Seek inputs from operations personnel when new advertising programs are being created • Develop advertising that features real employees performing their jobs 5. Ensure that service performance meets standards • Clarify employee roles • Match employees to jobs by selecting for the abilities & skills needed to perform each job well 4.

g. how many trains arrived late?  Soft measures refer to standards and measures that cannot easily be observed and must be collected by talking to customers. SERVQUAL. timed or measured through audits  typically operational processes or outcomes  e. Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 14 .Measuring & improving service quality  Hard measures refer to standards and measures that can be counted. surveys. and customer advisory panels.20 .  Control charts are useful for displaying performance over time against specific quality standards.g. employees or others  e.

XXX 14 .Composition e of FedEx’s Service Quality Index (SQI) Failure Type Weighting X Factor 1 5 1 5 1 1 10 10 10 5 5 1 No of Daily = Incidents Points Late Delivery – Right Day Late Delivery – Wrong Day Tracing request unanswered Complaints reopened Missing proofs of delivery Invoice adjustments Missed pickups Lost packages Damaged packages Aircraft Delays (minutes) Overcharged (packages missing label) Abandoned calls Total Failure Points (SQI) = Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E XXX.21 .

Control Chart: Percent of Flights Leaving within 15 Minutes of Schedule 100% 90% 80% 70% 60% J F M A M J J A S O N D Month Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 14 .22 .

e. the 80/20 rule. a majority of problems is caused by a minority of causes i.  Pareto charts: Separating the trivial from the important. Often. It allows one to identify fail points in both the frontstage and backstage. Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 14 .23 .  Blueprinting: A visualization of service delivery.Tools to Address Service Quality Problems  Fishbone diagrams: A cause-and-effect diagram to identify potential causes of problems.

Cause and Effect Chart for Airline Departure Delays Facilities. Equipment Frontstage Front-Stage Personnel Personnel Procedure Procedures Arrive late Oversized bags Customers Customers Delayed check-in Gate agents Aircraft late to procedure gate cannot process Mechanical fast enough Acceptance of late Failures passengers Late/unavailable Late pushback airline crew Delayed Departures Other Causes Weather Air traffic Late food service Late baggage Late fuel Materials. Materials.24 . Supplies Supplies Late cabin cleaners Poor announcement of departures Weight and balance sheet late Backstage Personnel Information Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 14 .

25 .Return on Quality (ROQ)  ROQ approach is based on four assumptions:  Quality is an investment  Quality efforts must be financially accountable  It’s possible to spend too much on quality  Not all quality expenditures are equally valid  Implication: Quality improvement efforts may benefit being related to productivity improvement programs from Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 14 .

26 .POKA-YOKES: An effective tool to design fail points out of service processes •Poka-Yokes in a service context is the need to address not only server errors but also customer errors • Server poka-yokes ensure that service staff do things correctly. as requested in the right order & in the right speed • Some service firms use poka-yokes to ensure that certain steps or standards in the customer staff interaction are adhered to. • Customer encounter poka-yokes usually focus on preparing the customer for the Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 14 .

Slide ©2004 by Christopher Lovelock and Jochen Wirtz 14 .27 . Small Improvement Services Marketing 5/E Assumption: Customers are equally (or even more) satisfied with the service recovery provided than with a service that is delivered as planned. Large Improvement Large Cost.When Does Improving Service Reliability Become Uneconomical? Satisfy Target Customers Through Service Recovery Optimal Point of Reliability: Cost of Failure = Service Recovery Satisfy Target Customers Through Service Delivery as Planned 100% Service Reliability A B C D Investment Small Cost.