Improving Service Quality and Productivity
Slide 2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
14 - 1
What is Service Quality? The Customer Gap
Customer Gap
Service quality is the customers 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
The customers judgment of overall excellence of the
service provided in relation to the quality that was expected.
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 - 3
Integrating service quality & productivity strategies
Similarly,
reasons:
improving productivity is important to marketers for several
1.
It helps to keep costs down. Lower costs either mean higher profits or the ability to hold down prices. 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. Firms with lower costs also generate higher margins, giving those firms the option of spending more than the competition in marketing activities, improved customer service & supplementary services.
2.
Slide 2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
14 - 4
Cont..
3. Improving productivity generates the opportunity to secure the firms longterm future through investments in new service technologies & in research to create superior new services, improved features & innovative delivery systems.
Thus,
quality & productivity are twin paths to creating value for both customers & companies. In broad terms, quality focuses on the benefits created for the customers side of the equation, & productivity is the financial costs incurred by the firm , which may subsequently be passed on to the customers, primarily in the form of price.
Carefully
integrating quality & productivity improvement programs will improve the long-term profitability of the firm.
Slide 2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
14 - 5
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 firms 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 - 6
Contrasting Quality components in Manufacturing & Services
Manufacturing-Based components of quality:
1.
2. 3.
Performance- Primary operating characteristics Features Reliability- Probability of malfunction or failure
4.
5.
Conformance- ability to meet specification
Durability- how long the product continues to provide value to the customer
6.
7.
Serviceability- speed, courtesy, competence & ease of having problems fixed.
Aesthetics- how the product appeals to any or all the users.
Services Marketing 5/E
Slide 2004 by Christopher Lovelock and Jochen Wirtz
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Service-based components of quality
Tangibles - appearance of physical elements
Reliability- dependable, accurate performance
Responsiveness- promptness & helpfulness
Assurance Empathy
competence, courtesy credibility security
access communication understanding of customer
Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E
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How Customers Judge the Five Dimensions of Service Quality
Slide 2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
14 - 9
Capturing the customers perspective of service quality
To measure customer satisfaction with different aspects of service quality
Zeithmal developed a survey research instrument called SERVQUAL.
It
is based on the premise that customers can evaluate a firms 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. In its basic form, the scale contains 21 perception items & a series of expectation items, reflecting the five dimensions of service quality.
Respondents complete a series of scales that measure their expectations
of companies in a particular industry on a wide array of specific service characteristics.
Using those same characteristics, respondents are subsequently asked
record their perceptions.
Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E
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The SERVQUAL Scale
The SERVQUAL scale includes 5 dimensions: tangibles, responsiveness,
reliability, assurance, & 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.
SERVQUAL Questions
Note: For actual survey respondents, instructions are also included, & each statement is accompanied by a seven-scale ranging from strongly agree=7 to strongly disagree=1. Only the end points of the scale are labeled; there are no words above the numbers 2 & 6 Tangibles:
Excellent banks (refer to cable TV companies, hospitals, or the appropriate
service business throughout the questionnaire) will have modern looking equipment.
Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E
14 - 11
Cont.
The physical facilities at excellent banks will be visually appealing.
Employees at excellent banks will be neat in appearance
Materials (e.g., brochures or statements) associated with the service will be
visually appealing in an excellent bank. Reliability
When excellent banks promise to do something by a certain time, they will
do so.
When customers have a problem, excellent banks will show a sincere
interest in solving it.
Excellent banks will perform the service right the first time
Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E
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Cont..
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
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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
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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 managements perceptions
of customer expectations & the quality standards established for service delivery
The delivery gap is the difference between specified delivery standards
& the service providers actual performance on these standards
The internal communications gap is the difference between what the
companys advertising & sales personnel think are the products features, performance & service quality level & what is actually delivered
Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E
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Cont
The perceptions gap is the difference between what is, in fact, 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 providers 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.
1,5,6 & 7 represents external gaps between the customer & the organization. Gaps 2,3 & 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. The service gap is the most critical; hence, the ultimate goal in improving service quality is to close or narrow this gap.
Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E
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Seven Service Quality Gaps
Customer needs and expectations
CUSTOMER
1. Knowledge Gap
Management definition of these needs
MANAGEMENT
2. Standards Gap
Translation into design/delivery specs
3. Delivery Gap
Execution of design/delivery specs
4. I.C.Gap
Advertising and sales promises
5. Perceptions Gap
Customer perceptions of product execution
6. Interpretation Gap
Customer interpretation of communications
7.
Service Gap
Customer experience relative to expectations
Slide 2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
14 - 17
Prescriptions for Closing Service Quality Gaps
1.
Learn what customers expect Understand customer expectations through research, compliant analysis, customer panels etc. 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
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Cont
3. 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. 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. Keep customers informed during service delivery & also debrief them at the end 6. Pretest communication materials to a sample of customers in advance
Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E
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Measuring & improving service quality
Hard measures refer to standards and measures that can
be counted, timed or measured through audits
typically operational processes or outcomes e.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, employees or others
e.g. SERVQUAL, surveys, and customer advisory panels.
Control charts are useful for displaying performance over
time against specific quality standards.
Slide 2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
14 - 20
Composition e of FedExs 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,XXX
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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
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Tools to Address Service Quality Problems
Fishbone diagrams: A cause-and-effect diagram to identify
potential causes of problems.
Pareto charts: Separating the trivial from the important.
Often, a majority of problems is caused by a minority of causes i.e. the 80/20 rule.
Blueprinting: A visualization of service delivery. 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
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, 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 - 24
Return on Quality (ROQ)
ROQ approach is based on four assumptions:
Quality is an investment
Quality efforts must be financially accountable
Its 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 - 25
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 - 26
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
D Investment
Small Cost, Large Improvement
Large Cost, 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.
Slide 2004 by Christopher Lovelock and Jochen Wirtz
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