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Service Quality

Learning Objectives

Describe the five dimensions of service quality. Use the service quality gap model to diagnose quality problems for a service firm. Illustrate how Taguchi methods and pokayoke methods are applied to service design. Perform service quality function deployment. Construct a statistical process control chart. Develop unconditional service guarantees. Plan for service recovery.

Moments of Truth

Each customer contact is called a moment of truth. You have the ability to either satisfy or dissatisfy them when you contact them. A service recovery is satisfying a previously dissatisfied customer and making them a loyal customer.

Dimensions of Service Quality

Reliability: Perform promised service dependably and accurately. Example: receive mail at same time each day. Responsiveness: Willingness to help customers promptly. Example: avoid keeping customers waiting for no apparent reason.

Dimensions of Service Quality

Assurance: Ability to convey trust and confidence. Example: being polite and showing respect for customer. Empathy: Ability to be approachable. Example: being a good listener. Tangibles: Physical facilities and facilitating goods. Example: cleanliness.

Perceived Service Quality

Word of mouth Personal needs Past experience

Service Quality Dimensions Reliability Responsiveness Assurance Empathy Tangibles

Expected service

Perceived service

Service Quality Assessment 1. Expectations exceeded ES<PS (Quality surprise) 2. Expectations met ES~PS (Satisfactory quality) 3. Expectations not met ES>PS (Unacceptable quality)

Gaps in Service Quality

Word -of-mouth communications Customer Expected service Personal needs Past experience

Perceived service

Service delivery (including pre- and post-contacts)

External communications to consumers


Translation of perceptions into service quality specifications



Management perceptions of consumer expectations

Quality Service by Design

Quality in the Service Package Budget Hotel example Taguchi Methods (Robustness) Notifying maids of rooms for cleaning Poka-yoke (fail-safing) Height bar at amusement park Quality Function Deployment House of Quality

Classification of Service Failures with Poka-Yoke Opportunities

Server Errors
Task: Doing work incorrectly Treatment: Failure to listen to customer Tangible: Failure to wear clean uniform

Customer Errors
Preparation: Failure to bring necessary materials Encounter: Failure to follow system flow Resolution: Failure to signal service failure

House of Quality


Strong Medium Weak


5 2




Customer Expectations Reliability Responsiveness Assurance Empathy Tangibles 9 7 6 4 2

Comparison with Volvo Dealer

Weighted score Improvement difficulty rank

Relati ve
Servic e Elements Im po rta nc e 8 3 5 2

Customer Perc eptions o Village Volvo

+ Volvo Dealer
1 2 3 4 5 + o o

5 9 9 7 3 6

o o o

+ +

o o o o o

127 82 4 5

63 102 1 3

65 2

Achieving Service Quality

Cost of Quality (Juran)

Service Process Control Statistical Process Control (Deming) Unconditional Service Guarantee

Costs of Service Quality

Failure costs
External failure: Customer complaints Warranty charges Liability insurance Legal judgments Loss of repeat service Internal failure: Scrap Rework Recovery: Expedite Labor and materials

Detection costs
Process control Peer review Supervision Customer comment card Inspection

Prevention costs
Quality planning Training program Quality audits Data acquisition and analysis Preventive maintenance Supplier evaluation Recruitment and selection

Service Process Control

Customer input Service concept Customer output


Service process

Take corrective action Identify reason for nonconformance

Monitor conformance to requirements

Establish measure of performance

Why SPC in Services?

Cons: Nothing to measure but time Pros: Consistency is at least as important as performance

For high performers Limited impact for low performers

Percentage of flights on time

Control Chart of Departure Delays


90 80 70 60

Lower Control Limit


p (1 p UCL p 3 n

p (1 p LCL p 3 n

Unconditional Service Guarantee: Customer View

Unconditional (L.L. Bean) Easy to understand and communicate (Bennigans) Meaningful (Dominos Pizza) Easy to invoke (Cititravel) Easy to collect (Manpower)

Unconditional Service Guarantee: Management View

Focuses on customers (British Airways) Sets clear standards (FedEx) Guarantees feedback (Manpower) Promotes an understanding of the service delivery system (Bug Killer) Builds customer loyalty by making expectations explicit

Customer Satisfaction

All customers want to be satisfied.

Customer loyalty is only due to the lack of a better alternative Giving customers some extra value will delight them by exceeding their expectations and insure their return

Expressing Dissatisfaction
Public Action Action Dissatisfaction occurs
Seek redress directly from the firm Take legal action Complaint to business, private, or governmental agencies

Private Action
Stop buying the product or boycott the seller

No Action

Warn friends about the product and /or seller

Customer Feedback and Word-of-Mouth

The average business only hears from 4% of their customers who are dissatisfied with their products or services. Of the 96% who do not bother to complain, 25% of them have serious problems. The 4% complainers are more likely to stay with the supplier than are the 96% non-complainers. About 60% of the complainers would stay as customers if their problem was resolved and 95% would stay if the problem was resolved quickly. A dissatisfied customer will tell between 10 and 20 other people about their problem. A customer who has had a problem resolved by a company will tell about 5 people about their situation.

Number of People Told Based on Level of Dissatisfaction

Average number of people told 30 25 20 15 10 5 0
Slight diss Annoyed Very annoyed Ext annoyed Abs furious

Action Taken Based on Level of Dissatisfaction

Percent of customers that take action 100 80 60 40 20 0
Slightly diss Annoyed Very annoyed Ext annoyed Abs furlous Tell friends Complain Make a fuses Not use again Dissuade others Complain against

Approaches to Service Recovery

Case-by-case addresses each customers complaint individually but could lead to perception of unfairness. Systematic response uses a protocol to handle complaints but needs prior identification of critical failure points and continuous updating. Early intervention attempts to fix problem before the customer is affected. Substitute service allows rival firm to provide service but could lead to loss of customer.

Making Customers into Champions


Walking wounded Could complain but dont; not happy but repurchase
How easy customers feel it is to contact British Airways

Champions Active in providing British Airways with information on quality of its services; loyal Remain Loyal

Missing in action Defected; non-complaining not easy dont complain

Detractors Defected; vocally critical complain

Propensity to contact British Airways

Topics for Discussion

How do the five dimensions of service quality differ from those of product quality? Why is measuring service quality so difficult? Illustrate the four components in the cost of quality for a service. Why do service firms hesitate to offer a service guarantee? How can recovery from a service failure be a blessing in disguise?

The Complaint Letter

Briefly summarize the complaints and compliments in Dr. Loflins letter. Critique the letter of Gail Pearson in reply to Dr. Loflin. What are the strengths and weaknesses of the letter? Prepare an improved response letter from Gail Pearson What further action should Gail Pearson take in view of this incident?