1

SM
Chapter 4

CUSTOMER
PERCEPTIONS OF
SERVICE

McGraw-Hill © 2000 The McGraw-Hill Companies

McGraw-Hill © 2000 The McGraw-Hill Companies
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Objectives for Chapter 4:
SM Customer Perceptions of
Service
• Provide you with definitions and
understanding of customer satisfaction and
service quality
• Show that service encounters or the
“moments of truth” are the building blocks of
customer perceptions
• Highlight strategies for managing customer
perceptions of service

McGraw-Hill © 2000 The McGraw-Hill Companies

 Figure 4-1 3
Customer Perceptions of
SM
Service Quality and
Customer Satisfaction
Reliability Situational
Factors
Responsiveness Service
Quality

Assurance
Customer
Empathy Satisfaction
Product
Quality
Tangibles

Personal
Price Factors

McGraw-Hill © 2000 The McGraw-Hill Companies

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Factors Influencing
SM
Customer Satisfaction

• Product/service quality
• Product/service attributes or features
• Consumer Emotions
• Attributions for product/service success or
failure
• Equity or fairness evaluations

McGraw-Hill © 2000 The McGraw-Hill Companies

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Outcomes of
SM
Customer Satisfaction

• Increased customer retention

• Positive word-of-mouth communications
• Increased revenues

McGraw-Hill © 2000 The McGraw-Hill Companies

 Figure 4-3 6

Relationship between Customer

SM
Satisfaction and Loyalty in
Competitive Industries
100%
Loyalty (retention)

80%

60%

40%

20%

0%
Very Dissatisfied Neither Satisfied Very
dissatisfied satisfied nor satisfied
dissatisfied

Satisfaction measure

Source: James L. Heskett, W. Earl Sasser, Jr., and Leonard A. Schlesinger, The Service Profit Chain, (New York, NY: The Free Press, 1997), p. 83.

McGraw-Hill © 2000 The McGraw-Hill Companies

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SM Service Quality

• The customer’s judgment of overall

excellence of the service provided in
relation to the quality that was expected.
• Process and outcome quality are both
important.

McGraw-Hill © 2000 The McGraw-Hill Companies

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SM The Five Dimensions of

Service Quality

Reliability Ability to perform the promised

service dependably and accurately.
Knowledge and courtesy of
Assurance employees and their ability to
convey 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.

McGraw-Hill © 2000 The McGraw-Hill Companies

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SM Exercise to
Identify Service
Attributes
In groups of five, choose a services industry and spend 10 minutes
brainstorming specific requirements of customers in each of the five
service quality dimensions. Be certain the requirements reflect the
customer’s point of view.
Reliability:

Assurance:

Tangibles:

Empathy:

Responsiveness:

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SERVQUAL Attributes
SM ASSURANCE
 Employees who instill confidence in
customers
 Making customers feel safe in their
transactions
RELIABILITY  Employees who are consistently courteous
 Employees who have the knowledge to
 Providing service as promised answer customer questions
 Dependability in handling customers’
service problems EMPATHY
 Performing services right the first time  Giving customers individual attention
 Providing services at the promised time  Employees who deal with customers in a
 Maintaining error-free records caring fashion
 Having the customer’s best interest at heart
Employees who understand the needs of
RESPONSIVENESS 
their customers
 Keeping customers informed as to
 Convenient business hours
when services will be performed TANGIBLES
 Prompt service to customers  Modern equipment
 Willingness to help customers  Visually appealing facilities
 Readiness to respond to customers’  Employees who have a
requests neat, professional
appearance
 Visually appealing materials
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2000 the service Companies
The McGraw-Hill
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SM The Service Encounter

• is the “moment of truth”

• occurs any time the customer interacts with the firm
• can potentially be critical in determining customer satisfaction and loyalty
• types of encounters:
– remote encounters
– phone encounters
– face-to-face encounters
• is an opportunity to:
– build trust
– reinforce quality
– build brand identity
– increase loyalty

McGraw-Hill © 2000 The McGraw-Hill Companies

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Figure 4-4

SM A Service Encounter
Cascade for a Hotel Visit

Check-In
Check-In
Bellboy
BellboyTakes
Takesto
toRoom
Room

Restaurant
RestaurantMeal
Meal

Request
Request Wake-Up
Wake-UpCall
Call
Checkout
Checkout

McGraw-Hill © 2000 The McGraw-Hill Companies

 Figure 4-5 13
A Service Encounter
SM Cascade for an Industrial
Purchase

Sales
SalesCall
Call
Delivery
Deliveryand
and Installation
Installation

Servicing
Servicing

Ordering
OrderingSupplies
Supplies
Billing
Billing

McGraw-Hill © 2000 The McGraw-Hill Companies

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Critical Service Encounters
SM
Research

• GOAL - understanding actual events and

behaviors that cause customer dis/satisfaction
in service encounters
• METHOD - Critical Incident Technique
• DATA - stories from customers and employees
• OUTPUT - identification of themes underlying
satisfaction and dissatisfaction with service
encounters

McGraw-Hill © 2000 The McGraw-Hill Companies

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Sample Questions for Critical
SM
Incidents Technique Study

• Think of a time when, as a customer, you had a

particularly satisfying (dissatisfying) interaction
with an employee of .
• When did the incident happen?
• What specific circumstances led up to this situation?
• Exactly what was said and done?
• What resulted that made you feel the interaction was
satisfying (dissatisfying)?

McGraw-Hill © 2000 The McGraw-Hill Companies

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SM Common Themes in Critical

Service Encounters
Research

Recovery: Adaptability:
Employee Response Employee Response
to Service Delivery to Customer Needs
System Failure and Requests

Coping: Spontaneity:
Employee Response Unprompted and
to Problem Customers Unsolicited Employee
Actions and Attitudes

McGraw-Hill © 2000 The McGraw-Hill Companies

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SM Recover
y
DO DON’T
• Acknowledge • Ignore customer
problem • Blame customer
• Explain causes • Leave customer to
• Apologize fend for him/herself
• Compensate/upgrade • Downgrade
• Lay out options • Act as if nothing is
• Take responsibility wrong

McGraw-Hill © 2000 The McGraw-Hill Companies

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SM Adaptability

DO DON’T
• Recognize the • Promise, then fail to
seriousness of the need follow through
• Acknowledge • Ignore
• Anticipate • Show unwillingness to
• Attempt to accommodate try
• Explain rules/policies • Embarrass the customer
• Take responsibility • Laugh at the customer
• Exert effort to • Avoid responsibility
accommodate

McGraw-Hill © 2000 The McGraw-Hill Companies

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SM Spontaneity

DO DON’T
• Take time • Exhibit impatience
• Be attentive • Ignore
• Anticipate needs
• Yell/laugh/swear
• Listen
• Provide information
• Steal from or cheat a
(even if not asked) customer
• Treat customers fairly • Discriminate
• Show empathy • Treat impersonally
• Acknowledge by name
McGraw-Hill © 2000 The McGraw-Hill Companies
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SM Coping

DO DON’T
• Listen • Take customer’s
• Try to accommodate dissatisfaction
• Explain personally
• • Let customer’s
Let go of the
customer dissatisfaction affect
others

McGraw-Hill © 2000 The McGraw-Hill Companies

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Figure 4-6
SM Evidence of Service from the
Customer’s Point of View
 Contact employees
 Customer him/herself
 Operational flow of  Other customers
activities
People
 Steps in process
 Flexibility vs.
standard
 Technology vs.
Process Physical  Tangible
human
Evidence communication
 Servicescape
 Guarantees
 Technology

McGraw-Hill © 2000 The McGraw-Hill Companies