Chapter 6 Service Quality Shin Ming Guo NKFUST Service Gap Measuring Service Quality Service Recovery Dimensions of Service Quality Reliability: Perform promised service dependably and accurately. Responsiveness: Willingness to help customers promptly. Assurance: Ability to convey trust and confidence. Empathy: caring for customers, understanding customer s needs. Tangibles: Physical facilities and facilitating goods. 2 1
Service Gap = Perceptions Expectations Does this bank Is speed of service important? provide fast service? 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) 3 Types of Service Gap 4 2
Measuring Service Gap SERVQUAL: a two part instrument that pairs an expectation statement with a corresponding perception statement to measure the five dimensions of service quality. Walk through Audit: a operations oriented survey to evaluate service gaps between a customer s perception and a manager s perspective. 5 SERVQUAL SERVQUAL EXPECTATIONS PERCEPTIONS This survey deals with your opinions of banks. Please show the extent to which you think banks should posses the following features. Please circle a number that best shows your expectations about institutions offering bank services The following statements relate to your feelings about the XYZ bank that you chose. Please show the extent to which you believe XYZ has the feature described in the statement. Please circle a number that shows your perceptions about XYZ bank Strongly Strongly Strongly Strongly Disagree Agree Disagree Agree 1 2 3 4 5 6 7 1 2 3 4 5 6 7 (E) Tangibles E1. Excellent banking companies will have modern looking equipment. E2. The physical facilities at excellent banks will be visually appealing. E3. Employees at excellent banks will be neat appearing. (P) Tangibles P1. XYZ bank has modern looking equipment. P2. XYZ Bank s physical facilities are visually appealing. P3. XYZ Bank s reception desk employees are neat appearing. Gap Score P - E 6 3
Importance-Performance Analysis Walk-through Audit 8 4
9 Classification of Service Failures 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 10 5
Cost of Quality Failure costs Detection costs Prevention costs External failure: Process control Quality planning Loss of future business Peer review Training program Negative word of mouth Supervision Quality audits Liability insurance Customer comment card Data acquisition Legal judgments Inspection Recruitment Interest penalties Supplier evaluation Internal failure: Scrapped forms Rework External Failure Costs Detection Costs Costs of Quality Prevention Costs Recovery: Expedite disruption Labor and materials Internal Failure Costs 11 Example: Pizza Delivery We offer pizza delivery service to campus area. Student newspaper has just published an article that criticizes us for poor service. What should we do? Step 1: Define critical to quality characteristics Taste, Late Deliveries, Wrong Orders, Cold Food, etc. 12 6
Step 2: Measure the Process Run Chart % of complaints 0.18 0.16 0.14 0.12 0.1 0.08 0.06 0.04 1 2 3 4 5 6 7 8 9 10 11 12 Time (months) 13 Step 3: Analyze the Process Total=251 complaints number of complaints 250 200 150 100 50 1 0.8 0.6 0.4 0.2 cumulative % 0 late deliveries wrong order cold food taste other 0 14 7
Step 4: Analyze using Cause and Effect Diagram 15 A Service Recovery is satisfying a previously dissatisfied customer and making them a loyal customer. 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 customer who has had a problem resolved by a company will tell about 5 people about their situation. A dissatisfied customer will tell between 10 and 20 other people about their problem. 16 8
Level of Customer Dissatisfaction 30 Average number of people told 25 20 15 10 5 0 17 Service Recovery Framework 18 9
Approaches to Service Recovery Case by case addresses each customer s 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. 19 Service Guarantee: Customer View Unconditional (L.L. Bean) Easy to understand and communicate (Bennigan s) Meaningful (Mobile phone service) Easy to invoke (Internet shopping) Easy to collect (Amazon) 20 10
Service Guarantee: Management View Service Guarantees As Design Drivers Focuses on customers (British Airways) Sets clear standards (FedEx) Guarantees feedback (Proactive approach) Promotes an understanding of the service delivery system (Bug Killer) Builds customer loyalty by making expectations explicit 21 Summary Most quality programs fail for one of two reasons: they have systems without passion, or passion without system. Tom Peters Pay attention to norms and rituals Training to anticipate possible situations. Customers are the ultimate judges of a service s value. Let the punishment fit the crime in service recovery 22 11