SM: Session 11 Service Quality

Service quality is an important parameter of success for most firms. In services context, quality and productivity create value for customers and companies. Service quality focuses on the benefits created for customers; productivity addresses financial costs incurred by firm. It keep costs down to improve profits and/or reduce prices, enable firms to spend more on improving customer service and supplementary services, secure firm’s future through increased spending on R&D and impact service experience.

Service Quality Perspectives

Transcendent approach: Quality in this sense is innate excellence. It reflects the best thing there is. It can only be realized by experience and exposure.

Manufacturing based approach: It relates to conformance with design or specification. Quality service would be one which is free of errors. 

User based approach: If a service meets the requirement of the user, then it is quality service. Fitness of purpose is the common phrase used in this context. This is a subject approach that recognizes that different consumers will have different needs and wants.

Value based approach: The quality is based on how customer sees value.

Benefits of Service quality

Good service quality is customer delight. It helps in retaining existing customers and attracting new ones. Quality edge boosts performance as in short run, superior quality fetches premium price and in long run - Business grows, gains in market share.

Rust, Zahorik and Keiningham Model – relationship between service quality and profit:

The Gaps Model

Planning services and managing the marketing efficiently is a challenge for most marketers. These challenges though well studied by service marketers, still leaves a lot of scope for improvement. Gaps model given by Parasuraman, Zeithaml and Berry identifies these scopes in form of five service quality gaps – Listening gap (knowledge gap), service design and standards gap (policy gap), service performance gap (delivery gap), communications gaps and customer gap (perceptions gap).

The first four gaps are the provider’s gap, while the fifth gap is the customer gap.

Gap I – The Listening Gap

This is the gap between the customer expectation and the management understanding of customer expectations. The firm lacks understanding of what is preferred by its customers. The reason behind this gap as explained by the model are:

• There is inadequate or insufficient consumer research. The techniques used may be inappropriate to find quality inputs.
• There can be lack of interaction between customers and management. The frontline employees that are important in getting customer inputs and not given opportunity to inform management. That may occur due to number of layers.
• Management may have failed to identify customer segments that may have different need sets. There is no emphasis given to relationship management.
• The ultimate reason may be no or inadequate service recovery or complaint management.

 Closing the Gap

• Service firms must have a sharpen market research process with more in-depth quality research.
• Implement effective customer feedback mechanism and complaint management will help in knowing problem areas.
• Bring relationship management to increase interaction at various tangents of service triangle.
• Facilitate and encourage communication between frontline employees and management

Gap II. The Service Design and Standard Gap

Understanding customer expectations are important but not the only thing for best quality service. All service design specifications and standards should be planned keeping in view of customers’ expectations. They may exists due to following reasons:

• Management may poorly design service. They may assume that consumers have no idea of quality service. For example, a restaurant serving soup in a big bowl.
• Unsystematic design process may also lead to this gap.
• Lack of understanding of customer driven service standards and no focus on customer requirements can also result in gap.
• Absence of process management and formal service quality goals may lead to poor service standards.
• Designing of inappropriate servicescape that lacks usability. There can be instances of poor maintenance and updating of physical evidences.

 Closing the Gap

• Get the customer process right by using a rigorous, systematic and communicate customer centric approach. Firm may also use soft technologies to standardize repetitive tasks.
• Set communicate and reinforce customer-oriented service standards and establish service quality goals at each step in service delivery
• Develop tired service products to allow self-segmentation
• Train managers to be service quality leaders

Gap III. The Service Performance Gap

This also known as delivery gap. Even the firm has correct understanding of customer expectation and design a beautiful servicescape, it’s all about how they are delivering it to the customer. The service performance gap is the discrepancy between the development of customer-driven service standards and actual service performance by company employees. The reason for such gap is:

• From management side, there is ineffective recruitment, training and empowerment of employees. There is lack of evaluation and compensation policies. For customers there is a failure in matching supply and demand.
• From employees, they are not very clear about their role in process. Also there may be bottlenecks due to problems with intermediaries – channel conflict regarding objects, performance, costs and rewards
• From customer’s side, negative customers (jay customers) may not let the service process go through smoothly. They may not provide complete information or may not corporate during delivery.

 Closing the Gap

• Improve recruitment, training and evaluation process
• Clarify employee roles
• Teach employees about customer expectations, perceptions and problems
• Build cross functional teams that offers customer centric service quality
• Sufficiently empower employees
• Device mechanism for measuring performances, feedback and rewards schemes
• Install right technology, equipment, support processes and capacity
• Balance demand
• Educate customers

Gap IV. The Communications Gap

This is the different between the service firm communication with the outside world through advertisement and other media and service delivery. External communication is very important in forming customer expectation. If the communication strategy and service delivery are different the service may be disastrous for the customer. Usually, the communication strategy is planned by the management (making promise) and service deliver is given by the employees (keeping promise) and hence the firm must inform and educate their employees about the communication strategy. The reasons for this gap are:

• Lack of integrated marketing communications program.
• Absence of strong internal marketing communication program
• Ineffective management of customer expectations and not adequately educating customers.
• Overpromising in advertising, personal selling and through servicescape cues.
• Insufficient communications between sales and operations, advertising and operations or across branches and units
• Inappropriate pricing as high prices raise customer expectations.

 Closing the Gap

• Ensure promises are realistic and correctly understood by customer
• Seek inputs from frontline staff
• Let service providers preview advertisements
• Develop internal educational and motivational campaigns
• Pretest all advertising, brochures telephone scripts and websites
• Identify and explain in real time service shortcomings
• Ensure operations in multisite operations

Gap V. The Customer Gap

This gap identifies the difference between customer expectations and customer perceptions. Reasons for this gap are:

• Inadequate servicescape
• High prices
• Customer perceived risks and anxiety
• Experience not matching with needs, word of mouth or previous experience.

 Closing the Gap

• Make service quality tangible and communicate
• Develop service environment
• Keep customers informed during service delivery
• Provide physical evidences

The Five Dimensions of Service Quality

Reliability - Ability to perform the promised service dependably and accurately. For an airline the measure of reliability is flights depart/arrive on schedule. For a telephone company billing should be error free.

Assurance - Knowledge, competence, credibility and courtesy of employees and their ability to inspire trust and confidence. For example - a knowledgeable Mechanic at the service center.

Tangibles - Physical facilities, equipment, and appearance of personnel. For example - seating and air-conditioning at the theater.

Empathy - Interpersonal communication, caring, individualized attention the firm provides its customers. For example - a service provider acknowledging the customer by name.

Responsiveness - Willingness to help customers and provide prompt service. For example - no waiting at the hospital.

Measuring Service Quality

Most widely used measure for service quality has been SERVQUAL devised by Parsuraman, Zeithaml and Berry. Customer expectation of service quality results from a comparison of service expectations and perceived performance. SERVQUAL was first published in 1988.

The five service quality dimensions of reliability, responsiveness, assurance, empathy and tangibles are the basic attributes measured by the SERVQUAL. SERVQUAL scores are expressed as the difference between expectations and performance. Respondents complete a series of questions which measure their expectations on 5 service quality dimensions and subsequently record their perception on performance on the same dimensions.

Hard and Soft Measures of 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.

SERVQUAL and SERVPERF - Important Soft Measures

SERVQUAL

The original SERVQUAL consisted of 22 statements – 4 on tangibles, 5 on reliability, 4 on responsiveness, 4 on assurance, 5 on empathy. Equipment, physical facilities, appearance of employees, materials like pamphlets are tangibles. Meeting promises, performing the service right the first time measures reliability. Prompt service, employees never too busy to respond to customer requests is responsiveness. Feeling of safety in transaction, employees having the knowledge to answer questions is assurance. Individual attention to customers measures empathy.

SERVQUAL example

  Expectation statements (E)

1. The physical facilities at Banks should be visually appealing 1 2 3 4 5 6 72.
2. Banks should give customers individual attention 1 2 3 4 5 6 7

Corresponding perception statements (P)

1. The physical facilities a XYZ bank are visually appealing 1 2 3 4 5 6 7
2. XYZ bank gives its customers individual attention 1 2 3 4 5 6 7

Scope of SERVQUAL

• To determine company’s service quality along 5 service quality dimensions
• To find out relative importance of the service quality dimensions as considered by the customer
• To track customers expectations and perceptions over time
• To compare the company’s SERVQUAL scores against that of the competitors

SERVPERF

 Researchers felt it was unnecessary to have expectation and Performance statements. Hence they came out with the Performance statements only which is called the SERVPERF. The statements are positively worded and those who agree with it fully give a 7 point and those who agree least give 1 point.

Examples of SERVPERF Statements

 Reliability

1.The TV was repaired right the first time. 1 2 3 4 5 6 7

2.The Airline is on time as per schedule. 1 2 3 4 5 6 7

3.The mobile bill is free of errors. 1 2 3 4 5 6 7

4.The lawyer calls back as he promised. 1 2 3 4 5 6 7

5.The course was completed as per the academic calendar 1 2 3 4 5 6 7

Assurance

1.The Travel agent is able to give all the details regarding the destination. 1 2 3 4 5 6 7

2.The professor is Knowledgeable in the subject. 1 2 3 4 5 6 7

3.The bank teller processes the transaction efficiently. 1 2 3 4 5 6 7

4.The Salon assistant is skilled in her work 1 2 3 4 5 6 7

5.The Doctor is experienced and highly qualified in his area of Medicine 1 2 3 4 5 6 7

Tangibility

1.The Hotel’s lobby and facilities are attractive 1 2 3 4 5 6 7

2.The bank statement is easy to understand 1 2 3 4 5 6 7

3.The classroom is well ventilated and equipped with projector and other aides. 1 2 3 4 5 6 7

4.The airline staff are well groomed. 1 2 3 4 5 6 7

5.The seats in the theatre are comfortable. 1 2 3 4 5 6 7

Empathy

1.The flight attendant has a pleasant demeanor 1 2 3 4 5 6 7

2.The reservation assistant at the theatre is consistently polite 1 2 3 4 5 6 7

3.The telephone operator is courteous. 1 2 3 4 5 6 7

4.The staff of the hospital knows the patients by name 1 2 3 4 5 6 7

5.The college gives a re-exam option for the students 1 2 3 4 5 6 7

6.The restaurant was ready to customize your meal according to you requirements

Responsiveness

1.When there is a problem the firm finds solution for it quickly 1 2 3 4 5 6 7

2.The DTH service operator was prompt to get the installation done 1 2 3 4 5 6 7

3.The doctor is always available on phone in case of emergencies 1 2 3 4 5 6 7

4.The teacher was available to clear the doubts of the students prior to the exam 1 2 3 4 5 6 7

5.In case of delay the airline made very quick alternative arrangements for passengers 1 2 3 4 5 6 7

6.The employees of the retail store are never too busy to help the customers 1 2 3 4 5 6 7

Other Soft Methods used by service organizations to assess quality

Transaction surveys

Also called as trailer calls or post transaction surveys. Usually done with a small questionnaire immediately after the service transaction. Ex- A survey of airline passengers while disembarking. Such surveys can also be conducted in total markets or annually. This technique aims to give accurate assessment of processes, branch, team or employees. 

Complaint solicitation and analysis

This soft measure encourages customers tend to voice their dissatisfaction through complaints. An analysis of the complaints can help in identifying quality failure points. Singapore Airlines prints excerpts from customer complaints and compliments letter in its monthly employee magazine. Customer complaints are taken as research inputs in quality service organisations.

Mystery shopping

In this method research companies are used by the service organization who send people posing as customers in order to judge service quality. The mystery shopper is unknown to the service provider. Mystery shopping also termed as ghost shopping can be useful in reinforcing service quality. 

Intermediary research

This form of research is useful in services where intermediaries can provide valuable feedback to the firm regarding the quality of service.

Hard Measures of Service Quality

Control charts to monitor a single variable

Control charts are useful for displaying performance over time against specific quality standards. Example: Percentage of Flights Leaving within 15 Minutes of Schedule time.

The charts bring visual representation of trend and can be used to monitor and communicate individual variables or overall index.

Service Quality Indexes

FedEx was one of first companies to understand the importance service quality. They have identified the possible failure point. They also aimed at working on key areas as service failure may be due to some key components. The Service Quality Index devised by FedEx gives weightage to different fail point. The total index is calculated per day and the efforts are taken to minimize the score.

Composition of FedEx’s Service Quality Index (SQI):

Root Cause Analysis (Fishbone Charts)

Fishbone diagrams are cause-and-effect diagram to identify potential causes of problems. It is originated from Ishikawa diagram which developed by Japanese quality expert Kaoru Ishikawa. Both Ishikawa and Fishbone diagrams are extensively used in manufacturing and services sectors. The important components of service quality are identified and given a shape of fishbone where tail and side bones represent the cause and the top represent the failure point.

Analysis of Causes of Flight Departure Delays using Fishbone Diagram:

Pareto Analysis

Pareto charts deals with the task of separating the trivial from the important. It is a statistical technique in decision making that is used for the selection of a limited number of tasks that produce significant overall effect.

It uses the Pareto Principle (also know as the 80/20 rule). In terms of quality improvement, a large majority of problems (80% of the variable) are produced by a few key causes (20%). This is also known as the vital few and the trivial many.

Blueprints

Blueprinting is visualization of service delivery. It allows one to identify fail points in both the front stage and backstage.

  

Soft Standards at Toyota in Japan

Standards for salespeople patterned after samurai behaviours.  Assume the samurai warrior’s “waiting position” by leaning five to ten degrees forward when a customer is looking at a car. stand with left hand over right, fingers together and thumbs interlocked, as the samurais did to show they were not about to draw their swords. Display the “Lexus Face,” a closed-mouth smile intended to put customers at ease.

Responsiveness Standards at Zappos.com

Respond to 80 percent of all incoming calls within 20 seconds. Respond to all e-mail messages in less than four hours. Respond to live (online) chats in less than 10 seconds.

Hard and Soft Service Standards at Ford

Appointment available within one day of customer’s requested service day. Write-up begins within four minutes. Service needs are courteously identified, accurately recorded on repair order and verified with customer. Service status provided within one minute of inquiry. Vehicle serviced right on first visit. Vehicle ready at agreed-upon time. Thorough explanation given of work done, coverage and charges

Standards at Four Seasons

Seven Service Culture Standards

Core Worldwide Service Operating Standards

1.Smile

2.Eye

3.Recognition

4.Voice

5.Informed

6.Clean

7.Everyone

Quality control at various levels such as reservations, hotel arrival, messages and paging, uest Room evening service, breakfast and room.