ass. prof. ozge ozgen - managing through excellence
DESCRIPTION
Managing Through Excellence Dr Ozge Ozgen DOKUZ EYLUL UNIVERSITY IZMIR, TURKEY IEMA TOURISM SUMMER SCHOOL 2012 Olympia, GreeceTRANSCRIPT
04.11.2012
1
Olympian Summer School
Managing through Excellence in Services Marketing
Assist. Prof. Dr. Ozge Ozgen
Department of International Business and Trade
Faculty of Business, Dokuz Eylul University, Izmir - Turkey
July 29, 2012 - Olympia Summer Schools - 2012
Basic Differences of Services
Customers do not obtain ownership
Intangible performances
Customer Involvement in the production process
People as part of the product
Greater variability in operational inputs and outputs
Harder for customers to evaluate
Importance of time factor
Summer Schools - 2012
Service Excellence
Being in a journey, not a destination
requires insistence and consistence
A goal that you attain with people, not something that you do to people
Hard to grasp
Summer Schools - 2012
04.11.2012
2
Summer Schools - 2012
Service Excellence
Meeting customers’ present needs, anticipating prospective needs and enhancing on-going relationship
Achieving customer delight
Satisfaction vs. delight
Satisfaction is judgement (perfomance>expectations)
Emotions, such as delight, are human affects resulting from judgements about satisfaction with a service.
Delight is “an expression of very high satisfaction” resulting from surprisingly good performance (Oliver, Rust and Varki, 1997)
Delight = Joy + Surprise (Plutchik, 1980)
Summer Schools - 2012
Understanding of Service Excellence (Johnston, 2004)
Delivering the promise
Providing personal touch
Going the extra mile
Dealing with problems
Service Quality
Customization
Understanding the Customer Needs
Service Recovery
Summer Schools - 2012
Different Perspectives of Service Quality
Product-based: Quality is precise and measurable
User-based: Quality lies in the eyes of the beholder
Manufacturing-based: Quality is in conformance to the firm’s developed specifications
Value-based: Quality is a trade-off between price and value
Summer Schools - 2012
Service Quality and Understanding Customer Needs: Three Models
SERVQUAL (Parasuraman, Zeithaml and Berry, 1988)
KANO (Kano, Seraku, Takahashi and Tsjui, 1984)
QUALITY FUNCTION DEPLOYMENT (Akao, 1990)
04.11.2012
3
Summer Schools - 2012
Components of Quality: Manufacturing-based
Performance: Primary operating characteristics
Features: Bells and whistles
Reliability: Probability of malfunction or failure
Conformance: Ability to meet specifications
Durability: How long product continues to provide value to customer
Serviceability: Speed, courtesy, competence
Esthetics: How product appeals to users
Perceived Quality: Associations such as brand name
Summer Schools - 2012
Components of Quality: Service-based
Tangibles: Appearance of physical elements
Reliability: Dependable and accurate performance
Responsiveness: Promptness; helpfulness
Assurance: Competence, courtesy, credibility, security
Empathy: Easy access, good communication, understanding of customer
Summer Schools - 2012
Capturing the Customer’s Perspective of Service Quality: SERVQUAL (1)
Survey research instrument based on premise that customers evaluate firm’s service quality by comparing
Their perceptions of service actually received
Their prior expectations of companies in a particular industry
Perceived performance ratings vs. expectations
Scale contains 22 items reflecting five dimensions of service quality
Subsequent research has highlighted some limitations of SERVQUAL
Summer Schools - 2012
Other Considerations in Service Quality Measurement
Services high in credence characteristics may cause consumers to use process factors and tangible cues as proxies to evaluate quality—halo effect
Time constraints
Process factors: Customers’ feelings
04.11.2012
4
Summer Schools - 2012
The Gaps Model—A Conceptual Tool to
Identify and Correct Service Quality
Problems
Summer Schools - 2012
Seven Service Quality Gaps (5-Gaps Model created by Parasuraman, Zeithaml, and Berry, 1985)
Customer experience relative to expectations
1. Knowledge Gap
2. Standards Gap
3. Delivery Gap
5. Perceptions Gap
7. Service Gap
Customer needs and expectations
6. Interpretation Gap
4. Internal Communications Gap
MANAGEMENT
CUSTOMER
4.
Customer perceptions of service execution
Management definition of these needs
Translation into design/delivery specs
Execution of design/delivery specs
Advertising and sales promises
Customer interpretation of communications
Summer Schools - 2012
KANO Model
Eg: Good brakes
Eg: Gas consumption
Eg: MP3 Player according to driver’s mood
Source: Berger, C., Blauth R., Boger D., et al. (1993), “A Special Issue on Kano’s Methods for Understanding Customer-defined Quality”, Center for Quality of Management Journal, 2 (4), p. 4.
Summer Schools - 2012
Quality Function Deployment
1. What are the qualities the customer desire?
2. What function(s) must this product serve and what functions
must we use to provide this product or service?
3. Based upon the resources we have available, how can we
best provide what our customer wants?
04.11.2012
5
Summer Schools - 2012
Ho
use
of
Qu
alit
y
Summer Schools - 2012 04.11.2012 18
Go to GEMBA, Listen Your Customer
GEMBA: the place where the real action takes place,
where a consumer puts the good or service that he/she
bought into use
See customers in action to understand their unknown
unspoken needs.
If you will analyze the Olympia,
where is GEMBA?
Summer Schools - 2012
Measuring and Improving
Service Quality
Summer Schools - 2012
Soft and Hard Measures of Service Quality
Soft measures— not easily observed, must be collected by talking to customers, employees, or others
Hard measures— can be counted, timed, or measured through audits
04.11.2012
6
Summer Schools - 2012
Cause-and-Effect Chart for Flight Departure Delays
Aircraft late to gate
Late food service
Late fuel
Late cabin cleaners
Poor announcement of departures
Weight and balance sheet late
Delayed Departures
Delayed check-in procedure
Acceptance of late passengers
Facilities, Equipment
Front-Stage Personnel
Procedures
Materials, Supplies
Customers
Gate agents cannot process fast enough
Late/unavailable airline crew
Arrive late Oversized bags
Weather Air traffic
Frontstage Personnel
Procedures
Materials, Supplies
Backstage Personnel
Information
Customers
Other Causes
Mechanical Failures Late pushback
Late baggage
Summer Schools - 2012
Improving Service Productivity: (1) Operations-driven Strategies
Control costs, reduce waste
Set productive capacity to match average demand
Automate labor tasks
Upgrade equipment and systems
Train employees
Broadening array of tasks that a service worker can perform
Leverage less-skilled employees through expert systems
Service process redesign
Olympian Summer School
Summer Schools - 2012
Service Failures
the situation in which the prospective outcomes of a service
process or the process itself cannot be accomplished by the
service provider and
cannot meet the customers’ former expectations
04.11.2012
7
Summer Schools - 2012
Long Waiting Times May Indicate Need for Service Process Redesign
Summer Schools - 2012
Types of Service Failures
1st Classification
• Service system failure
• Failures in implicit or explicit customer requests
• Unprompted and unsolicited employee actions
2nd Classification
• Outcome failure
• Process failure
• Outcome and Process Failure
Summer Schools - 2012
Types of Service Failures (1st Classification)
Service system failure
unavailable service
• delayed flight or the hotel’s making excess reservation
slow service without reason
• delay of meal in a restaurant
other core service failures
• cold food or loss of package during freight transportation
Summer Schools - 2012
Types of Service Failures (1st Classification)
Failures in implicit or explicit customer requests:
This occurs chiefly when employees are unable to comply with the customer’s individual needs
• food not cooked to order
• seating problems
• seating smokers in non-smoking section
• not to find specific menu for a vegetarian
04.11.2012
8
Summer Schools - 2012
Types of Service Failures (1st Classification)
Unprompted and unsolicited employee actions:
This includes behavior of employees that is unacceptable to customers
• level of attention (ignoring the customer)
• unusual actions (abusive and improper touching)
• cultural norms
• Gestalt (customer evaluating the whole of the holiday as dissatisfaction without identifying a certain reason)
• adverse conditions (employee behavior under stressful event)
Summer Schools - 2012
Types of Service Failures (2nd Classification)
Outcome failure
some aspect of the core service is not delivered
room is unclean, flight is delayed
Process failure
the core service is delivered in a deficient manner
front-desk personnel of hotel is impolite
Summer Schools - 2012
www.ratemyprofessors.com
He makes me hate life and management. Maybe he should change his clothes once in awhile? Run away from this guy.
You can’t cheat in her class, because no one knows the answers.
BORING! But I learned there are 137 tiles on the ceiling.
He will destroy you like an academic ninja.
His class was like milk. It was good for just two weeks.
All the professors in the world should attend at least one of his lectures, so they know what is a real teaching
Houston we have a problem.
Summer Schools - 2012
Understanding Customer Responses to Service Failure
Why do customers complain?
What proportion of unhappy customers complain?
Why don’t unhappy customers complain?
Where do customers complain?
What do customers expect once they have made a complaint?
A. Had unhappy childhoods? B. Do they have a genetical problem? C. Have trouble in their primary relationships?
04.11.2012
9
Summer Schools - 2012
Why don’t Customers Complain?
Don’t know how to complain to
Don’t think it will do any good
May doubt their own subjective evaluation
May want to avoid confrontation
May lack expertise
Customers often view complaining as difficult and unpleasant
Summer Schools - 2012
Customer Response Categories to Service Failures
Dissatisfactory service
Take some form of public action
Take some form of private action
Complain to the service firm
Complain to a third party
Take legal action to seek redress
Defect
(switch provider)
Negative
word-of-mouth
Take no action
Summer Schools - 2012
Complaining Outcomes
Voice
HIGH:
Store manager
MEDIUM:
Sales clerk
LOW:
No one associated with the store
Exit
HIGH:
Never purchases again
MEDIUM:
Only purchases if other alternatives are not available
LOW:
Continue to shop as usual
Retaliation
HIGH:
Tells lots of people and attempts to physically
damage
MEDIUM:
tell a few people and created minor
inconveniences
LOW:
does not retaliate at all
Summer Schools - 2012
Service Recoveries
all the actions taken by the service provider in order to diminish the effects of the failure or fix the problem or even eliminate it totally,
under the conditions that the organization meets the failure via complaints or some other sources etc.
to correct the failure at first hand
to eliminate all of the prospective negative effects
04.11.2012
10
Summer Schools - 2012
Service Recovery Strategies
Discount
Replacement
Refund
No charge
Gift giving
Apology
Failure escalation
Nothing
Summer Schools - 2012
Importance of Service Recovery
The effects on trust, customer satisfaction and loyalty
Positive vs. negative word-of-mouth
Recovery paradox was developed by Etzel and Silverman (1981)
“it may be those who experience the gracious and efficient handling of a complaint who become a company’s best customer.”
“a good recovery can turn angry, frustrated customers into loyal ones.”
Note: Not all research support this paradox
Summer Schools - 2012
Perceived Justice
Distributive Justice Procedural Justice Interactional Justice
Relates with outcome of service recovery
Relates with the methods of processing complaints and service recovery
Relates with the treatment of employees during complaint handling
• Refund • Discounts • Gifts
• Accessibility • Timing • Speed • Flexibility
Employees’ • Empathy • Courtesy • Sensitivity • Treatment
Justice Theory
SERVICE RECOVERY OPTIONS
Your Tokyo flight delayed one day and you have to
delay your all appointments in Tokyo.
Airline company provides free hotel for him or they arrange another flight from another airline company in two hours.
He waits 6 hours in airport than airline company arrange a hotel or in one hour he goes to hotel.
Employees of airline company do not inform passengers about delay and its reasons or they are so professional and sensitive to all passengers.
04.11.2012
11
Summer Schools - 2012
How to Enable Effective Service Recovery
Be proactive—on the spot, before customers complain
Plan recovery procedures
Teach recovery skills to relevant personnel
Empower personnel to use judgment and skills to develop recovery solutions
Summer Schools - 2012
CRISIS IN SERVICES
The cumulative impact of service failures may result in crisis
Characteristics of a crisis
Crises involve a wide range of stakeholders
There are time pressures requiring an urgent response
A crisis usually results from a surprise to the organization
There is a high degree of ambiguity, in which cause and effects are unclear
A crisis creates a significant threat to an organization’s strategic goals
Summer Schools - 2012
Crisis Response Strategies
Defensive strategies
Accommodative strategies
atta
ck t
he
accu
ser
den
ial
corr
ecti
ve
acti
on
full
apo
logy
Summer Schools - 2012
Air France Crash
04.11.2012
12
Summer Schools - 2012
Bernardo Souza, who said his brother and sister-in-law were
on the flight, complained he had received no details from Air
France.
"I had to come to the airport but when I arrived I just found
an empty counter," he was quoted as saying by Reuters
news agency.
Summer Schools - 2012
Response of Air France
Earlier, Air France chief executive Pierre-Henri Gourgeon told reporters: "We are without a doubt faced with an air disaster." He added: "The entire company is thinking of the families and shares their pain."
From press release of Air France
Air France is doing its utmost to provide support for relatives and friends.
Medical and psychological assistance involving 15 specialist physicians has been set up at Paris-Charles de Gaulle 2 and Rio de Janeiro airports.
Some one hundred voluntary members of Air France staff are backing up the teams in Paris-Charles de Gaulle and Rio de Janeiro.
Air France has also established a special toll-free number for the relatives and friends of passengers.
Summer Schools - 2012
It is all about emotions...
Emotions are also another important outcome of the service recovery
Summer Schools - 2012
04.11.2012
13
Summer Schools - 2012
Key References Akao, Y. (ed.) (1990), Quality Function Deployment: Integrating Customer Requirements into Product Design, Productivity Press, Cambridge, MA. Berger, C., Blauth R., Boger D., et al. (1993), “A Special Issue on Kano’s Methods for Understanding Customer-defined Quality”, Center for Quality of Management Journal, 2 (4). Coombs, W. T. (1998), “An analytic framework for crisis situations: Better responses from a better understanding of the situation”, Journal of Public Relations Research, Vol.10, pp. 177-191. Johnston, R. (2004) “Towards a Better Understanding of Service Excellence”, Managing Service Quality, 14(2/3), 129-133. Kano, N., N. Seraku, F. Takahashi ve S. Tsjui, (1984), "Attractive Quality and Must-be Quality", Hinshitsu, 14(2), 147-56. Mattila A. (2001). The effectiveness of service recovery in a multi industry setting. Journal of Services Marketing, 15(7), 583-596. Maxham III, J.G., (2001). Service recovery’s influence on consumer satisfaction, positive word-of-mouth, and purchase intentions. Journal of Business Research, 54(1), 11-24. Oliver, R. L., Rust, R. T., and Varki S. (1997) “Customer Delight: Foundations, Findings and Managerial Insight”, Journal of Retailing, 73, Fall, 311-336. Parasuraman A., Zeithaml, V. A., and Berry L. L. (1985) “A Conceptual Model of Service Quality and Its Implications for Future Research”, Journal of Marketing, 49, Fall, 41-50. Plutchik, R. (1980), Emotion: A Psychoevolutionary Synthesis, New York: Harper & Row. Smith, A.K., Bolton, R.N. & Wagner, J. (1999). A model of customer satisfaction with service encounters involving failure and recovery. Journal of Marketing Research, 36, August, 356-372.
Summer Schools - 2012
Thanks for listening... [email protected]