Service Quality

McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved.

6-2

Learning Objectives

Describe and illustrate the five dimensions of service quality.

Use the service quality gap model to diagnose quality problems.

Illustrate how poka-yoke methods are applied to quality design in services.

Perform service quality function deployment. Construct a statistical process control chart. Develop unconditional service guarantees. Discuss the concept of a service recovery. Perform a walk-through audit (WtA)

6-3

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.

6-4

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.

6-5

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.

6-6

Perceived Service Quality Word of

mouthPersonal

needsPast

experience

Expectedservice

Perceivedservice

Service Quality Dimensions

ReliabilityResponsiveness

AssuranceEmpathyTangibles

Service Quality Assessment1. Expectations exceeded ES<PS (Quality surprise)2. Expectations met ES~PS (Satisfactory quality)3. Expectations not met ES>PS (Unacceptable quality)

6-7

Service Quality Gap ModelCustomer

Perceptions

Customer

Expectations

Service

Delivery

Service Standards

ManagementPerceptions of Customer Expectations

Managing the Evidence

Conformance Service Design

Understanding the Customer

Customer Satisfaction GAP 5

Customer / Marketing Research

GAP 1

Conformance GAP 3

Communication GAP 4

Design GAP 2

Service Quality Gap Model

6-8

Quality Service by Design

Quality in the Service PackageBudget Hotel example

Poka-yoke (fail-safing)Height bar at amusement park

Quality Function DeploymentHouse of Quality

6-9Classification of Service Failures

Server ErrorsTask:

Doing work incorrectlyTreatment:

Failure to listen to customer

Tangible:Failure to wear clean uniform

Customer ErrorsPreparation:

Failure to bring necessary materials

Encounter:Failure to follow system flow

Resolution:Failure to signal service failure

6-10

House of Quality

Importance

Relative

1 2 3 4 5 Customer Expectations

Reliability

Responsiveness

Assurance

Empathy

Tangibles

Comparison with Volvo Dealer

Weighted score

Improvement difficulty rank

O O

O Weak

Medium

* Strong

9

9

9

Tra

inin

g

Att

itude

Ca

paci

ty

Info

rmat

iion

Equ

ipm

ent

8

7

7

6 6

5 5

5

5

4

4

3 3

3

3

2

2 2

2

+

_

+

Customer Perceptions

o

+

+ +

o

o

o

o

+

o o

o

o o

o Village Volvo

+ Volvo Dealer

Service Elements

Relationships

127 82 63 102 65

1

* *

6-11

Achieving Service Quality

Cost of Quality (Juran)

Statistical Process Control (Deming)

Unconditional Service Guarantee

6-12

Costs of Service Quality(Bank Example)

Failure costs Detection costs Prevention costsExternal 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 and

analysis Legal judgments Inspection Recruitment and selection Interest penalties Supplier evaluation Internal failure: Scrapped forms Rework Recovery: Expedite disruption Labor and materials

6-13Control Chart of Departure Delays

60

70

80

90

100P

erce

nta

ge

of

on

tim

e fl

igh

ts

expected

Lower Control Limit

1998 1999

n

pppUCL

1(3

n

pppLCL

1(3

6-14

Unconditional Service Guarantee: Customer View

Unconditional (L.L. Bean) Easy to understand and

communicate (Bennigan’s) Meaningful (Domino’s Pizza) Easy to invoke (Cititravel) Easy to collect (Manpower)

6-15Unconditional 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

6-16

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

6-17

Customer Feedback andWord-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.

6-18

Walk-Through-Audit Service delivery system should

conform to customer expectations. Customer impression of service

influenced by use of all senses. Service managers lose sensitivity

due to familiarity. Need detailed service audit from a

customer’s perspective.

6-19Service Recovery Framework

Patronage

LoyaltySatisfactionRetention

SeverityOf

Failure

PerceivedServiceQuality

Psychological-empathy

-apology

Tangible -fair fix-value add

Psychological-apology-show interest

Follow-upService

Recovery

Tangible-small token

ServiceRecoveryExpectations

ServiceRecovery

CustomerLoyalty

ServiceGuarantee

Speed of Recovery

FrontlineDiscretion

ServiceFailure Occurs

ProviderAware

ofFailure

Fair Restitutio

n

Pre-recovery Phase Immediate Recovery Phase Follow-up Phase

6-20

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.

6-21

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?

6-22

Interactive Exercise

The class breaks into small groups. Each group identifies the worst service experience and the best service experience that any member has had. Return to class and discuss what has been learned about service quality.

6-23

The Complaint Letter

1. Briefly summarize the complaints and compliments in Dr. Loflin’s letter.

2. Critique the letter of Gail Pearson in reply to Dr. Loflin. What are the strengths and weaknesses of the letter?

3. Prepare an “improved” response letter from Gail Pearson

4. What further action should Gail Pearson take in view of this incident?

6-24The Museum of Art and Design

1. Critique the WtA gap analysis. Could there be other explanations for the gaps?

2. Make recommendations for closing the gaps found in the WtA.