service productivity, quality and innovation: implications for service-design practice and research
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Professor A. ―Parsu‖ ParasuramanUniversity of MiamiService Science Factory PresentationMaastricht UniversityMaastricht, Netherlands21 January 2011TRANSCRIPT
Professor A. ―Parsu‖ ParasuramanUniversity of Miami
Service Science Factory PresentationMaastricht University
Maastricht, Netherlands21 January 2011
Service Productivity, Quality and Innovation: Implications for Service-
Design Practice and Research
© Professor A. Parasuraman; not to be reproduced or disseminated without permission 2
October 23, 2000
Some Preliminary Observations
Service continues to be mediocre in many sectors
Gains in service productivity of firms may lead to lower service quality as experienced by customers
Service innovations may not necessarily lead to gains in service productivity and quality
© Professor A. Parasuraman; not to be reproduced or disseminated without permission 3
Service Productivity, Quality and Innovation are Intertwined
© Professor A. Parasuraman; not to be reproduced or disseminated without permission 4
Service Productivity
Service Innovation
Service Quality
© Professor A. Parasuraman; not to be reproduced or disseminated without permission 5
What is Service Productivity?
Output Input
Simple Definition of Productivity
6© Professor A. Parasuraman; not to be reproduced or disseminated without permission
7
Traditional View of Service Productivity
Company’s
Inputs
Company’s
Outputs
Service Productivity
© Professor A. Parasuraman; not to be reproduced or disseminated without permission
Proposed View of Service
Productivity
Service productivity can and should be evaluated from the perspectives of both companiesand customers
8© Professor A. Parasuraman; not to be reproduced or disseminated without permission
Components of Service Productivity
Inputs from company’s perspective: Labor, capital investments, ongoing expenses, etc.
Inputs from customer’s perspective: Monetary cost, time, effort, mental stress, etc.
Outputs from company’s perspective: Revenue, profits, customer loyalty, etc.
Outputs from customer’s perspective: Value, satisfaction, service experience, etc.
© Professor A. Parasuraman; not to be reproduced or disseminated without permission
10
A Company-Customer Conceptualization of Service Productivity
Inputs
[Labor, Equipment,
Technology, etc.]
Outputs
[Sales, Profits, Market
Share, etc.]
Company’s Perspective
Productivity
Inputs
[Time, Effort, Emotional
Energy, etc.]
Outputs
[Service Performance,
Satisfaction, etc.]
Customer’s Perspective
ProductivityMissing
Link!Service
Quality!
© Professor A. Parasuraman; not to be reproduced or disseminated without permission
© Professor A. Parasuraman; not to be reproduced or disseminated without permission 11
What is Service Quality?
From Customers’ Perspective…
Service quality results from a comparison customers’ service expectations with their actual service experience
Their service experience frequently falls short of their expectations
© Professor A. Parasuraman; not to be reproduced or disseminated without permission 12
© Professor A. Parasuraman; not to be reproduced or disseminated without permission 13
Determinants of Customers’ Evaluation of a Service
The outcome and the process of the service delivery
Whether the service is routine or nonroutine
© Professor A. Parasuraman; not to be reproduced or disseminated without permission 14
A Common Disconnect between Companies and Customers
Nature of Service
Process
ServiceDelivery
Outcome
Routine Nonroutine
Most customer svc. standards fall
here……
……and perhaps some fall here
Customers affected disproportionately
by this……
……and perhaps by this
From a Company’s Perspective…
Delivering superior service quality on a sustained basis is a major challenge
This challenge arises because of four key internal deficiencies or ―gaps‖ within the organization
© Professor A. Parasuraman; not to be reproduced or disseminated without permission 15
© Professor A. Parasuraman; not to be reproduced or disseminated without permission 16
Conceptual Model of Service Quality – GAPS Model
CUSTOMER SERVICE ORGANIZATION
Customers’ Service
Expectations
Customers’ Service
Perceptions
ServiceQuality
GapGAP 5
GAP 2
GAP 3
GAP 1
GAP 4
Organization’s Understanding of
Expectations
Organization’s Service Standards
Organization’s Service
Performance
Organization’s Communications
to Customers
MarketInformation
Gap
ServiceStandards
Gap
Service PerformanceGap
Internal Communication
Gap
© Professor A. Parasuraman; not to be reproduced or disseminated without permission 17
GAP 1: Market Information Gap
Do you have an accurateunderstanding of customers’
expectations?
No or not sure
GAP 2: Service Standards Gap
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Do you have service standards and are they aligned with customers’ expectations?
No or not sure
© Professor A. Parasuraman; not to be reproduced or disseminated without permission 19
GAP 3: Service Performance Gap
―McDonald’s Finds AngryCustomers on Its Menu‖
-The Wall Street Journal
Does your service delivery meet your own internal standards?
No or not sure
© Professor A. Parasuraman; not to be reproduced or disseminated without permission 20
GAP 4: Internal Communication Gap
Are all your interfaces and interactions with your customers
synchronized?
No or not sure
Prerequisite for Superior Customer Experience
© Professor A. Parasuraman; not to be reproduced or disseminated without permission 21
Close Gaps 1-4 & hence Gap 5!
The internal organizational gaps not only lead to poor service quality but also adversely affect service productivity!
An Important Implication of the Four Organizational Gaps
22© Professor A. Parasuraman; not to be reproduced or disseminated without permission
Svc. Gaps—Svc. Productivity Link
Opportunities for Improving Service Productivity
Reallocation of resources Better customer service
Resource Misallocation and Customer Frustration
Focus on ―wrong‖ attributes Service delivery deficiencies
Organizational Gaps
Managerial: Gaps 1&2 Employee/Systems: Gaps 3&4
© Professor A. Parasuraman; not to be reproduced or disseminated without permission 23
24
A Dual Conceptualization of Service Productivity: A Second Look
Inputs
[Labor, Equipment,
Technology, etc.]
Outputs
[Sales, Profits, Market
Share, etc.]
Company’s Perspective
Productivity
Inputs
[Time, Effort, Emotional
Energy, etc.]
Outputs
[Service Performance,
Satisfaction, etc.]
Customer’s Perspective
ProductivityService
Quality
+
++
+
─
─
© Professor A. Parasuraman; not to be reproduced or disseminated without permission
© Professor A. Parasuraman; not to be reproduced or disseminated without permission 25
Role of Technology in Service Delivery
The ―Technology Readiness‖ Construct and Its Implications
© Professor A. Parasuraman; not to be reproduced or disseminated without permission 26
Pyramid Model of Services Marketing
Technology
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An Important Implication of the
Pyramid Model
An organization’s ability to use technology effectively in marketing to and serving customers critically depends on the technology readiness of its customers and employees
© Professor A. Parasuraman; not to be reproduced or disseminated without permission 28
What is Technology Readiness?
Technology Readiness [TR] refers to ―people’s propensity to embrace and use new technologies for accomplishing goals in home life and at work‖
© Professor A. Parasuraman; not to be reproduced or disseminated without permission 29
Drivers of Technology Readiness
Technology Readiness
Discomfort InsecurityInhibitors
Contributors InnovativenessOptimism
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OPT
.TRIINS
.
DIS
.
INN
.
MeanTR
Scores
TR Scores by Dimension and Overall TRI*
0
0,5
1
1,5
2
2,5
3
3,5
4
4,5
1999 2000 2001 20042002 2006 2007 2009
*Data are for U.S.A.
© Professor A. Parasuraman; not to be reproduced or disseminated without permission 31
Five TR-Based Customer Segments
Optimism Innovative-ness
Discomfort Insecurity
Explorers High High Low Low
Pioneers High High High High
Skeptics Low Low Low Low
Paranoids High Low High High
Laggards Low Low High High
32
High-Tech versus High-Touch Customer Service
High
Low
Appeal of
Hig
h-T
ech
Serv
ice C
hannels
Appeal of High-Touch Service Channels
Explorers
Pioneers
Skeptics
Paranoids
Laggards
Low High
© Professor A. Parasuraman; not to be reproduced or disseminated without permission
© Professor A. Parasuraman; not to be reproduced or disseminated without permission 33
An Important Implication of
Technology Readiness
To be effective, the implementation of any technology-based service innovation has to take into account the technology readiness of its intended users
© Professor A. Parasuraman; not to be reproduced or disseminated without permission 34
Typology of Service Innovations
Unfavorable
Favorable
Impact on Svc. Productivity: Customer Perspective
Impact on Svc. Productivity: Co. Perspective
Favorable Unfavorable
Win-Win Unaffordable
Short-sighted Dumb
© Professor A. Parasuraman; not to be reproduced or disseminated without permission 35
Take into account customers’ service expectations (as well as their resources/capabilities)
Increase service productivity from both company and customer perspectives
Focus not only on developing completely new services but also on the process of service delivery
Service Innovation Should Ideally Lead to Service Enhancements
That:
Evolution Required for Effective Service Enhancements
© Professor A. Parasuraman; not to be reproduced or disseminated without permission 36
Service Productivity
Service Innovation
Service Quality
Service Productivity
Service Innovation
Service Quality
37
Critical Issues Worthy of Scholarly Research
Mathematical/analytical modeling of tradeoffs between the two conceptualizations of service productivity
Metrics for operationalizing input and output constructs embedded in the dual conceptualization of service productivity
Approaches for assessing and classifying service enhancements into the productivity-based typology
Refining the two-dimensional typology – e.g., by adding dimensions such as ―ease of resource transfer‖
© Professor A. Parasuraman; not to be reproduced or disseminated without permission
38
Critical Issues Worthy of Scholarly Research (continued)
Exploring ways for fostering greater inter-functional collaboration—particularly among marketing, operations, human resources, and accounting/finance—when developing service innovations
Developing process innovations that focus specifically on improving the efficiency and effectiveness of service recovery
© Professor A. Parasuraman; not to be reproduced or disseminated without permission
© Professor A. Parasuraman; not to be reproduced or disseminated without permission 39
www.technoreadymarketing.com
Sources of Additional Information
© Professor A. Parasuraman; not to be reproduced or disseminated without permission 40
Sources of Additional Information
Parasuraman, A. ―Service Productivity, Quality and Innovation: Implications for Service-Design Practice and Research,‖ International Journal of Quality and Service Sciences, Vol. 2, Issue 3, 2010, pp. 277-286.
© Professor A. Parasuraman; not to be reproduced or disseminated without permission 41
Thank You!