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Service Quality

Toronto Dominion

P4 Sept/Oct -2003 Services Marketing – Professor V. Padmanabhan

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An Illustration

P4 Sept/Oct -2003 Services Marketing – Professor V. Padmanabhan

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Federal Express

• How do you create dissatisfaction? Consider Fedex– calls

•abandonment (1)– pick-up

•miss package (10)– transport and delivery

•lost (10), damaged (10), etc.– invoice

•adjustment (1)– customer service

•complaint reopened (5)

P4 Sept/Oct -2003 Services Marketing – Professor V. Padmanabhan

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Federal Express (contd.)

Calls CallsCallsPick-

up

Transport&

Delivery

•Abandoned calls (1)

•Missed pick-up (10)

•Lost (10)•Damaged (10)•Wrong late (5)•Overgoods (lost & found) (5)•Right day late (1)•Missing proof of delivery (1)•International (composite index)

•Adjustment (1) •Complaint reopened (5)•Traces (not answered) (1)

12

IndexQuality Service factor) ng x weightis(occurence

P4 Sept/Oct -2003 Services Marketing – Professor V. Padmanabhan

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Operational Efficiency and Customer Satisfaction

P4 Sept/Oct -2003 Services Marketing – Professor V. Padmanabhan

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Service Quality

• Service Quality– expectation (expected service)– performance (perceived service)

• SERVQUAL– Dimensions:

• Tangibles, • Reliability, • Responsiveness, • Assurance, and, • Empathy.

P4 Sept/Oct -2003 Services Marketing – Professor V. Padmanabhan

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A Conceptual Model of Service Quality

P4 Sept/Oct -2003 Services Marketing – Professor V. Padmanabhan

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Consumer Expectations Revisited

• Almost all the SERVQUAL type instruments focus on consumer’s making a point estimate of quality, satisfaction, etc.,

• What if– consumer has a prior distribution about the average quality

of a brand?– consumer care not just about the outcome (on average), but

also about the distribution of possible outcomes?– consumer updates beliefs over time?

• Implications– It is not necessary to exceed expectations (reducing

variance in quality alone can raise future preference)– If customer expects bad quality and receives it, he/she will

not reduce preference for that brand (matching expectations reduces risk!)

– Given two equally priced options, customers will not necessarily choose the one with the higher expected quality

P4 Sept/Oct -2003 Services Marketing – Professor V. Padmanabhan

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Commerce Bank: Service Quality Does Not Mean Automation

P4 Sept/Oct -2003 Services Marketing – Professor V. Padmanabhan

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Service Quality & Organizational Performance

• An Application of Service Quality Methodology– Gerrad & Cunningham, “Bank Service Quality: A

Comparison between a Publicly Quoted and Govt. Bank in Singapore,” Journal of Financial Services Marketing, 2001.

• Oliva & Sterman, “Cutting Corners and Working Overtime,” Management Science, 2001.

– Characteristics of service = inseparability, intangibility and labor intensity

– Rising Financial Pressures on Performance implies Focus on Driving Productivity

– Consequence = Employees Drop Time Spent on Consumers at Expense of Service Quality

– Result = Rework, Reduced Loyalty, High Turnover– Data: NatWest Bank, U.K.