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Chapter 06 Service Quality
McGraw-Hill/Irwin Service Management: Operations, Strategy, and Information Technology, 6e Copyright © 2008 by The McGraw-Hill Companies, Inc. All Rights Reserved.
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.
6-2
Perceived Service Quality
Word of
mouth
Personal
needs
Past
experience
Expected
service
Perceived
service
Service Quality
Dimensions
Reliability
Responsiveness
Assurance
Empathy
Tangibles
Service Quality Assessment
1. Expectations exceeded
ES<PS (Quality surprise)
2. Expectations met
ES~PS (Satisfactory quality)
3. Expectations not met
ES>PS (Unacceptable quality)
6-3
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.
6-4
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.
6-5
Service Quality Gap Model
Customer
Perceptions
Customer
Expectations
Service
Delivery
Service
Standards
Management
Perceptions
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
6-6
Measuring Service Quality
is challenge because customer satisfaction is determined by intangible factors.
Contains many psychological fetures (ambiance of a restaurant)
Has an impact on a person’s future quality of life (healthcare)
Multiple dimensions of service quality are captured in the SERVQUAL instrument.
..\ServQual_Forms.doc
Quality Service by Design
Quality in the Service Package Budget Hotel example
Poka-yoke (fail-safing) Height bar at amusement park
Quality Function Deployment House of Quality
6-8
Classification of Service Failures
Server Errors
Task:
Doing work incorrectly
Treatment:
Failure to listen to customer
Tangible:
Failure to wear clean uniform
Customer Errors
Preparation:
Failure to bring necessary materials
Encounter:
Failure to follow system flow
Resolution:
Failure to signal service failure
6-9
House of Quality
Importance
Rela
tive
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
pacity
Info
rmatiio
n
Equip
ment
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
* *
6-10
Achieving Service Quality
Cost of Quality (Juran)
Statistical Process Control (Deming)
Unconditional Service Guarantee
6-11
Costs of Service Quality (Bank Example)
Failure costs Detection costs Prevention costs
External 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
6-12
Control Chart of Departure Delays
60
70
80
90
100P
erc
en
tag
e o
f o
nti
me
flig
hts
expected
Lower Control Limit
1998 1999
n
pppUCL
1(3
n
pppLCL
1(3
6-13
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)
6-14
Unconditional 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
6-15
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
6-16
Customer Feedback and Word-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.
6-17
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.
6-18
Service Recovery Framework
Patronag
e
Loyalty
Satisfaction
Retention
Severity
Of
Failure
Perceived
Service
Quality
Psychological
-empathy
-apology
Tangible
-fair fix
-value add
Psychological
-apology
-show interest
Follow-up
Service
Recovery
Tangible
-small token
Service
Recovery
Expectations
Service
Recovery
Customer
Loyalty
Service
Guarantee Speed of
Recovery Frontline
Discretion
Service
Failure
Occurs
Provider
Aware
of
Failure
Fair
Restitutio
n
Pre-recovery Phase Immediate Recovery Phase Follow-up Phase
6-19
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.
6-20
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?
6-21