chapter 14 improving service quality and productivity
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Chapter 14 Improving Service Quality and Productivity. Learning Objectives - Chapter 14. Define service quality Diagnose service quality problems using The Gaps Measuring and improving service quality Explore key tools for measuring and improving productivity. What Is Service Quality?. - PowerPoint PPT PresentationTRANSCRIPT
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 14- 1
Chapter 14
Improving Service Quality and Productivity
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 14- 2
Learning Objectives - Chapter 14
Define service quality
Diagnose service quality problems using The Gaps Measuring and improving service quality
Explore key tools for measuring and improving productivity
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 14- 3
What Is Service Quality?
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 14- 4
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
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 14- 5
Capturing the Customer’s Perspective of Service Quality: SERVQUAL 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
Developed primarily in context of face-to-face encounters
Scale contains 22 items reflecting five dimensions of service quality
Subsequent research has highlighted some limitations of SERVQUAL
See Research Insights 14.1: Measuring E-Service Quality
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 14- 6
Other Considerations in Service Quality Measurement
In uncompetitive markets or in situations where customers do not have a free choice, researchers should use needs or wants as comparison standards
Time constraints
Services high in credence characteristics may cause consumers to use process factors and tangible cues as proxies to evaluate quality—halo effect
Process factors: Customers’ feelings
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 14- 7
The Gaps Model—A Conceptual Tool to Identify and Correct
Service Quality Problems
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 14- 8
Seven Service Quality Gaps(Fig 14.3)
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
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 14- 9
Prescriptions for Closing theSeven Service Quality Gaps (Table 14.3)
1. Knowledge gap: Learn what customers expect
2. Standards gap: Specify SQ standards that reflect expectations
3. Delivery gap: Ensure service performance meets standards
4. Internal communications gap: Ensure that communications promises are realistic
5. Perceptions gap: Educate customers to see reality of service quality delivered
6. Interpretation gap: Pretest communications to make sure message is clear and unambiguous
7. Service gap: Close gaps 1 to 6 to meet customer expectations consistently
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 14- 10
Measuring and Improving Service Quality
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 14- 11
Soft and Hard Measures of Service Quality
Soft measures—not easily observed, must be collected by talking to customers, employees, or others
Provide direction, guidance, and feedback to employees on ways to achieve customer satisfaction
Can be quantified by measuring customer perceptions and beliefs
― For example: SERVQUAL, surveys, and customer advisory panels
Hard measures—can be counted, timed, or measured through audits
Typically operational processes or outcomes Standards often set with reference to percentage of
occasions on which a particular measure is achieved Control charts are useful for displaying performance over
time against specific quality standards
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 14- 12
Composition of FedEx’s Service Quality Index—SQI (Table 14.4)
Late delivery—right day Late Delivery—wrong dayTracing request unanswered Complaints reopened Missing proofs of delivery Invoice adjustments Missed pickups Lost packages Damaged packages Aircraft delays (minutes) Overcharged (packages missing label) Abandoned calls
151511
101010551
Failure Type
Total Failure Points (SQI) =
Weighting Factor
XXX,XXX
Daily Points
XNumber of Incidents
=
Source: See Services Marketing textbook, page 417, for full source information.
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 14- 13
Control Chart for Departure Delays(Fig 14.3)
J F M A M J J A S O N D
60%
70%
80%
90%
100%
Month
% Flights Departing Within 15 Minutes of Schedule
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 14- 14
Tools to Analyze and Address Service Quality Problems
Fishbone diagram
Cause-and-effect diagram to identify potential causes of problems
Pareto Chart
Separating the trivial from the important. Often, a majority of problems is caused by a minority of causes (i.e. the 80/20 rule)
Blueprinting
Visualization of service delivery, identifying points where failures are most likely to occur
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 14- 15
Tools to Analyze and Address Service Quality Problems (Appendix)
Total Quality Management (TQM)
ISO 9000 Comprises requirements, definitions, guidelines, and related
standards to provide an independent assessment and certification of a firm’s quality management system
Malcolm Baldrige Model Applied to Services
To promote best practices in quality management, and recognizing, and publicizing quality achievements among U.S. firms
Six Sigma
Statistically, only 3.4 defects per million opportunities (1/294,000)
Has evolved from defect-reduction approach to an overall business-improvement approach
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 14- 16
Cause-and-Effect Chart for Flight Departure Delays (Fig 14.4)
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-StagePersonnel
Procedures
Materials,Supplies
Customers
Gate agents cannot process
fast enough
Late/unavailable airline crew
Arrive lateOversized bags
Weather Air traffic
Frontstage Personnel
Procedures
Materials, Supplies
BackstagePersonnel
Information
Customers
Other Causes
MechanicalFailures
Late pushback
Late baggage
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 14- 17
Late passengers
Waiting for pushbackWaiting for fuelling
Late weight and balance sheetLate cabin cleaning/supplies
Other
Newark
All stations, excludingChicago-Midway Hub
Washington Natl.
23.1%23.1%
23.1%15.3%
15.4%
53.3%
15%
11.3%
8.7%
11.7%
33.3%
33.3%19%
9.5%
4.9 %
Case: Analysis of Causes of Flight Departure Delays (Fig 14.5)
Source: For full source information, see Services Marketing textbook, page 419.
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 14- 18
Blueprinting
Depicts sequence of front-stage interactions experienced by customers plus supporting backstage activities
Used to identify potential fall points—where failures are most likely to appear
Shows how failures at one point may have a ripple effect later
Managers can identify points which need urgent attention
Important first step in preventing service quality problems
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 14- 19
Six Sigma Methodology to Improve and Redesign Service Processes
Process Improvement Process Design/Redesign Define Identify the problem
Define requirements Set goals
Identify specific or broad problems Define goal/change vision Clarify scope and customer
requirements
Measure Validate problem/process Refine problem/goal Measure key steps/inputs
Measure performance to requirements Gather process efficiency data
Analyze Develop causal hypothesis Identify root causes Validate hypothesis
Identify best practices Assess process design Refine requirements
Improve Develop ideas to measure root causes
Test solutions Measure results
Design new process Implement new process, structures,
and systems
Control Establish measures to maintain performance
Correct problems as needed
Establish measures and reviews to maintain performance
Correct problems as needed
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 14- 20
TQM in a Service Context: Twelve Critical Dimensions for Implementation Top management commitment and visionary leadership
Human resource management
Technical system, including service process design and process management
Information and analysis system
Benchmarking
Continuous improvement
Customer focus
Employee satisfaction
Union intervention and employee relations
Social responsibility
Servicescapes
Service culture
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 14- 21
Return On Quality (ROQ)
Assess costs and benefits of quality initiatives ROQ approach is based on four assumptions:
– Quality is an investment– Quality efforts must be financially accountable– It’s possible to spend too much on quality – Not all quality expenditures are equally valid
Implication: Quality improvement efforts may benefit from being related to productivity improvement programs
To determine feasibility of new quality improvement efforts, determine costs and then relate to anticipated customer response
Determine optimal level of reliability Diminishing returns set in as improvements require higher
investments Know when improving service reliability becomes uneconomical
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 14- 22
When Does Improving Service Reliability Become Uneconomical? (Fig 14.7)
Satisfy Target Customers through Service Recovery
Optimal Point of Reliability: Cost of Failure = Service
Recovery
Satisfy Target Customers through Service Delivery as
Planned
100%
Ser
vice
Rel
iab
ilit
y
InvestmentSmall Cost,
Large ImprovementLarge Cost,
Small Improvement
A B C D
Assumption: Customers are equally (or even more) satisfied with the service recovery provided than with a service that is delivered as planned.
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 14- 23
Defining and Measuring Productivity
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 14- 24
Productivity in a Service Context
Productivity measures amount of output produced relative to the amount of inputs.
Improvement in productivity means an improvement in the ratio of outputs to inputs.
Intangible nature of many service elements makes it hard to measure productivity of service firms, especially for information-based services
Difficult in most services because both input and output are hard to define
Relatively simpler in possession-processing services, as compared to information- and people-processing services
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 14- 25
Service Efficiency, Productivity, and Effectiveness
Efficiency: Involves comparison to a standard, usually time-based (for example: how long employee takes to perform specific task)
Problem: Focus on inputs rather than outcomes
May ignore variations in service quality/value
Productivity: Involves financial valuation of outputs to inputs
Consistent delivery of outcomes desired by customers should command higher prices
Effectiveness: Degree to which firm meets goals
Cannot divorce productivity from quality and customer satisfaction
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 14- 26
Measuring Service Productivity:Variability Is a Major Problem
Traditional measures of service output tend to ignore variations in quality or value of service Focus on outputs rather than outcomes Stress efficiency but not effectiveness
Firms that consistently deliver outcomes desired by customers can command higher prices; loyal customers are more profitable
Measures with customers as denominator include: Profitability by customer Capital employed per customer Shareholder equity per customer
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 14- 27
Improving Service Productivity
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 14- 28
Questions When Developing Strategies to Improve Service Productivity
How to transform inputs into outputs efficiently? Will improving productivity hurt quality? Will improving quality hurt productivity? Are employees or technology the key to productivity? Can customers contribute to higher productivity?
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 14- 29
Generic Productivity Improvement Strategies
Typical strategies to improve service productivity:
Careful control of costs at every step in process Efforts to reduce wasteful use of materials or labour Replacing workers by automated machines Installing expert systems that allow paraprofessionals to
take on work previously performed by professionals who earn higher salaries
Although improving productivity can be approached incrementally, major gains often require redesigning entire processes
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 14- 30
Improving Service Productivity:(1) Operations-Driven Strategies
Control costs, reduce waste
Set productive capacity to match average demand
Automate labour 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
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 14- 31
Improving Service Productivity:(2) Customer-Driven Strategies
Change timing of customer demand By shifting demand away from peaks, managers can make
better use of firm’s productive assets and provide better service
Involve customers more in production Get customers to self-serve Encourage customers to obtain information and buy from
firm’s corporate websites
Ask customers to use third parties Delegate delivery of supplementary service elements to
intermediary organizations
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 14- 32
Backstage and Front-stage Productivity Changes: Implications for Customers Backstage improvements can ripple to front and affect
customers
Keep abreast of proposed backstage changes, not only to identify such ripples but also to prepare customers for them
― For example: New printing peripherals may affect appearance of bank statements
Front-stage productivity enhancements are especially visible in high contact services
Some improvements only require passive acceptance, while others require customers to change behaviour
Must consider impacts on customers and address customer resistance to changes
Better to conduct market research first if changes are substantial
See Service Perspectives 14.1: Managing Customers’ Reluctance to Change
Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 14- 33
Summary – Chapter 14
Customers evaluate services using five different categories
Tangibles, reliability, responsiveness, assurance, empathy
There are seven service quality gaps and solutions presented in the Gaps Model
Knowledge, standards, delivery, internal communications gap, perceptions, interpretation, service
Key tools for measuring and improving productivity are:
Fishbone diagram Pareto Chart Blueprinting Total Quality Management (TQM) ISO 9000 Malcolm Baldrige Model Applied to Services Six Sigma