service operations (so) week 8 - vinay...

26-08-2016

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Week 8

Vinay Kumar Kalakbandi

Assistant Professor

Operations & Systems Area

8/26/2016 Vinay Kalakbandi 1

Service Operations (SO) Post Graduate Program 2015-17

Up Next

• Today:

– Service Quality

– Ritz Carlton company

• Next week

– ITC e-choupal

– Dabbawallahs

• Final week

– Project Presentations

– Course Wrap-up


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Customer induced variability

• Arrival variability – Provide generous staffing or require reservations

• Capability variability – Adapt to customer skill levels or target customers based on

capability

• Request variability – Cross-train employees or limit service breadth

• Effort variability – Do work for customers or reward increased effort

• Subjective preference variability – Diagnose expectations or persuade customers to adjust


Breaking the Trade-Off Between

Efficiency and Service


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Key points

• Strategies to manage customer induced variability – Classic accommodation

– Low-cost accommodation

– Classic reduction

– Uncompromised reduction

• Dependence of choice of strategy dependent on Quality of service experience and cost to serve.

• Need to control customer behavior

• Normative and Instrumental controls

• When to use which type of controls?


SERVICE QUALITY


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Opening questions

• Your good service experience?

• Your bad service experience?

• Negativity bias!


Quality definitions

• Transcendent – You cannot define quality but you know when you can see it

• Product-based – Rely on measurable quantities

• User-based – Fitness for use; quality is in the hands of the beholder

• Manufacturing based – Conformance to requirements

• Value-based – Balance between conformance or performance and an

acceptable price


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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


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Defining Service Quality

• Specifications

– Company: Standard operating procedures

– Customer: Personal expectations

– Misalignment of company and customer

specifications can lead to dissatisfaction, even if the

service is delivered as designed

• Effective communication is key in eliminating

misalignment

8/26/2016 Vinay Kalakbandi

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Defining Expectations

• Will expectation: Average level of quality that is predicted based on all known information

• Should expectation: What customers feel they deserve from the transaction

• Ideal expectation: What would happen under the best of circumstances; useful as a barometer of excellence

• Minimally acceptable level: The threshold at which mere satisfaction is achieved


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The Expectations Hierarchy


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Service quality

• Product quality versus service quality

• Fuzzy specifications

• Managing expectations

• Expectations are complicated!

– Not what on an average should happen

– What might, could, will, should or better not

happen!!!


Determinants of service quality

• Reliability

• Responsiveness

• Competence

• Access

• Courtesy

• Communication

• Credibility

• Security

• Understanding/Knowing the customer

• Tangibles


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Principle dimensions of Service Quality

• Reliability: Perform promised service

dependably and accurately.

• Responsiveness: Willingness to help customers

promptly.

• Assurance: Ability to convey trust and confidence

• Empathy: Ability to be approachable.

• Tangibles: Physical facilities and facilitating

goods.


The Service Quality gap model


Customer

Perception

Customer

Expectation

Service

Delivery

Service

Standards

Management

Perceptions of

customer

expectations

GAP 5

GAP 1

GAP 2 GAP 3

GAP 4

Customer Satisfaction

Understanding Customers

Service Design Conformance

External communications

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Gaps in Service Quality

Gap Problem Cause(s)

1. Consumer

expectation –

mgmt.

perception

The service features

offered don’t meet

customer needs

Lack of marketing research; inadequate

upward communication; too many

levels between contact personnel and

management

2. Management

perception –

service quality

specification

The service

specifications defined do

not meet management’s

perceptions of customer

expectations

Resource constraints; management

indifference; poor service design

3. Service

quality

specification –

service delivery

Specifications for service

meet customer needs but

service delivery is not

consistent with those

specifications

Employee performance is not

standardized; customer perceptions are

not uniform


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Gaps in Service Quality

Gap Problem Cause(s)

4. Service

delivery –

external

communication

The service does not

meet customer

expectations, which have

been influenced by

external communication

Marketing message is not consistent

with actual service offering; promising

more than can be delivered

5. Expected

service –

perceived

service

Customer judgments of

high/low quality based

on expectations vs.

actual service

A function of the magnitude and

direction of the gap between expected

service and perceived service


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UNCONDITIONAL SERVICE

GUARANTEES


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.


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Unconditional Service Guarantee: Customer

View

• Unconditional

• Easy to understand and communicate

• Meaningful

• Easy to invoke

• Easy to collect


Unconditional Service Guarantee:

Management View

• Focuses on customers

• Sets clear standards

• Guarantees feedback

• Promotes an understanding of the service

delivery system

• Builds customer loyalty by making expectations

explicit


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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.


THANK YOU


service operations (so) week 8 - vinay...

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