Supplementary: Service Quality - PowerPoint Presentation

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Supplementary:Service Quality

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2020/3/4

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Learning Objectives

Describe the five dimensions of service quality.Use the service quality gap model to diagnose quality problems.

Illustrate how Taguchi methods and

poka

-yoke methods are applied to quality design.Perform service quality function deployment.Construct a statistical process control chart.Develop unconditional service guarantees.Plan for service recovery.Perform a walk-through audit (WtA)

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Service Quality

Measuring and improving quality is more difficult for services than for products

Unsatisfactory service cannot be replaced or repaired

Intangible and temporary nature

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Quality Systems

Total Quality Management (TQM)Managing the entire organization so that it excels on all dimensions of products and services that are important to the customer

Drivers are often set internally

Return on Quality (ROQ)

Customers set parameters and marketers select quality improvements that lead to the highest return on investment42020/3/4

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Defining Service Quality

SpecificationsCompany: 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 52020/3/4

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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 achieved62020/3/4

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Types of Definitions of Quality

Transcendent:

Innate excellence that can be recognized only through experience

Product-based

: Measurable quantities are used to define qualityUser-based: Quality is in the eyes of the beholderManufacturing-based: Conformance to requirementsValue-based: A balance between conformance or performance quality and an acceptable price to the customer

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Five Dimensions of Service Quality

Reliability: Perform promised service dependably and accurately; consistency of performance and dependability

Example: receive mail at same time each day.

Responsiveness

: Willingness to help customers promptly, or readiness of employees to provide service Example: avoid keeping customers waiting for no apparent reason. 2020/3/48

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Five Dimensions of Service Quality (cont’d)

Assurance

: Ability to convey trust and confidence; the knowledge, competence and courtesy of service employees and their ability to convey trust and confidence

Example: being polite and showing respect for customer.

Empathy: Ability to be approachable. The caring and individual attention provided to customers Example: being a good listener.Tangibles: Physical facilities and facilitating goods. Physical evidence of the service Example: cleanliness. 2020/3/49

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Determinants of Service Quality

ReliabilityResponsivenessCompetence

Access

Courtesy

CommunicationCredibilitySecurityUnderstanding or knowing the customerTangibles102020/3/4

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Quality: Profit or Cost

Both!Improving quality does require a company to incur costs

Return on quality storyline:

Improved

Service

Performance

Increased

Market

Share

Improved

Customer

Satisfaction

Increased

Profitability

Improved

Customer

Retention

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Costs of Quality

Prevention of problemsInspection and appraisal to monitor ongoing quality

The cost to rework a defective product before it is delivered to a customer

The cost to repair/replace a defected product after it reaches the customer

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Calculating Return on Quality

Determine customer needs from the service

Collect data on customers’ satisfaction with business processes

Relate customer needs to internal business processes

Determine the shift in customer satisfaction with the firm or a

business process resulting from a quality improvement effort

Estimate the customer retention rate after the quality improvement effort

Relate customer satisfaction with various process and customer retention

Estimate the market share impact corresponding to the new retention rate

Determine the profit impact resulting from the change in market share,

plus any cost savings, minus the cost of the quality improvement effort

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Other Quality-Related Sources of Profits

Cost reductions due to increased efficiencyAttraction of new customers resulting from positive word-of-mouth

The ability to charge higher prices

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Implementing Quality Service

Design fail-safe attributes into servicesService guarantees and refunds

Unconditional

Easy to understand and communicate

MeaningfulEasy to invoke Easy to collect152020/3/4

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The Cost of Quality

In the long run, the most important single factor affecting a business unit’s performance is the quality of its products and services relative to those of competitorsInferior quality: 8% ROS, 16% ROI

Superior quality: 12% ROS, 32% ROI

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Moments of TruthEach 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.2020/3/417

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SERVQUAL Model

Compares customer expectations with their experience of the service that was actually deliveredDiscrepancies are “gaps” in service quality

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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)

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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

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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Service Quality Gap Model

Service Quality Gap Model

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SERVQUAL Model

Personal Needs

Service Quality

Specifications

Management Perceptions of

Customer Expectations

Expected Service

Past Experience

External

Communications

to Customers

Perceived Service

Service Delivery

Word-of-Mouth

Communications

Customer

Provider

Gap 1

Gap 5

Gap 4

Gap 3

Gap 2

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Quality Service by DesignQuality in the Service Package

Budget Hotel exampleTaguchi Methods (Robustness)

Notifying maids of rooms for cleaning

Poka-yoke (fail-safing)

Height bar at amusement parkQuality Function Deployment House of Quality 2020/3/423

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Service Fail-

safing

Poka

-Yokes (A Proactive Approach)

Keeping a mistake from becoming a service defect.

How can we fail-safe the three

Ts

?

Task

Tangibles

Treatment

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Service Quality Design

Poka-Yoke: Fool proofing mechanisms

Prevent inevitable mistakes from turning into defects

Example: Repeating back order at Starbucks before giving you a cup of coffee

Conceived of by Shigeo Shingo, “Mr. Improvement”252020/3/4

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Classification of Service Failureswith Poka-Yoke Opportunities

Server Errors

Task

:

Doing work incorrectlyTreatment: Failure to listen to customerTangible: Failure to wear clean uniformCustomer Errors

Preparation:

Failure to bring necessary materials

Encounter

:

Failure to follow system flow

Resolution

:

Failure to signal service failure

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House of Quality

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Achieving Service QualityCost of Quality (Juran)

Service Process Control

Statistical Process Control (Deming)

Unconditional Service Guarantee

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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

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Service Process Control

Resources

Identify reason

for

nonconformance

Establish

measure of

performance

Monitor

conformance to

requirements

Take

corrective

action

Service

concept

Customer

input

Customer

output

Service

process

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Control Chart of Departure Delays

expected

Lower Control Limit

1998

1999

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Customer SatisfactionAll 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 2020/3/432

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Customer Feedback andWord-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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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.

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Service Recovery

Measure the costsBreak the silence and listen closely for complaints

Anticipate the needs for recovery

Act fast

Train employeesEmpower the front lineClose the loop362020/3/4

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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.2020/3/437

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Interactive Exercise The class breaks into small groups. Each group identifies the

worst service experience and the

best

service experience that any member has had. Return to class and discuss what has been learned about service quality.

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Expressing Dissatisfaction

Dissatisfaction

occurs

Action

No Action

Public Action

Private Action

Seek redress directly from

the firm

Take legal action

Complaint to business, private,

or governmental agencies

Stop buying the product or

boycott the seller

Warn friends about the product

and /or seller

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Number of People Told Based on Level of Dissatisfaction

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Action Taken Based on Level ofDissatisfaction

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The Complaint Letter

Briefly summarize the complaints and compliments in Dr. Loflin’s letter.

Critique the letter of Gail Pearson in reply to Dr. Loflin. What are the strengths and weaknesses of the letter?

Prepare an “improved” response letter from Gail Pearson

What further action should Gail Pearson take in view of this incident?2020/3/442

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Topics for Discussion

How do the 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 of your choice.

Why do service firms hesitate to offer a service guarantee?

How can recovery from a service failure be a blessing in disguise?2020/3/443