6 Service Quality Mc GrawHillIrwin Copyright 2006 by

Service Guarantee (100% Satisfaction Guarantee) Ø Offer dissatisfied customer a refund, discount, or free service. Ø Advertising the firm’s commitment to quality Ø Focuses employees by defining performance standards explicitly Ø Builds a loyal customer base Ø Motivating effect on employees Ø Customer feedback

ØService Quality is measured by comparing a customer’s expected service, which comes from word-of-mouth, personal needs and past experience, with his or her perceptions of service. Ø The Measurement of Satisfaction is based on whether the expectations were met, not met, or exceeded.

Moments of Truth ØEach customer contact is called a moment of truth. ØYou have the ability to either satisfy or dissatisfy them when you contact them. ØA service recovery is satisfying a previously dissatisfied customer and making them a loyal customer.

Dimensions of Service Quality ØReliability: Perform promised service dependably and accurately. Example: receive mail at same time each day. ØResponsiveness: Willingness to help customers promptly. Example: avoid keeping customers waiting for no apparent reason.

Dimensions of Service Quality ØAssurance: Ability to convey trust and confidence. Example: being polite and showing respect for customer. ØEmpathy: Ability to be approachable. Example: being a good listener. ØTangibles: Physical facilities and facilitating goods. Example: cleanliness.

Perceived Service Quality Word of mouth Service Quality Dimensions Reliability Responsiveness Assurance Empathy Tangibles Personal needs Expected service Perceived service Past experience 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)

Service Quality Gap Model

Quality Service by Design Ø Quality in the Service Package Budget Hotel example Ø Taguchi Methods (Robustness) Notifying maids of rooms for cleaning Ø Poka-yoke (fail-safing) Height bar at amusement park Ø Quality Function Deployment House of Quality

Poka-yoke Ø Shigeo Shingo believed that Low-cost, In-process quality-control mechanisms and routines used by employees in their work could achieve high quality w/o costly inspection. Ø Use checklists or manual devices that do not let the employee make a mistake. “Foolproof” devices Ø Enhances cleanliness and the aesthetic quality of the service. Ø Reminds workers of steps often forgotten in hurrying to satisfy customers in a timely manner.

Classification of Service Failures with Poka-Yoke Opportunities Server Errors Customer Errors Task: Doing work incorrectly Treatment: Failure to listen to customer Tangible: Failure to wear clean uniform Preparation: Failure to bring necessary materials Encounter: Failure to follow system flow Resolution: Failure to signal service failure

House of Quality (Q Function Development) Customer Input at Product Design Stage

Achieving Service Quality ØCost of Quality (Juran) ØService Process Control ØStatistical Process Control (Deming) ØUnconditional Service Guarantee

Costs of Service Quality (Bank Example)

Control Chart of Departure Delays expected Lower Control Limit 1998 1999 6 -15

Service Process Control Customer input Service process Resources Take corrective action Identify reason for nonconformance Service concept Customer output Monitor conformance to requirements Establish measure of performance

Unconditional Service Guarantee: Customer View Ø Unconditional (L. L. Bean) Ø Easy to understand communicate (Bennigan’s) Ø Meaningful (Domino’s Pizza) Ø Easy to invoke (Cititravel) Ø Easy to collect (Manpower)

Unconditional Service Guarantee: Management View Ø Focuses on customers (British Airways: Care, Concern, Initiative, Problem Solving, Recovery) Ø Sets clear standards (Fed. Ex) Ø Guarantees feedback (Manpower) Ø Promotes an understanding of the service delivery system (Bug Killer) Ø Builds customer loyalty by making expectations explicit

Disney’s SERVICE Smile Ø Eye contact & Body language Ø Respect & Welcome Ø Value the Magic Ø Initiate Guest Contact Ø Create Service Solutions Ø End W/ a "Thank You" Ø

Customer Satisfaction Ø All customers want to be satisfied. Ø Customer loyalty is only due to the lack of a better alternative. Ø Giving customers some extra value will delight them by exceeding their expectations and insure their return.

Categories of Tipping Behavior Ø Person-to-Person Service t t t Time the server spends at table doing extra. . . # visits to table by server after entree’s been served Average # of times server refills drink glasses Ø Service Delays -- customers don’t want to be ignored once they have arrived Ø Ambience Variables-t t Lighting Level Music Level Color Scheme Presence of Cooking Smells Ø Check Presentation Ø Promotion and Suggestive Selling

Customer Feedback and Word-of-Mouth Ø 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. Ø The 4% complainers are more likely to stay with the supplier than are the 96% noncomplainers.

Customer Feedback and Word-of-Mouth (Cont) Ø About 60% of the complainers would stay as customers if their problem was resolved and 95% would stay if the problem was resolved quickly. Ø A dissatisfied customer will tell between 10 and 20 other people about their problem. Ø A customer who has had a problem resolved by a company will tell about 5 people about their situation.

Walk-Through-Audit Ø Service delivery system should conform to customer expectations. Ø Customer impression of service influenced by use of all senses. Ø Service managers lose sensitivity due to familiarity. Ø Need detailed service audit from a customer’s perspective.

Approaches to Service Recovery Ø Case-by-case addresses each customer’s complaint individually but could lead to perception of unfairness. Ø Systematic response uses a protocol to handle complaints but needs prior identification of critical failure points and continuous updating. Ø Early intervention attempts to fix problem before the customer is affected. Ø Substitute service allows rival firm to provide service but could lead to loss of customer.