Supplementary Service Quality 2020107 1 Learning Objectives Describe
Supplementary: Service Quality 2020/10/7 1
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 (Wt. A) 2020/10/7 2
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 2020/10/7 3
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 investment 2020/10/7 4
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 2020/10/7 5
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 2020/10/7 6
Types of Definitions of Quality • Transcendent: Innate excellence that can be recognized only through experience • Product-based: Measurable quantities are used to define quality • User-based: Quality is in the eyes of the beholder • Manufacturing-based: Conformance to requirements • Value-based: A balance between conformance or performance quality and an acceptable price to the customer 2020/10/7 7
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. 2020/10/7 8
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. 2020/10/7 9
Determinants of Service Quality • • • 2020/10/7 Reliability Responsiveness Competence Access Courtesy Communication • Credibility • Security • Understanding or knowing the customer • Tangibles 10
Quality: Profit or Cost • Both! • Improving quality does require a company to incur costs • Return on quality storyline: Improved Service Performance 2020/10/7 Improved Customer Satisfaction Improved Customer Retention Increased Market Share Increased Profitability 11
Costs of Quality • Prevention of problems • Inspection 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 2020/10/7 12
Calculating Return on Quality Determine customer needs from the service Relate customer needs to internal business processes Collect data on customers’ satisfaction with business processes Relate customer satisfaction with various process and customer retention 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 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 2020/10/7 13
Other Quality-Related Sources of Profits • Cost reductions due to increased efficiency • Attraction of new customers resulting from positive word-of-mouth • The ability to charge higher prices 2020/10/7 14
Implementing Quality Service • Design fail-safe attributes into services • Service guarantees and refunds – – – 2020/10/7 Unconditional Easy to understand communicate Meaningful Easy to invoke Easy to collect 15
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 competitors – Inferior quality: 8% ROS, 16% ROI – Superior quality: 12% ROS, 32% ROI 2020/10/7 16
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. 2020/10/7 17
SERVQUAL Model • Compares customer expectations with their experience of the service that was actually delivered – Discrepancies are “gaps” in service quality 2020/10/7 18
Perceived Service Quality Word of mouth Service Quality Dimensions Reliability Responsiveness Assurance Empathy Tangibles 2020/10/7 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) 19
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 2020/10/7 20
Service Quality Gap Model 2020/10/7 21
SERVQUAL Model Word-of-Mouth Communications Personal Needs Past Experience Expected Service Gap 5 Customer Perceived Service Gap 1 Gap 4 Service Delivery Gap 3 External Communications to Customers Service Quality Specifications Provider Gap 2 Management Perceptions of Customer Expectations 2020/10/7 22
Quality Service by Design • Quality in the Service Package Budget Hotel example • Taguchi Methods (Robustness) Notifying maids of rooms for cleaning • Poka-yoke (fail-safing) Height bar at amusement park • Quality Function Deployment House of Quality 2020/10/7 23
Service Fail-safing Poka-Yokes (A Proactive Approach) u Keeping a mistake from becoming a service defect. Task Treatment Tangibles u How can we failsafe three Ts? 2020/10/7 24
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” 2020/10/7 25
Classification of Service Failures with Poka-Yoke Opportunities Server Errors Task: Doing work incorrectly Treatment: Failure to listen to customer Tangible: Failure to wear clean uniform 2020/10/7 Customer Errors Preparation: Failure to bring necessary materials Encounter: Failure to follow system flow Resolution: Failure to signal service failure 26
House of Quality 2020/10/7 27
Achieving Service Quality • Cost of Quality (Juran) • Service Process Control • Statistical Process Control (Deming) • Unconditional Service Guarantee 2020/10/7 28
Costs of Service Quality (Bank Example) Failure costs Detection costs External failure: Process control Loss of future business Peer review Negative word-of-mouth Supervision Liability insurance Customer comment card Legal judgments Inspection Interest penalties Prevention costs Quality planning Training program Quality audits Data acquisition and analysis Recruitment and selection Supplier evaluation Internal failure: Scrapped forms Rework Recovery: Expedite disruption Labor and materials 2020/10/7 29
Service Process Control Customer input Service process Resources Take corrective action Service concept Customer output Monitor conformance to requirements Establish measure of performance Identify reason for nonconformance 2020/10/7 30
Control Chart of Departure Delays expected Lower Control Limit 1998 2020/10/7 1999 31
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 2020/10/7 32
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. 2020/10/7 33
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. 2020/10/7 34
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Service Recovery • Measure the costs • Break the silence and listen closely for complaints • Anticipate the needs for recovery • Act fast • Train employees • Empower the front line • Close the loop 2020/10/7 36
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. 2020/10/7 37
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. 2020/10/7 38
Expressing Dissatisfaction Public Action Seek redress directly from the firm Take legal action Dissatisfaction occurs Complaint to business, private, or governmental agencies Private Action Stop buying the product or boycott the seller No Action 2020/10/7 Warn friends about the product and /or seller 39
Number of People Told Based on Level of Dissatisfaction 2020/10/7 40
Action Taken Based on Level of Dissatisfaction 2020/10/7 41
The Complaint Letter 1. Briefly summarize the complaints and compliments in Dr. Loflin’s letter. 2. Critique the letter of Gail Pearson in reply to Dr. Loflin. What are the strengths and weaknesses of the letter? 3. Prepare an “improved” response letter from Gail Pearson 4. What further action should Gail Pearson take in view of this incident? 2020/10/7 42
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? 2020/10/7 43
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