Service Quality

Service Quality
 When expectations are exceeded, service
is perceived to be of exceptional quality.

 When expectations are not met, service

quality is deemed unacceptable.
Dimensions of Service Quality
 Reliability: Perform promised service
dependably and accurately.
Example: receive mail at same time
each day.
 Responsiveness: Willingness to help
customers promptly. Example: avoid
keeping customers waiting for no
apparent reason.
Dimensions of Service Quality
 Assurance: Ability to convey trust
and confidence. Example: being
polite and showing respect for
customer.
 Empathy: Ability to be approachable.
Example: being a good listener.
 Tangibles: Physical facilities and
facilitating goods. Example:
cleanliness.
Perceived Service Quality

Word of Personal Past

mouth needs Experience

Dimensions
Of Service
Quality Expected Perceived Service Quality
Service 1. Expectations Exceeded
Reliability ES < PS (Quality surprise)
2. Expectations met
Responsiveness
ES = PS (Satisfactory qlty)
Assurance 3. Expectations not met
Empathy Perceived
ES > PS (unacceptable quality)
Tangible Service
 Service Quality Gap Model
Service Quality
Customer CustomerGap
Satisfaction Model
GAP 5
Customer
Perceptions Expectations

Managing the Customer / Understanding

Evidence Marketing Research the Customer
Communication
GAP 4 GAP 1
Management
Service
Perceptions
Delivery of Customer
Expectations
Conformance
Design GAP 2
GAP 3
Conformance Service Design
Service
Standards
 Gaps in Service Quality

 Knowledge Gap ( Mkt. Research Gap 1)– Gap

between customer expectations of a Service and
what the management perceives the consumers
to expect
 Standards Gap (Design Gap 2) - Gap between
what the management perceives the consumers
to expect and the quality standards set for
service delivery
 Delivery Gap (Conformance Gap 3) - Gap
between the quality standards set for service
delivery and the actual quality of service delivery.
Gaps in Service Quality
 Communication Gap 4 - Gap between
the actual quality of service delivery
and the quality of service described in
the firm’s external communications
such as brochures and mass media.
Service Gap (Customer Satisfaction Gap 5) –
Gap between customer’s expectation and their
perception of service actually delivered.
Factors influencing Knowledge Gap
 Research Orientation
 Flow of upward communication
 Levels of Management
Factors influencing Standards Gap
 Management Belief in customer
requirements.
 Management priorities
 Service Standards not measurable as
felt by the management.
Factors influencing Delivery
Gap
 Employee willingness to perform the
service
 Employee Job fit
 Role conflict
 Role ambiguity
 Dispersion of control
 Inadequate support of management
Factors influencing Communication
Gap
 Overpromise
 Flow of internal communication
Measuring Service Quality
 is a challenge because customer
satisfaction is determined by many
intangible factors.

 SERVQUAL – A diagnostic tool that

uncovers a firm’s broad weaknesses and
strengths in the area of service quality
based on the five dimensions.
Records 22 items of customer expectations
and 22 items customers’ perception of a
particular Service Firm
 Tangibles
 Firms ability to manage its tangible
elements.
1. Excellent companies will have modern
looking equipments
2. The physical facilities at excellent
companies will be visually appealing
3. Employees of excellent companies will be
neat in appearance
4. Materials associated with the service (such
as pamphlets) will be visually appealing in
an excellent company.
 Reliability
 Refers to the consistency and dependability of
a firm’s performance.
5. When excellent companies promise to do
something by a certain time, they will do so.
6. When customers have a problem, excellent
companies will show a sincere interest in
solving it.
7. Excellent companies will perform the service
right the first time.
8. Excellent companies will provide the service at
the time promise to do so.
9. Excellent companies will insist on error-free
records
Responsiveness
 Reflects a firm’s commitment to provide
services in a timely manner

10. Employees of excellent companies will tell

customers exactly when services will be
performed
11. Employees of excellent companies will give
prompt service to customers.
12. Employees of excellent companies will
always be willing to help customers
13. Employees of excellent companies will
never be too busy to respond to customer
requests.
 Assurance
 Assessment of a firm’s competence, courtesy to
its customers and security of its operations.
14. The behaviour of employees of excellent
companies will instill confidence in customers.
15. Customers of excellent companies will feel safe
in their transactions.
16. Employees of excellent companies will be
consistently courteous to customers.
17. Employees of excellent companies will have the
knowledge to answer customer questions.
 Empathy
 Assessment of a firm’s ability to put itself in its
customers place.
18. Excellent companies will give customers
individual attention.
19. Excellent companies will have operating hours
convenient to all their customers.
20. Excellent companies will have employees who
give customers personal attention
21. Excellent companies will have the customer’s
best interest at heart.
22. Employees of excellent companies will
understand the specific needs of their
customers.
Another 22 items
 Now the same 22 items are applied to
a particular service firm . Service
quality is measured in terms of the
difference that the customer assigns
to paired expectation and perception
statements. The resulting score is
called GAP
Criticisms
 Length of the instrument
 Overlap in some areas
 Validity of the 5 dimensions
Quality Service by Design
 How can quality be designed into a
Service Package?
 One approach is to focus on the four
dimensions of the Service Package
Incorporating Quality in the Service Package

1. Supporting facility
2. Facilitating goods
3. Explicit Services
4. Implicit Services
Taguchi Methods
 Robust design of products to ensure
functioning under adverse conditions
 Cost of poor quality = square of the
deviation from the target.
 Poka-Yoke (Failsafing)
 Errors occur because of interruptions in routine
or lapses in attention.
 Poka–Yoke methods ie foolproof methods –
advocated by Shigeo Shingo
 Use checklists that do not allow employee to
make mistakes.
 Service Errors can originate both from
customer and employee. Poka-Yoke methods
therefore should address both sources.
 Classification of Service Failures

Customer Errors
Server Errors Preparation
Task •Failure to bring necessary materials
•Doing work incorrectly •Failure to understand role in
•Doing work not required transactions
•Doing work in the wrong order •Failure to engage the correct service
•Doing work too slowly
Encounter
Treatment •Failure to remember steps in process
•Failure to acknowledge the customer •Failure to follow system flow
•Failure to listen to the customer •Failure to specify desires sufficiently
•Failure to react appropriately •Failure to follow instructions

Tangible Resolution
•Failure to clean facilities •Failure to signal service failure
•Failure to provide clean uniforms •Failure to learn from experience
•Failure to control environmental factors •Failure to adjust expectations
•Failure to execute post-encounter action
 House of Quality
Relationships

* Strong

Medium

O Weak
Relati ve

O O
* * Customer Perc eptions
Servic e Elements

Informatiion
Im o Village Volvo

Equipment
po

Capacity
rta

Training

Attitude
nc
e
+ Volvo Dealer

Customer Expectations 1 2 3 4 5
Reliability 9 8 5 5 + o
Responsiveness 7 3 9 3 2 o +
Assurance 6 5 9 6 + o
Empathy 4 7 + o
Tangibles 2 2 3 + o

+
o o
Comparison with Volvo Dealer o o
_ o

Weighted score 127 82 63 102 65

Improvement difficulty rank 4 5 1 3 2
Achieving Service Quality
 Cost of Quality (Juran)

 Service Process Control

 Statistical Process Control (Deming)

 Unconditional Service Guarantee

 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
Service Process Control
Customer
input Service
concept

Service Customer
Resources output
process

Take Monitor Establish

corrective conformance to measure of
action requirements performance

Identify reason
for
nonconformance
Unconditional Service Guarantee:
Customer View
 Unconditional (L.L. Bean)
 Easy to understand and communicate
(Bennigan’s)
 Meaningful (Domino’s Pizza)
 Easy to invoke (Cititravel)
 Easy to collect (Manpower)
Unconditional Service Guarantee:
Management View
 Focuses on customers (British
Airways)
 Sets clear standards (FedEx)
 Guarantees feedback (Manpower)
 Promotes an understanding of the
service delivery system (Bug Killer)
 Builds customer loyalty by making
expectations explicit
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
 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.
 Quality Function Deployment (QFD)
To provide customer input at the product design stage, QFD process is
used resulting in a house of quality. This translates customer satisfaction
into identifiable and measurable conformance specifications for service design

 Establish aim of the project

 Determine customer expectations
 Describe elements of the Service
 Note the strength of the relationship between
elements.
 Note the association between customer
expectations and service elements.
 Weighting the service elements
 Service element improvement difficult rank
 Assessment of competition
 Strategic assessment and goal setting
Benchmarking
 Measure of quality of a firm’s
performance can be made by
comparison with the performance of
other companies known for being
‘best in class’, which is a process
called benchmarking.
 Walk-Through Audit

 A walk through audit is a customer-focused

survey to uncover areas for improvement.
 An audit was developed for full-service sit-down
restaurants. 42 qns included nine category of
variables.
 Maintenance items/person-to-person
service/waiting/table and place settings/
ambience/food presentation/check presentation/
promotion and suggestive selling and tipping
Wta
 Likert scale used
 Can be administered through mail,
telephone interview, in person.
 Sample size/stratification etc. to be
considered
 It is an opportunity to evaluate the
Service experience from a customer’s
perspective.
 Wta
 Useful diagnostic instrument for management
to evaluate the gaps in perception between the
customers and managers of the service
delivery system.
 Customers can notice even subtle changes
than the managers.
 Wta was conducted for customers as well as for
managers and employees. Gaps were
uncovered after the exercise and provided
scope for improvements.
 Cost of Quality for Services
Cost Category Definition Bank Example
Prevention Costs associated with Quality Planning
Operations or activities that Recruitment and Selection
keep failure from happening Training programmes
and minimize detection costs Quality improvement projects

Detection Costs incurred to ascertain the Periodic inspection

Condition of a service to determine Process Control
whether it conforms to safety Checking, balancing, verifying
standards Collecting quality data
Costs incurred to correct
Internal Failure nonconforming work prior to
Scrapped forms and reports
Rework
delivery to the customer Machine downtime
Costs incurred to correct
External Failure nonconforming work after Payment of interest penalties
delivery to the customer or Investigation time
to correct work that did not Legal judgments
satisfy a customer’s special Negative word-of-mouth
needs Loss of future business
 Statistical Process Control
Risks in Quality-Control decisions

Quality-Control Decision
______________________
True State of Service Take Corrective Action Do Nothing

Process in control Type I error (producers’ Correct decision

risk)

Process out of control Correct decision Type II error

(consumer’s risk)
Control Chart
 Is used to plot values of a measure of
process performance to determine if
the process is in control.
 When a measurement falls outside
control limits ie above UCL or below
LCL – the process is stated to be out
of control.
_
X Chart
_
UCL = X + A2 R
_
LCL = X - A2 R

A2 – Value from table for sample size n

_
X = Estimate of population mean
_
R = Estimate of population range
R-Chart
_
UCL = D4 R
_
LCL = D3 R
_
R = Estimate of population range
D4 and D3 are values from table for LCL
and UCL for sample size n
p=Chart – Attribute Control Chart

 Number of defects or errors as a

percentage
_
 UCL = p + 3√p(1-p)/n
_
 LCL = p - 3√p(1-p)/n
_
 n = sample size, p = estimation of
population %
Control Chart of Departure Delays
100
Percentage of flights on

expected
90
Lower Control Limit

80
time

70

60
1998 199
9

p (1  p p (1  p
UCL  p  3 LCL  p  3
n n
Thank You