Gap Analysis

Session 10
The Gaps
 The Gaps
 Customer’s Gap
Customer’s expectation not matching with
customer’s perception (Gap 5)
 Provider’s Gaps
Not Knowing what Customers Expect (Gap 1)
Not Selecting Right Service Designs &
Standards (Gap 2)
Not Delivering to Service Standards (Gap 3)
Not Matching Performance to Promises (Gap 4)
 Customer GAP
Expected
Service

GAP 5
CUSTOMER
Perceived
Service

MARKET
CUSTOMER GAP
Customer’s expectation not matching with
customer’s perception
Customer’s perception is subjective assessment of
actual service experiences
 Customer’s expectation are the standards of
performance against which service experiences are
compared arising for
 Market-controlled
factors (i.e. advertising) or
 Non-market-controlled factors (i.e. customer needs)

Ideally expectations and perceptions are identical:

customers perceive that they get what they think they
will and should
 CLOSING CUSTOMER GAP
Practically this gap exits
Provider Gap causes this gap
 Provider Gap 1: Not Knowing What Customers Expect
 Provider Gap 2: Not Selecting The Right Service Design & Standards
 Provider Gap 3: Not Delivering To Service Standards
 Provider Gap 4: Not Matching Performance To Promises
Services marketing bridges this gap
Thus closing Provider Gap actually closes
Customer Gap
Provider GAP 1

CUSTOMER
Expected
Service

GAP 1

Company
MARKET Perceptions of
Consumer
Expectations
PROVIDER GAP 1:
NOT KNOWING WHAT CUSTOMERS EXPECT
The difference between customer expectations of a service and
company understanding of those expectations.
Inadequate market research orientation
 Insufficient marketing research
 Research not focused on service quality
 Inadequate use of market research

Lack of upward communication

 Lack of interaction between management and customers
 Insufficient communication between contact (front-line)
employees and managers (decision-makers)
 Too many layers between contact personnel and top
management
PROVIDER GAP 1:
NOT KNOWING WHAT CUSTOMERS EXPECT
Insufficient relationship focus
 Lack of adequate market segmentation
 Focus on transactions rather than relationships
 Focus on new customers rather than relationship customers
 Lack of prior & after-sales service

Benefits of Exceptional Customer Service

 Attracts and keeps customers; adds value
 Recovers lost or about-to-be-lost sales

 Links customer satisfaction to service quality

 Results in a profitable ROI (in customer service)

 Performs a major role in the marketing mix

Cost of Losing One Customer
 Losing a single customer creates a ripple effect of sales, profits,
and goodwill losses throughout the organization.
 Research shows:
 A dissatisfied customer tells 11 others who each tell 5 others;
67 people are now involved
 17 of those told would have spent $50 weekly and they decide
not to buy from the retailer
 Result: 17 x $50 x 52 weeks = $44,200 per year in lost sales
 Service research suggests that attracting a new customer costs
6-times more than keeping a current customer.
 It costs $19 for a retailer to keep one customer happy
 It costs $118 to attract a new customer into the store
 Total impact: $118 x 17 = $2,006 to attract 17 new customers
PROVIDER GAP 1:
NOT KNOWING WHAT CUSTOMERS EXPECT
Inadequate Service Recovery
 Even the best companies with the best intentions and clear
understanding of their customers’ expectations sometimes fail!
 Itis critical to understand the causes of failing and the effective
service recovery strategies for dealing with inevitable service
failures:
 Measure the costs of effective service recovery

 Break the silence

 Anticipate the needs for recovery

 Act fast

 Train employees

 Empower the front line

 Close the loop

Provider GAP 2

CUSTOMER

MARKET Customer-Driven
Service Designs and
Standards

GAP 2

Company
Perceptions of
Consumer
Part 3 Opener Expectations
PROVIDER GAP 2:
NOT SELECTING THE RIGHT SERVICE DESIGN & STANDARDS
A recurring theme in service companies is difficulty experienced in
translating customers’ expectations in to service quality
specifications
Poor service design
 Unsystematic new service development process
 Vague, undefined service design
 Failure to connect service design to service positioning

Absence of customer-defined standards

 Lack of customer-defined service standards
 Absence of process management to focus on customer requirements
 Absence of formal process for setting service quality goals

Inappropriate physical evidence and servicescape

 Lack of efficient tangibles surrounding the service (business cards,
website, equipment..)
Provider GAP 3

CUSTOMER

Service Delivery
MARKET
GAP 3
Customer-Driven
Service Designs and
Standards
PROVIDER GAP 3:
NOT DELIVERING TO SERVICE STANDARDS
The discrepancy between development of customer driven service
standards and actual service performance by company employees.

A. Problems with the Company:

Deficiencies in human resource policies
 Ineffective recruitment
 Role ambiguity and role conflict
 Poor employee-technology job fit
 Inappropriate evaluation and compensation systems
 lack of empowerment, perceived control and teamwork

Failure to match supply and demand

 Failure to smooth peaks and valleys of demand
 Inappropriate customer mix
 Over reliance on price to smooth demand
PROVIDER GAP 3:
NOT DELIVERING TO SERVICE STANDARDS

B. Problems with the Customers:

Customers not Fulfilling Roles
 Lackof knowledge on their roles & responsibilities
 Negatively affecting each-other

C. Problems with the Intermediaries:

Problems with service intermediaries
 Channel conflict over objectives & performance
 Channel conflict over costs and rewards
 Difficulty in controlling quality and consistency
 Tension between empowerment and control
 Provider GAP 4

CUSTOMER

External
Service Delivery communications
MARKET GAP 4 to consumers
PROVIDER GAP 4:
NOT MATCHING PERFORMANCE TO PROMISES

The difference between service delivery and the service

provider’s external communications.

Lack of integrated marketing communications

 Tendency to view external communications as independent
 Not including interactive marketing in communication plan
 Absence of a strong internal marketing program

Ineffective management of customer expectations

 Not managing customer expectations through all forms of communication
 Absence of strong reference point on pricing
 Not adequately educating the customer
PROVIDER GAP 4:
NOT MATCHING PERFORMANCE TO PROMISES

The difference between service delivery and the service

provider’s external communications.

Over promising
 Over promising in advertising
 Over promising in personal selling
 Over promising through physical evidence cues

Inadequate horizontal communications

 Insufficient communication between sales and operations.
 Insufficient communication between advertising and operations.
 Differences in policies and procedures across branches and units
CLOSING PROVIDER GAP 4

Manage
Customer
Expectations

Goal:
Manage Delivery Improve
Service greater than Customer
Promises or equal to Education
promises

Manage
Internal
Marketing
Communication
STRATEGIES TO MATCH SERVICE PROMISE WITH DELIVERY

GOAL: DELIVERY THAT IS GREATER OR EQUAL TO YOUR PROMISE…..

 Manage Customer Expectation

 Negotiate unrealistic expectations
 Value, and not price alone
 Offer choice – time vs. cost (If customers understand the trade off,
expectation will be realistic)
 Tiered value service offerings – Burden of choice on the client (Can identify
which clients are willing to pay a premium for higher service level)

 Improve Customer Education

 Teach Customers to Avoid Peak Demand Periods and Seek Slow Periods
 Prepare Customers for the Service Process
 Explain customers role in the project
 Draft a timetable with the customer that allocates responsibility that both
the service provider and client can realistically stick to
 Clarify Expectations after the Sale
STRATEGIES TO MATCH SERVICE PROMISE WITH DELIVERY

 Manage internal marketing communications

 Communicate service process and where employees fit into that process
 Align Back Office Personnel with External Customers
 Create Cross-Functional Teams
 Involve employees in evaluation of the service after it has been delivered

 Manage Service Promise

 Specificity over generality
 Document and cite past positive performance statistics
 Present vivid story of actual service delivery incident
 Customer testimonials
 Promise only what is possible
 Create advertising that generates talk
 Wherever possible offer service guarantees
PULLING IT ALL TOGETHER: CLOSING THE GAPS
The full conceptual model conveys a clear message to managers wishing to
improve the quality of Service…

The key to closing the gap between customer expectation and customer
perception is to close provider gaps 1 – 4 and keep them closed.

The Gaps model serves as a framework for service organisations attempting

to improve quality service and services marketing
This model begins where the process of improving service quality begins: by
gaining an understanding of the nature and extent of the customer gap.

The model ends with closing all four providers gap: by gaining an
understanding customer expectations, valuing that in designing services,
delivering properly and matching activities with the promises made.

BUT-

 Gaps exist!
 Thus what we can only do- try to minimize them!!
Reliability is Critical in Service but…
 In all service contexts, service failure is
inevitable.

 Service failure occurs when service

performance falls below a customer’s
expectations in such a way that leads to
customer dissatisfaction.
 Service recovery refers to the actions taken
by a firm in response to service failure.
Service Recovery Strategies
 Fixing the Customer
 When customers take the time to
complain, they generally have high
expectations.
They expect the company to respond
quickly and to be accountable.
They expect to be compensated for their
grief and for the hassle of being
inconvenienced.
They expect to be treated nicely in the
process!
 Fixing the Problem
 After “fixing the customer” the company should
address the actual problem that created the poor
service delivery in the first place.
 Ifthe problem is likely to recur for other customers, then
the service delivery process may need to be fixed, too.
 Strategies for fixing the problem include
encouraging and tracking complaints, learning
from recovery experiences and from lost
customers, and making the service fail-safe.
 The Service Recovery Paradox
 Service recovery improves satisfaction, but not increase
purchase intentions/perceptions of the brand
 The service recovery paradox (SRP) is a situation in
which a customer thinks more highly of a company after
it has corrected a problem with its service, compared to
how s/he would regard it if non-faulty service had been
provided.
 For example, a traveller's flight is cancelled. When she
calls the airline, they apologise and offer her another
flight of her choice on the same day, and a discount
voucher against future travel.
 Under SRP, the traveller is now happier with the airline, and
more loyal to it, than she would have been had no problem
occurred.