L06: Service Quality

SOM 2011 IIM Raipur

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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October 20, 2011

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
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Dr. Sushil

L06: Service Quality

SOM 2011 IIM Raipur

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.

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October 20, 2011

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.

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October 20, 2011

Dr. Sushil

L06: Service Quality

SOM 2011 IIM Raipur

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.

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October 20, 2011

Perceived Service Quality

Word of mouth Personal needs Past experience

Service Quality Dimensions Reliability Responsiveness Assurance Empathy Tangibles

Expected service

Perceived service

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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October 20, 2011

Dr. Sushil

L06: Service Quality

SOM 2011 IIM Raipur

Service Quality Gap Model

C u sto m er P erc eption s
M an agin g th e E vid en ce
C usto m er S a tisfa ctio n GAP 5

C u sto m e r E xpe ctation s

C usto m er / M arketin g R esea rch GAP 1

C om m u nication GAP 4

U n d e rstan d in g th e C u sto m e r

S ervic e D elive ry
C on for m a nc e GAP 3 D esign G A P 2

M a n a ge m en t P erce ption s of C u sto m er E xp ectation s

C o n fo rm an c e

S ervice S ta n d ard s
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S e rvice D e sign

October 20, 2011

Gaps in Service Quality

Gap 1. Consumer expectation mgmt. perception 2. Management perception service quality specification 3. Service quality specification service delivery
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Problem The service features offered dont meet customer needs

Cause(s) Lack of marketing research; inadequate upward communication; too many levels between contact personnel and management

The service specifications Resource constraints; management defined do not meet indifference; poor service design managements perceptions of customer expectations 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

October 20, 2011

Dr. Sushil

L06: Service Quality

SOM 2011 IIM Raipur

Gaps in Service Quality

Gap 4. Service delivery external communicatio n Problem The service does not meet customer expectations, which have been influenced by external communication Cause(s) 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 Scope

Scope of the service system to needs to be drawn for a better understanding: Content, Process, Structure, Outcome, Impact Content: standard procedure followed? Process: Sequence of events appropriate? SOP. Muri Structure: adequately designed physical facilities, and also the organizational design. Outcome: Has service affected any change in status? Impact: Long range effect on consumer? Polio mission.
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October 20, 2011

Dr. Sushil

L06: Service Quality

SOM 2011 IIM Raipur

Measuring Service Quality for a health Clinic

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Quality Service by Design

Quality in the Service Package Taguchi Methods (Robustness) Poka-yoke (fail-safing) Quality Function Deployment Benchmarking

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October 20, 2011

Dr. Sushil

L06: Service Quality

SOM 2011 IIM Raipur

Quality Requirements for Budget Hotel

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October 20, 2011

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

Customer Errors
Preparation: Failure to bring necessary materials Encounter: Failure to follow system flow Resolution: Failure to signal service failure

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October 20, 2011

Dr. Sushil

L06: Service Quality

SOM 2011 IIM Raipur

Rel ationshi ps

*
O O O

Strong M ediu m W eak

*
Capacity
Training

*
Informatiion Equipment Attitude

Servic e Elem e nts Im po rt a nc e Custom er E xpec tations Relia bility Res p onsi ven es s A ss urance E m pathy Tangi bles 9 7 6 4 2

Custom er P erc eptio ns o V illage Vol vo

House of Quality

Com pa rison with Vol vo De ale r

W eighted s co re Im p ro vem ent di ffic ulty ra nk

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Best in class Same Similar Different

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Relative

+ Vol vo De aler
1 2 3 4 5 o o

8 3 5 2 o o o 9 7 9

5 3 6

5 2

+ + +

+
o o o

3 o o

+ _
127 4 82 5

63 1

102 3

65 2

October 20, 2011

Benchmarking

October 20, 2011

Dr. Sushil

L06: Service Quality

SOM 2011 IIM Raipur

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 customers perspective.

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October 20, 2011

Walk Through Audit (WtA)

Get into customers shoes Customer-focused Survey Pg 144-5 Binding customer interactions in a process WtA as a Diagnostic Instrument

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October 20, 2011

Dr. Sushil

L06: Service Quality

SOM 2011 IIM Raipur

Achieving Service Quality

Cost of Quality (Juran) Service Process Control Statistical Process Control (Deming) Unconditional Service Guarantee

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October 20, 2011

Quality: Profit or Cost

Both! Improving quality does require a company to incur costs Return on quality storyline:

Improved Service Performance

Improved Customer Satisfaction

Improved Customer Retention

Increased Market Share

Increased Profitability

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Dr. Sushil

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L06: Service Quality

SOM 2011 IIM Raipur

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
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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

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Dr. Sushil

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L06: Service Quality

SOM 2011 IIM Raipur

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

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October 20, 2011

Costs of Service Quality

(Bank Example)
Failure costs External failure: Loss of future business Negative word-of-mouth Liability insurance Legal judgments Interest penalties Internal failure: Scrapped forms Rework Recovery: Expedite disruption Labor and materials Detection costs Process control Peer review Supervision Customer comment card Inspection Prevention costs Quality planning Training program Quality audits Data acquisition and analysis Recruitment and selection Supplier evaluation

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Dr. Sushil

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L06: Service Quality

SOM 2011 IIM Raipur

Chain of Events from Quality to Profits

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Implementing Quality Service

Design fail-safe attributes into services Service guarantees and refunds Unconditional Easy to understand and communicate Meaningful Easy to invoke Easy to collect

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Dr. Sushil

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L06: Service Quality

SOM 2011 IIM Raipur

Service Process Control

Customer input Service concept Customer output

Resources

Service process

Take corrective action Identify reason for nonconformance

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Monitor conformance to requirements

Establish measure of performance

October 20, 2011

Control Chart of Departure Delays

Percentage of flights on time 100 90 80 70 60
1998 1999 expected Lower Control Limit

UCL = p + 3
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p (1 p n

LCL = p 3

p (1 p n
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Dr. Sushil

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L06: Service Quality

SOM 2011 IIM Raipur

Unconditional Service Guarantee: Customer View

Unconditional (L.L. Bean) Easy to understand and communicate (Free meal if not served in 15 minutes) Meaningful (Dominos Pizza) Easy to invoke (Cititravel: A toll-free call would do the job!) Easy to collect (On-spot?)

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October 20, 2011

Unconditional Service Guarantee: Management View

Focuses on customers (British Airways) Sets clear standards (FedEx) Guarantees feedback (Maruti) Promotes an understanding of the service delivery system Builds customer loyalty by making expectations explicit Recent steps by Blackberry to recover from the service failure?
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