Service Quality

Service Quality

Learning Objectives Describe the five dimensions of service quality. Use the service quality gap model to diagnose quality problems for a service firm. Illustrate how Taguchi methods and poka-yoke methods are applied to service design. Construct a statistical process control chart. Develop unconditional service guarantees. Plan for service recovery.

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.

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 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)

Gaps in Service Quality Word -of-mouth communications Personal needs Past experience Customer Expected service GAP 5 Perceived service Service delivery (including pre- and post-contacts) GAP 1 GAP 3 GAP 4 Translation of perceptions into service quality specifications Provider External communications to consumers GAP 2 Management perceptions of consumer expectations

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

Classification of Service Failures Server Errors Task: Doing work incorrectly Treatment: Failure to listen to customer Tangible: Failure to clean facilities Customer Errors Preparation: Failure to bring necessary materials Encounter: Failure to follow instructions Resolution: Failure to learn from experience

Service Fail-safing Poka-Yokes (A Proactive Approach) Keeping a mistake from becoming a service defect. Task Treatment How can we failsafe the three Ts? Tangibles

Have we compromised one of the 3 Ts?

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

Costs of Service Quality Failure costs Detection costs External failure: Customer complaints Warranty charges Liability insurance Legal judgments Loss of repeat service Process control Peer review Supervision Customer comment card Inspection Internal failure: Scrap Rework Recovery: Expedite Labor and materials Prevention costs Quality planning Training program Quality audits Data acquisition and analysis Preventive maintenance Supplier evaluation Recruitment and selection

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

Percentage of flights on time Control Chart of Departure Delays 100 expected 90 Lower Control Limit 80 70 60 1998 p (1 p UCL p 3 n 199 9 p (1 p LCL p 3 n

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

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

Expressing Dissatisfaction Public Action 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 Warn friends about the product and /or seller

Customer Feedback and Wordof-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 problems 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.

Number of People Told Based on Level of Dissatisfaction average number of people told 30 25 20 15 10 5 0 Slight dis s A nnoyed V ery Ext A bs annoyed annoyed furious

Action Taken Based on Level of Dissatisfaction 100 Tell friends 80 Complain 60 Make a fuses 40 Not use again Dissuade others 20 Complain against 0 Slightly diss Annoyed Very annoyed Ext annoyed Abs furlous

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.

Making Customers into Champions easy How easy customers feel it is to contact British Airways Walking wounded Could complain but don’t; not happy but repurchase Champions Active in providing British Airways with information on quality of its services; loyal Remain Loyal Defect Missing in action Defected; non-complaining Detractors Defected; vocally critical not easy don’t complain Propensity to contact British Airways complain

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?

The Complaint Letter Briefly summarize the complaints and compliments in Dr. Loflin’s letter. Critique the letter of Gail Pearson in reply to Dr. Loflin. What are the strengths and weaknesses of the letter? Prepare an “improved” response letter from Gail Pearson What further action should Gail Pearson take in view of this incident?