MD850: e-Service Operations

Service Quality Management in Electronic Services

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Agenda
Background Value Quality
Goods Quality Service Quality e-Service Quality

e-Service Customer Satisfaction e-Service Quality Measurement e-Service Quality Management

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Background
Quality problems are rampant among e-Services

Many possible reasons

digital content problems website process problems lack of website capacity stockouts/fulfillment/delivery problems

Background
e-Service Quality Management Issues of Interest
What is e-Service quality? How is it defined? How can I measure the quality of my services? How can I control quality of my services? Any methodologies available for managing e-Service quality? Is zero defects a reasonable strategy? How much does quality cost in e-Services? What are the costs of low quality e-Services?
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Background
e-Service Segment: Quality Measurement Intermediaries

Positioned as Omniscient Quality Gurus Aggregators of information about many websites services

B2B Marketing Researcher/Expert Service business model B2B Subscription business model Affiliate business model Infomediary/Recommender business model Advertising business model Merchant business model
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Affiliate-oriented want a piece of each transaction

Advertising oriented

Border on e-Retailing

Background
Additional e-Service Quality Management Issues of Interest
Should I measure my own quality? Which e-Quality measurement vendor should I use? Are vendors measuring quality correctly? Appropriate strategy for using vendors quality measurement data? Any risks involved with using their information to make decisions? Any risks involved with integrating e-Quality vendors into my system?

Value

Value
What is value in e-Services? Why should we be concerned about value?

Value
Value is high-level and abstract
Value is more individualistic and personal than quality Value involves a tradeoff of give and get components; quality does not

Value
What constitutes value appears to be highly personal and idiosyncratic (Zeithaml, p. 13)
Value is low price

price minimizer a most important dimension

Value is whatever I want in a product

Value is the quality I get for the price I pay

v=q/p
v = f(get1, get2, , getM) / f(give1, give2, , giveN)
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Value is what I get for what I give

Value
Value is positioned at an important place in consumers means-ends chains
Value affects

behavioral intentions purchase intention actual purchase activities revenue that results from such actual purchase activities

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Value
Zeithamls Means-End Model (1988) & other marketing models
Perceived Quality Perceived Value Customer Loyalty
Purchase/ Repurchase/ Actual Loyalty

Perceived Satisfaction

Intended Repurchase Behavior

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Value
Zeithamls Means-End Model (1988)
Service Product
Extrinsic Attributes Intrinsic Attributes
Consumer Personality, Values

Perceived Quality Perceived Satisfaction

Perceived Sacrifice

Perceived Value

Actual Price

Perceived Monetary Price

Perceived Non-Monetary Price

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Value
Theory (Zeithaml, 1988)
Perceived Value is a function of

Perceived Quality is a function of

Extrinsic Attributes - e.g, brand, reputation Intrinsic Attributes - i.e., actual attributes
Perceived Monetary Price Perceived Non-Monetary Price - search costs, waiting costs, privacy costs from use of personal information the values of individual customers (Keeney)

Perceived Sacrifice is a function of ...

Higher Level Abstractions

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Value
Theory (Keeney, 1999) - Internet Commerce
Value conceptualized as a Means-Ends Process
Value is driven by Fundamental Objectives Fundamental objectives are a result of Means Objectives

Elicited customer values can be weighted together to obtain value estimates for new Internet services
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Value
Theory (Keeney, 1999) - Internet Commerce
Value is maximizing customer satisfaction along ...

Product quality Cost Time to receive product Convenience Time Spent Privacy Shopping Enjoyment Safety Environmental Impact

Fundamental Objectives

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Value
Customer Lifetime Value
Uses an NPV approach to calculate expected profit over customer lifetime
retention rates discount rates

Because retention is a function of quality variables, these should probably be factored into the CLV calculation
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Quality

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Quality
Quality affects (is a driver of ) value Characteristics
Objective quality vs. Perceived quality

Consumers may judge quality along both Consumers may rate objective product attributes Consumers may rate many levels of abstractions of those objective product attributes an overall summary/evaluation quality evaluations depend on what the consumer knows about other products, or depends on the set the consumer chooses to compare a product against

Attribute vs. Higher level abstraction

Global assessment, similar to attitude

Judgement made within a consumers evoked set

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Quality
Attribute Level
e-Service Product Attributes

Goods Services Digital Content

Abstract Levels
e-Service Quality will be a function of each of the above
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Goods Quality
Goods Quality
Concepts

Objective Perceived

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Goods Quality
Goods Quality
David Garvins Model of 8 Quality Dimensions (1984)

Performance: a goods primary operating characteristics Features: the bells and whistles of a product Reliability: the probability of a good surviving over a specified period of time under stated conditions of use Conformance: the degree to which physical and performance 22 characteristics of a good match preestablished standards

Goods Quality
Goods Quality
David Garvins Model (1984) of 8 Quality Dimensions

Durability the amount of use one gets from a product before it physically deteriorates or until replacement is preferable Serviceability the ability to repair agood quickly and easily Aesthetics how a good looks, feels, sounds, tastes, or smells Perceived Quality subjective assessment resulting from image,

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Goods Quality
Goods Quality
Measurement
Objective
actual measures (length, weight, etc.) counts (# of errors across a space)

Perceived
perceptions of objective dimensions relative to other goods/average good/prior expectations relative to aims for using good/prior expectations 24 rankings

Goods Quality
Goods Quality
Management
Objective
Statistical Process Control control charts (X-bar, R, C, U, P, etc.) Root-cause analysis techniques House of Quality

Perceived
House of Quality Conjoint Analysis/Experimental Design
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Goods Quality
How do goods affect e-Service quality? How is quality of a good affected by eServices?

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Service Quality
Traditional Services (Person-to-Person)
Concepts
Objective
actual attributes (of facilitating goods) quality is having certain attributes some people say services cannot be measured objectively (i.e, counted, weighed, have no objective length)

Perceived
ratings of performance ratings of performance relative to some prior expected rating Gap Model Quality = Performance - Expected

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Service Quality
Service Quality
Measurement

General Idea

psychology based consumers (society) have evolved to some joint understanding of N dimensions that fully define quality researchers attempt to discover what those N dimensions are once researchers discover dimensions, managers can use them to manage their services
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Service Quality
Service Quality
Measurement

SERVQUAL - 10 dimensions of quality originally

Tangibles Reliability Responsiveness Communication Credibility Security Competence Courtesy Understanding/Knowing Customers Access

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Service Quality
Service Quality
Measurement
SERVQUAL - 5 dimensions
Tangibles physical facilities, equipment, appearance of personnel Reliability ability to perform the promised service dependably and accurately Responsiveness willingness to help customers and provide prompt service Assurance knowledge and courtesy of employees and their ability to inspire trust and confidence Empathy caring, individualized attention

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Service Quality
Service Quality
Measurement

Examples of SERVQUAL survey questions/statements

Their physical facilities should be visually appealing. Their employees should be well dressed and appear neat. Their employees dont always have to be willing to help customers. Their employees should be polite. 15 others

Rate these questions along a 1-7 scale

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Service Quality
When/How does (person-to-person) Service Quality affect e-Service Quality? Is e-Service Quality different from SERVQUAL?

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e-Service Quality
Old Professors
Its all the same. We dont need new quality dimensions. We dont need new measurement tools.

Young Professors
e-Service quality is very different.

It involves person-to-technology interactions, and usually not the way they are dressed, whether they smile, physical buildings, etc. We need to publish our own papers. 33

e-Service Quality
Are we measuring Service Quality or Customer Satisfaction of e-Services?
Quality

Attitude, overall evaluation, overall excellence Long-run

Traditional Services: typically measured with a survey long after consumption

Satisfaction

Relate to a specific transaction Related to a situation Short-run

e-Services: can be measured immediately after transaction

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Customer Satisfaction in e-Services

Ends Dimensions (Keeney 1999, Shim and Mahoney 1992)
Convenience Shopping Enjoyment Shopping Ease Safety Privacy Time Spent Purchasing/Shopping Time to Receive Product Description of Merchandise Advertisement Frequency of Sales
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Customer Satisfaction in e-Services

Ends Dimensions (Keeney 1999, Shim and Mahoney 1992)
Ease of Returns Variety of Stores Variety of Selection Delivery Credit Ease of Access Store Reputation Environmental Impact

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Customer Satisfaction in e-Services

Systemic Qualities (SUN)
User-Level Qualities
Usability Accessibility

Service-Level Qualities
Performance Reliability Availability

Strategic-Level Qualities
Scalability Flexibility

The list of systemic qualities is potentially inexhaustible.

System-Level Qualities
Security Manageability Maintainability
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Customer Satisfaction in e-Services

SunTone Quality of Service (QoS) Dimensions mentioned
Reliability Performance Security Consistency Functionality Predictability Public Shared Reusable Coarse-Grained Controllable Manageable System-Independent Location-Independent Updatability Flexibility Assemble-able

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Customer Satisfaction in e-Services

Is there anything missing from these dimensions?
Keeneys means objectives? ?

Is this the proper approach for

representing satisfaction/quality? measuring?
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e-Service Quality Measurement

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e-Service Quality Measurement

Online surveys of customer experiences
Approaches
Pop-up surveys used to gather customer feedback Post-checkout survey pages

Survey process
Build it into your website/e-Service Outsource it to a measurement service

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e-Service Quality Measurement

Levels of measurement
Objective

Service attributes

Has shopping cart Allows customers to pay by VISA credit card

Errors/Defects in system Customer satisfaction perceptions Expert ratings of customer satisfaction Customer comments - written

Abstract/Subjective

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e-Service Quality Measurement

Object/Event Being Measured
Transactions - consumer measurement at point of purchase

BizRate Gold (attributes, perceptions) WebWatchdog (attributes, perceptions) BizRate Silver (attributes, ratings) Rating Wonders (attributes, ratings) Gomez Associates (attributes, ratings) Opinion Lab Web Guide magazine (expert ratings) Watchfire (Web-spider content analysis)

Transactions - expert ratings

Page Oriented - consumer measurement on page

Content Oriented

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e-Service Quality Measurement

Object/Event Being Measured
Content Oriented

Web Guide magazine (expert ratings) Watchfire (Web-spider content analysis) Apples iReview (Mac-friendly expert ratings) Gomez Epinions TRUSTe Web Watchdog
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Consumer Comments

e-Service Quality Measurement

BizRate
Perception
Overall Service Quality Ease of Ordering Product Selection Product Information Product Prices Website Navigation and Looks On-Time Delivery Product Representation Privacy Policies Product Shipping and Handling Level and Quality of Customer Support
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Attributes

Ordering Methods Supported Special Features Delivery Methods Available Payment Methods Accepted

e-Service Quality Measurement

RatingWonders
Ratings
Attributes

Product attributes Service attributes Site Quality attributes Feature attributes Ordering attributes Payment attributes Shipping attributes Return attributes

Overall Rating Products Service Site Quality Features Ordering Payment Shipping Returns

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e-Service Quality Measurement

BizRate Overall Rating Price Product Information Product Selection Product Representation Website Ease of Ordering Customer Support Gomez Associates Overall Score Overall Cost Product ratingWonders webwatchdog Pricing Product Information Product Selection Product Representation Website Design

On-Site Resources Site Quality Relationship Services Website Features Ease of Use Ordering Method Customer Service

Customer Service Technical Service Online Response Time Offline Response Time Accessibility

Privacy Policies Shipping and Handling On-Time Delivery Customer Loyalty (old system) Customer Confidence Payment Policy Shipping Policy On-Time Delivery Return Policy Customer Loyalty
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e-Service Quality Management

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e-Service Quality Management

Approaches
e-Service book Sun Tone Architecture Methodology Field, Heim and Sinha (2002)

Related Issues
How to manage e-Service quality ratings provided to the world by measurement services?
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e-Service Quality Management

e-Service Approach
Ask the Academy Award question
Get the customer to specify their vision of their real needs and what the possible future e-Services would be like to fulfill those needs Captures future quality expectations

Experience your e-Service and then experience competitor e-Services

Test the extent of performance in the e-Service Actively rate each Compare your performance to other e-Services to find out what you are doing well and not so well
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e-Service Quality Management

Sun ONE Methodology
Layers + Tiers + Systemic Qualities Systemic qualities drive the choices for architecting the Layers and Tiers

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e-Service Quality Management

SunTone 3-Dimensional Framework

Securability Performance Reliability Availability

Application

Upper Platform
Lower Platform Hardware

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e-Service Quality Management

SunTone 3-Dimensional Framework
Line Item Order Customer Catalog Segment Product

HTML Netscape

JSP iWS

EJB

JMS

APPC

iAS MQSeries CICS MVS

ES9000
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Windows Solaris Solaris Solaris

PC E450 E5500 E250

e-Service Quality Management

SunTone Architecture Methodology

Formalizes the 3D Approach Based on the industry standard Rational Unified Process (RUP)
Driven by Use Cases Iterative and Incremental Architecture-Centric

Extends RUP
Patterns Based Systemic Quality Driven (i.e., Emphasizes QoS)
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e-Service Quality Management

SunTone Methodology Phased Approach
Inception
Functional Requirements Service Level Requirements

Elaboration

Functional Design Functional Specifications

Structural Design

Validate Refine

Structural Prototype

Structural Specifications

Construction

Code Production

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e-Service Quality Management

Field, Heim and Sinha (2002)
Generate Use Case diagrams and other UML diagrams of e-Service design Extend diagrams to incorporate service flows within the e-Service Link quality dimensions to the entities and flows within the diagrams Create a strategy for measuring quality dimensions that relate to important entities/flows within the e-Service
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e-Service Quality Management

What are the management implications of so many e-Service quality measurements being available for customers? Any risks of utilizing one (or more) of these e-Service quality measurement services?

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e-Service Quality Management

Questions to Guide Quality Management Efforts
What are your objectives?
Customer satisfaction perception management?
Real-time - sense and respond D.I.Y. Time-delayed POS site experience - analyze and adapt BizRate Gold, WebWatchdog Time-delayed page experience - analyze and adapt OpinionLab

Control of public perceptions?

BizRate Silver, BBBOnline, Epinions.com, Gomez, Keynote Systems, Rating Wonders, TRUSTe, WebWatchdog

Detection and control of errors/defects?

OpinionLab - feedback from customers linked to page 58 Watchfire (D.I.Y.) - Web spider crawls your own site, identifies

e-Service Quality Management

Questions to Guide Quality Management Efforts
Do you want to measure quality of a sub-system of your e-Service process?
Do you have a model (service-blueprint) of the e-Service system (of the service-product or service-process)? D.I.Y. Define your own satisfaction dimensions and measure(s) for that sub-system Directly measure consumer as they are using that sub-system Do you want to measure quality of individual pages? OpinionLab
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e-Service Quality Management

Questions to Guide Quality Management Efforts
What is the real long-term business model of your service-quality measurement vendor? Service Quality measurement, analysis, reporting? Transaction fees from referrals?

Vendor might outsource their measurement Vendor might discontinue their measurement program, and use someone elses Privacy issues? How much data do you want your SQ measurement company to have about your customers?
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Data vending?

Retailing?

Vendor might discontinue their measurement program

e-Service Quality Management

Questions to Guide Quality Management Efforts
How to manage public perceptions?

Request to be removed from ratings system? Provide data when requested?

ex: B-schools provide yearly updates to Business Week Advise of site updates Advise of new service attributes Actively monitor customer feedback sites for trolls who just try to get excitement out of making controversial statements
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Proactively work with quality rating service?

Summary
Conceptual models of value, service quality, customer satisfaction Quality measurement techniques currently employed Quality measurement e-Services Survey of quality management strategies and methodologies

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