Lecture 06 Service Quality

McGraw-Hill/Irwin Service Management: Operations, Strategy, and Information Technology, 6e

Copyright 2008 by The McGraw-Hill Companies, Inc. All Rights Reserved.

Learning Objectives

Describe and illustrate the five dimensions of service quality. Use the service quality gap model to diagnose quality problems. Illustrate how poka-yoke methods, and service quality function deployment, are applied to quality design in services. Develop unconditional service guarantees. Discuss the concept of a service recovery. Perform a walk-through audit (WtA)
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Moments of Truth

Customers assess quality at different points during service delivery Each customer contact/interface is called a moment of truth. You have the ability to either satisfy or dissatisfy customers when you interface. A service recovery is satisfying a previously dissatisfied customer and making them a loyal customer.
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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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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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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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Service Quality Gap Model

Service Quality Gap Model

Customer Perceptions
Managing the Evidence
Customer Satisfaction GAP 5

Customer Expectations
Understanding the Customer

Communication GAP 4

Customer / Marketing Research GAP 1

Service Delivery
Conformance GAP 3

Management Perceptions of Customer Expectations

Design GAP 2

Conformance

Service Standards

Service Design

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Quality Service by Design

Design quality into the Service Package

Budget Hotel example (robust design Taguchi)

Poka-yoke (fail-safing / error proofing)

Height bar at amusement park;
French fry scoop at fast food store

Quality Function Deployment

House of Quality (matches customer requirements with service attributes, and compares
with competitors)
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Classification of Service Failures for Mistake Proofing (Poka-Yoke)

Provider 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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House of Quality
Relationships

*
O O O

Strong Medium Weak

Informatiion

Equipment

Capacity

Training

Attitude

Customer Expectations Reliability Responsiveness Assurance Empathy Tangibles 9 7 6 4 2

Comparison with Volvo Dealer

Weighted score Improvement difficulty rank

Relati ve
Servic e Elements Im po rta nc e 8 3 5 2

Customer Perc eptions o Village Volvo

+ Volvo Dealer
1 2 3 4 5 + o o

5 9 9 7 3 6

5 2

+
o o o

+ +
3

+
o o o o o

_
127 4 82 5

63 1

102 3

65 2
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Achieving Service Quality

Cost of Quality (Juran)

Statistical Process Control (Deming) Unconditional Service Guarantee

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Costs of Service Quality

(Bank Example)
Detection costs
Process control Peer review Supervision Customer comment card Inspection

Failure costs
External failure:
Loss of future business Negative word-of-mouth Liability insurance Legal judgments Interest penalties

Prevention costs
Quality planning Training program Quality audits Data acquisition and analysis Recruitment and selection Supplier evaluation

Internal failure:
Scrapped forms Rework

Recovery:
Expedite disruption Labor and materials
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Control Chart of Departure Delays

Percentage of ontime flights
100
expected

90 80 70 60

Lower Control Limit

1998

1999

p (1 p ) UCL p 3 n

p (1 p ) LCL p 3 n
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Unconditional Service Guarantee: Customer View

Unconditional (L.L. Bean) Easy to understand and communicate (Bennigans) Meaningful (Dominos Pizza) Easy to invoke (Cititravel) Easy to collect (Manpower)

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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
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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
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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. 6-17

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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Service Recovery Framework

Severity Of Failure Perceived Service Quality Psychological -empathy -apology Tangible -fair fix -value add Psychological -apology -show interest

Patronage

Service Recovery Expectations

Service Recovery

Follow-up Service Recovery

Loyalty Satisfaction Retention

Customer Loyalty Service Failure Occurs

Service Guarantee

Speed of Recovery Provider Aware of Failure

Frontline Discretion Fair Restitution

Tangible -small token

Pre-recovery Phase

Immediate Recovery Phase

Follow-up Phase

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Approaches to Service Recovery

Case-by-case addresses each customers 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.
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Topics for Discussion

How do the five 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. Why do service firms hesitate to offer a service guarantee? How can recovery from a service failure be a blessing in disguise?
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Interactive Exercise
The class breaks into small groups. Each group identifies the worst service experience and the best service experience that any member has had. Return to class and discuss what has been learned about service quality.

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The Complaint Letter

1. 2.

3.

4.

Briefly summarize the complaints and compliments in Dr. Loflins 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?
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The Museum of Art and Design

1.

2.

Critique the WtA gap analysis. Could there be other explanations for the gaps? Make recommendations for closing the gaps found in the WtA.

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