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.
 Perform service quality function deployment.
 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 Personal Past
mouth needs experience

Service Quality Expected Service Quality Assessment

Dimensions service 1. Expectations exceeded
Reliability ES<PS (Quality surprise)
Responsiveness 2. Expectations met
Assurance Perceived ES~PS (Satisfactory quality)
Empathy service 3. Expectations not met
Tangibles ES>PS (Unacceptable quality)
 Gaps in Service Quality
Word -of-mouth
Personal needs Past experience
communications

Customer

Expected service

GAP 5
Perceived service

Service delivery (including External communications

pre- and post-contacts) to consumers

GAP 1 GAP 3 GAP 4

Translation of perceptions into
service quality specifications
GAP 2
Provider
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
with Poka-Yoke Opportunities
Server Errors Customer Errors
Task: Preparation:
Doing work incorrectly Failure to bring necessary
Treatment: materials
Encounter:
Failure to listen to
customer Failure to follow system
flow
Tangible:
Resolution:
Failure to wear clean
Failure to signal service
uniform
failure
Fail-safing the Customer
 Preparation for the encounter
 DEC service flier
 During the encounter
 Locks on airline doors activate lights
 Resolution of the encounter
 Outlines for toys on floor of child care
center
DEC Service Flier
Fail-safing the Server
 Task
 Operating room trays with indentations for
instruments
 Treatment
 Smile checklist (greeting, taking order, informing
of desert special, and giving change)
 Tangibles
 Mirrors for personal appearance inspection
 Chairs with armrests to prevent sleeping
 House of Quality
Relationships

* Strong

Medium

O Weak
Relative

O O
* * Custom er Perc eptions
Servic e Elements

Informatiion
Im o Village Volvo

Equipment
po

Capacity
rta

Training

Attitude
nc
e
+ Vol vo Dealer

Customer Expectations 1 2 3 4 5
Reliability 9 8 5 5 + o
Responsiveness 7 3 9 3 2 o +
Assurance 6 5 9 6 + o
Empathy 4 7 + o
Tangibles 2 2 3 + o

+
o o
Com parison with Volvo Dealer o o
_ o

Weighted score 127 82 63 102 65

Improvement difficulty rank 4 5 1 3 2
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 Prevention costs
External failure: Process control Quality planning
Customer complaints Peer review Training program
Warranty charges Supervision Quality audits
Liability insurance Customer comment card Data acquisition and analysis
Legal judgments Inspection Preventive maintenance
Loss of repeat service Supplier evaluation
Recruitment and selection
Internal failure:
Scrap
Rework

Recovery:
Expedite
Labor and materials
Service Process Control
Customer
input Service
concept

Service Customer
Resources output
process

Take Monitor Establish

corrective conformance to measure of
action requirements performance

Identify reason
for
nonconformance
Why SPC in Services?
 Cons: Nothing to measure but time
 Pros: Consistency is at least as
important as performance
 For high performers
 Limited impact for low performers
 Percentage of flights on time
Control Chart of Departure Delays

100 expected

Lower Control Limit

90

80

70
1998 199
9
60
p (1 − p p (1 − p
UCL = p + 3 LCL = p − 3
n 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 by making
expectations explicit
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

Seek redress directly from

Action the firm

Take legal action

Dissatisfaction
Complaint to business, private,
occurs 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
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.
Number of People Told Based
on Level of Dissatisfaction
Average number of people told

30
25
20
15
10
5
0
Slight Annoyed Very Ext Abs
diss annoyed annoyed furious
 Action Taken Based on Level of
Dissatisfaction

Percent of customers that take action

100
Tell friends
80 Complain
60 Make a fuses

40 Not use again

Dissuade others
20
Complain against
0
Slightly Annoyed Very Ext Abs
diss annoyed annoyed 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
Walking wounded Champions
Could complain but don’t; Active in providing
not happy but repurchase British Airways with
information on quality
How easy customers feel it is to

of its services; loyal

Remain Loyal
contact British Airways

Defect
Missing in action Detractors
Defected; Defected;
non-complaining vocally critical
not easy
don’t complain complain

Propensity to contact British Airways

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?
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?