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Improving Service Quality and Productivity

Overview of Chapter 14:

Overview of Chapter 14 Integrating service quality strategies What is service quality? The Gaps Model—a conceptual tool to identify and correct service quality problems Measuring and improving service quality

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1. Integrating Service Quality and Productivity Strategies

Integrating Service Quality and Productivity Strategies:

Integrating Service Quality and Productivity Strategies Quality and productivity are twin paths to creating value for both customers and companies Quality focuses on the benefits created for customers; productivity addresses financial costs incurred by firm Importance of productivity: Keeps costs down to improve profits and/or reduce prices Enables firms to spend more on improving customer service and supplementary services Secures firm’s future through increased spending on R&D May impact service experience—marketers must work to minimize negative effects, promote positive effects

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2. What Is Service Quality?

Components of Quality: Manufacturing-based:

Components of Quality: Manufacturing-based Performance: Primary operating characteristics Features: Bells and whistles Reliability: Probability of malfunction or failure Conformance: Ability to meet specifications Durability: How long product continues to provide value to customer Serviceability: Speed, courtesy, competence Esthetics: How product appeals to users Perceived Quality: Associations such as brand name

Components of Quality: Service-based:

Components of Quality: Service-based Tangibles: Appearance of physical elements Reliability: Dependable and accurate performance Responsiveness: Promptness; helpfulness Assurance: Competence, courtesy, credibility, security Empathy: Easy access, good communication, understanding of customer

Capturing the Customer’s Perspective of Service Quality: SERVQUAL (1):

Capturing the Customer ’ s Perspective of Service Quality: SERVQUAL (1) Survey research instrument based on premise that customers evaluate firm’s service quality by comparing Their perceptions of service actually received Their prior expectations of companies in a particular industry Poor quality Perceived performance ratings < expectations Good quality Perceived performance ratings > expectations

Capturing the Customer’s Perspective of Service Quality: SERVQUAL (2):

Capturing the Customer ’ s Perspective of Service Quality: SERVQUAL (2) Developed primarily in context of face-to-face encounters Scale contains 22 items reflecting five dimensions of service quality Subsequent research has highlighted some limitations of SERVQUAL See Research Insights 14.1: Measuring E-Service Quality*

How Customers Might Evaluate Online Businesses: Seven Dimensions of E-S-QUAL:

How Customers Might Evaluate Online Businesses: Seven Dimensions of E-S-QUAL Accessibility : Is site easily found? Navigation: How easy is it to move around the site? Design and presentation: Image projected from site? Content and purpose: Substance and richness of site Currency and accuracy Responsiveness:Firm’s propensity to respond to e-mails Interactivity, customization, and personalization Reputation and security Source:Shohreh A. Kaynama (2000), “ A Conceptual Model to Measure Service Quality of Online Companies: E-qual, in Developments in Marketing Science, ” Harlan E. Spotts and H. Lee Meadows, eds., Proceedings of the Academy of Marketing Science , Vol. 22, pp. 46 – 51. For more information pertaining to online service quality see A. Parasuraman, Vlerie A. Zeithaml, and Arvind Malhotra (2005), “ E-S-QUAL: A Multiple-Item Scale for Assessing Electronic Service Quality. ” J ournal of Service Research , Vol. 7. issue 3. pp. 213 – 234.

Other Considerations in Service Quality Measurement:

Other Considerations in Service Quality Measurement In uncompetitive markets or in situations where customers do not have a free choice, researchers should use needs or wants as comparison standards Services high in credence characteristics may cause consumers to use process factors and tangible cues as proxies to evaluate quality—halo effect Process factors: Customers’ feelings

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3. The Gaps Model

Seven Service Quality Gaps (Fig 14.3):

Seven Service Quality Gaps ( Fig 14.3) Customer experience relative to expectations 1. Knowledge Gap 2. Standards Gap 3. Delivery Gap 5. Perceptions Gap 7. Service Gap Customer needs and expectations 6. Interpretation Gap 4. Internal Communications Gap MANAGEMENT CUSTOMER 4. Customer perceptions of service execution Management definition of these needs Translation into design/delivery specs Execution of design/delivery specs Advertising and sales promises Customer interpretation of communications

Prescriptions for Closing the Seven Service Quality Gaps (1) (Table 14.3):

Prescriptions for Closing the Seven Service Quality Gaps (1) (Table 14.3) Knowledge gap: Learn what customers expect Understand customer expectations Improve communication between frontline staff and management Turn information and insights into action Standards gap: Specify SQ standards that reflect expectations Set, communicate, and reinforce customer-oriented service standards for all work units Measure performance and provide regular feedback Reward managers and employees

Prescriptions for Closing the Seven Service Quality Gaps (2) (Table 14.3):

Prescriptions for Closing the Seven Service Quality Gaps (2) (Table 14.3) Delivery gap: Ensure service performance meets standards Clarify employee roles Train employees in priority setting and time management Eliminate role conflict among employees Develop good reward system Internal communications gap: Ensure that communications promises are realistic Seek comments from frontline employees and operations personnel about proposed advertising campaigns Get sales staff to involve operations staff in meetings with customers Ensure that communications sets realistic customer expectations

Prescriptions for Closing the Seven Service Quality Gaps (3) (Table 14.3):

Prescriptions for Closing the Seven Service Quality Gaps (3) (Table 14.3) Perceptions gap: Educate customers to see reality of service quality delivered Keep customers informed during service delivery and debrief after delivery Provide physical evidence Interpretation gap: Pretest communications to make sure message is clear and unambiguous Present communication materials to a sample of customers in advance of publication Service gap: Close gaps 1 to 6 to meet customer expectations consistently

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4. Measuring and Improving Service Quality

Soft Measures of Service Quality:

Soft Measures of Service Quality Key customer-centric SQ measures include: Total market surveys, annual surveys, transactional surveys Service feedback cards Mystery shopping Analysis of unsolicited feedback — complaints and compliments, focus group discussions, and service reviews Ongoing surveys of account holders to determine satisfaction in terms of broader relationship issues Customer advisory panels offer feedback/advice on performance Employee surveys and panels to determine: Perceptions of the quality of service delivered to customers on specific dimensions Barriers to better service Suggestions for improvement

Hard Measures of Service Quality:

Hard Measures of Service Quality Control charts to monitor a single variable Offer a simple method of displaying performance over time against specific quality standards Are only good if data on which they are based is accurate Enable easy identification of trends Service quality indexes* E mbrace key activities that have an impact on customers

Composition of FedEx’s Service Quality Index—SQI (Table 14.4):

Composition of FedEx’s Service Quality Index—SQI (Table 14.4) Late delivery—right day Late Delivery—wrong day Tracing request unanswered Complaints reopened Missing proofs of delivery Invoice adjustments Missed pickups Lost packages Damaged packages Aircraft delays (minutes) Overcharged (packages missing label) Abandoned calls 1 5 1 5 1 1 10 10 10 5 5 1 Failure Type Total Failure Points (SQI) = Weighting Factor XXX,XXX Daily Points X Number of Incidents =