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Recap - The Gaps model (Zeithaml, Parasuraman & Berry 1990):

Recap - The Gaps model (Zeithaml, Parasuraman & Berry 1990)

Recap: Stages in Consumer Decision Making and Evaluation of Services:

Recap: Stages in Consumer Decision Making and Evaluation of Services

Models of service quality:

Models of service quality

The evolution of service quality:

The evolution of service quality Disconfirmation of expectations The Nordic model The three component model The Gaps model of service quality & SERVQUAL

Disconfirmation of expectations (Oliver 1980):

Disconfirmation of expectations (Oliver 1980)

Frequently Asked Questions About Customer Expectations:

Frequently Asked Questions About Customer Expectations Should a company aim to ‘delight’ the customer? How does a company exceed customer service expectations? Do customer service expectations continually escalate? Is it a better strategy to under-promise and over-deliver? How does a service company stay ahead of competition in meeting customer expectations?

The Nordic model (Gronroos 1990):

The Nordic model (Gronroos 1990) Represents the service experience on the basis of functional and technical elements Technical quality refers to what the customer receives from the service Functional quality refers to service delivery Model emphasises companies must be careful what they promise

The three-component model Rust & Oliver (1994):

The three-component model Rust & Oliver (1994) Source: Rust & Oliver, 1994. p. 11

Customer expectations of service:

Customer expectations of service Types of expectations customers hold for service performance Sources of customer expectations

Possible Levels of Customer Expectations:

Possible Levels of Customer Expectations

Dual customer expectations levels and the Zone of Tolerance:

Dual customer expectations levels and the Zone of Tolerance Adequate Service Desired Service Zone of Tolerance

Zones of Tolerance for Different Service Dimensions:

Reliability Tangibles Level of Expectation Source : L. L. Berry, A. Parasuraman, and V. A. Zeithaml, “Ten Lessons for Improving Service Quality,” Marketing Science Institute, Report No. 93-104 (May 1993). Adequate Service Desired Service Desired Service Adequate Service Zones of Tolerance for Different Service Dimensions Zone of Tolerance Zone of Tolerance

Factors That Influence Desired Service:

Lasting Service Intensifiers Personal Needs Zone of Tolerance Desired Service Adequate Service Factors That Influence Desired Service

Factors That Influence Adequate Service:

Self-Perceived Service Role Situational Factors Perceived Service Alternatives Temporary Service Intensifiers Zone of Tolerance Desired Service Adequate Service Factors That Influence Adequate Service Predicted Service

Factors That Influence Desired and Predicted Service:

Predicted Service Explicit Service Promises Implicit Service Promises Word-of-Mouth Past Experience Zone of Tolerance Desired Service Adequate Service Factors That Influence Desired and Predicted Service

Customer perceptions:

Customer perceptions Factors which influence consumers’ perceptions Factors which influence satisfaction Dimensions of service quality Service encounters

Customer Perceptions of Quality and Customer Satisfaction :

Customer Perceptions of Quality and Customer Satisfaction

Factors Influencing Customer Satisfaction:

Factors Influencing Customer Satisfaction Product/service quality Specific product or service features Consumer emotions Attributions for service success or failure

Factors Influencing Customer Satisfaction:

Factors Influencing Customer Satisfaction Perceptions of equity or fairness Other consumers, family members, and coworkers Price Personal factors the customer’s mood or emotional state situational factors

Outcomes of Customer Satisfaction:

Outcomes of Customer Satisfaction Increased customer retention Positive word-of-mouth communications Increased revenues

ASCI and Annual Percentage Growth in S&P 500 Earnings:

ASCI and Annual Percentage Growth in S&P 500 Earnings Source : C. Fornell “Customer Satisfaction and Corporate Earnings,“ commentary appearing on ACSI website, May 1, 2001, http://www.bus.umich.edu/research/nqre/Q1-01c.html.

Relationship between Customer Satisfaction and Loyalty in Competitive Industries:

Relationship between Customer Satisfaction and Loyalty in Competitive Industries Source : James L. Heskett, W. Earl Sasser, Jr., and Leonard A. Schlesinger, The Service Profit Chain , (New York, NY: The Free Press, 1997), p. 83.

Service Quality:

Service Quality The customer’s judgment of overall excellence of the service provided in relation to the quality that was expected. Service quality assessments are formed on judgments of: outcome quality interaction quality physical environment quality

The SERVQUAL dimensions – Perceived Service Quality (Parasuraman, Zeithaml & Berry 1988):

The SERVQUAL dimensions – Perceived Service Quality (Parasuraman, Zeithaml & Berry 1988) Reliability (dependability, accurate performance) Assurance (competence, courtesy, credibility & security) Tangibles (appearance of physical elements) Empathy (easy access, good communications & customer understanding) Responsiveness (promptness & helpfulness)

The Five Dimensions of Service Quality:

The Five Dimensions of Service Quality Ability to perform the promised service dependably and accurately. Knowledge and courtesy of employees and their ability to inspire trust and confidence. Physical facilities, equipment, and appearance of personnel. Caring, individualized attention the firm provides its customers. Willingness to help customers and provide prompt service. T angibles R eliability R esponsiveness A ssurance E mpathy

Exercise to Identify Service Attributes:

Exercise to Identify Service Attributes In groups of five, choose a services industry and spend 10 minutes brainstorming specific requirements of customers in each of the five service quality dimensions. Be certain the requirements reflect the customer’s point of view. Reliability: Assurance: Tangibles: Empathy: Responsiveness:

SERVQUAL Attributes:

Providing service as promised Dependability in handling customers’ service problems Performing services right the first time Providing services at the promised time Maintaining error-free records Keeping customers informed as to when services will be performed Prompt service to customers Willingness to help customers Readiness to respond to customers’ requests RELIABILITY RESPONSIVENESS Employees who instill confidence in customers Making customers feel safe in their transactions Employees who are consistently courteous Employees who have the knowledge to answer customer questions ASSURANCE Giving customers individual attention Employees who deal with customers in a caring fashion Having the customer’s best interest at heart Employees who understand the needs of their customers Convenient business hours EMPATHY Modern equipment Visually appealing facilities Employees who have a neat, professional appearance Visually appealing materials associated with the service TANGIBLES SERVQUAL Attributes

The Service Encounter:

The Service Encounter is the “moment of truth” occurs any time the customer interacts with the firm can potentially be critical in determining customer satisfaction and loyalty types of encounters: remote encounters, phone encounters, face-to-face encounters is an opportunity to: build trust reinforce quality build brand identity increase loyalty

A Service Encounter Cascade for a Hotel Visit:

Check-In Request Wake-Up Call Checkout Bellboy Takes to Room Restaurant Meal A Service Encounter Cascade for a Hotel Visit

A Service Encounter Cascade for an Industrial Purchase:

Sales Call Ordering Supplies Billing Delivery and Installation Servicing A Service Encounter Cascade for an Industrial Purchase

Critical Service Encounters Research:

Critical Service Encounters Research GOAL: understanding actual events and behaviors that cause customer dis/satisfaction in service encounters METHOD: Critical Incident Technique DATA: stories from customers and employees OUTPUT: identification of themes underlying satisfaction and dissatisfaction with service encounters

Sample Questions for Critical Incidents Technique Study:

Sample Questions for Critical Incidents Technique Study Think of a time when, as a customer, you had a particularly satisfying (dissatisfying) interaction with an employee of ______________. When did the incident happen? What specific circumstances led up to this situation? Exactly what was said and done? What resulted that made you feel the interaction was satisfying (dissatisfying)?

Common Themes in Critical Service Encounters Research:

Common Themes in Critical Service Encounters Research Recovery: Adaptability: Spontaneity: Coping: employee response to service delivery system failure employee response to customer needs and requests employee response to problem customers unprompted and unsolicited employee actions and attitudes

Recovery:

Recovery Acknowledge problem Explain causes Apologize Compensate/upgrade Lay out options Take responsibility Ignore customer Blame customer Leave customer to fend for him/herself Downgrade Act as if nothing is wrong “Pass the buck” DO DON’T

Adaptability:

Adaptability Recognize the seriousness of the need Acknowledge Anticipate Attempt to accommodate Adjust the system Explain rules/policies Take responsibility Ignore Promise, but fail to follow through Show unwillingness to try Embarrass the customer Laugh at the customer Avoid responsibility “Pass the buck” DO DON’T

Spontaneity:

Spontaneity Take time Be attentive Anticipate needs Listen Provide information Show empathy Exhibit impatience Ignore Yell/laugh/swear Steal from customers Discriminate DO DON’T

Coping:

Coping Listen Try to accommodate Explain Let go of the customer Take customer’s dissatisfaction personally Let customer’s dissatisfaction affect others DO DON’T

Evidence of Service from the Customer’s Point of View:

Evidence of Service from the Customer’s Point of View People Process Physical Evidence Contact employees Customer him/herself Other customers Operational flow of activities Steps in process Flexibility vs. standard Technology vs. human Tangible communication Servicescape Guarantees Technology Website Source : From “Managing the Evidence of Service” by M. J. Bitner from The Service Quality Handbook, eds. E. E. Scheuing and W. F. Christopher (1993), pp. 358-70.

Customer perceptions of service:

Customer perceptions of service

Customer Perceptions of Service:

Customer Perceptions of Service Influences on customer perceptions of service and the relationships among customer satisfaction, service quality, and individual service encounters. Importance of customer satisfaction—what it is, the factors that influence it, and the significant outcomes resulting from it. Service quality and its five key dimensions: reliability, responsiveness, empathy, assurance, and tangibles. Service encounters or “moments of truth” are the essential building blocks from which customers form their perceptions.

Customer Perceptions of Quality and Customer Satisfaction :

Customer Perceptions of Quality and Customer Satisfaction

Factors Influencing Customer Satisfaction:

Factors Influencing Customer Satisfaction Product/service quality Specific product or service features Consumer emotions Attributions for service success or failure Perceptions of equity or fairness Other consumers, family members, and coworkers Price Personal factors the customer’s mood or emotional state situational factors

Outcomes of Customer Satisfaction:

Outcomes of Customer Satisfaction Increased customer retention Positive word-of-mouth communications Increased revenues

ASCI and Annual Percentage Growth in S&P 500 Earnings:

ASCI and Annual Percentage Growth in S&P 500 Earnings Source : C. Fornell “Customer Satisfaction and Corporate Earnings,“ commentary appearing on ACSI website, May 1, 2001, http://www.bus.umich.edu/research/nqre/Q1-01c.html.

Relationship between Customer Satisfaction and Loyalty in Competitive Industries:

Relationship between Customer Satisfaction and Loyalty in Competitive Industries Source : James L. Heskett, W. Earl Sasser, Jr., and Leonard A. Schlesinger, The Service Profit Chain , (New York, NY: The Free Press, 1997), p. 83.

Service Quality:

Service Quality The customer’s judgment of overall excellence of the service provided in relation to the quality that was expected. Service quality assessments are formed on judgments of: outcome quality interaction quality physical environment quality

The Five Dimensions of Service Quality:

The Five Dimensions of Service Quality Ability to perform the promised service dependably and accurately. Knowledge and courtesy of employees and their ability to inspire trust and confidence. Physical facilities, equipment, and appearance of personnel. Caring, individualized attention the firm provides its customers. Willingness to help customers and provide prompt service. T angibles R eliability R esponsiveness A ssurance E mpathy

Exercise to Identify Service Attributes:

Exercise to Identify Service Attributes In groups of five, choose a services industry and spend 10 minutes brainstorming specific requirements of customers in each of the five service quality dimensions. Be certain the requirements reflect the customer’s point of view. Reliability: Assurance: Tangibles: Empathy: Responsiveness:

SERVQUAL Attributes:

Providing service as promised Dependability in handling customers’ service problems Performing services right the first time Providing services at the promised time Maintaining error-free records Keeping customers informed as to when services will be performed Prompt service to customers Willingness to help customers Readiness to respond to customers’ requests RELIABILITY RESPONSIVENESS Employees who instill confidence in customers Making customers feel safe in their transactions Employees who are consistently courteous Employees who have the knowledge to answer customer questions ASSURANCE Giving customers individual attention Employees who deal with customers in a caring fashion Having the customer’s best interest at heart Employees who understand the needs of their customers Convenient business hours EMPATHY Modern equipment Visually appealing facilities Employees who have a neat, professional appearance Visually appealing materials associated with the service TANGIBLES SERVQUAL Attributes

The Service Encounter:

The Service Encounter is the “moment of truth” occurs any time the customer interacts with the firm can potentially be critical in determining customer satisfaction and loyalty types of encounters: remote encounters, phone encounters, face-to-face encounters is an opportunity to: build trust reinforce quality build brand identity increase loyalty

A Service Encounter Cascade for a Hotel Visit:

Check-In Request Wake-Up Call Checkout Bellboy Takes to Room Restaurant Meal A Service Encounter Cascade for a Hotel Visit

A Service Encounter Cascade for an Industrial Purchase:

Sales Call Ordering Supplies Billing Delivery and Installation Servicing A Service Encounter Cascade for an Industrial Purchase

Critical Service Encounters Research:

Critical Service Encounters Research GOAL: understanding actual events and behaviors that cause customer dis/satisfaction in service encounters METHOD: Critical Incident Technique DATA: stories from customers and employees OUTPUT: identification of themes underlying satisfaction and dissatisfaction with service encounters

Sample Questions for Critical Incidents Technique Study:

Sample Questions for Critical Incidents Technique Study Think of a time when, as a customer, you had a particularly satisfying (dissatisfying) interaction with an employee of ______________. When did the incident happen? What specific circumstances led up to this situation? Exactly what was said and done? What resulted that made you feel the interaction was satisfying (dissatisfying)?

Common Themes in Critical Service Encounters Research:

Common Themes in Critical Service Encounters Research Recovery: Adaptability: Spontaneity: Coping: employee response to service delivery system failure employee response to customer needs and requests employee response to problem customers unprompted and unsolicited employee actions and attitudes

Recovery:

Recovery Acknowledge problem Explain causes Apologize Compensate/upgrade Lay out options Take responsibility Ignore customer Blame customer Leave customer to fend for him/herself Downgrade Act as if nothing is wrong “Pass the buck” DO DON’T

Adaptability:

Adaptability Recognize the seriousness of the need Acknowledge Anticipate Attempt to accommodate Adjust the system Explain rules/policies Take responsibility Ignore Promise, but fail to follow through Show unwillingness to try Embarrass the customer Laugh at the customer Avoid responsibility “Pass the buck” DO DON’T

Spontaneity:

Spontaneity Take time Be attentive Anticipate needs Listen Provide information Show empathy Exhibit impatience Ignore Yell/laugh/swear Steal from customers Discriminate DO DON’T

Coping:

Coping Listen Try to accommodate Explain Let go of the customer Take customer’s dissatisfaction personally Let customer’s dissatisfaction affect others DO DON’T

Evidence of Service from the Customer’s Point of View:

Evidence of Service from the Customer’s Point of View People Process Physical Evidence Contact employees Customer him/herself Other customers Operational flow of activities Steps in process Flexibility vs. standard Technology vs. human Tangible communication Servicescape Guarantees Technology Website Source : From “Managing the Evidence of Service” by M. J. Bitner from The Service Quality Handbook, eds. E. E. Scheuing and W. F. Christopher (1993), pp. 358-70.

Slide 62:

Part 3 UNDERSTANDING CUSTOMER REQUIREMENTS

Provider Gap 1:

Company Perceptions of Consumer Expectations Expected Service CUSTOMER COMPANY Listening Gap Provider Gap 1 Part 3 Opener

Listening to customers through market research:

Listening to customers through market research Using Marketing Research to Understand Customer Expectations Elements in an Effective Services Marketing Research Program Analyzing and Interpreting Marketing Research Findings Model Services Marketing Research Programs Using Marketing Research Information Upward Communication

Objectives for Chapter 6: Listening to Customers through Research:

Objectives for Chapter 6: Listening to Customers through Research Present the types of and guidelines for marketing research in services. Show how marketing research information can and should be used for services. Describe the strategies by which companies can facilitate interaction and communication between management and customers. Present ways that companies can and do facilitate interaction between contact people and management.

Common Research Objectives for Services :

Common Research Objectives for Services To discover customer requirements or expectations for service. To monitor and track service performance. To assess overall company performance compared with that of competition. To assess gaps between customer expectations and perceptions. To identify dissatisfied customers, so that service recovery can be attempted. To gauge effectiveness of changes in service delivery. To appraise the service performance of individuals and teams for evaluation, recognition, and rewards. To determine customer expectations for a new service. To monitor changing customer expectations in an industry. To forecast future expectations of customers.

Criteria for an Effective Service Research Program:

Criteria for an Effective Service Research Program Includes both qualitative and quantitative research Includes both expectations and perceptions of customers Balances the cost of the research and the value of the information Includes statistical validity when necessary Measures priorities or importance of attributes Occurs with appropriate frequency Includes measures of loyalty, behavioral intentions, or actual behavior

Stages in the Research Process:

Stages in the Research Process Stage 1 : Define Problem Stage 2 : Develop Measurement Strategy Stage 3 : Implement Research Program Stage 4 : Collect and Tabulate Data Stage 5 : Interpret and Analyze Findings Stage 6 : Report Findings

Portfolio of Services Research:

Portfolio of Services Research Customer Complaint Solicitation “Relationship” Surveys Post-Transaction Surveys Customer Focus Groups “Mystery Shopping” of Service Providers Employee Surveys Identify dissatisfied customers to attempt recovery; identify most common categories of service failure for remedial action Obtain customer feedback while service experience is fresh; act on feedback quickly if negative patterns develop Use as input for quantitative surveys; provide a forum for customers to suggest service-improvement ideas Assess company’s service performance compared to competitors; identify service-improvement priorities; track service improvement over time Measure individual employee service behaviors for use in coaching, training, performance evaluation, recognition and rewards; identify systemic strengths and weaknesses in service Measure internal service quality; identify employee-perceived obstacles to improve service; track employee morale and attitudes Determine the reasons why customers defect Research Objective Type of Research Lost Customer Research Future Expectations Research Forecast future expectations of customers; develop and test new service ideas

Figure 6.3 Tracking of Customer Expectations and Perceptions of Service Reliability:

Figure 6.3 Tracking of Customer Expectations and Perceptions of Service Reliability Source : E. Sivadas, “Europeans Have a Different Take on CS [Customer Satisfaction] Programs,” Marketing News , October 26, 1998, p. 39.

Figure 6.4 Service Quality Perceptions Relative to Zones of Tolerance:

Retail Chain 9 8 7 6 5 4 3 2 1 0 Reliability Responsiveness Assurance Empathy Tangibles O O = Zone of Tolerance = Service Quality Perception O O O O Figure 6.4 Service Quality Perceptions Relative to Zones of Tolerance

Service Quality Perceptions Relative to Zones of Tolerance:

Computer Manufacturer 10 8 6 4 2 0 Reliability Responsiveness Assurance Empathy Tangibles O O O O O = Zone of Tolerance = S.Q. Perception O Service Quality Perceptions Relative to Zones of Tolerance

Figure 6.5 Importance/Performance Matrix:

Figure 6.5 Importance/Performance Matrix HIGH HIGH LOW Performance Importance           Attributes to Improve Attributes to Maintain High Leverage Attributes to De-emphasize Attributes to Maintain Low Leverage Low Leverage

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