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Service Productivity, Quality and Innovation: Implications for Service-Design Practice and Research
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Service Productivity, Quality and Innovation: Implications for Service-Design Practice and Research

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Professor A. ―Parsu‖ Parasuraman …

Professor A. ―Parsu‖ Parasuraman
University of Miami
Service Science Factory Presentation
Maastricht University
Maastricht, Netherlands
21 January 2011

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  • 1. Service Productivity, Quality andInnovation: Implications for Service- Design Practice and Research Professor A. ―Parsu‖ Parasuraman University of Miami Service Science Factory Presentation Maastricht University Maastricht, Netherlands 21 January 2011
  • 2. October 23, 2000© Professor A. Parasuraman; not to be reproduced or disseminated without permission 2
  • 3. Some Preliminary Observations  Service continues to be mediocre in many sectors  Gains in service productivity of firms may lead to lower service quality as experienced by customers  Service innovations may not necessarily lead to gains in service productivity and quality© Professor A. Parasuraman; not to be reproduced or disseminated without permission 3
  • 4. Service Productivity, Quality and Innovation are Intertwined Service Productivity Service Service Quality Innovation© Professor A. Parasuraman; not to be reproduced or disseminated without permission 4
  • 5. What is Service Productivity?© Professor A. Parasuraman; not to be reproduced or disseminated without permission 5
  • 6. Simple Definition of Productivity Output Input© Professor A. Parasuraman; not to be reproduced or disseminated without permission 6
  • 7. Traditional View of Service Productivity Company’s Inputs Service Productivity Company’s Outputs© Professor A. Parasuraman; not to be reproduced or disseminated without permission 7
  • 8. Proposed View of Service Productivity Service productivity can and should be evaluated from the perspectives of both companies and customers© Professor A. Parasuraman; not to be reproduced or disseminated without permission 8
  • 9. Components of Service Productivity  Inputs from company’s perspective: Labor, capital investments, ongoing expenses, etc.  Inputs from customer’s perspective: Monetary cost, time, effort, mental stress, etc.  Outputs from company’s perspective: Revenue, profits, customer loyalty, etc.  Outputs from customer’s perspective: Value, satisfaction, service experience, etc.© Professor A. Parasuraman; not to be reproduced or disseminated without permission
  • 10. A Company-Customer Conceptualization of Service Productivity Company’s Perspective Customer’s Perspective Inputs Inputs [Labor, Equipment, [Time, Effort, Emotional Technology, etc.] Energy, etc.] Productivity Missing Service Productivity Link! Quality! Outputs Outputs [Sales, Profits, Market [Service Performance, Share, etc.] Satisfaction, etc.]© Professor A. Parasuraman; not to be reproduced or disseminated without permission 10
  • 11. What is Service Quality?© Professor A. Parasuraman; not to be reproduced or disseminated without permission 11
  • 12. From Customers’ Perspective…  Service quality results from a comparison customers’ service expectations with their actual service experience  Their service experience frequently falls short of their expectations© Professor A. Parasuraman; not to be reproduced or disseminated without permission 12
  • 13. Determinants of Customers’ Evaluation of a Service  The outcome and the process of the service delivery  Whether the service is routine or nonroutine© Professor A. Parasuraman; not to be reproduced or disseminated without permission 13
  • 14. A Common Disconnect between Companies and Customers Customers affected ……and perhaps by this Nature of Service disproportionately by this…… Routine Nonroutine Process Service Delivery Outcome Most customer svc. ……and perhaps standards fall some fall here here……© Professor A. Parasuraman; not to be reproduced or disseminated without permission 14
  • 15. From a Company’s Perspective…  Delivering superior service quality on a sustained basis is a major challenge  This challenge arises because of four key internal deficiencies or ―gaps‖ within the organization© Professor A. Parasuraman; not to be reproduced or disseminated without permission 15
  • 16. Conceptual Model of Service Quality – GAPS Model CUSTOMER SERVICE ORGANIZATION Organization’s Market Service Understanding of Information Standards Customers’ Expectations Gap Gap Service Expectations Organization’s GAP 1 Service Standards GAP 2 Service Quality GAP 5 Service Performance Gap GAP 3 Gap GAP 4 Customers’ Organization’s Service Service Perceptions Performance Organization’s Internal Communications Communication to Customers Gap© Professor A. Parasuraman; not to be reproduced or disseminated without permission 16
  • 17. GAP 1: Market Information Gap Do you have an accurate understanding of customers’ expectations? No or not sure© Professor A. Parasuraman; not to be reproduced or disseminated without permission 17
  • 18. GAP 2: Service Standards Gap Do you have service standards and are they aligned with customers’ expectations? No or not sure© Professor A. Parasuraman; not to be reproduced or disseminated without permission 18
  • 19. GAP 3: Service Performance Gap Does your service delivery meet your own internal standards? No or not sure ―McDonald’s Finds Angry Customers on Its Menu‖ -The Wall Street Journal© Professor A. Parasuraman; not to be reproduced or disseminated without permission 19
  • 20. GAP 4: Internal Communication Gap Are all your interfaces and interactions with your customers synchronized? No or not sure© Professor A. Parasuraman; not to be reproduced or disseminated without permission 20
  • 21. Prerequisite for Superior Customer Experience Close Gaps 1-4 & hence Gap 5!© Professor A. Parasuraman; not to be reproduced or disseminated without permission 21
  • 22. An Important Implication of the Four Organizational Gaps The internal organizational gaps not only lead to poor service quality but also adversely affect service productivity!© Professor A. Parasuraman; not to be reproduced or disseminated without permission 22
  • 23. Svc. Gaps—Svc. Productivity Link Organizational Gaps Managerial: Gaps 1&2 Employee/Systems: Gaps 3&4 Resource Misallocation and Customer Frustration Focus on ―wrong‖ attributes Service delivery deficiencies Opportunities for Improving Service Productivity Reallocation of resources Better customer service© Professor A. Parasuraman; not to be reproduced or disseminated without permission 23
  • 24. A Dual Conceptualization of Service Productivity: A Second Look Company’s Perspective Customer’s Perspective Inputs Inputs ─ [Labor, Equipment, [Time, Effort, Emotional Technology, etc.] Energy, etc.] + ─ Productivity Service Productivity + Quality + Outputs Outputs [Sales, Profits, Market [Service Performance, Share, etc.] + Satisfaction, etc.]© Professor A. Parasuraman; not to be reproduced or disseminated without permission 24
  • 25. Role of Technology in Service Delivery The ―Technology Readiness‖ Construct and Its Implications© Professor A. Parasuraman; not to be reproduced or disseminated without permission 25
  • 26. Pyramid Model of Services Marketing Technology© Professor A. Parasuraman; not to be reproduced or disseminated without permission 26
  • 27. An Important Implication of the Pyramid Model An organization’s ability to use technology effectively in marketing to and serving customers critically depends on the technology readiness of its customers and employees© Professor A. Parasuraman; not to be reproduced or disseminated without permission 27
  • 28. What is Technology Readiness? Technology Readiness [TR] refers to ―people’s propensity to embrace and use new technologies for accomplishing goals in home life and at work‖© Professor A. Parasuraman; not to be reproduced or disseminated without permission 28
  • 29. Drivers of Technology Readiness Contributors Optimism Innovativeness Technology Readiness Inhibitors Discomfort Insecurity© Professor A. Parasuraman; not to be reproduced or disseminated without permission 29
  • 30. TR Scores by Dimension and Overall TRI* 4,5 4 3,5 3 Mean 2,5 TR 2 Scores 1,5 1 0,5 0 OPT INN DIS INS TRI 1999 . 2000 . 2001 2002 . 2004 . 2006 2007 2009*Data are for U.S.A.© Professor A. Parasuraman; not to be reproduced or disseminated without permission 30
  • 31. Five TR-Based Customer Segments Optimism Innovative Discomfort Insecurity -ness Explorers High High Low Low Pioneers High High High High Skeptics Low Low Low Low Paranoids High Low High High Laggards Low Low High High© Professor A. Parasuraman; not to be reproduced or disseminated without permission 31
  • 32. High-Tech versus High-Touch Customer Service High Explorers Appeal of High-Tech Service Channels Pioneers Skeptics Paranoids Laggards Low Low High Appeal of High-Touch Service Channels© Professor A. Parasuraman; not to be reproduced or disseminated without permission 32
  • 33. An Important Implication of Technology Readiness To be effective, the implementation of any technology-based service innovation has to take into account the technology readiness of its intended users© Professor A. Parasuraman; not to be reproduced or disseminated without permission 33
  • 34. Typology of Service Innovations Impact on Svc. Productivity: Co. Perspective Favorable Unfavorable Favorable Win-Win Unaffordable Impact on Svc. Productivity: Customer Perspective Unfavorable Short-sighted Dumb© Professor A. Parasuraman; not to be reproduced or disseminated without permission 34
  • 35. Service Innovation Should Ideally Lead to Service Enhancements That:  Take into account customers’ service expectations (as well as their resources/capabilities)  Increase service productivity from both company and customer perspectives  Focus not only on developing completely new services but also on the process of service delivery© Professor A. Parasuraman; not to be reproduced or disseminated without permission 35
  • 36. Evolution Required for Effective Service Enhancements Service Productivity Service Productivity Service Service Service Service Quality Innovation Quality Innovation© Professor A. Parasuraman; not to be reproduced or disseminated without permission 36
  • 37. Critical Issues Worthy of Scholarly Research  Mathematical/analytical modeling of tradeoffs between the two conceptualizations of service productivity  Metrics for operationalizing input and output constructs embedded in the dual conceptualization of service productivity  Approaches for assessing and classifying service enhancements into the productivity-based typology  Refining the two-dimensional typology – e.g., by adding dimensions such as ―ease of resource transfer‖© Professor A. Parasuraman; not to be reproduced or disseminated without permission 37
  • 38. Critical Issues Worthy of Scholarly Research (continued)  Exploring ways for fostering greater inter-functional collaboration—particularly among marketing, operations, human resources, and accounting/finance—when developing service innovations  Developing process innovations that focus specifically on improving the efficiency and effectiveness of service recovery© Professor A. Parasuraman; not to be reproduced or disseminated without permission 38
  • 39. Sources of Additional Information www.technoreadymarketing.com© Professor A. Parasuraman; not to be reproduced or disseminated without permission 39
  • 40. Sources of Additional Information Parasuraman, A. ―Service Productivity, Quality and Innovation: Implications for Service-Design Practice and Research,‖ International Journal of Quality and Service Sciences, Vol. 2, Issue 3, 2010, pp. 277-286.© Professor A. Parasuraman; not to be reproduced or disseminated without permission 40
  • 41. Thank You!© Professor A. Parasuraman; not to be reproduced or disseminated without permission 41