Customer satisfaction and service quality Module 3 (b) Lovelock, chapter 4 (pp.99-128) including appendix Selected Reading 3.1

Satisfaction and service quality Prior attitude PSQ t-1 Expectations Performance Disconfirmation CS or DS PSQ t+1

Figure 4.7 Relationship between satisfaction and service quality CS/D with various service encounters Revised PSQ perceptions Existing level of PSQ PSQ, CS/D Time

Lecture overview Measuring service quality ServQual model Gaps model of service quality Reasons for the gaps Strategies for closing the gaps Measure customer satisfaction

Measuring service quality

ServQual model

Gaps model of service quality

Reasons for the gaps

Strategies for closing the gaps

Measure customer satisfaction

Group activity: What is good customer service? What comprises ‘good’ customer service? Could one group member please describe one ‘good’ customer service experience What made it ‘good’? Could one group member please describe one ‘bad’ customer service experience What made it ‘bad’?

What comprises ‘good’ customer service?

Could one group member please describe one ‘good’ customer service experience

What made it ‘good’?

Could one group member please describe one ‘bad’ customer service experience

What made it ‘bad’?

Measuring service quality: SERVQUAL Model ( Parasuraman, Zeithaml & Berry 1985, 1988) Service Quality Reliability Responsiveness Assurance Empathy Tangibles

ServQual dimensions Refer to table 4.1, p. 101 Reliability dependability delivering on promises accuracy consistency Responsiveness promptness helpfulness Get it right the first time! and on time!

Refer to table 4.1, p. 101

Reliability

dependability

delivering on promises

accuracy

consistency

Responsiveness

promptness

helpfulness

Assurance competence courtesy credibility security Empathy easy access good communication customer understanding personalised attention Tangibles physical evidence I feel safe They listen to me People look smart

Assurance

competence

courtesy

credibility

security

Empathy

easy access

good communication

customer understanding

personalised attention

Tangibles

physical evidence

The gaps model of service quality Where are things going wrong? What leads to poor service quality Gaps model of service quality Refer to fig 4.8, p. 103, Reading 3.1 Customer gap (Gap 5) difference between customer’s expectations and perceptions of performance Four provider gaps each may lead to the customer gap

Where are things going wrong?

What leads to poor service quality

Gaps model of service quality

Refer to fig 4.8, p. 103, Reading 3.1

Customer gap (Gap 5)

difference between customer’s expectations and perceptions of performance

Four provider gaps

each may lead to the customer gap

The Gaps Model of Service Quality Marketer Consumer Past experience Expected service Perceived service Service delivery (including pre- and post-contacts) External communications to consumers Translations of perceptions into service quality specifications Management perceptions of consumer expectations GAP 5 GAP 3 GAP 2 GAP 1 GAP 4 Personal needs Word-of-mouth communications

Not knowing what customers expect Not selecting the right service standards and designs Not delivering to service standards Not matching performance to promised Customer expectations Customer perceptions Reasons for Customer Gap 5

Not knowing what customers expect

Not selecting the right service standards and designs

Not delivering to service standards

Not matching performance to promised

Inadequate marketing research orientation Lack of upward communication Insufficient relationship focus Inadequate service recovery Customer’s expectations Company’s perceptions of customer expectations Reasons for provider gap I

Inadequate marketing research orientation

Lack of upward communication

Insufficient relationship focus

Inadequate service recovery

Poor service design Absence of customer-defined service standards Inappropriate physical evidence and servicescape Translation of perceptions into service quality specifications Management perceptions of customer expectations Reasons for provider gap 2

Poor service design

Absence of customer-defined service standards

Inappropriate physical evidence and servicescape

Poor human resource policies Failure to match supply and demand Customer not fulfilling their roles Problems with service intermediaries Service delivery Customer-driven service designs and standards Reasons for provider gap 3

Poor human resource policies

Failure to match supply and demand

Customer not fulfilling their roles

Problems with service intermediaries

Lack of integration of marketing communications Inadequate management of customer expectations Overpromising Inadequate horizontal communications External communications to consumers Service delivery Reasons for provider gap 4

Lack of integration of marketing communications

Inadequate management of customer expectations

Overpromising

Inadequate horizontal communications

Closing the gaps Refer to table 4.2, p. 104 Gap 1: Learn what customers expect Gap 2: Establish the right service quality standards Gap 3: Ensure that service performance meets standards Gap 4: Ensure that delivery matches promises

Refer to table 4.2, p. 104

Gap 1: Learn what customers expect

Gap 2: Establish the right service quality standards

Gap 3: Ensure that service performance meets standards

Gap 4: Ensure that delivery matches promises

Closing gap 1: Learn what customers expect Use research, complaint analysis, customer panels Increase direct interactions between managers and customers Improve upward communications Act on information and insights listen to customers

Use research, complaint analysis, customer panels

Increase direct interactions between managers and customers

Improve upward communications

Act on information and insights

Closing gap 2: Establish the right service quality standards Top management commitment to providing service quality Set, communicate, and reinforce customer-oriented service standards Establish challenging and realistic service quality goals Train managers to be service quality leaders Be receptive to new ways to deliver service quality Standardise repetitive tasks

Top management commitment to providing service quality

Set, communicate, and reinforce customer-oriented service standards

Establish challenging and realistic service quality goals

Train managers to be service quality leaders

Be receptive to new ways to deliver service quality

Standardise repetitive tasks

Prioritise tasks Gain employee acceptance of goals and priorities Measure performance of service standards and provide regular feedback Reward managers and employees for achievement of quality goals Service Quality Awards

Prioritise tasks

Gain employee acceptance of goals and priorities

Measure performance of service standards and provide regular feedback

Reward managers and employees for achievement of quality goals

Closing gap 3: Ensure that service performance meets standards Attract the best employees Select the right employees Develop and support employees train employees provide appropriate technology & equipment encourage and build teamwork empower employees internal marketing Can I take your order?

Attract the best employees

Select the right employees

Develop and support employees

train employees

provide appropriate technology & equipment

encourage and build teamwork

empower employees

internal marketing

Retain good employees measure and reward service quality achievements develop equitable and simple reward systems You are a Star Service Provider

Retain good employees

measure and reward service quality achievements

develop equitable and simple reward systems

Closing gap 4: Ensure that service delivery matches promises Seek input from operations personnel on what can be done ‘ Reality’ advertising real employees, real customers, real situations Seek input from employees on advertising Gain communications between sales, operations and customers Internal marketing programs Ensure consistent standards in multi-site operations

Seek input from operations personnel on what can be done

‘ Reality’ advertising

real employees, real customers, real situations

Seek input from employees on advertising

Gain communications between sales, operations and customers

Internal marketing programs

Ensure consistent standards in multi-site operations

In advertising, focus on service characteristics that are important to customers Manage customer’s expectations What are realistic expectations? Explain industry realities Tiered service options Offer different levels of service - user pays Why do we always have to wait?

In advertising, focus on service characteristics that are important to customers

Manage customer’s expectations

What are realistic expectations?

Explain industry realities

Tiered service options

Offer different levels of service - user pays

Service Satisfaction Information System Customer Complaints Surveys Employee Surveys Focus Groups ‘ Mystery shopping’ research Competitive market surveys - benchmark

Customer Complaints

Surveys

Employee Surveys

Focus Groups

‘ Mystery shopping’ research

Competitive market surveys - benchmark

Measuring Satisfaction Qualitative Research Understand key drivers / determinants Questionnaire design Data analysis Service performance index (SPI) Importance - performance analysis

Qualitative Research

Understand key drivers / determinants

Questionnaire design

Data analysis

Service performance index (SPI)

Importance - performance analysis

Figure 4.11 The determinants (drivers) of satisfaction for telecommunications services * CSR = Customer Service Representative Customer expectations Attributes Business processes ( key drivers ) Installed when promised etc. etc. Installation Quick response to enquiries Possess product knowledge CSR* takes ownership of problem Personalised service Customer service Always first understand customer’s needs Use customer’s name Be friendly and courteous Practise empathy Call quality Repairs Billing Be friendly and courteous Give customer your name Overall Satisfaction

Figure 4.12 Linking customer expectations to internal service standards Quick response to enquiries Number of monthly complaints about slow service All mail enquiries processed within 1 working day In 95% of calls, CSR is capable of taking responsibility for outcome Less than 5% abandoned call rate 95% of calls answered within 3 rings Attribute Internal service standards

Figure 4.14 Scatter diagrams showing correlations between drivers and the impact of each driver on overall satisfaction High positive correlation r = + 0.71 Overall Satisfaction Customer service performance Low positive correlation r = + 0.31 Overall Satisfaction Performance on repairs

Table 4.3 Correlation coefficients between key drivers (business processes) and overall satisfaction Driver (business process) Correlation coefficient (r) Installation Customer service Call quality Repairs Billing 0.19 0.71 0.62 0.31 0.42

Table 4.4 Estimated multiple regression model: example Y = 0.117+0.055X 1 +0.376X 2 +0.331X 3 +0.173X 4 +0.169X 5 where: Y = Overall satisfaction X 1 = Installation X 2 = Customer service X 3 = Call quality X 4 = Repairs X 5 = Billing

Figure 4.15 Importance-performance matrix High importance Low importance Low performance High performance Focus improvement efforts here Maintain performance Reduce emphasis Medium-low priority X 1 X 2 X 3 X 5 X 4 Legend: X 1 Installation; X 2 Customer Service;X 3 Call quality; X 4 Repairs; X 5 Billing

Summary Customer satisfaction definition benefits factors that influence customer satisfaction the disconfirmation of expectations model four types of expectations zone of indifference

Customer satisfaction

definition

benefits

factors that influence customer satisfaction

the disconfirmation of expectations model

four types of expectations

zone of indifference

Summary ServQual - five dimensions of service quality reliability, responsiveness, assurance, empathy and tangibles Gaps model of service quality Reasons for the gaps Closing the gaps Measuring customer satisfaction & service quality

ServQual - five dimensions of service quality

reliability, responsiveness, assurance, empathy and tangibles

Gaps model of service quality

Reasons for the gaps

Closing the gaps

Measuring customer satisfaction & service quality

Tutorial Case 14 –Chiva Som p. 523 Review questions 7, 8, 9 & 10

Case 14 –Chiva Som p. 523

Review questions 7, 8, 9 & 10