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.

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.

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.

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.

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

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

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

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 Task : Doing work incorrectly Treatment : Failure to listen to customer Tangible : Failure to wear clean uniform Customer Errors Preparation : Failure to bring necessary materials Encounter : Failure to follow system flow Resolution : Failure to signal service failure

Server Errors

Task :

Doing work incorrectly

Treatment :

Failure to listen to customer

Tangible :

Failure to wear clean uniform

Customer Errors

Preparation :

Failure to bring necessary materials

Encounter :

Failure to follow system flow

Resolution :

Failure to signal service failure

House of Quality

Achieving Service Quality Cost of Quality (Juran) Service Process Control Statistical Process Control (Deming) Unconditional Service Guarantee

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

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 Resources Identify reason for nonconformance Establish measure of performance Monitor conformance to requirements Take corrective action Service concept Customer input Customer output Service process

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

Cons: Nothing to measure but time

Pros: Consistency is at least as important as performance

For high performers

Limited impact for low performers

Control Chart of Departure Delays expected Lower Control Limit 1998 1999

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 (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

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

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 Dissatisfaction occurs Action No Action Public Action Private Action Seek redress directly from the firm Take legal action Complaint to business, private, or governmental agencies Stop buying the product or boycott the seller 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.

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

Action Taken Based on Level of Dissatisfaction

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.

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 of its services; loyal Remain Loyal Defect Missing in action Detractors Defected; Defected; non-complaining vocally critical not easy don’t complain complain Propensity to contact British Airways How easy customers feel it is to contact British Airways

easy

Walking wounded Champions

Could complain but don’t; Active in providing

not happy but repurchase British Airways with

information on quality

of its services; loyal

Remain Loyal

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?

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?

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?