Ass. Prof. Ozge Ozgen - Managing through excellence


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Managing Through Excellence
Dr Ozge Ozgen
Olympia, Greece

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Ass. Prof. Ozge Ozgen - Managing through excellence

  1. 1. 04.11.2012 Basic Differences of Services Customers do not obtain ownership Olympian Summer School Intangible performances Managing through Excellence in Services Marketing Customer Involvement in the production process People as part of the product Greater variability in operational inputs and outputs Harder for customers to evaluate Importance of time factor Assist. Prof. Dr. Ozge Ozgen Department of International Business and Trade Faculty of Business, Dokuz Eylul University, Izmir - Turkey July 29, 2012 - Olympia Summer Schools - 2012Service Excellence Being in a journey, not a destination requires insistence and consistence A goal that you attain with people, not something that you do to people Hard to grasp Summer Schools - 2012 Summer Schools - 2012 1
  2. 2. 04.11.2012Service Excellence Understanding of Service Excellence (Johnston, 2004) Meeting customers’ present needs, anticipating prospective Delivering the promise Service Quality needs and enhancing on-going relationship  Achieving customer delight Providing personal touch Customization Satisfaction vs. delight Going the extra mile Understanding the Customer Needs Satisfaction is judgement (perfomance>expectations) Dealing with problems Service Recovery Emotions, such as delight, are human affects resulting from judgements about satisfaction with a service. Delight is “an expression of very high satisfaction” resulting from surprisingly good performance (Oliver, Rust and Varki, 1997) Delight = Joy + Surprise (Plutchik, 1980) Summer Schools - 2012 Summer Schools - 2012Different Perspectives of Service Quality Service Quality and Understanding Customer Needs: Three Models Product-based: Quality is precise and measurable User-based: Quality lies in the eyes of the beholder SERVQUAL (Parasuraman, Zeithaml and Berry, 1988) Manufacturing-based: Quality is in conformance to the firm’s KANO (Kano, Seraku, Takahashi and Tsjui, 1984) developed specifications QUALITY FUNCTION DEPLOYMENT (Akao, 1990) Value-based: Quality is a trade-off between price and value Summer Schools - 2012 Summer Schools - 2012 2
  3. 3. 04.11.2012Components of Quality: Manufacturing-based Components of Quality: Service-based Performance: Primary operating characteristics Tangibles: Appearance of physical elements Features: Bells and whistles Reliability: Dependable and accurate performance Reliability: Probability of malfunction or failure Responsiveness: Promptness; helpfulness Conformance: Ability to meet specifications Assurance: Competence, courtesy, credibility, security Durability: How long product continues to provide value to Empathy: Easy access, good communication, understanding of customer customer Serviceability: Speed, courtesy, competence Esthetics: How product appeals to users Perceived Quality: Associations such as brand name Summer Schools - 2012 Summer Schools - 2012 Other Considerations inCapturing the Customer’s Perspective of Service Quality: Service Quality MeasurementSERVQUAL (1) Services high in credence characteristics may cause consumers Survey research instrument based on premise that customers to use process factors and tangible cues as proxies to evaluate evaluate firm’s service quality by comparing quality—halo effect Their perceptions of service actually received Their prior expectations of companies in a particular industry Time constraints Process factors: Customers’ feelings Perceived performance ratings vs. expectations Scale contains 22 items reflecting five dimensions of service quality Subsequent research has highlighted some limitations of SERVQUAL Summer Schools - 2012 Summer Schools - 2012 3
  4. 4. 04.11.2012 Seven Service Quality Gaps (5-Gaps Model created by Parasuraman, Zeithaml, and Berry, 1985) Customer needs and CUSTOMER expectations 1. Knowledge Gap MANAGEMENT Management definition of these needs The Gaps Model—A Conceptual Tool to 2. Standards Gap Identify and Correct Service Quality Translation into design/delivery specs 4. Internal Communications Problems 3. Delivery Gap Execution of Gap Advertising and sales 4. design/delivery specs promises 5. Perceptions Gap 6. Interpretation Gap Customer perceptions of Customer interpretation of service execution communications 7. Service Gap Customer experience relative to expectations Summer Schools - 2012 Summer Schools - 2012 KANO Model Quality Function Deployment Eg: Gas consumption Eg: MP3 Player 1. What are the qualities the customer desire? according to driver’s mood 2. What function(s) must this product serve and what functions must we use to provide this product or service? 3. Based upon the resources we have available, how can we Eg: Good brakes best provide what our customer wants?Source: Berger, C., Blauth R., Boger D., et al. (1993), “A Special Issue onKano’s Methods for Understanding Customer-defined Quality”, Center forQuality of Management Journal, 2 (4), p. 4. Summer Schools - 2012 Summer Schools - 2012 4
  5. 5. 04.11.2012 Go to GEMBA, Listen Your Customer GEMBA: the place where the real action takes place, where a consumer puts the good or service that he/sheHouse of Quality bought into use See customers in action to understand their unknown unspoken needs. If you will analyze the Olympia, where is GEMBA? 04.11.2012 18 Summer Schools - 2012 Summer Schools - 2012 Soft and Hard Measures of Service Quality Soft measures— not easily observed, must be collected by talking Measuring and Improving to customers, employees, or others Service Quality Hard measures— can be counted, timed, or measured through audits Summer Schools - 2012 Summer Schools - 2012 5
  6. 6. 04.11.2012Cause-and-Effect Chart for Improving Service Productivity:Flight Departure Delays (1) Operations-driven Strategies Facilities, Frontstage Procedures Control costs, reduce waste Front-Stage Procedures Equipment Personnel Personnel Set productive capacity to match average demand Aircraft late to Gate agents Delayed check-in Automate labor tasks Arrive late gate cannot process procedure Oversized bags Mechanical fast enough Acceptance of late Upgrade equipment and systems Customers Failures Customers Late/unavailable passengers Late pushback airline crew Train employees Delayed Broadening array of tasks that a service worker can perform Departures Late food Late cabin Leverage less-skilled employees through expert systems service cleaners Other Causes Poor announcement of Service process redesign Weather Late baggage departures Air traffic Late fuel Weight and balance sheet late Materials, Materials, Backstage Information Supplies Supplies Personnel Summer Schools - 2012 Summer Schools - 2012 Service Failures Olympian Summer School the situation in which the prospective outcomes of a service process or the process itself cannot be accomplished by the service provider and cannot meet the customers’ former expectations Summer Schools - 2012 6
  7. 7. 04.11.2012Long Waiting Times May Indicate Needfor Service Process Redesign Types of Service Failures • Service system failure • Failures in implicit or explicit customer requests 1st Classification • Unprompted and unsolicited employee actions • Outcome failure • Process failure 2nd • Outcome and Process Failure Classification Summer Schools - 2012 Summer Schools - 2012Types of Service Failures (1 st Classification) Types of Service Failures (1 st Classification) Service system failure Failures in implicit or explicit customer requests: unavailable service This occurs chiefly when employees are unable to comply • delayed flight or the hotel’s making excess reservation with the customer’s individual needs • food not cooked to order slow service without reason • seating problems • delay of meal in a restaurant • seating smokers in non-smoking section other core service failures • not to find specific menu for a vegetarian • cold food or loss of package during freight transportation Summer Schools - 2012 Summer Schools - 2012 7
  8. 8. 04.11.2012Types of Service Failures (1 st Classification) Types of Service Failures (2 nd Classification) Outcome failure Unprompted and unsolicited employee actions: some aspect of the core service is not delivered This includes behavior of employees that is unacceptable to customers room is unclean, flight is delayed • level of attention (ignoring the customer) Process failure • unusual actions (abusive and improper touching) the core service is delivered in a deficient manner • cultural norms front-desk personnel of hotel is impolite • Gestalt (customer evaluating the whole of the holiday as dissatisfaction without identifying a certain reason) • adverse conditions (employee behavior under stressful event) Summer Schools - 2012 Summer Schools - Understanding Customer He makes me hate life and management. Maybe he should change his clothes once in awhile? Run away from this guy. Responses to Service Failure You can’t cheat in her class, because no one knows the answers. BORING! But I learned there are 137 tiles on the ceiling. Why do customers complain? He will destroy you like an academic ninja. A. Had unhappy childhoods?customers complain? What proportion of unhappy His class was like milk. It was good for just two weeks. B. Do they have a genetical problem? All the professors in the world should attend at least one of his Why don’t unhappy customers complain? C. Have trouble in their primary relationships? lectures, so they know what is a real teaching Where do customers complain? Houston we have a problem. What do customers expect once they have made a complaint? Summer Schools - 2012 Summer Schools - 2012 8
  9. 9. 04.11.2012 Customer Response Categories to Service Why don’t Customers Complain? Failures Don’t know how to complain to Complain to the service firm Don’t think it will do any good May doubt their own subjective evaluation Take some form of Complain to a third public action party May want to avoid confrontation May lack expertise Take some form of Take legal action to Dissatisfactory service private action seek redress Defect Customers often view complaining as difficult Take no action (switch provider) and unpleasant Negative word-of-mouth Summer Schools - 2012 Summer Schools - 2012Complaining Outcomes Service Recoveries Voice Exit Retaliation all the actions taken by the service provider in order to diminish the effects of the failure or fix the problem or even HIGH: HIGH: HIGH: eliminate it totally, Never purchases Tells lots of people and Store manager again attempts to physically under the conditions that the organization meets the failure damage MEDIUM: via complaints or some other sources etc. MEDIUM: MEDIUM: Sales clerk Only purchases if to correct the failure at first hand other alternatives tell a few people and are not available created minor to eliminate all of the prospective negative effects inconveniences LOW: LOW: No one associated Continue to shop as LOW: with the store usual does not retaliate at all Summer Schools - 2012 Summer Schools - 2012 9
  10. 10. 04.11.2012 Service Recovery Strategies Importance of Service Recovery Discount The effects on trust, customer satisfaction and loyalty Replacement Positive vs. negative word-of-mouth Refund Recovery paradox was developed by Etzel and Silverman (1981) No charge “it may be those who experience the gracious and efficient Gift giving handling of a complaint who become a company’s best Apology customer.” Failure escalation “a good recovery can turn angry, frustrated customers into loyal ones.” Nothing Note: Not all research support this paradox Summer Schools - 2012 Summer Schools - 2012 Your Tokyo flight delayedJustice Theory one day and you have to delay your all appointments in Tokyo. Perceived Justice Distributive Justice Procedural Justice Interactional JusticeRelates with Relates with the Relates with theoutcome of service treatment of methods of processing SERVICE RECOVERY OPTIONSrecovery employees during complaints and service complaint handling He waits 6 hours in airport than airline company arrange a hotel or recovery in one hour he goes to hotel.• Refund • Accessibility Employees’ Airline company provides free hotel for him or they arrange• Discounts • Timing • Empathy another flight from another airline company in two hours.• Gifts • Speed • Courtesy Employees of airline company do not inform passengers about • Flexibility • Sensitivity delay and its reasons or they are so professional and sensitive to Summer Schools - 2012 • Treatment all passengers. 10
  11. 11. 04.11.2012How to Enable Effective Service Recovery CRISIS IN SERVICES Be proactive—on the spot, before customers complain The cumulative impact of service failures may result in crisis Plan recovery procedures Characteristics of a crisis Teach recovery skills to relevant personnel Crises involve a wide range of stakeholders Empower personnel to use judgment and skills to develop There are time pressures requiring an urgent response recovery solutions A crisis usually results from a surprise to the organization There is a high degree of ambiguity, in which cause and effects are unclear A crisis creates a significant threat to an organization’s strategic goals Summer Schools - 2012 Summer Schools - 2012Crisis Response Strategies Air France Crash Defensive strategies Accommodative strategies full apology attack the corrective accuser action denial Summer Schools - 2012 Summer Schools - 2012 11
  12. 12. 04.11.2012 Response of Air France Earlier, Air France chief executive Pierre-Henri Gourgeon told reporters: "We are without a doubt faced with an air disaster." He added: "The entire company is thinking of the families and shares their pain." Bernardo Souza, who said his brother and sister-in-law were From press release of Air France on the flight, complained he had received no details from Air Air France is doing its utmost to provide support for relatives and friends. France. Medical and psychological assistance involving 15 specialist physicians has been set up at Paris-Charles de Gaulle 2 and Rio de Janeiro "I had to come to the airport but when I arrived I just found airports. an empty counter," he was quoted as saying by Reuters Some one hundred voluntary members of Air France staff are backing up the teams in Paris-Charles de Gaulle and Rio de Janeiro. news agency. Air France has also established a special toll-free number for the relatives and friends of passengers. Summer Schools - 2012 Summer Schools - 2012It is all about emotions... Emotions are also another important outcome of the service recovery Summer Schools - 2012 Summer Schools - 2012 12
  13. 13. 04.11.2012Key References Akao, Y. (ed.) (1990), Quality Function Deployment: Integrating Customer Requirements into Product Design, Productivity Press, Cambridge, MA. Berger, C., Blauth R., Boger D., et al. (1993), “A Special Issue on Kano’s Methods for Understanding Customer-defined Quality”, Center for Quality of Management Journal, 2 (4). Coombs, W. T. (1998), “An analytic framework for crisis situations: Better responses from a better understanding of the situation”, Journal of Public Relations Research, Vol.10, pp. 177- 191. Johnston, R. (2004) “Towards a Better Understanding of Service Excellence”, Managing Service Quality, 14(2/3), 129-133. Kano, N., N. Seraku, F. Takahashi ve S. Tsjui, (1984), "Attractive Quality and Must-be Quality", Hinshitsu, 14(2), 147-56. Mattila A. (2001). The effectiveness of service recovery in a multi industry setting. Journal of Services Marketing, 15(7), 583-596. Maxham III, J.G., (2001). Service recovery’s influence on consumer satisfaction, positive word- of-mouth, and purchase intentions. Journal of Business Research, 54(1), 11-24. Oliver, R. L., Rust, R. T., and Varki S. (1997) “Customer Delight: Foundations, Findings and Managerial Insight”, Journal of Retailing, 73, Fall, 311-336. Parasuraman A., Zeithaml, V. A., and Berry L. L. (1985) “A Conceptual Model of Service Quality and Its Implications for Future Research”, Journal of Marketing, 49, Fall, 41-50. Thanks for listening... Plutchik, R. (1980), Emotion: A Psychoevolutionary Synthesis, New York: Harper & Row. Smith, A.K., Bolton, R.N. & Wagner, J. (1999). A model of customer satisfaction with service encounters involving failure and recovery. Journal of Marketing Research, 36, August, 356-372. Summer Schools - 2012 Summer Schools - 2012 13