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Chapter 06Service Quality

McGraw-Hill/IrwinService Management: Operations, Strategy, and

Information Technology, 6e Copyright © 2008 by The McGraw-Hill Companies, Inc. All Rights Reserved.

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Learning Objectives

Describe and illustrate the five dimensions of service quality.

Use the service quality gap model to

diagnose quality problems. Illustrate how poka-yoke methods are

applied to quality design in services.

Perform service quality function deployment.

Construct a statistical process control chart.

Develop unconditional service guarantees.

Discuss the concept of a service recovery.

Perform a walk-through audit (WtA) 6-2

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Moments of Truth Each customer contact is called a

moment of truth.

You have the ability to either satisfy ordissatisfy them when you contact them.

A service recovery is satisfying apreviously dissatisfied customer and

making them a loyal customer. 6-3

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Dimensions of Service Quality Reliability : Perform promised service

dependably and accurately. Example:

receive mail at same time each day.

Responsiveness : Willingness to helpcustomers promptly. Example: avoid

keeping customers waiting for noapparent reason.

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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 andfacilitating goods. Example:cleanliness.

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Perceived Service QualityWord of

mouth

Personal

needs

Past

experience

Expected

service

Perceived

service

Service QualityDimensions

Reliability

Responsiveness

Assurance

EmpathyTangibles

Service Quality Assessment 1. Expectations exceeded

ES<PS (Quality surprise)

2. Expectations met

ES~PS (Satisfactory quality)

3. Expectations not metES>PS (Unacceptable quality)

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Service Quality Gap Model

Customer

Perceptions

Customer

Expectations

Service

Delivery

Service

Standards

Management

Perceptions

of CustomerExpectations

Managing the

Evidence

Conformance Service Design

Understanding

the Customer

Customer Satisfaction

GAP 5

Customer /

Marketing Research

GAP 1

Conformance

GAP 3

Communication

GAP 4

Design GAP 2

Service Quality Gap Model

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Quality Service by Design

Quality in the Service PackageBudget Hotel example

Poka-yoke (fail-safing)Height bar at amusement park

Quality Function Deployment

House of Quality

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Classification of Service Failures

Server Errors

Task :

Doing work incorrectly

Treatment :

Failure to listen to customer

Tangible :Failure to wear cleanuniform

Customer Errors

Preparation :

Failure to bring necessarymaterials

Encounter :

Failure to follow systemflow

Resolution:

Failure to signal servicefailure

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House of Quality

I m p o r t a n c e

R e l a t

i v e

1 2 3 4 5Customer Expectations

Reliability

Responsiveness

Assurance

Empathy

Tangibles

Comparison with Volvo Dealer

Weighted score

Improvement difficulty rank

O O

O Weak

Medium

* Strong

9

9

9

T r a i n i n g

A t t i t u d e

C a p a c i t y

I n f o r m a t i i o n

E q u i p m e n t

8

7

7

6 6

5 5

5

5

4

4

3 3

3

3

2

2 2

2

+

_

+

Customer Perceptions

o

+

+

+

o

o

o

o

+

o

o

o

o

o

o Village Volvo

+ Volvo Dealer

Service Elements

Relationships

12782 63 102 65

1

* *

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Achieving Service Quality Cost of Quality (Juran)

Statistical Process Control (Deming)

Unconditional Service Guarantee

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Costs of Service Quality

(Bank Example)Failure costs Detection costs Prevention costs

External failure : Process control Quality planning

Loss of future business Peer review Training program

Negative word-of-mouth Supervision Quality auditsLiability insurance Customer comment card Data acquisition and analysis

Legal judgments Inspection Recruitment and selection

Interest penalties Supplier evaluation

Internal failure:

Scrapped formsRework

Recovery:

Expedite disruption

Labor and materials

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Control Chart of Departure Delays

60

70

80

90

100

P

e r c e n t a g e o

f o n t i m e

f l i g h t s

expected

Lower Control Limit

1998 1999

n

p p pUCL

1(3

n

p p p LCL

1(3

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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)

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Unconditional Service Guarantee:

Management View Focuses on customers (British Airways)

Sets clear standards (FedEx)

Guarantees feedback (Manpower)

Promotes an understanding of theservice delivery system (Bug Killer)

Builds customer loyalty by makingexpectations explicit

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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 willdelight them by exceeding theirexpectations and insure their return

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Customer Feedback andWord-of-Mouth

The average business only hears from 4% of their customers whoare dissatisfied with their products or services. Of the 96% whodo not bother to complain, 25% of them have serious problems.

The 4% complainers are more likely to stay with the supplier thanare the 96% non-complainers.

About 60% of the complainers would stay as customers if theirproblem was resolved and 95% would stay if the problem was

resolved quickly.

A dissatisfied customer will tell between 10 and 20 other peopleabout their problem.

A customer who has had a problem resolved by a company will tell

about 5 people about their situation. 6-17

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Service Recovery Framework

Patronag

e

Loyalty

Satisfactio

n

Retention

Severity

Of

Failure

Perceived

Service

Quality

Psychological

-empathy

-apology

Tangible

-fair fix

-value add

Psychological

-apology

-show interest

Follow-up

Service

Recovery

Tangible

-small token

Service

Recovery

Expectations

Service

Recovery

Customer

Loyalty

Service

GuaranteeSpeed of

RecoveryFrontline

Discretion

Service

Failure

Occurs

Provider

Aware

of

Failure

Fair

Restitutio

n

Pre-recovery Phase Immediate Recovery Phase Follow-up Phase6-18

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Approaches to ServiceRecovery

Case-by-case addresses each customer’scomplaint individually but could lead toperception of unfairness.

Systematic response uses a protocol tohandle complaints but needs prioridentification of critical failure points andcontinuous updating.

Early intervention attempts to fix problembefore the customer is affected.

Substitute service allows rival firm to provideservice but could lead to loss of customer.

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Walk-Through-Audit

Service delivery system should conformto customer expectations.

Customer impression of serviceinfluenced by use of all senses.

Service managers lose sensitivity due to

familiarity. Need detailed service audit from a

customer’s perspective.

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Topics for Discussion

How do the five dimensions of service qualitydiffer 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 aservice guarantee?

How can recovery from a service failure be ablessing in disguise?

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Interactive Exercise

The class breaks into small groups.Each group identifies the worst service

experience and the best serviceexperience that any member has had.Return to class and discuss what has

been learned about service quality.

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The Complaint Letter

1. Briefly summarize the complaints andcompliments in Dr. Loflin’s letter.

2. Critique the letter of Gail Pearson in reply toDr. Loflin. What are the strengths andweaknesses of the letter?

3. Prepare an “improved” response letter from

Gail Pearson4. What further action should Gail Pearson

take in view of this incident?

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The Museum of Art and Design

1. Critique the WtA gap analysis. Couldthere be other explanations for the

gaps?2. Make recommendations for closing the

gaps found in the WtA.

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