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QUALITY MANAGEMENT:
Dr Le Thai Phong
Foreign Trade University
T: 0975.055.299
Chapter 1: Quality Management:
Foundation
QUALITY MANAGEMENT
AND PRODUCTIVITY
Dr L Thi Phong
Vice Dean
Faculty of Business Administration
T: 0975.055.299
QUALITY MANAGEMENT:
Dr Le Thai Phong
Foreign Trade University
T: 0975.055.299
Chapter 1: Quality Management:
Foundation
Chapter 4:
Quality Management in
service
Dr L Thi Phong
Vice Dean
Faculty of Business Administration
T: 0975.055.299
3
Facts & figures
15 40% customers say satisfied still leave you for your competitors
98% unsatisfied customers never complaints. They immediately move to competitors
It costs 5-7 times to have a new customer compared to retain an existing one
Fredrick Reichheld
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Facts & Figures
Reducing 5% leaving customers can increase your
Profit from 30 to 85%;
Bhote, 1996
70% 70% customers who complaints still stay with customers who complaints still stay with you if their problems are positively solved you if their problems are positively solved
An unsatisfied customer can spread his words toAn unsatisfied customer can spread his words to8 8 12 12 othersothers
For you...
The reasons make customers leave you?
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Here are the reasons...
0
10
20
30
40
50
Found a betterproduct
Found acheaperproduct
Lack ofpersonalattention
Staff was rude,unhelpful
%
15%15% 15%15%20%20%
49%49%Product quality
Service quality}
}
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To have a better
product
To have a
cheaper
product
Lack of
Customer care
Lack of support
from your
employees
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Here are the reasons...
Whose is responsible
for customer service?
70%
Because of service quality
15% because of product quality
15%
Because of price
Contents
Session 1: concepts
Session 2: models of excellence
Session 3: measuring service quality
Session 4: service quality strategy
Session 5: service quality recovery
Session 6: service quality assurance
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Service quality
Each business is a service provider. Does the service you
provide make customers smile?
- Philip Kotler -
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Service
Philip Kotler : A service is an act of performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product.
P.Kotler v Amstrong (1991)
Service
a service is a type of product. Service is
always the result of an activity or interaction
between a service supplier and a customer
and can take many forms.ISO 9004: 2001
Characteristics of service
1. Intangibility2. Inseperatability3. Variability4. Perish ability5. Ownership6. Simultaneously7. Quality measurement8. Consumer, a part of production process
9. No inventory
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Fast Food
What do customers buy?
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What do customers buy?
MOBILE PHONE
What do customers buy?
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What do customers buy?
What do customers buy?
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Model of excellence for service
Products
Excellent (e.g. PC business)Excellent (e.g. PC business)
Delivery Systems
Excellent (IBM man Excellent (IBM man -- Dell)Dell)
Service mindset
excellentexcellent
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Model of excellence
My stories
1...
2...
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Levels of service
BasicBasicExpectedExpected
DesiredDesiredSupprisingSupprising
UnbelievableUnbelievable
UnbelievableUnbelievable
Discuss
Where are we, FTU?
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3 rules of service
1. S = P E
2. First impression is the most important
My story at Kodak photo boot, B10 Kim Lien
3. Focus on tangible feature of service
Barriers to listening to customers
Probably the most important management fundamental that is being ignored today is staying close to the customer to satisfy his needs and anticipate his wants. In too many companies, the customer has become a bloody nuisance whose unpredictable behaviour damages carefully made strategic plans, whose activities mess up computer operations, and who stubbornly insists that purchased products should work.
Business Week
Barriers to listening to customers
the evidence of anecdotal events which occur
on a one-off basis and can cloud a managers
opinion
FTU is a Harvard in Vietnam
FTU is the number one
...
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Barriers to listening to customers
the views of complainants which are often not
counterbalanced by non-complainants
A high percentage of customers do not complain
only one in 26 people is the figure often quoted,
based on research undertaken in USA
Barriers to listening to customers
the opinions of a strongly articulate group of
customers which may cloud an organizations
view of customer requirements
Barriers to listening to customers
preconceptions within the organization the
we have always done it this way and this is
what the customer wants syndrome
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Barriers to listening to customers
It has been proved that by actively listening to
customers companies can save, rather than
expend money. The 1-10-100 rule illustrates
this point
Barriers to listening to customers
For every pound your company might spend
on preventing a quality problem, it will spend
ten to inspect and correct the mistake after it
occurs. In the worst case, the quality failure
goes unanswered or unnoticed until after your
customer has taken delivery. To fix the
problem at this stage, you probably pay about
100 times what you could have paid to
prevent it from happening at all.
Session 3: measuring service quality
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Concept Parasuraman et al (1985, 1988):
Gap model shows you different gaps cause the difference between customer perception and customer expectation
Measuring service
SERVQUAL
SERVQUAL (service quality gap model) is a gap
method in service quality measurement, a
tool that can be used by Product Manager
across all industries.
Developed by Parasuraman, Zeithalm and
Berry in 1985
SERVQUAL
The aim of this model is to:
Identify the gaps between customer expectation
and the actual services provided at different
stages of service delivery
Close the gap and improve the customer service
identifies five different gaps:
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SERVQUAL
Customer expectation
Management perceptions of customer expectation
Service quality specifications
Service delivery
External communications to customers
Gap 1 :Knowledge gap
Source : Delivering Quality Service by Zeithmal, Parasuraman & Berry
Gap 2 :Policy gap
Gap 3 :Delivery gap
Gap 4 :Communication gap
Gap 5 :Customer gap
SERVQUAL
The Customer Gap: The Gap between
Customer Expectations and Customer
Perceptions
Expectation: what the customer expects according to available resources
Influenced by cultural background, family lifestyle, personality, demographics, advertising, experience with similar products and information available online
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SERVQUAL
Customer perception: totally subjective
Based on the customers interaction with the
product or service.
Perception is derived from the customers
satisfaction of the specific product or service
and the quality of service delivery.
SERVQUAL
The customer gap: the most important gap
In an ideal world: expectation would be
almost identical to the perception.
... should be based on a clear understanding
of the target market.
Understanding customer needs and knowing
customer expectations could be the best way
to close the gap.
SERVQUAL
The Knowledge Gap: The Gap between
Consumer Expectation and Management
Perception
managers are not aware or have not correctly interpreted the customers expectation in relation to the companys services or products.
Companies are trying to meet wrong or non-existing consumer needs.
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SERVQUAL
In a customer-orientated business, it is
important to have a clear understanding of
the consumers need for service.
To close the gap: will require comprehensive
market research.
SERVQUAL
The Policy Gap: The Gap between Management Perception and Service Quality Specification
This gap reflects managements incorrect translation of the service policy into rules and guidelines for employees
This can include poor service design, failure to maintain and continually update their provision of good customer service or simply a lack of standardisation.
This gap may see consumers seek a similar product with better service elsewhere.
SERVQUAL
The Delivery Gap: The Gap between Service
Quality Specification and Service Delivery
exposes the weakness in employee performance.
Firms may specify the service required but have subsequently failed to train their employees, put good processes and guidelines in action. As a result, employees are ill equipped to manage consumers needs.
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SERVQUAL
Some of the problems:
Employees lack of product knowledge and have
difficulty managing customer questions and issues
Organisations have poor human resource policies
Lack of cohesive teams and the inability to deliver
SERVQUAL
The Communication Gap: The Gap between Service Delivery and External Communications
Promises through advertising media and communication raise customer expectations.
When over-promising does not match the actual service delivery, it creates a communication gap.
Consumers disappointed because the promised service does not match the expected service and consequently may seek alternative product sources.
Casestudy: AMAZON.COM
Amazon.com provides books, movies, music
and games along with electronics, toys,
apparel, sports, tools, groceries and general
home and garden items.
a good example of an online business that
tries to close the service gaps in order to
thoroughly meet consumer expectations.
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Amazon.com
Understanding Customer Needs
From the time the consumer starts to shop at Amazons online store, Amazon will attempt to understand their expectations. From when a customer first makes a product selection Amazon creates a consumer profile and attempts to offer alternative goods and services that may delight the consumer. The longer the consumer shops at Amazon, the more the company attempts to identify their preferences and needs.
Amazon.com
Customer Defined Standards
Consumer selects the mode of delivery and the company tells them the expected number of days it will take to receive their merchandise.
E.g: standard shipping: 3-5 days. 1-2 also available. when a product is unavailable (immediately), out of print book can be located (three weeks), return items (30 days) and whether they pay return shipping costs.
These standards exist for many activities at Amazon from delivery to communication to service recovery.
Amazon.com
Service Performance
Amazon goes one step further
Orders often arrive ahead of the promised
dates;
Orders are accurate and are in excellent
condition because of careful shipping practice.
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Amazon.com
Customers can track packages and review previous orders at any time.
All its partners who sell used and new books and other related items meet Amazons high standards.
The company verifies the performance of each purchase by surveying the customer and posting scores that are visible to other customers.
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By the early 1990s: RATER model
Reliability: the ability to perform the promised service dependably and accurately
Assurance: the knowledge and courtesy of employees and their ability to convey trust and confidence
Tangibles: the appearance of physical facilities, equipment, personnel and communication materials
Empathy: the provision of caring, individualized attention to customers
Responsiveness: the willingness to help customers and to provide prompt service
Measuring service quality
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Your task...
Develop questionnaires based on RATER
model
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GAPCustomer
perception
Customer
expectation
SERVQUAL model
SERVPERF model
Service qualityCustomer
perception
Service quality strategy
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Defining strategic pathDefining strategic path
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Some concepts ...
VISION
Who are we in the future?
MISSON
Why we are here? What business we are in?
QUALITY AIMS
Customer experience
CORE VALUES
values, beliefs of the organisation
KPIs
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Approach
ORGANISATIONAL PERFORMANCE
PHILOSOPHY
RESULTS & MEASUREMENT
LEADERSHIP
STRATEGY PROCESS PEOPLE
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Management
Frontline
CUSTOMERS
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Management
Frontline
CUSTOMERS
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Service recovery
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Service recovery
A successful firm
Is responsible for the things it does
Prepare to accept failure
Act immediately
Response to individual
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Service recovery
Service recovery is to transform a failed service to an
opportunity that you have never expected
Christopher Hart
moving from unsatisfaction to satisfaction after
providing a failed service. When having a mistake, firm
needs to solve that problem immediately for
customers.
Ron Zemke
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Service recovery, why?
Only 4% unsatisfied customer complain.
In which, up to 95% keeps doing business
with the firm if their complaints are solved
immediately .
68% leave the firms because of ignorance .
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S.E.R.V.E. model
Say youre sorry Sorry for ...
Expedite the solution Show them that not only customers but ththe firm its self really interested in ..
Respond to the person Deal with them as an individual
Victory to the customer show that because of the customer, the
firm is sacrifying something or doing
something
Extend the outcome Other steps to show that the are satisfied
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Your experience?
As a role of customer, have you experienced
a failed service?
Have the firm done anything to recover the
failed service?
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SERVICE ASSURANCE
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Quality assurance, why?
Quality assurance forces you to adopt customer-focused approach
Quality assurance helps set clear standards Quality assurance helps receive feedback Quality assurance helps understand why we fail Quality assurance helps improve competiveness
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Quality assurance
You dont have to wait. If thepatients in A&E department haveto wait more than 5 minutes, yourbill will be automatically reduced25%.
Hospital Mission, Log Gatos, CA
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Service assurance
whenever you experience a mistakein your bank account, we willimmediately compensate and send aletter to say sorry to all relatedparties, ... Even credit $10 into youraccount
Bank of state of Maryland, MD
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Thank you!
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