Service Quality
Competing through Service Quality
Example of Service Industries
Health Care – Hospital, medical practice, dentistry, eye care Professional Services – Accounting, Legal, Architectural, IT Financial Services – Banking, Investment advising, Insurance Hospitality – Restaurant, Hotel/Motel, Bed & Breakfast - Ski resort, rafting
Example of Service Industries
Travel – Airlines, travel agencies, theme park Others – Hair styling, Pest control, Plumbing, Lawn maintenance, Counselling services, Health club
Each will survive only if the customers come back!
Evolution of QA Methods
Inspection
SPC
DOE
Taguchi
Quality Mgmt
Systems
Six Sigma
2000 1995 1990 1985 1975 1930 1950
Implications of Perishability of Service
It is difficult to synchronize supply and demand with services Services cannot be returned or resold
Moments of Truth in Service
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
Customer Acceptance Criteria: Now it is the total experience
Criteria
1. Performance
2. Aesthetics
3. Special features, Convenience High tech
4. Safety
Product
Automobile
Everything works, fit & finish Ride, handing, grade of materials used Interior design, soft touch Gauge/control placement Cellular phone, CD player
Antilock brakes, airbags
Service
Auto Repair
All work done, at agreed price Friendliness, courtesy. Competency, quickness Clean work/waiting area Location, call when ready Computer diagnostics Separate waiting area
Customer Acceptance Criteria: Now it is the total experience
Criteria Product
Automobile
Service
Auto Repair
5. Reliability
6. Durability
7. Perceived quality
8. Service after sale
Infrequency of breakdowns
Useful life in miles, resistance To rust & corrosion
Top-rated car
Handling of complaints and/or requests for information
Work done correctly, ready when promised
Work holds up over time
Award-winning service department
Handing of complaints
The Dimensions of Service Quality
Reliability: Perform promised service dependably and accurately. Example: Receive postal mail at same time each day Responsiveness: Willingness to help customers promptly. Example: Avoid keeping customers waiting for no apparent reason.
The 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 See Kano model to prioritize customer needs.
Some sources of satisfaction are intangible The Tangibility Spectrum
Tangible Dominant
Intangible Dominant
Salt
Soft Drinks
Detergents Automobiles
Cosmetics Fast Food Outlets
Advertising Agencies Fast Food Outlets
Airlines Investment Management Consulting
Teaching
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 may delight them if it
exceeds their expectations to cause their return • The Kano model is a good approach to address satisfaction
How Serious 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% have serious problems.
• The 4% of complainers are more likely to stay with their 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.
Ability to Detect Likelihood of Occurrence Degree of Severity Rating
Sure that the potential failure will be detected and prevented before reaching the next customer
Very remote possibility Customer will not at all observe the adverse effect
1
Almost sure that the potential failure will be detected and prevented before reaching the next customer
Low failure with supporting documents
Customer will experience slight discomfort 2
Less chance that the potential failure will reach the next customer undetected
Low failure without supporting documents
Customer will experience annoyance because of slight degradation of performance
3
Some controls may detect the potential from reaching the real customers
Occasional failures Customer dissatisfied due to reduce performance
4
Moderate chances that the potential failure will reach the next customer
Moderate failure rate with supporting documents
Customer is uncomfortable 5
Best “1”to Worst “10” ratings for Failure to Serve
Ability to Detect Likelihood of Occurrence Degree of Severity Rating
High chances that the potential failure will reach the next customer
Very remote possibility Warranty repairs 6
Little chance of potential failure being detected
High failure rate with supporting documents
High degree of customer dissatisfaction 7
Very little chance of potential failure being detected
High failure rate with supporting documents
Very high degree of customer dissatisfaction
8
Potential failure will not be detected
Occasional failures Negative impact on customers 9
Potential failure will not be detected
Moderate failure rate with supporting documents
Negative impact on customers 10
Best “1”to Worst “10” ratings for Failure to Serve
But many things can be done!
• Note the five dimensions of service quality – reliability, responsiveness, empathy, assurance and tangibles
• Use the service quality gap model (next slide) to diagnose quality problems
• Perform service quality function deployment • Use the Kano model to prioritize customer requirements • Construct a statistical process control chart to monitor • Develop unconditional service guarantees • Plan for service recovery • Perform a walk-through audit (WtA)
Seek out where the Service Quality Gap exists
Customer Perceptions
Service Delivery
Customer Expectations
Management Perceptions of Customer Expectations
Service Standards
Managing the Evidence
Conformance
Understanding the Customer
Service Design
Communications GAP 4
Customer Satisfaction GAP 5
Customer Marketing Research GAP 1
Conformance GAP 3
Design GAP 2
The best approach: Raise the Quality of Service by Design
• Quality in the Service Package Budget Hotels • Taguchi Methods (Robustness) – Customer’s notifying room
cleaning maids • Poka-yoke (fail-safing) – Height bar at amusement park • Quality Function Deployment & Kano model – House of Quality,
maximising satisfaction
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 (at ATMs) Encounter: Failure to follow system flow Resolution: Failure to signal service failure
Recall Six Sigma!
Six Sigma business process improvement projects have two objectives: Variability reduction: In the context of service the customer’s experience should meet or exceed her expectations and be consistent Loss Reduction: Any defective service delivery, material, time or monetary loss should be minimized
Case: Quality Monitoring (Control Metrics implemented at…
CCU began Six Sigma with extensive customer survey: - What all things did a customer want the Credit Union to provide
her - Which of these the CU would consider to be of strategic value to
its own vision/mission
This survey determined the required Dimensions of Teller Performance (QFD used): • Technical Knowledge/Skills – 35% • Service Quality/Professionalism – 40% • Teamwork – 25%
Service Quality/Professionalism Targets • Average at least 3 on all feedbacks – 45% • No more than two controllable negative complaints from
members per year – 35% • No more than one counselling session about dress code per year
– 20% Teamwork Targets • No more than two legitimate peer complaints per year – 50% • No more than 6 absences (occurrences) per year – 50%
Survey led to setting performance targets for Tellers
• Technical Knowledge/Skills Targets • Over/Short no more that $300.00 per year – 25% • No more than 12 times out per year – 25% • Balance within 30 minutes after last member has been helped
and performs necessary corrections – 10% • No more than 5 controllable errors per month – 30% • Average minimum teller transactions/month including Saturdays
– 10% • Controllable errors can include but are not limited to: Errors found on non-cash audits; Error on logs; Errors detected by member calls; Errors found during “out of balance” searches; All reversals; Repetitive errors; Force balancing
The Rubric
• Criteria • Unsatisfactory • Below Requirements • Meets Requirements • Exceeds Requirements • Significantly Exceeds Requirements
Some Good Practices in Service Quality Management
Cost of Quality (Juran) – Think prevention! Service Process Control – Monitor how you are performing Statistical Process Control (Deming – Variability reduction) Unconditional Service Guarantee (Kano)
Costs of Service Quality (Bank Example)
Failure costs External Failure • Loss of future business • Negative word-of-mouth • Liability insurance • Legal judgments • Inherent penalties Internal Failure • Scrapped forms • Rework Recovery • Expedite disruption • Labour and materials
Detection costs Process control • Peer review Supervision Customer comment card Inspection
Prevention costs Quality planning • Training program Quality audits Data acquisition and analysis Recruitment and selection Supplier evaluation
Minimise Optimise
Costs of Service Quality (Bank Example) This is a continuous version of DMAIC
Resources Service Process
Customer Input
Customer Output
Take corrective action
Identify reason for
nonconformance
Monitor conformance to
requirements
Establish measure of performance
Service concept
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