CUSTOMER PERCEPTIONS OF SERVICE

Azka Humayun 5846Usman Akram 5904AbuBAKAR 5941

Customer Perceptions of Service Quality and Customer Satisfaction

ServiceQuality

Reliability

Responsiveness

Assurance

Empathy

Tangibles

ProductQuality

PricePersonalFactors

CustomerSatisfaction

SituationalFactors

Factors Influencing Customer Satisfaction

• Product/service quality• Product/service attributes or features• Consumer Emotions• Attributions for product/service success

or failure• Equity or fairness evaluations

Outcomes of Customer Satisfaction

• Increased customer retention• Positive word-of-mouth

communications• Increased revenues

Relationship between Customer Satisfaction and Loyalty in Competitive Industries

0%

20%

40%

60%

80%

100%

Verydissatisfied

Dissatisfied Neithersatisfied nordissatisfied

Satisfied Verysatisfied

Satisfaction measure

Lo

yalt

y (

rete

nti

on

)

Source: James L. Heskett, W. Earl Sasser, Jr., and Leonard A. Schlesinger, The Service Profit Chain, (New York, NY: The Free Press, 1997), p. 83.

Service Quality

• The customer’s judgment of overall excellence of the service provided in relation to the quality that was expected.

• Process and outcome quality are both important.

The Five Dimensions of Service Quality

Tangibles: Physical facilities, equipment & appearance of personnel.

Reliability: Ability to perform the promised service dependably and accurately.

Assurance: Knowledge and courtesy of employees and their ability to convey trust and confidence.

Empathy: Caring, individualized attention the firm provides its customers.

Responsiveness: Willingness to help customers and provide prompt service.

SERVQUAL AttributesSERVQUAL Attributes

Providing service as promised Dependability in handling customers’

service problems Performing services right the first time Providing services at the promised time Maintaining error-free records

RELIABILITY

RESPONSIVENESS

Keeping customers informed as to when services will be performed

Prompt service to customers Willingness to help customers Readiness to respond to customers’

requests

TANGIBLES

Modern equipment Visually appealing facilities Employees who have a neat, professional

appearance Visually appealing materials associated

with the service

Giving customers individual attention Employees who deal with customers in a

caring fashion Having the customer’s best interest at heart Employees who understand the needs of

their customers Convenient business hours

EMPATHY

Employees who instill confidence in customers

Making customers feel safe in their transactions

Employees who are consistently courteous Employees who have the knowledge to

answer customer questions

ASSURANCE

The Service Encounter

• is the “moment of truth”• occurs any time the customer interacts with the

firm• can potentially be critical in determining customer

satisfaction and loyalty

• types of encounters:1. remote encounters2. phone encounters3. face-to-face encounters

• is an opportunity to:1. build trust2. reinforce quality3. build brand identity4. increase loyalty

The Service Encounter

Check-InCheck-In

Request Wake-Up CallRequest Wake-Up Call

CheckoutCheckout

Bellboy Takes to Room Bellboy Takes to Room

Restaurant MealRestaurant Meal

A Service Encounter Cascade for a Hotel Visit

Critical Service Encounters Research

• GOAL - understanding actual events and behaviors that cause customer dis/satisfaction in service encounters

• METHOD - Critical Incident Technique• DATA - stories from customers and employees• OUTPUT - identification of themes underlying

satisfaction and dissatisfaction with service encounters

Common Themes in Critical Service Encounters Research

Recovery: Adaptability:

Spontaneity:Coping:

Employee Responseto Service DeliverySystem Failure

Employee Responseto Customer Needsand Requests

Employee Responseto Problem Customers

Unprompted and Unsolicited Employee Actions and Attitudes

Recovery

• Acknowledge problem• Explain causes• Apologize• Compensate/upgrade• Lay out options• Take responsibility

• Ignore customer• Blame customer• Leave customer to

fend for him/herself• Downgrade• Act as if nothing is

wrong

DO DON’T

Adaptability

• Recognize the seriousness of the need

• Acknowledge• Anticipate• Attempt to accommodate• Explain rules/policies• Take responsibility• Exert effort to

accommodate

• Promise, then fail to follow through

• Ignore• Show unwillingness to try• Embarrass the customer• Laugh at the customer• Avoid responsibility

DO DON’T

Spontaneity

• Take time• Be attentive• Anticipate needs• Listen• Provide information (even

if not asked)• Treat customers fairly• Show empathy• Acknowledge by name

• Exhibit impatience• Ignore• Yell/laugh/swear• Steal from or cheat a

customer• Discriminate• Treat impersonally

DO DON’T

Coping

• Listen• Try to accommodate• Explain• Let go of the customer

• Take customer’s dissatisfaction personally

• Let customer’s dissatisfaction affect others

DO DON’T

Evidence of Service from the Customer’s Point of View

People

Process PhysicalEvidence

Contact employees Customer him/herself Other customers

Operational flow of activities

Steps in process

Flexibility vs. standard

Technology vs. human

Tangible communication

Services cape

Guarantees

Technology

SERVICE RECOVERY

Unhappy Customers’ Repurchase Intentions

95%

70%

46%

37%

82%

54%

19%

9%

Complaints Resolved Quickly

Complaints Resolved

Complaints Not Resolved

Minor complaints ($1-$5 losses) Major complaints (over $100 losses)

Unhappy Customers Who Don’t Complain

Unhappy Customers Who Do Complain

Percent of Customers Who Will Buy Again

Source: Adapted from data reported by the Technical Assistance Research Program.

Customer Response Following Service Failure

Service Failure

Do NothingTake Action

Stay with Provider

Switch Providers

Complain to Provider

Complain to Family & Friends

Complain to Third Party

Stay with ProviderSwitch Providers

Service Recovery Strategies

Learn fromRecovery Experiences

Treat C

ustomers

Fairly

Learn

from

Lo

st Cu

stom

ers

Welcome and Encourage

Complaints

Fail Safe th

e Serv

iceA

ct Qu

ickly

Service Recovery Strategies

Causes Behind Service Switching

Service Switching Behavior

• High Price• Price Increases• Unfair Pricing• Deceptive Pricing

Pricing

• Location/Hours• Wait for Appointment• Wait for Service

Inconvenience

• Service Mistakes• Billing Errors• Service Catastrophe

Core Service Failure

• Uncaring• Impolite• Unresponsive• Unknowledgeable

Service Encounter Failures

• Negative Response• No Response• Reluctant Response

Response to Service Failure

• Found Better Service

Competition

• Cheat• Hard Sell• Unsafe• Conflict of Interest

Ethical Problems

• Customer Moved• Provider Closed

Involuntary SwitchingSource: Sue Keaveney

Service Guarantees

• guarantee = an assurance of the fulfillment of a condition (Webster’s Dictionary)

• for products, guarantee often done in the form of a warranty

• services are often not guaranteed–cannot return the service–service experience is intangible

–(so what do you guarantee?)

Characteristics of an Effective Service GuaranteeUnconditional

The guarantee should make its promise unconditionally - no strings attached.

Meaningful It should guarantee elements of the service that are

important to the customer. The payout should cover fully the customer's

dissatisfaction. Easy to Understand and Communicate

For customers - they need to understand what to expect.

For employees - they need to understand what to do. Easy to Invoke and Collect

There should not be a lot of hoops or red tape in the way of accessing or collecting on the guarantee.

.

Why a Good Guarantee Works

• forces company to focus on customers

• sets clear standards

• generates feedback

• forces company to understand why it failed

• builds “marketing muscle”

Service Guarantees

• Does everyone need a guarantee?

• Reasons companies do NOT offer guarantees:– guarantee would be at odds with company’s

image– too many uncontrollable external variables– fears of cheating by customers– costs of the guarantee are too high

Service Guarantees

• service guarantees work for companies who are already customer-focused

• effective guarantees can be BIG deals - they put the company at risk in the eyes of the customer

• customers should be involved in the design of service guarantees

• the guarantee should be so stunning that it comes as a surprise -- a WOW!! factor

• “it’s the icing on the cake, not the cake”