Service Quality

Contents

Introduction Literature review Five Dimensions of Quality Service Customer Satisfaction SERVQUAL model Service Recovery Conclusion

Introduction

Consumers all over the world have become more quality conscious; therefore customers‟ requirements for higher quality service have been increased (Lee, 2005).

In spite of the criticality of service quality to businesses, measuring service quality causes difficulties to service providers, as of the unique characteristics of services: intangibility, heterogeneity, inseparability and perishability (Douglas & Connor, 2003). In sight of this, services need a distinctive framework for quality clarification and measurement. Among the major frameworks, SERVQUAL model developed by Parasuraman et al. (1985; 1988) is most preferred and widely used model for measuring service quality in the service industry.

SERVQUAL was originally measured on 10 aspects of service quality: Reliability, Responsiveness, Competence, Access, Courtesy, Communication, Credibility, Security, Understanding the customer , Tangibles to measure the gap between customer expectation and experiences.

Literature review – Service• Some of basic definitions of service as defined by Management Gurus are :1. “ A service is any activity or benefit that one party can offer to another which is essentially

intangible and does not result in the ownership of anything.” -- By Kotler, Armstrong, Saunders and Wong

2. “Services are economic activities that create value and provide benefits for customers at specific times and places as a result of bringing about a desired change in or on behalf of the recipient of the service.” -- By Christopher Lovelock

3. “Services are the production of essentially intangible benefits and experience, either alone or as part of a tangible product through some form of exchange, with the intention of satisfying the needs, wants and desires of the consumers.” -- By C. Bhattachargee

• Our understanding: 1. “services are some intangible activities provided by the servers to fulfill the customers’ needs.”

Literature review – Quality

Quality has been defined from diverse perspectives. Quality was primarily seen as a defensive mechanism but it is seen as a competitive weapon for emergence of new markets as well as growing market share (Davis et al., 2003).

Quality can be defined as satisfying or exceeding customer requirements and expectations, and consequently to some extent it is the customer who eventually judges the quality of a product (Shen et al., 2000).

Literature review – Service quality

• Definition of service quality: 1. Service quality(SQ) is a comparison of expectations (E) with performance (P) SQ=P-E.2. Customers form service expectations from past experiences, word of mouth and

advertisement. In general, Customers compare perceived service with expected service in which if the former falls short of the latter the customers are disappointed.

• The importance of service quality:1. A business with high service quality will meet customer needs whilst remaining

economically competitive. Improved service quality may increase economic competitiveness.

Reference: https://en.wikipedia.org/wiki/Service_quality

Five Dimensions of Service Quality In 1988 the 10 components of SERVQUAL model were collapsed into 5 dimensions (RATER). Reliability,

tangibles and responsiveness remained distinct, but the remaining 7 components collapsed into 2 aggregated dimensions: assurance and empathy.

Reference:http://www.revistas.usp.br/reeusp/article/viewFile/78084/82144

Five Dimensions of Service Quality

1. Reliability: Perform promised service dependably and accurately. Example: receive mail at same time each day.

2. Responsiveness: Willingness to help customers promptly. Example: avoid keeping customers waiting for no apparent reason.

3. Assurance: Ability to convey trust and confidence. Example: being polite and showing respect for customer.

Five Dimensions of Service Quality

4. Empathy: Ability to be approachable. Example: being a good listener.

5. Tangibles: Physical facilities and facilitating goods. Example: cleanliness.

Not All Dimensions Are Equal

All dimensions are important to customers, but some more than others. Service providers need to know which are which to avoid majoring in minors. At the same time they can’t focus on only one dimension and let the others suffer.

SERVQUAL research showed dimensions’ importance to each other by asking customers to assign 100 points across all five dimensions. Here’s their importance to customers:

Source: Click here

Methodology – SERVQUAL model

• Survey• Data analysis and implementation

1. Survey

• 2 sections -customer expectation -customer perception

• 22 attributes corresponding to 5 dimensions

• Determination of Likert scale

2. Data Analysis and Implementation• Statistical data analysis

Hypothesis test ANOVA

Perceived Service Quality

Word of mouth

Personal needs

Past experience

Expectedservice

Perceivedservice

Service Quality Dimensions

ReliabilityResponsiveness

AssuranceEmpathyTangibles

Service Quality Assessment1. Expectations exceeded ES<PS (Quality surprise)2. Expectations met ES~PS (Satisfactory quality)3. Expectations not met ES>PS (Unacceptable quality)

Unconditional Service Guarantees

• Unconditional (L.L. Bean)• Easy to understand and communicate (Bennigan’s)• Meaningful (Domino’s Pizza)• Easy to invoke (Cititravel)• Easy to collect (Manpower)

Customers’ Views

Unconditional Service Guarantees

• Focuses on customers (British Airways)• Sets clear standards (FedEx)• Guarantees feedback (Manpower)• Promotes an understanding of the service delivery

system (Bug Killer)• Builds customer loyalty

Management’s Views

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 will delight them by exceeding their expectations and insure their return

Expressing Dissatisfaction

Dissatisfactionoccurs

Action

No Action

Public Action

Private Action

Seek redress directly from the firm

Take legal action

Complaint to business, private,or governmental agencies

Stop buying the product or boycott the seller

Warn friends about the productand /or seller

Service Recovery

Case-by-case addresses each customer’s complaint individually but could lead to perception of unfairness.

Systematic response uses a protocol to handle complaints but needs prior identification of critical failure points and continuous updating.

Early intervention attempts to fix problem before the customer is affected.

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

SERVQUAL model

The SERVQUAL service quality model was developed by a group of American authors, 'Parasu' Parasuraman, Valarie Zeithaml and Len Berry, in 1988. It highlights the main components of high quality service. The SERVQUAL model comes as a facilitator to measure, evaluate and manage quality analysis of services and has also been named as a method of analysis of the deficiencies in service from the process to improve the service provided.

Professor A. Parasuraman

Dr. Valarie Zeithaml Dr. Leonard L. Berry

SERVQUAL model

The SERVQUAL model is dependent on three major bases: 1. The 5 gaps: there are 5 gap that create a void between

the customers’ expectations and the service delivered by the service providers. Organizations should measure, manage and minimize these 5 gaps for successfully marketing their service.

2. Causes and solution to gaps: Identifying the causes and appropriate solutions are very crucial to minimize that void.3. The key service dimensions: the aspects that should be stressed upon so as to allow the service to be adopted by targeted segments.

SERVQUAL as management model

SERVQUAL as measurement model

The Five Gaps

Source: Click here

PerceivedService

Expected Service

CUSTOMER

COMPANY

CustomerGap

Gap 1

Gap 2

Gap 3

External Communicatio

ns to Customers

Gap 4Service Delivery

Customer-Driven Service Designs and

Standards

Company Perceptions of Consumer Expectations

Customer gap:◦ Difference between expectations and perceptions

Provider gap 1:◦ Not knowing what customers expect

Provider gap 2:◦ Not selecting the right service designs and

standards

Provider gap 3:◦ Not delivering to service standards

Provider gap 4:◦ Not matching performance to promises

Causes and solution to gap 1

Some of the examples: The internet service company:

was not offering USB dongle internet

The restaurant: was not offering some drinks

The bank: has limited online payment services

Key factors leading to provider gap 1• Inadequate marketing research orientation

Insufficient marketing research Research not focused on service quality Inadequate use of market research

• Lack of upward communication Lack of interaction between management and customers Insufficient communication between contact employee and managers Too many layers between contact personnel and top management

• Insufficient relationship focus Lack of market segmentation Focus on transactions rather than relationships Focus on new customers rather than relationship customers

• Inadequate service recovery Lack of encouragement to listen to customer complaints Failure to make amends when things go wrong No appropriate recovery mechanisms in place for service failures

Closing gap 1: learn what customers expect• Use research, complaint analysis, customer panels • Increase direct interactions between managers and customers • Improve upward communications• Act on information and insights

listen to customers

Causes and solution to gap 2

Some of the examples: The internet service company:

then started USB dongle but not up to standard;

The restaurant: started offering the drink but not of high quality;

The bank: started offering online payment service but not of excellent quality;

Key factors leading to provider gap 2• Poor service design

Unsystematic new service development process Vague, undefined service designs Failure to connect service design to service positioning

• Absence of customer-driven standards Lack of customer-driven service standards Absence of process management to focus on customer requirements Absence of formal process for setting service quality goals

• Inappropriate physical evidence and Servicescape Failure to develop tangibles in line with customer expectations Servicescape design that does not meet customer and employee needs Inadequate maintenance and updating of the Servicescape

Closing gap 2: Establish the right service quality standards• Top management commitment to providing service quality• Set, communicate, and reinforce customer-oriented service standards• Establish challenging and realistic service quality goals• Train managers to be service quality leaders• Be receptive to new ways to deliver service quality• Standardise repetitive tasks• Prioritise tasks• Gain employee acceptance of goals and priorities• Measure performance of service standards and provide regular

feedback• Reward managers and employees for achievement of quality goals Service Quality

Awards

Causes and solution to gap 3

Some of the examples: Internet service company: has

no user guide given by the customer service officer;

The restaurant: unavailability of the desserts;

The bank: service not on time;

Key factors leading to provider gap 3• Deficiencies in HR policies

Ineffective recruitment Role ambiguity and role conflict Poor employee-technology job fit Inappropriate evaluation and compensation systems Lack of empowerment, perceived control and teamwork

• Failure to match supply and demand Failure to smooth peaks and valleys of demand Inappropriate customer mix Over-reliance on price to smooth demand

• Customer not fulfilling rules Customers lack knowledge of their roles and responsibilities Customers negatively impact each other

• Problems with service intermediaries Channel conflict over objectives and performance Channel conflict over costs and rewards Difficulty controlling quality and consistency Tension between empowerment and control

Closing gap 3: Ensure that service performance meets standards• Attract the best employees• Select the right employees• Develop and support employees

train employees provide appropriate technology & equipment encourage and build teamwork empower employees internal marketing

• Retain good employees measure and reward service quality achievements develop equitable and simple reward systems

Causes and solution to gap 4

Some of the examples: The internet service company:

excellent services but not exactly what it advertises

The restaurant: it’s good to eat, but not as much as the mouth watering ad seems to be;

The bank: delivered service is good, but not exactly the same as depicted in the ads;

Key factors leading to provider gap 4• Lack of integrated services marketing communications

Tendency to view each external communications as independent Not including interactive marketing in communications plan Absence of strong internal marketing program

• Ineffective management of customer expectations Not managing customer expectations through all forms of communication Not adequately educating customers

• Overpromising Overpromising in advertising Overpromising in personal selling Overpromising through physical evidence cues

• Inadequate horizontal communications Insufficient communication between sales and operations Insufficient communication between advertising and operations Differences in policies and procedures across branches or units

Closing gap 4: Ensure that service delivery matches promises• Seek input from operations personnel on what can be done• ‘Reality’ advertising

real employees, real customers, real situations• Seek input from employees on advertising• Gain communications between sales, operations and customers• Internal marketing programs• Ensure consistent standards in multi-site operations• In advertising, focus on service characteristics that are important to customers• Manage customer’s expectations

What are realistic expectations? Explain industry realities

• Tiered service options Offer different levels of service - user pays

Brief Summary Gaps in Service QualityGap Problem Cause(s)

1. Consumer expectation – mgmt. perception

The service features offered don’t meet customer needs

Lack of marketing research; inadequate upward communication; too many levels between contact personnel and management

2. Management perception – service quality specification

The service specifications defined do not meet management’s perceptions of customer expectations

Resource constraints; management indifference; poor service design

3. Service quality specification – service delivery

Specifications for service meet customer needs but service delivery is not consistent with those specifications

Employee performance is not standardized; customer perceptions are not uniform

4. Service delivery – external communication

The service does not meet customer expectations, which have been influenced by external communication

Marketing message is not consistent with actual service offering; promising more than can be delivered

Advantages Vs Disadvantages of SERVQUAL modelAdvantages DisadvantagesIt can be used on a regular basis to track customer perceptions of service quality of a particular firm compared to its competitors.

First of all Validity, the validity of the SERVQUAL model as a generic instrument for measuring service quality across different service sector has been raised.

It provides the opportunity for a firm to assess its service quality performance on the basis of each dimension individually as well as the overall dimensions

Secondly Gaps Model, there is little evidence that customers access service quality in terms of Perception (P) minus Expectation (E) gaps.

It allow the firm to classify its customers into different segments based on their individual SERVQUAL scores

Process Orientation, SERVQUAL is process oriented it focus on the process of service delivery, not on the outcomes of the service encounter , while process and outcome together is a better predictor of consumers choice than process or outcome alone

SERVQUAL model can be used in various service setting/sectors and provides a basic skeleton that can be adapted to fit the specific attributes of a particular organization.

In the fourth place Dimensionality, SERVQUAL five dimensions are not universal. Items do not always load on to the factors which one would a priori expect; and there is a high degree of inter correlation between the five dimensions.

SERVQUAL gap analysis approach seems a logical and straightforward concept and the questionnaire is also pre-described and can be adapted as required

Finally Model Objections, SERVQUAL is based on an expectation model rather than an attitudinal model besides SERVQUAL fails to draw on establishing economic and psychological theory (fail to draw on the large literature on the psychology of perception).

SERVQUAL is a tried and tested instrument which can be used comparatively for benchmarking purposes.

Ramifications of SERVQUAL model

SERVPERF model LODGQUAL model LODGSERV model DINESERV model GROVQUAL model

Conclusion

SERVQUAL has been used in many ways, such as identifying specific service elements requiring improvement, and targeting training opportunities for service staff.

Proper development of items used in the SERVQUAL instrument provides rich item-level information that leads to practical implications for a service manager.

The service quality dimensions evaluated by SERVQUAL should be adjusted for optimal performance in different industry, public and private sector applications.

SERVQUAL scores are highly reliable, but when used in different industries may fail to produce a clear delineation of the five basic dimensions. Other measures, such as the Six Sigma model should be considered for applicability in quantifying the gap between service expectations and perceptions.

Q & A