Service Quality and Profits

• Service recommendation

• “Physical evidence in terms of infrastructure scores low in Customer satisfaction . Investment in refurbishment would lead to better satisfied customers”

• What returns can I expect on this quality improvement?

FAQs

• Where should I invest

• How much should I invest

• How much return can I expect

• How will I measure the improvement

• How can I trace the improvement to this attribute ?

ROSQ(Return on Service Quality)

• Quality is an Investment

• Quality efforts must be financially accountable

• It is possible to spend too much on quality

• Not all quality expenditures are equally valid

Relationship

• Service

• Profit

?

Past metrics

• Impact on share prices to significant qlty improvements (SEARS) while holding advt expenditure constant.

• India Posts, Indian Railways

Marketing effects

• Offensive Defensive

Attraction of new Retention

clients

Service

Market Share

Reputation

Price PRemium Sales

Profits

Customer Retention

New Customer Acq

Lower costs

Vol of purch

Price Prm

Word of mouth

Margins

Balanced Score Card

• Customer Perspective

• Financial Implication

• Operational Measures - Effectiveness

• Innovation and Learning

Financial perspective

Cost of customer acquisition

Ability to charge a price premium

Volume increases

Customer referrals

Cross sales

Measuring Customer Satisfaction

• SERVQUAL

Operational Efficiency

• Ability of system to cope with service failure

• Service recovery strategy

• Standards-Customer defined and company defined

• Wastage reduction

Innovation and Learning

• Number of new products

• Return on innovations

• Employee skills

• Time to market

• Time spent talking to customers

Application of BSCStrategy map

• Financial outcomes are possible only if targetted customers are satisfied

• Identify cause and effect

• How the company will create value and for who ?

• Linking critical internal processes to deliver best value at optimum cost

Exercise- Increase customer service time in

restaurant

People metrics (Internal, Learning and Growth)

Internal process improvement Metrics

Customer Perspective Metrics

Financial Metrics

Recap

• Sources of profit in defensive mktg

• Sources of profit in offensive mktg

• What is ROSQ model?