4

Unit 4
Service Quality and Measurement
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SERVICE QUALITY

 The service industry thrives on culture of high service

quality.
 Quality in services described by many quality models.
 To identify the service problems & to take necessary steps
to overcome these problems.
 The process by which consumers form an opinion about
service quality is complex.
 Popular Theory: “GAPS” “SERVQUAL”
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Significance of Quality in Services

 Reduced Costs: commitment to high quality, lesser
mistakes, recovery cost is less, preventive & corrective
measures.
 Resistant or less affected to Price War- differentiating
factor, firms can charge high
 Greater Customer Loyalty: Greater customer satisfaction,
customer involvement as services are process consumption
 Higher Market Share: positive word of mouth
 Loyal Internal Customers: liner relationship between
satisfied customers & happy employees.
 Higher ROI: high quality service can be facilitated via
service profit chain which will result in higher profitability.
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Categories of Service Quality

Objective Service Quality: it is a measure which

determines how well the concept in practice measures
against the defined objective.

Subjective Service Quality: it is the way the

consumers perceive the actual result with the expected
benefits that they seek.
Process of matching the consumers imagined services with
the service privider’s claim of offering a reasonable service.
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What is the measurement of

service quality?
To recap, service quality focuses on the needs
and expectations of customers to improve
products and/or services.
The measurement of service quality measures
the gap between the customer’s level of
expectation and how well they rated the
service(s).
Measuring service quality can be both a
specific project as well as a continual process
to enhance and improve services.
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Why measure service quality?

The benefits of measuring service quality

include:
You will be able to identify where services
need improving in the view of your users.
It will enable you to provide services that are
more closely aligned with the expectations of
your users.
It will allow you to compare your service
quality with peer institutions in an effort to
develop benchmarks.
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What should I measure?

Youfirst need to decide if you want to
measure a specific aspect of your service

Ifyou are measuring the whole service, you

will need indicators from each aspect of the
service.
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Moments of Truth
 Each customer contact is called a moment of truth.
 Youhave 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.
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Dimensions of Service Quality

 Reliability:

 Perform promised service dependably and accurately.

 Example: receive mail at same time each day.

 Responsiveness:

 Willingness to help customers promptly.

 Example: avoid keeping customers waiting for no apparent
reason.
 Quick recovery, if service failure occurs
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Dimensions of Service Quality

 Assurance:
 Ability to convey trust and confidence.
 Give a feeling that customers’ best interest is in your heart
 Example: being polite and showing respect for customer.

 Empathy:
 Ability to be approachable, caring, understanding and relating with customer
needs.
 Example: being a good listener.

 Tangibles:
 Physical facilities and facilitating goods.
 Example: cleanliness.
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Service Quality Gap Model

Customer Customer Satisfaction Customer

GAP 5
Perceptions Expectations

Managing the Customer / Understanding

Evidence Marketing Research the Customer
Communication
GAP 4 GAP 1

Management
Service
Perceptions
Delivery of Customer
Expectations
Conformance
Design GAP 2
GAP 3
Conformance Service Design
Service
Standards
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Prescriptions for Closing the

Seven Service Quality Gaps (Table 14.3)
1. Knowledge gap: Learn what customers expect

2. Standards gap: Specify SQ standards that reflect expectations

3. Delivery gap: Ensure service performance meets standards

4. Internal communications gap: Ensure that communications promises

are realistic

5. Perceptions gap: Educate customers to see reality of service quality

delivered

6. Interpretation gap: Pretest communications to make sure message is

clear and unambiguous

7. Service gap: Close gaps 1 to 6 to meet customer expectations

consistently
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How do I measure it?

Generally organisations use a mixture of

qualitative and quantitative methods:
• Qualitative Methods: interviews, focus
groups, observation (including mystery
shopping!).
• Quantitative Methods: surveys
(questionnaires, customer comments
cards), statistics (routine data
collection).
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Soft and Hard Measures

of Service Quality

 Soft measures—not easily observed, must be collected by

talking to customers, employees, or others
 Provide direction, guidance, and feedback to employees on ways to
achieve customer satisfaction
 Can be quantified by measuring customer perceptions and beliefs
― For example: SERVQUAL, surveys, and customer advisory panels

 Hard measures—can be counted, timed, or measured

through audits
 Typically operational processes or outcomes
 Standards often set with reference to percentage of occasions on
which a particular measure is achieved
 Control charts are useful for displaying performance over time against
specific quality standards
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Scope of service quality

 View quality from five perspectives
 Content – are standard procedures being followed?
 Process – is the sequence of events in the service process
appropriate?
 Structure – are the physical facilities and organizational design
adequate for the service?
 Outcome – what change in the status has the service effected? Is the
consumer satisfied?
 Impact – what is the long-range effect of the service on the
consumer?
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Quality Service by Design

1. Quality service by design

2. Taguchi method
3. Poka-Yoke
4. Benchmarking
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1. Quality in the Service Package

Budget Hotel example (table 6.4 (pp. 138)

 Supporting facility
 Design of the building
 Facilitating goods
 Room furnishings like: bedside tables, carpet cleaning
 Explicit services
 Maids are trained to clean and make up roooms
 Implicit services
 Pleasant appearances of individuals at front office
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2. Taguchi Method (Robustness)

 Robust designs to serve under adverse conditions
 Robustness concept also applied to the manufacturing
process – for example using online computer to notify the
cleaning staff when the room has been vacated
 Taguchiemphasized that quality was achieved by
consistently meeting the design specifications
 Cost to society of poor quality was measured by the square
of the deviation from the target (see fig. 6.4 pp. 139)
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3. Poka-Yoke (Fail safing)

 Shigeo Shingo observed that errors occurred, not because
employees were incompetent, but because of interruptions
in routines or lapses in attention.
 He advocated adoption of Poka-Yoke methods – foolproof
devices to prevent employee mistakes.
 Example, hotel reservation employee is expected to make eye-
contact with customer. So Poka-Yoke is to ask the employee to
enter the eye-color of the customer.
 Sincecustomers also play an active role in service-delivery
so you need Poka-Yoke for them to prevent them from
making errors.
 Example, frames at airport check-in counters to help customers
determine if their bag can go in overhead bin as hand luggage.

Classification of Service Failures with
Poka-Yoke Opportunities (table 6.5)
Server Errors
Task:
Doing work incorrectly
Doing work not required
Doing work in the wrong order
Doing work too slowly
Treatment:
Failure to listen to customer
Failure to acknowledge the customer
Failure to react appropriately
Tangible:
Failure to clean facilities
Failure to wear clean uniform
Failure to control environmental factors
Failure to proofread documents
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Customer Errors
Preparation:
Failure to bring necessary materials
Failure to understand role in transaction
Failure to engage in correct service
Encounter:
Failure to remember steps in process
Failure to follow system flow
Failure to specify desires sufficiently
Failure to follow instructions
Resolution:
Failure to signal service failure
Failure to learn from experience
Failure to adjust expectations
Failure to execute post-encounter action
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4. Benchmarking
 Compare your performance with other companies known for
being ‘the best in class’
 Forevery quality dimension, some firm has earned the
reputation for being the best in class
 Learnhow the management has achieved to be the best in
class to correct your process
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5. Walk-Through-Audit

 Impressions about service quality are determined by both the

outcome and the process (because customers are a part of service
delivery)
 Walk through audit is a customer-focused survey to find the areas
for improvement
 Entire customer experience is traced from beginning to end, and a flow chart of
customer interaction with service system is made
 Customer is asked for his/her impressions on each of these interactions

 Customers can provide anew perspective to service – they can

notice things easily as they are new in the system
 Service managers and employees can get de-sensitize to their
surroundings and also may not notice marginal decreases in
service levels.
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Examples
1. Access - convenient opening times; alternative
methods to accessing services: e.g. telephone
and internet/email.
2. Communication - “plain English” signs &
pamphlets/guides; suggestions and complaints
procedures.
3. Competence - all staff knowing, and able to do,
their job.
4. Courtesy - staff behaving politely and
pleasantly.
5. Credibility - the reputation of the service in the
wider community; staff generating a feeling of
trust with users.
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Examples
6. Reliability - standards defined in local service
charters; accuracy of information provided; doing
jobs right first time; keeping promises and
deadlines.
7. Responsiveness - resolving problems quickly;
allowing users to book an “appointment” for help
(e.g. in literature searching, reference
management etc.)
8. Security - ensuring service meets health and
safety requirements, for staff and users.
9. Tangibles - up to date equipment and resources.
10. Understanding the customer - tailoring services
where practical to meet individual needs.
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4. Unconditional Service Guarantee:

Customer View
 Unconditional (L.L. Bean) – without exception
 Easyto understand and communicate (Bennigan’s) – to the
customer
 Meaningful
(Domino’s Pizza) – it should provide
compensation that is meaningful
 Easy to invoke (Cititravel) – not to fill out cumbersome forms
or go through a lengthy process
 Easy to collect (Manpower) – should be given soon after the
service lapse and after a significant time
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Unconditional Service Guarantee:

Management View
 Focuses on customers (British Airways)
 Sets clear standards (FedEx) – knows when the service has
failed
 Guarantees feedback (Manpower) – gets data on service
failure because dissatisfied customers have an incentive to
complain
 Promotes an understanding of the service delivery system
(Bug Killer) – you will have a better understanding of your
service delivery process
 Builds customer loyalty by making expectations explicit
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Customer Feedback and

Word-of-Mouth (Table 6.9, pp. 156)
 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% of them have serious problems.

 The 4% complainers are more likely to stay with the 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.
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Service Recovery Framework

(Figure 6.13, pp. 156)
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Service Recovery
 Disasters can be turned into loyal customers by proper and rapid
service recovery
 Frontline workers, therefore, need to be properly trained and
given the discretion to make things right.
 Approaches to 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.
 INSPECTION
 Opinion surveys - about quality of service
 100percent inspection - every unit is checked; fatigue
error unless automated
 First article inspection - usually after the process is set up
 Destructive testing
 Acceptance sampling - based on statistical sampling table,
the associate checks a random or stratified sample from a
larger lot. If the sample is within the acceptable quality level,
the lot passes inspection.
 Process focus
 Processcapability means capable of meeting customer
requirements or specifications.
 COMMON CAUSE vs
SPECIAL CAUSE VARIATION

 Assignable-cause variation: these can be assigned to

specific causes
 Common cause variation: random and harder to
trace. This is system wide and requires management
decision.
 Statistical Control: when a process output is free of all
special cause variation, it is said to be in statistical
control or simply in control.
 A process in control may still have common cause
variation. Continuous improvement aims at
constantly working to reduce common cause
variation.
 VARIABLES AND ATTRIBUTES

 In
order to study process variation, we need process output
data. This comes in two forms: variables and attributes data
 Variablesdata result from measuring or computing the
amount of or value of a quality characteristic. This data is
continuous.
 Attributes data - measurement is not required, just a
classifying judgment: maybe yes or no for friendly service;
good or bad for a car wash; small, medium, large melons.
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Topics for Discussion

 How do the five dimensions of service quality differ from those
of product quality?
 Why is measuring service quality so difficult?
 Compare the philosophies of Deming and Crosby.
 What are the limitations of “benchmarking”.
 Illustrate the four components in the cost of quality for a
service.
 Why do service firms hesitate to offer a service guarantee?
 How can recovery from a service failure be a blessing in
disguise?