Chapter 6 Service Quality Shin Ming Guo NKFUST Service Gaps - PDF document

Chapter 6 Service Quality Shin ‐ Ming Guo NKFUST  Service Gaps  Measuring Service Quality  Service Recovery Case: Hotel Shuttle Service • A passenger called the hotel shuttle service at the airport and was told a shuttle was already on its way. • He made two more calls and finally checked into the hotel one hour later. • The receptionist apologized and offered free breakfast. • The passenger had the breakfast but was asked to pay when he checked out the next morning. Q1: What went wrong in the service process? Q2: How should the hotel manager recover from the service failure? 1

Dimensions of Service Quality • Reliability: Perform promised service dependably and accurately. • Responsiveness: Willingness to help customers promptly. • Assurance: Ability to convey trust and confidence. • Empathy: caring for customers, understanding customer’s needs. • Tangibles: Physical facilities and facilitating goods. 3 Service Gap - = Perceptions Expectations Does this bank Is speed of service important? provide fast service? Word of Personal Past mouth needs experience Service Quality Service Quality Assessment Expected Dimensions 1. Expectations exceeded service Reliability ES<PS (Quality surprise) Responsiveness 2. Expectations met Perceived Assurance ES~PS (Satisfactory quality) service Empathy 3. Expectations not met Tangibles ES>PS (Unacceptable quality) 4 2

Types of Service Gap 5 Measuring Service Gap  SERVQUAL: a two ‐ part instrument that pairs an expectation statement with a corresponding perception statement to measure the five dimensions of service quality.  Walk ‐ through Audit: a operations oriented survey to evaluate service gaps between a customer’s perception and a manager’s perspective. 6 3

SERVQUAL SERVQUAL EXPECTATIONS PERCEPTIONS This survey deals with your opinions of banks. The following statements relate to your feelings Please show the extent to which you think about the XYZ bank that you chose. Please banks should posses the following features. show the extent to which you believe XYZ has Please circle a number that best shows your the feature described in the statement. Please expectations about institutions offering bank circle a number that shows your perceptions services about XYZ bank Strongly Strongly Strongly Strongly Disagree Agree Disagree Agree 1 2 3 4 5 6 7 1 2 3 4 5 6 7 Gap Score (E) (P) P - E Tangibles Tangibles E1. Excellent banking companies will P1. XYZ bank has modern looking have modern looking equipment. equipment. E2. The physical facilities at excellent P2. XYZ Bank’s physical facilities banks will be visually appealing. are visually appealing. E3. Employees at excellent banks will P3. XYZ Bank’s reception desk be neat appearing. employees are neat appearing. 7 Importance-Performance Analysis Service Gap Importance  Expectation Performance  Perception 4

Walk-through Audit 9 10 5

Measuring Service Quality • Satisfaction/Success Ratio • Complaint Ratio • Retention Ratio • First Response Time • Total Response Time • Stock Out Ratio • Due Date Performance • Data Accuracy Classification of Service Failures Server Errors Customer Errors Task : Preparation : Doing work incorrectly Failure to bring necessary materials Treatment : Encounter : Failure to listen to customer Failure to follow system flow Tangible : Resolution : Failure to wear clean uniform Failure to signal service failure 12 6

Example: Pizza Delivery • A pizza store offer delivery service to campus area. Student newspaper has just published an article that criticizes the store for poor service. • The store has kept all customer complaint records. What should the manager do? 13 Step 1: Define Critical Quality Characteristics • Reliability: Wrong orders • Responsiveness: Late Deliveries, Cold Food • Assurance: Drop pizza, Unable to answer questions • Empathy: Forget to mention special deals • Tangibles: Taste 14 7

Step 2: Measure the Process Run Chart 0.18 % of complaints 0.16 0.14 0.12 0.1 0.08 0.06 0.04 1 2 3 4 5 6 7 8 9 10 11 12 Time (months) 15 Step 3: Analyze the Process Total=251 complaints 250 1 number of complaints 200 0.8 cumulative % 150 0.6 100 0.4 50 0.2 0 0 late wrong cold food taste other deliveries order 16 8

Step 4: Cause and Effect Diagram 17 Cost of Quality Failure costs Detection costs Prevention costs External failure : Process control Quality planning Loss of future business Peer review Training program Negative word ‐ of ‐ mouth Supervision Quality audits Liability insurance Customer comment card Data acquisition Legal judgments Inspection Recruitment Interest penalties Supplier evaluation Detection Costs Internal failure : Scrapped forms Rework Costs of External Failure Prevention Costs Costs Quality Recovery : Expedite disruption Internal Failure Labor and materials Costs 18 9

Service Recovery A Service Recovery is satisfying a previously dissatisfied customer and making them a loyal customer. 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 customer who has had a problem resolved by a company will tell about 5 people about their situation. A dissatisfied customer will tell between 10 and 20 other people about their problem. 19 Level of Customer Dissatisfaction 30 Average number of people told 25 20 15 10 5 0 20 10

Service Recovery Framework 21 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. 22 11

Southwest Flight 1380 • On 4/17/2018, Southwest Flight 1380 was scheduled to fly from New York to Dallas. When the engine on the left wing broke, the plane made an emergency landing in Philadelphia. • When it was all over, the pilot came out of the cabin and walked through the aisle and talked with passengers to make sure they were all right. • Passengers received a letter from Southwest three days later. "We value you as our customer and hope you will allow us another opportunity to restore your confidence in Southwest… we are sending you a check in the amount of $5,000 to cover any of your immediate financial needs." Service Guarantee: Customer View  Unconditional (L.L. Bean)  Easy to understand and communicate (Bennigan’s)  Meaningful (Mobile phone service)  Easy to invoke (Internet shopping)  Easy to collect (Amazon) 24 12

Service Guarantee: Management View Service Guarantees As Design Drivers  Focuses on customers (British Airways)  Sets clear standards (FedEx)  Guarantees feedback (Proactive approach)  Promotes an understanding of the service delivery system (Bug Killer)  Builds customer loyalty by making expectations explicit 25 Summary  Most quality programs fail for one of two reasons: they have systems without passion, or passion without system. ― Tom Peters  Pay attention to norms and rituals  Training to anticipate possible situations.  Customers are the ultimate judges of a service’s value.  Let the punishment fit the crime in service recovery 26 13