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.
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Classification of Service Failures with

Poka-Yoke Opportunities (table 6.5)
Server Errors Customer Errors
Task: Preparation:
Doing work incorrectly Failure to bring necessary materials
Doing work not required Failure to understand role in transaction
Doing work in the wrong order Failure to engage in correct service
Doing work too slowly Encounter:
Treatment: Failure to remember steps in process
Failure to listen to customer Failure to follow system flow
Failure to acknowledge the customer Failure to specify desires sufficiently
Failure to react appropriately Failure to follow instructions
Tangible: Resolution:
Failure to clean facilities Failure to signal service failure
Failure to wear clean uniform Failure to learn from experience
Failure to control environmental factors Failure to adjust expectations
Failure to proofread documents 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?