Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin SERVICE QUALITY Chapter 6

Learning Objectives Describe and illustrate dimensions of service quality. Use the service quality gap model to diagnose quality problems. Apply poka-yoke methods to a service. Perform service quality function deployment. Construct a statistical process control chart for a service operation. Describe unconditional service guarantees. Perform a walk-through audit (WtA). Explain the concept of service recovery. 6-2

Moments of Truth Each customer contact is called a moment of truth. You have the ability either to satisfy or dissatisfy customers when you contact them. A service recovery is satisfying a previously dissatisfied customers and making them loyal customers. 6-3

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. 6-4

Dimensions of Service Quality Assurance: Ability to convey trust and confidence, e.g., being polite and showing respect for customer Empathy: Ability to be approachable, e.g., being a good listener Tangibles: Physical facilities and facilitating goods, e.g., cleanliness. 6-5

Perceived Service Quality Word of mouth Personal needs Past experience Expected service Perceived service Service Quality Dimensions Reliability Responsiveness Assurance Empathy Tangibles Service Quality Assessment 1. Expectations exceeded ES<PS (Quality surprise) 2. Expectations met ES~PS (Satisfactory quality) 3. Expectations not met ES>PS (Unacceptable quality) 6-6

Service Quality Gap Model 6-7

Walk-Through-Audit Service delivery system should conform to customer expectations. Customer impression of service is influenced by use of all senses. Service managers lose sensitivity owing to familiarity. A detailed service audit from a customer’s perspective is needed. 6-8

Quality Service by Design Quality in the Service Package Budget Hotel example Poka-yoke (fail-safing) Height bar at amusement park Quality Function Deployment House of Quality 6-9

Taguchi’s Cost of Quality Function Taguchi quadratic cost function (internal quality) Customer cost function (no loss within limits) 6-10

Classification of Service Failures Server Errors Task: Doing work incorrectly Treatment: Failure to listen to customer Tangible: Failure to wear clean uniform Customer Errors Preparation: Failure to bring necessary materials Encounter: Failure to follow system flow Resolution: Failure to signal service failure 6-11

House of Quality 6-12

Achieving Service Quality Cost of Quality (Juran) Statistical Process Control (Deming) Unconditional Service Guarantee 6-13

Costs of Service Quality (Bank Example) 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 and analysis Legal judgments Inspection Recruitment and selection Interest penalties Supplier evaluation Internal failure: Scrapped forms Rework Recovery: Expedite disruption Labor and materials 6-14

Control Chart of Departure Delays expected Lower Control Limit

Unconditional Service Guarantee: Customer View Unconditional (L.L. Bean) Easy to understand and communicate (Bennigan’s) Meaningful (Domino’s Pizza) Easy to invoke (Cititravel) Easy to collect (Manpower) 6-16

Unconditional Service Guarantee: Management View 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 by making expectations explicit 6-17

Customer Satisfaction All customers want to be satisfied. Customer loyalty is due only to the lack of a better alternative Giving customers some extra value will delight them by exceeding their expectations and insure their return 6-18

Customer Feedback and Word-of-Mouth The average business hears only 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 were resolved and 95% would stay if the problem were resolved quickly. A dissatisfied customer will tell between 10 and 20 other people about the problem. A customer who has had a problem resolved by a company will tell about 5 people about the situation. 6-19

Service Recovery Framework 6-20

Approaches to Service Recovery Case-by-case approach addresses each customer’s complaint individually but could lead to perception of unfairness. Systematic response approach uses a protocol to handle complaints but needs prior identification of critical failure points and continuous updating. Early intervention approach attempts to fix a problem before the customer is affected. Substitute service approach allows rival firm to provide service but could lead to loss of customer. 6-21

Topics for Discussion How do the five dimensions of service quality differ from those of product quality? Why is measuring service quality so difficult? 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? 6-22

The Complaint Letter 1. Briefly summarize the complaints and compliments in Dr. Loflin’s letter. 2. Critique the letter of Gail Pearson in reply to Dr. Loflin. What are the strengths and weaknesses of the letter? 3. Prepare an “improved” response letter from Gail Pearson. 4. What further action should Gail Pearson take in view of this incident? 6-23

The Helsinki Museum of Art and Design 1. Critique the WtA gap analysis. Could there be other explanations for the gaps? 2. Make recommendations for closing the gaps found in the WtA. 6-24

Interactive Exercise The class breaks into small groups. Each group identifies the worst service experience and the best service experience that any member has had. Return to class and discuss what has been learned about service quality. 6-25