Chapter 4 Customer Perceptions of Service Donna J. Hill Associate Professor of Marketing Bradley University Fall 2000

Satisfaction versus Quality n Satisfaction is broader n Quality reflects specific dimensions-- reliability, responsiveness, assurance, empathy, and tangibles n Satisfaction influenced by --- perceptions of service quality, product quality, price, situational factors, and personal factors

Customer Perceptions of Service Quality and Customer Satisfaction Customer Perceptions of Service Quality and Customer Satisfaction Service Quality Reliability Responsiveness Assurance Empathy Tangibles Product Quality Price Personal Factors Customer Satisfaction Situational Factors

Factors Influencing Customer Satisfaction n Product/service quality n Product/service attributes or features n Consumer Emotions n Attributions for product/service success or failure n Equity or fairness evaluations

Outcomes of Customer Satisfaction n Increased customer retention n Positive word-of-mouth communications n Increased revenues

Relationship between Customer Satisfaction and Loyalty in Competitive Industries Source: James L. Heskett, W. Earl Sasser, Jr., and Leonard A. Schlesinger, The Service Profit Chain, (New York, NY: The Free Press, 1997), p. 83.

Service Quality n The customer’s judgment of overall excellence of the service provided in relation to the quality that was expected. n Process and outcome quality are both important. Process --- how a service is deliveredProcess --- how a service is delivered Outcome --- technical qualityOutcome --- technical quality

When can’t accurately evaluate technical quality n Customers form opinion of quality from whatever sources exist courtesy is an extremely powerful signalcourtesy is an extremely powerful signal

The Five Dimensions of Service Quality Ability to perform the promised service dependably and accurately. Knowledge and courtesy of employees and their ability to convey trust and confidence. Physical facilities, equipment, and appearance of personnel. Caring, individualized attention the firm provides its customers. Caring, individualized attention the firm provides its customers. Willingness to help customers and provide prompt service. Willingness to help customers and provide prompt service. Tangibles Reliability Responsiveness Assurance Empathy

SERVQUAL Attributes n n Providing service as promised n n Dependability in handling customers’ service problems n n Performing services right the first time n n Providing services at the promised time n n Maintaining error-free records n n Keeping customers informed as to when services will be performed n n Prompt service to customers n n Willingness to help customers n n Readiness to respond to customers’ requests RELIABILITY RESPONSIVENESS n n Employees who instill confidence in customers n n Making customers feel safe in their transactions n n Employees who are consistently courteous n n Employees who have the knowledge to answer customer questions ASSURANCE n n Giving customers individual attention n n Employees who deal with customers in a caring fashion n n Having the customer’s best interest at heart n n Employees who understand the needs of their customers n n Convenient business hours EMPATHY n n Modern equipment n n Visually appealing facilities n n Employees who have a neat, professional appearance n n Visually appealing materials associated with the service TANGIBLES

The Service Encounter n is the “moment of truth” n occurs any time the customer interacts with the firm n can potentially be critical in determining customer satisfaction and loyalty n types of encounters: remote encountersremote encounters phone encountersphone encounters face-to-face encountersface-to-face encounters n is an opportunity to: build trustbuild trust reinforce qualityreinforce quality build brand identitybuild brand identity increase loyaltyincrease loyalty

The Service Encounter n The greatest potential variability in the interaction between a customer and a service firm occurs in a face-to-face encounter verbal behviorsverbal behviors décor of physical environmentdécor of physical environment verbal behaviors of customersverbal behaviors of customers appearance of employeesappearance of employees

Check-In Request Wake-Up Call Checkout Bellboy Takes to Room Restaurant Meal Figure 4-4 A Service Encounter Cascade for a Hotel Visit

Sales Call Ordering Supplies Billing Delivery and Installation Servicing Figure 4-5 A Service Encounter Cascade for an Industrial Purchase A Service Encounter Cascade for an Industrial Purchase

Critical Service Encounters Research n GOAL - understanding actual events and behaviors that cause customer dis/satisfaction in service encounters n METHOD - Critical Incident Technique n DATA - stories from customers and employees n OUTPUT - identification of themes underlying satisfaction and dissatisfaction with service encounters

Sample Questions for Critical Incidents Technique Study n Think of a time when, as a customer, you had a particularly satisfying (dissatisfying) interaction with an employee of. n When did the incident happen? n What specific circumstances led up to this situation? n Exactly what was said and done? n What resulted that made you feel the interaction was satisfying (dissatisfying)?

Common Themes in Critical Service Encounters Research Recovery: Adaptability: Spontaneity:Coping: Employee Response to Service Delivery System Failure Employee Response to Customer Needs and Requests Employee Response to Problem Customers Unprompted and Unsolicited Employee Actions and Attitudes

Recovery Acknowledge problem Acknowledge problem Explain causes Explain causes Apologize Apologize Compensate/upgra de Compensate/upgra de Lay out options Lay out options Take responsibility Take responsibility Ignore customer Ignore customer Blame customer Blame customer Leave customer to fend for him/herself Leave customer to fend for him/herself Downgrade Downgrade Act as if nothing is wrong Act as if nothing is wrong DO DON’T

Adaptability Recognize the seriousness of the need Recognize the seriousness of the need Acknowledge Acknowledge Anticipate Anticipate Attempt to accommodate Attempt to accommodate Explain rules/policies Explain rules/policies Take responsibility Take responsibility Exert effort to accommodate Exert effort to accommodate Promise, then fail to follow through Promise, then fail to follow through Ignore Ignore Show unwillingness to try Show unwillingness to try Embarrass the customer Embarrass the customer Laugh at the customer Laugh at the customer Avoid responsibility Avoid responsibility DODON’T

Spontaneity Take time Take time Be attentive Be attentive Anticipate needs Anticipate needs Listen Listen Provide information (even if not asked) Provide information (even if not asked) Treat customers fairly Treat customers fairly Show empathy Show empathy Acknowledge by name Acknowledge by name Exhibit impatience Exhibit impatience Ignore Ignore Yell/laugh/swear Yell/laugh/swear Steal from or cheat a customer Steal from or cheat a customer Discriminate Discriminate Treat impersonally Treat impersonally DO DON’T

Coping Listen Listen Try to accommodate Try to accommodate Explain Explain Let go of the customer Let go of the customer Take customer’s dissatisfaction personally Take customer’s dissatisfaction personally Let customer’s dissatisfaction affect others Let customer’s dissatisfaction affect others DO DON’T

Figure 4-6 Evidence of Service from the Customer’s Point of View People Process Physical Evidence Contact employees Customer him/herself Other customers Operational flow of activities Steps in process Flexibility vs.. standard Technology vs.. human Tangible communication Servicescape Guarantees Technology