Assessment of service delivery process Chap. 6 Service Quality Assessment of service delivery process Chap. 6

Defining Service Quality Moment of truth Customer contact Perceived quality Expectation

Perceived Service Quality Word of mouth Personal needs Past experience 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) Expected service Perceived service 6-3

Dimension of service quality Customer used to judge service quality Reliability The ability to perform the promised service Service is accomplished On time In the same manner Without errors Every time Back office Billing accuracy, book keeping

Responsiveness Willingness to help customers and to provide prompt service Keeping customers waiting for no apparent reason Ability to recover service failure quickly

Assurance Knowledge and courtesy of employees Ability to convey trust and confidence Competence to perform the service Politeness and respect for the customer Effective communication Customer’s best interests at heart

Empathy Caring, individualized attention Approachability Sensitivity Effort to understand the customers’ needs Airline agent try the best to find a flight for missing connection customer

Tangibles The appearance of physical facility, equipment, personnel, and communication materials. Tidiness of physical surrounding Noise

Gaps in service quality Gap between Expected service Perceived service

Gap #1: marketing research gap Customer expectation Management perception Management’s lack of full understanding How customers formulate their expectation Advertising Past experience with us with competitors Personal needs

Gap #2: service design gap Management perceived customer expectation Service standard Lack of management commitment Inability to formulate target level of service quality Goals Standardize service delivery tasks

Gap #3: conformance gap Lack of team work Poor employee selection Service standard Service delivery Lack of team work Poor employee selection Inadequate training Inappropriate job design

Gap #4: communication gap Service delivery Customer perception Exaggerated promises Lack of information provided to contact personnel

Gap #5: satisfaction gap Customer perceived Customer expected Consequence of all 4 steps

Measuring Service Quality Challenge No physical feature Objectively Many psychological features Ambiance Easy to use Subjectively

ServQual Multiple item scale Measure 5 dimensions of service quality Two parts instruments Compute the difference between the ratings Perceived Expected Many varieties of modified scales

Walk-through Audit Walk-through audit Operation or process oriented Customer satisfaction survey Marketing oriented Overall customer satisfaction Walk-through audit Operation or process oriented Systematic evaluation of a customer’s view of the service operation From the beginning to the end of the service experience Examine verbal, environmental, and sensory cues of a pleasant experience

Questions for a restaurant walk-through audit Maintenance items Person-to-person service Waiting Table and place setting Ambiance Food presentation Check presentation Promotion and suggestive selling Tipping

WtA for Helsinki Museum

Designing a Walk-through Audit Flowchart of customer interactions with the service system Helsinki Museum Ticketing, Information, … Questions of customer observations “sign give clear info” Likert scale Comments Unanticipated observation

Poll all customer segments Administrated in Mail Telephone interview In person Poll all customer segments

walk-through audit as diagnostic instrument Manager see facility daily Overlook gradual deterioration Peeling paint or worn rugs Employee is less sensible than customers in quality deterioration

Quality Service by Design Quality can NOT inspected into Incorporation of quality in the service package ex: Budget hotels Supporting facility Building material is maintenance-free 磁磚脫落 Automatic underground sprinkler system Decentralized heating & air condition Confined failure to one room only

Facilitating goods Information Furnishing is durable and easy to clean Bedside tables are supported from the wall to facilitate carpet cleaning Disposal plastic cups are used instead of glass 環保形象? Information Online computer track billing, reservation, registration Speedy check-in Anticipate needs: non-smoking rooms Quick check-out

Explicit service Implicit service Room has same appearance Maids are trained to make up room in a standard manner Implicit service Employee with pleasant appearance and good interpersonal skill Training in SOP Recruit

Taguchi methods “Robust design” of products Proper function under adverse condition 手機不小心掉落30次，還不致損壞 Robust design of manufacturing process Manufacturing Original: products should be kept in refrigerator to be fresh Robust: can be stored under room temperature Computer automatically notify maids once customer check-out

Quality is best by focusing on a specified goal

Poka-Yoke (Failsafing) 防呆 Low-cost, in-process, quality control mechanism Achieve high quality without costly inspection

Service provider errors McDonald French fry scoop Consistent serving Bank’s teller Enter customer’s eye color Ensure eye contacts

Customers’ errors Physical designs Preparation failure Carry-on luggage size limit Height Bar at amusement park Tray return stands near exit Physical designs instead of discretion can prevent most mistakes

Quality functional deployment 品質機能展開 Framework translate customer’s desire and taste into identifiable and measurable conformance specification House of quality

House of Quality 6-37

House of Quality 增加 工程規格欄 6-38

Achieving Service Quality Quality inspection intervention is impossible intangible and consumed simultaneously with production Educate employee’s sense of Cost of quality Statistical process control Service guarantee

Cost of quality Costly “Buyer beware” has become obsolete Automobile recall for defects Toyota 2012 recall 6 million vehicles worldwide estimate cost $589 million Malpractice litigation Huge settlement Defensive medicine Loss to everyone since no improvement in quality

Hotel could be sued for negligent to protect customers Juran’s Cost of quality Internal failure cost Defect discovered before shipping External failure cost Defect discovered after shipping Detection cost Inspection Prevention cost training

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 6-42

Statistical process control 99.7% of the normal distribution falls within 3 standard deviations from the mean Control Charts

Unconditional Service Guarantee 隔夜送達、否則免費 Unconditional Satisfaction is unconditional, without exceptions 下雨、颱風延誤；免費。 Easy to understand and communicate Know exactly what to expect 早上 10 點沒送到；免費。 Meaningful Important to customer in financial as well as in service

Service guarantee Easy to invoke Easy to collect Marketing appeal Hassle-free to invoke for dissatisfied customers No need to fill a form; signature maybe Easy to collect Resolved at the spot Domino’s pizza delivered within 30 minutes, or $3 off Service guarantee Marketing appeal Operations innovation Fedex

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 6-46

Stages in Quality Development Summary

Service Recovery 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.

Service Recovery Framework 6-49

Club Med: an all-inclusive resort Pre-recovery phase With dark cloud forming in the sky Outdoors activities will be cancelled Alternative activities planned Immediate recovery phase Organized group games Putting a stage show “the Club Med magic”

Follow-up phase Give away complementary service Free lunch Discount for return visits

Approaches to service recovery Case-by-case approach Address each customer’s complaint individually Inexpensive Easy to implement Persistent and aggressive complainer always receive satisfactory response Reasonable do not Unfairness

Systematic-response approach Protocol to handle customer’s complaints Reliable Response guideline need continuously update Early intervention approach Intervention before customers affected Shipment being held up due to truck breakdown Notify customer immediately

Substitute service recovery Overbook hotel Send customers to competitors might lose customers

Complaints handling policy Every complaint is treated as a gift We welcome complaints Encourage customers to complain Make easy to complain Handle complaints fast …

Mini cases Case 6.2 The complaint letter Local case: negative response over the Internet(?) Case 6.3 The Helsinki Museum of Art and Design