OPSM 405 Service Management Koç University OPSM 405 Service Management Class 6: Service Quality Management Service Quality tools Zeynep Aksin zaksin@ku.edu.tr

Identifying quality shortfalls word-of-mouth personal needs past experience expected service Gap 5 perceived service Customer Provider service delivery Gap 3 Gap 1 Gap 4 external communications to customer service quality specifications Gap 2 management perceptions

Diagnosis for Gap 1 lack of bottom-up communication expected service lack of bottom-up communication too many management layers no measurement of what customers expect: marketing failure Gap 1 management perceptions of these expectations

Diagnosis for Gap 2 reluctance to tackle challenges service quality specifications reluctance to tackle challenges lack of management commitment ease of measurement driving decision no employee involvement Gap 2 management perceptions of customer specifications

Diagnosis for Gap 3 wrong incentives (control systems) service delivery wrong incentives (control systems) wrong technology for the job wrong type of people for the job insufficient resources lack of management commitment Gap 3 service quality specifications

Diagnosis for Gap 4 over promising lack of communication service delivery over promising lack of communication lack of product design and development discipline Gap 4 external communications

Addressing internal gaps use front-line employees give customers an incentive to complain: service guarantees Gap 2 don’t take no measurement as an option involve people in measurement Gap 3 & 4 value proposition / formulation process design and management capacity design and management HRM

The full picture: customer satisfaction, customer retention, and market share Time Enter Them t-1 Us Leave Enter t Us Them Leave Enter Us t+1 Them Leave

ROQ: Quality as an investment Improvement effort Service quality improvement Word of mouth Perceived Serv. Qual. & Satis. Cost reduction Customer retention New cust. attraction Revenues & Market share Profitability

A service quality truth expectations change dynamically the bar is going up excellent service yesterday, acceptable service today need to monitor and measure dynamically don’t lose sight of economics

Service Quality Design Poka-Yoke: Fool proofing mechanisms Prevent inevitable mistakes from turning into defects Example: Repeating back order at Starbucks before giving you a cup of coffee Indented trays to hold surgical equipment Frames at airports to check luggage size Conceived of by Shigeo Shingo, “Mr. Improvement”

Which knob would you turn? Example Which knob would you turn? Ocak A Ocak B

Service guarantees: What is a good guarantee? unconditional easy to understand meaningful easy to invoke easy and quick to collect on

Guarantees for professional services: marketing benefits prices are high negative consequences of unsolved problems are high services highly customized brand name recognition can be tough buyer resistance is high

Guarantees for professional services: quality benefits understanding customer needs understanding service delivery process forces firm to establish measures of customer satisfaction a general emphasis and focus on service quality

Guarantees for professional services: the risks co-production: double moral hazard can be giving the wrong message doesn’t always provide good feedback on quality ethical issues: can’t guarantee outcomes international setting: cultural differences

Other options, other views a specific result guarantee could this trigger the wrong signal? the implicit guarantee maybe reputation is all you need? Firnstahl: “employees are my guarantee”

Summary: service guarantees As a marketing tool: professional services, web based services as a measurement tool: incentives to make customers talk as a quality tool: continuous improvement mitigating the risks good guarantee design careful implementation implicit guarantees specific result guarantees awareness of culture

Research approaches to building service-quality information systems Type Description Purpose Limitations Transactional surveys focus on most recent service encounter; noncustomers excluded survey following service encounter fresh feedback, quick action Mystery shopping researchers become customers measure individual employee service behavior; identify systemic strengths and weaknesses in customer-contact service subjective evaluations; expensive; could destroy employee morale New, declining, lost-cust. surveys why customers select, reduce buying, leave firm relating customer service quality to loyalty need to identify and monitor individual service usage Focus group interviews questioning of small group on specific topic; cust., empl. or noncust. elicit suggestions for improvement; fast feedback hard to project results to the population of interest

Research approaches to building service-quality information systems (cont.) Type Description Purpose Limitations Employee field reporting incentivizing for negative feedback reporting formally extracts information from front-line people capture and share field info. w/ management Employee surveys surveys of employee satis. measures internal service quality can be subjective service operating data capture may not be relevant to cust. perception of service retain, categorize, track, distribute service performance operating data monitor performance and take corrective action

Research approaches to building service-quality information systems (cont.) Type Description Purpose Limitations Customer advisory panel hard to project to customer base and noncustomers a recruited group of customers providing periodic feedback obtain timely feedback from cooperating cust. Service reviews periodic visits w/ cust.; common set of questions identify cust. expectations and perceptions, past and future Time consuming and expensive; eg. would work well w/ consulting Capturing complaints, inquiries, comments hard to capture all complaints; offers only a partial picture retain, track, categorize, distribute communications w/ company identify failures, opportunities for improvement Total market surveys surveys entire market for cust. service assessment benchmark against others; identify improvement opportunities measures overall assessment but not individual service encounters

Next class No class this Wednesday We meet again next Monday HW2 for Monday March 3: Read the Zipcar case Answer the questions in the assignment