1. Service Quality

2. Learning Objectives Describe the five dimensions of service quality.
Use the service quality gap model to diagnose quality problems for a service firm.
Illustrate how Taguchi methods and poka-yoke methods are applied to service design.
Construct a statistical process control chart.
Develop unconditional service guarantees.
Plan for service recovery.

3. Moments of Truth Each customer contact is called a moment of truth.
You have 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.

4. 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.

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

6. 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

7. Gaps in Service Quality
Word -of-mouth
communications
Personal needs
Past experience
Customer
Expected service
GAP 5
Perceived service
Service delivery (including
pre- and post-contacts)
External communications
to consumers
GAP 3
GAP 1
GAP 4
Translation of perceptions into
service quality specifications
GAP 2
Provider
Management perceptions of
consumer expectations

8. Quality Service by Design
Quality in the Service Package Budget Hotel example
Taguchi Methods (Robustness) Notifying maids of rooms for cleaning
Poka-yoke (fail-safing) Height bar at amusement park
Quality Function Deployment House of Quality

9. Classification of Service Failures
Server Errors
Task:
Doing work incorrectly
Treatment:
Failure to listen to customer
Tangible:
Failure to clean facilities
Customer Errors
Preparation:
Failure to bring necessary materials
Encounter:
Failure to follow instructions
Resolution:
Failure to learn from experience

10. Service Fail-safing Poka-Yokes (A Proactive Approach)
Keeping a mistake from becoming a service defect.
How can we fail- safe the three Ts?
Task
Tangibles
Treatment

11. Have we compromised one of the 3 Ts?

12. Achieving Service Quality
Cost of Quality (Juran)
Service Process Control
Statistical Process Control (Deming)
Unconditional Service Guarantee

13. Costs of Service Quality
Failure costs Detection costs Prevention costs
External failure: Process control Quality planning
Customer complaints Peer review Training program
Warranty charges Supervision Quality audits
Liability insurance Customer comment card Data acquisition and analysis
Legal judgments Inspection Preventive maintenance
Loss of repeat service Supplier evaluation
Recruitment and selection
Internal failure:
Scrap
Rework
Recovery:
Expedite
Labor and materials

14. Service Process Control
Customer
input
Service
concept
Customer
output
Resources
Service
process
Take
corrective
action
Monitor
conformance to
requirements
Establish
measure of
performance
Identify reason
for
nonconformance

15. Control Chart of Departure Delays
expected
Lower Control Limit
1998
1999

16. 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)

17. 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

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

19. Expressing Dissatisfaction
Public Action
Seek redress directly from
the firm
Action
Take legal action
Dissatisfaction
occurs
Complaint to business, private,
or governmental agencies
Private Action
Stop buying the product or
boycott the seller
No Action
Warn friends about the product
and /or seller

20. Customer Feedback and Word-of-Mouth
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 problems 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.

21. Number of People Told Based on Level of Dissatisfaction

22. Action Taken Based on Level of Dissatisfaction

23. 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.

24. Making Customers into Champions
easy
Walking wounded Champions
Could complain but don’t; Active in providing
not happy but repurchase British Airways with
information on quality
of its services; loyal
Remain Loyal
Defect
Missing in action Detractors
Defected; Defected;
non-complaining vocally critical
not easy
don’t complain complain
Propensity to contact British Airways
How easy customers feel it is to
contact British Airways

25. Topics for Discussion
How do the 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 of your choice.
Why do service firms hesitate to offer a service guarantee?
How can recovery from a service failure be a blessing in disguise?

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