1. Designing Quality Services
Chapter 8
Designing Quality Services
S. Thomas Foster, Jr.
Boise State University
PowerPoint
prepared by
Dave Magee
University of Kentucky
Lexington Community College
©2004 Prentice-Hall

2. Chapter Overview Differences between Services and Manufacturing
What Do Services Customers Want?
SERVQUAL
Designing and Improving the Services Transaction
The Customer Benefits Package
The Globalization of Services
Improving Customer Service in Government
Quality in Health Care
A Theory for Service Quality Management

3. Differences Between Services and Manufacturing Slide 1 of 3
Unique Attributes of Services
The output of services is heterogeneous
Services are intangible
The production and consumption of services often occur simultaneously
Customers are more involved in the production of services than they are in manufacturing

4. Differences Between Services and Manufacturing Slide 2 of 3
Intangible
Many service attributes are intangible. This means that they cannot be inventoried or carried in stock over long periods of time.
Heterogeneous
This means that for many companies, no two services are exactly the same.
Simultaneous Production and Consumption
Customer Contact
Customers tend to be more involved in the production of services than they are in manufacturing.

5. Differences Between Services and Manufacturing Slide 3 of 3
Internal Versus External Services
External services are those whose customers pay the bills.
Internal services are in-house services such as data processing, printing, and mail.
Voluntary Versus Involuntary Services
Voluntary services are those services that we actively seek out and employ of our own accord.
The quintessential example of an involuntary service is a prison. Other involuntary services include hospitals, the IRS, and the fire department.

6. How Are Service Quality Issues Different from Those of Manufacturing
How Are Service Quality Issues Different from Those of Manufacturing? Slide 1 of 3
Availability of Data
Simultaneous Production and Consumption
Customer Contact
Design of Services
Product Liability

7. How Are Service Quality Issues Different from Those of Manufacturing
How Are Service Quality Issues Different from Those of Manufacturing? Slide 2 of 3
Availability of Data
Because services attributes are often intangible, it is sometimes difficult to obtain hard data relating to services.
Simultaneous Production and Consumption
Service must be done right the first time.
Customer Contact
Leads to an increase in the variability in the service, a high degree of customization and great variability in the time required to perform the service.

8. How Are Service Quality Issues Different from Those of Manufacturing
How Are Service Quality Issues Different from Those of Manufacturing? Slide 3 of 3
Design of Services
Must take into account variables such as customer moods and feelings.
Product Liability
In services, liability issues often relate to malpractice, whereas in manufacturing liability issues typically relate to safety concerns.

9. How Are Service Quality Issues Similar to Those of Manufacturing?
For both manufacturing and service firms, the customer is the core of the business, and customer needs provide the major input to design.

10. What Do Services Customers Want? Slide 1 of 2
Zeithamel, Parasuraman, and Berry’s List of the Dimensions of Service Quality
Tangibles
Reliability
Responsiveness
Assurance
Empathy

11. What Do Services Customers Want? Slide 2 of 2
Attributes of Effective Leaders in Service Industries
Service Vision
High Standards
In-the-Field Leadership Style

12. SERVQUAL Instrument Slide 1 of 12
A survey instrument for assessing quality along five service dimensions
Tangibles
Reliability
Responsiveness
Assurance
Empathy
The SERVQUAL survey has been used by many firms and is an off-the-shelf approach that can be used in many service settings.

13. SERVQUAL Instrument Slide 2 of 12
Advantages of SERVQUAL
Accepted as a standard for assessing different dimensions of services quality.
Shown to be valid for a number of different service situations.
Demonstrated to be reliable, meaning that different readers interpret the questions similarly.
Only has 22 items making it parsimonious. It can be filled out quickly by customers and employees.
Has a standardized analysis procedure to aid interpretation and results.

14. SERVQUAL Instrument Slide 3 of 12
SERVQUAL survey has two parts
Customer expectations
Customer perceptions
Gap Analysis
The SERVQUAL instrument is used to perform gap analysis.
Gaps in communication and understanding between employees and customers have a serious negative affect on the perceptions of services quality.

15. SERVQUAL Instrument Slide 4 of 12
SERVQUAL Items and Dimensions
Dimension Items
Tangibles
Reliability
Responsiveness
Assurance
Empathy

16. SERVQUAL Instrument Slide 5 of 12
Word-of-mouth
communication
Personal needs
Past experience
Expected service
Gap 5
Perceived service
CUSTOMER
PROVIDER
Gap 4
External
communications
to customers
Service delivery
Gap 3
Service quality
specifications
Gap 1
Gaps Model
Figure 8.4
Gap 2
Management perceptions
of customer expectations

17. SERVQUAL Instrument (Gap Models) Slide 6 of 12
Figure 8.5
Management
perceptions of
customer
expectations
Expected
service
Gap 1
Gap 1 shows that there can be a difference between
actual customer expectations and management’s idea
or perception of customer expectations.

18. SERVQUAL Instrument (Gap Models) Slide 7 of 12
Figure 8.6
Service
quality
specifications
Management
perceptions of
customer
expectations
Gap 2
Manager’s expectations of service quality may not
match service quality specifications. This mismatch
is demonstrated in gap 2.

19. SERVQUAL Instrument (Gap Models) Slide 8 of 12
Figure 8.7
Service
delivery
Service
quality
specifications
Gap 3
Inadequate training, communication, and preparation
of employees who interact with the customer, referred
to as contact personnel, can lower the quality of service
delivered. This mismatch is represented as Gap 3.

20. SERVQUAL Instrument (Gap Models) Slide 9 of 12
Figure 8.8
Service
delivery
External
communications
to customers
Gap 4
Gap 4 shows the differences between services delivery
and external communications with the customer.

21. SERVQUAL Instrument (Gap Models) Slide 10 of 12
Figure 8.9
Expected service
Perceived service
Gap 5
Gap 5 is the difference between perceived and expected services. The key to closing this gap is to first close gaps 1 through 4 through thoughtful system design, careful communication with the customer, and a workforce trained to provide consistently outstanding customer service.

22. SERVQUAL Instrument Slide 11 of 12
Differencing Technique
The differencing technique is used to assess the differences between expectations and perceptions.
Simple Differencing
The averages for each dimension of service quality is computed by averaging the items pertaining to each dimension and then computing the difference.
Two-Dimensional Differencing
Very useful for evaluating responses when there is enough variation in different dimensions.
The vertical axis reflects the expectations score and the horizontal axis relates to the perceptions score.

23. SERVQUAL Instrument Slide 12 of 12
Two-Dimensional Differencing Plane
Figure 6.10
EXPECTATIONS 7
. Tangibles
Reliability . 6
Empathy . 5
PERCEPTIONS 4 1 2 3 5 6 7
. Assurance 3
. Responsiveness 2 1

24. Designing & Improving the Services Transaction Slide 1 of 5
Services Blueprinting
A services blueprint is a flowchart that isolates potential fail points in a process.
Steps to developing a service blueprint.
1. Identify processes
2. Isolate fail points
3. Establish a time frame
4. Analyze profits

25. Designing & Improving the Services Transaction (Services Blueprinting) Slide 2 of 5
Services Blueprinting Example
Figure 8.11
Standard execution time 2 minutes
Brush shoes
Apply
polish
Buff
Collect
payment
Total acceptable execution time 5 minutes
30 seconds
30 seconds
45 seconds
15 seconds
Fail
point
Wrong color wax
Clean
shoes
Materials
(e.g., polish, cloth)
Seen by customer
45 seconds
Line of visibility
Not seen by customer but necessary to
performance
Select and
purchase supplies

26. Designing & Improving the Services Transaction (Services Blueprinting) Slide 3 of 5
Steps in Developing a Service Blueprint
Step 1: Identify processes. Processes are flowcharted so that the bounds of the process are identified.
Step 2: Isolate fail points. What can happen here? What could go wrong. Mistakes can be expensive.
Step 3: Establish a time frame. Time can be a major determinant of profitability. Those steps that lose time result in lost income. Time standards should be established for each step in the process.
Step 4: Analyze profits. As errors occur in the process, the service provider becomes liable. Because delays and errors affect profitability, the provide could lose money.

27. Designing & Improving the Services Transaction Slide 4 of 5
Line of Visibility
Identifies the point beyond which activities are not seen by the customer, but still influence performance.
Moments of Truth
The fail points in the service blueprint are also referred to as moments of truth.
These are times at which the customer expects something to happen.
Poka-Yoke
The idea behind poka-yoke (or fail-safing) is to ensure that certain errors will never occur.

28. Designing & Improving the Services Transaction Slide 5 of 5
Fail Safe Methods Can Also Be Described as the Three Ts
Task
Treatment
Tangibles
Figure 8.12

29. The Customer Benefits Package Slide 1 of 3
Customer Benefits Package (CBP)
A customer benefits package consists of both tangibles that define the service and intangibles that make up the service.
Tangibles are known as goods-content.
Intangibles are referred to as service-content.
Stages of Service Design Process
1. Idea/concept generation
2. The definition of a services package
3. Process definition and selection
4. Facilities requirement definition

30. The Customer Benefits Package Slide 2 of 3
CBP Design Process
Figure 8.13
Idea/concept
generation
Define
CBP
Select and
define process
Define
facility
requirements

31. The Customer Benefits Package Slide 3 of 3
Process/CBP Matrix
Figure 8.14
Service Process Structure
Unique service package
Selective service package
Restricted service package
Generic service package
Expert service
Consulting
Service shop
Higher Education
Service factory
Package Delivery

32. Globalization of Services
The trend toward globalization the way we manage service quality.
Eastern European and Eastern Asian countries are following the lead of the United States by transferring labor and GDP into the services sector.
The implication is that service competition will increase on a global scale, as has been the case in manufacturing for the past 40 years.

33. Improving Customer Service In Government
If customer service is the battlefield for business leading into the twenty-first century, then government is probably the last frontier. There are some evidences of improvement in several aspects of government service.

34. Quality in Health Care
Several factors have contributed to increased attention in the area of health care
Health care is facing the same “cost squeeze” that government is facing.
A move toward HMO’s is causing hospitals to streamline operations.
There is increasing diversity in health care.
Calls for a nationalized health care system threaten the status quo an provide the competitive pressures that spur the impetus to improve.

35. A Theory For Service Quality Management Slide 1 of 5
Proposition 1: The Unified Services Theory
Proposition 2: The Unreliable Supplier Dilemma
Proposition 3: Capricious Labor
Proposition 4: Everyone Presumes to be An Expert

36. A Theory For Service Quality Management Slide 2 of 5
Proposition 1: The Unified Services Theory
“With services, the customer provides significant inputs
into the production process. With manufacturing, groups
of customers may contribute ideas to the design of the
product; however, individual customers’ only part in the
actual process is to select and consume the output.
Nearly all other managerial themes unique to
services are founded in this distinction.

37. A Theory For Service Quality Management Slide 3 of 5
Proposition 2: The Unreliable Supplier Dilemma
“With services, the customer-suppliers often
provide unreliable inputs.”

38. A Theory For Service Quality Management Slide 4 of 5
Proposition 3: Capricious Labor
“With services, customer-labor may ignore, avoid,
or reject technologies or process improvements
which are intended to increase quality and
productivity. As a result, customer buy-in to
process changes must be carefully addressed.”

39. A Theory For Service Quality Management Slide 5 of 5
Proposition 4: Everyone Presumes to be An Expert
“With services, the customer often provides
product specifications (what to make) and
process design (how to make it), often without the
invitation of the service provider.”

40. Summary Differences between Services and Manufacturing
What Do Services Customers Want?
SERVQUAL
Designing and Improving the Services Transaction
The Customer Benefits Package
The Globalization of Services
Improving Customer Service in Government
Quality in Health Care
A Theory for Service Quality Management