1. Customer Perceptions of Service
Chapter 4
09/07/2012

2. Customer Perceptions of Service
Chapter 4
Customer Perceptions of Service
Customer Perceptions
Customer Satisfaction
Service Quality
Service Encounters: The Building Blocks for Customer Perceptions
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3. Objectives for Chapter 4: Consumer Perceptions of Service
Provide a solid basis for understanding what influences customer perceptions of service and the relationships among customer satisfaction, service quality, and individual service encounters.
Demonstrate the importance of customer satisfaction—what it is, the factors that influence it, and the significant outcomes resulting from it.
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4. Objectives for Chapter 4: Consumer Perceptions of Service
Develop critical knowledge of service quality and its five key dimensions: reliability, responsiveness, empathy, assurance, and tangibles.
Show that service encounters, or the “moments of truth” are the essential building blocks from which customers form their perceptions.

5. The customer is . . .
Anyone who receives the company’s services, including:
external customers (outside the organization, business customers, suppliers, partners, end consumers)
internal customers (inside the organization, e.g., other departments, fellow employees)
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6. Customer perceptions
How customer assess whether they have experienced quality service and whether they are satisfied
Perceptions are always considered relative to expectations.
A discussion of quality and satisfaction is based on customer’s perceptions of the service- not some predetermined objective criteria of what service is or should be.

7. Transaction versus Cumulative Perceptions
The customers will have perception on single, transaction-specific encounters as well as overall perceptions of a company based on all their experiences.
Isolated encounters are the building blocks for overall, cumulative experience evaluations.
Understanding perceptions at the transaction-specific level is critical for diagnosing service issues and making immediate changes.

8. Customer Satisfaction
is the customer’s evaluation of a product or service in terms of whether that product or service has met the customer’s needs and expectations.
Satisfaction and quality are different.
Satisfaction is viewed as a broader concept, while
service quality is a component of customer satisfaction.
Customer Satisfaction can mean
Contentment, pleasure, delight, ambivalence

9. Customer Perceptions of Quality and Customer Satisfaction
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10. Factors Influencing Customer Satisfaction
Product quality
Service quality
Personal factors
Situational factors
Price
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11. Factors Influencing Customer Satisfaction (continued)
Specific product or service features
eg. Resort hotel-pool, restaurants, room comfort
Consumer emotions
If you are happy, your mood will influence how you feel about the services you experience.

12. Attributions for service success or failure
e.g. A customer of a weight-loss organization will search for the causes of the success/ failure before determining her satisfaction with the service.
Perceptions of equity or fairness
Am I treated fairly compared with other customers?
Other consumers, family members, and coworkers

13. Outcomes of Customer Satisfaction
Increased customer loyalty
Positive word-of-mouth communications
Increased revenues
Increased return to shareholders
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14. ASQI and Market Value Added
A relationship between market value added and satisfaction.
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15. Relationship between Customer Satisfaction and Loyalty in Competitive Industries
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16. Top Box Scores – A Higher Standard
Overall Satisfaction
with XYZ
(% of customers)
Definitely Will Repurchase from XYZ
Definitely Would Recommend XYZ
TOP BOX Very Satisfied
(64%) =
96% =
91%
44-point drop
55-point drop
SECOND BOX
Somewhat Satisfied
(29%)
All Customers =
52% =
36%
BOTTOM 3 BOXES
Neutral to Very Dissatisfied
(7%) = 7% = 4%
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Source: Technical Assistance Research Bureau (TARP), 2007.

17. What is Service Quality? The Customer Gap
Expected Service
Customer gap
Perceived Service
Service quality is the customer’s judgment of overall excellence of the service provided in relation to the quality that was expected.
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18. Service Quality
Service quality assessments are formed on judgments of:
outcome quality
interaction quality
physical environment quality
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19. E.g. a legal service
Outcome quality- how the court case was resolved
Interaction quality- the lawyer's timeliness in returning phone calls, his empathy for the client
Physical environment quality- the décor and surroundings
E.g. restaurant
Outcome quality - food
Interaction quality - how the food is served
Physical environment quality - the décor and surroundings

20. The Five Dimensions of Service Quality
Ability to perform the promised service dependably and accurately.
Knowledge and courtesy of employees and their ability to inspire trust and confidence.
Physical facilities, equipment, and appearance of personnel.
Caring, individualized attention the firm provides its customers.
Willingness to help customers and provide prompt service.
Reliability
Assurance
Tangibles
Empathy
Responsiveness
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21. SERVQUAL Attributes RELIABILITY EMPATHY RESPONSIVENESS TANGIBLES
Providing service as promised
Dependability in handling customers’ service problems
Performing services right the first time
Providing services at the promised time
Maintaining error-free records
Giving customers individual attention
Employees who deal with customers in a caring fashion
Having the customer’s best interest at heart
Employees who understand the needs of their customers
Convenient business hours
RESPONSIVENESS
TANGIBLES
Keeping customers informed as to when services will be performed
Prompt service to customers
Willingness to help customers
Readiness to respond to customers’ requests
Modern equipment
Visually appealing facilities
Employees who have a neat, professional appearance
Visually appealing materials associated with the service
ASSURANCE
Employees who instill confidence in customers
Making customers feel safe in their transactions
Employees who are consistently courteous
Employees who have the knowledge to answer customer questions
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22. Reliability
Absolutely, positively has to get there.

23. Geek Squad’s Focus on Responsiveness
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24. How Customers Judge the Five Dimensions of Service Quality
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25. Empathy Southwest airline commercials

26. Exercise to Identify Service Attributes
In groups of two, choose a services industry and spend 10 minutes brainstorming specific requirements of customers in each of the five service quality dimensions. Be certain the requirements reflect the customer’s point of view.
Reliability:
Assurance:
Tangibles:
Empathy:
Responsiveness:
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27. Service Encounter: The building blocks for customer perceptions
is the “moment of truth”
occurs any time the customer interacts with the firm
can potentially be critical in determining customer satisfaction and loyalty
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28. The Service Encounter types of encounters:
remote encounters, phone encounters, face-to-face encounters
is an opportunity to:
build trust
reinforce quality
build brand identity
increase loyalty

29. A Service Encounter Cascade for a Hotel Visit
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30. A Service Encounter Cascade for an Industrial Purchase
Sales Call
Delivery and Installation
Servicing
Ordering Supplies
Billing
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31. Service Encounters: An Opportunity to Build Satisfaction and Quality
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32. Common Themes in Critical Service Encounters Research
Recovery:
Adaptability:
employee response
to service delivery
system failure
employee response
to customer needs
and requests
Coping:
Spontaneity:
unprompted and
unsolicited employee
actions and attitudes
employee response
to problem customers
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33. Recovery
Employee is required to respond in some way to consumer complaints and disappointments.
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34. Adaptability
Customers judge service encounters quality in terms of the flexibility of the employees and the system.
Customer perceives that something special is being done for her individual needs.
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35. Spontaneity
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36. Coping
The behavior required of employee to handles problem customers encounters.
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37. Technology-Based Service Encounters
Themes for satisfying self-service technologies (SSTs)
The technology solved an intensified need
The technology was better than the alternative
The technology did its job
Themes for dissatisfying SSTs
The technology itself failed
The process failed
The technology was poorly designed
The customer did not use the technology properly
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38. Homework: due next week
Read Technology Spotlight on page 100.
Visit Amazon.com’s website.
Visit a traditional bookstore.
How would you compare the two experience?
Compare and contrast the factors that most influenced you satisfaction and perceptions of service quality in the two different situations.
When would you choose to use one versus another?