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Service Quality

Service Quality. 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.

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Service Quality

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  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. 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 Classification of Service Failures

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

  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 expectationsand 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 ofDissatisfaction

  23. Approaches to Service Recovery • Case-by-caseaddresses 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 actionDetractors 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?

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