Topic 4

Evolution of
Service
Quality
Theories
BY: Jazira Anuar
PM Dr Zurinawati Mohyi
Service Encounters: Overview

• The heart of service

• Moment of truth;
• Example: the Iceberg
principle in service
operations
The Iceberg Principle in Service
Operations
The Iceberg Principle in Service
Operations
The Iceberg Principle in Service
Operations
The Iceberg Principle in Service
Operations
Introduction to Service Quality
Review: Perceived Difference
between Manufacturing and Services
• The product is intangible.
• Services cannot be kept in stock.
• Services vary and cannot be mass produced.
• There is high customer contact.
• Customers participate in the service.
• Facilities are located near to customers.
• Services are labour intensive.
• Quality is difficult to measure.
• Quality depends largely on the service provider
 Defining Services Quality in the
Service Industries:
• Measuring and improving quality is more difficult for services
than for products
• Unsatisfactory service cannot be replaced or repaired
• Intangible and temporary nature

• Specifications
• Company: Standard operating procedures
• Customer: based on their personal expectations
• Misalignment of company and customer specifications can lead
to dissatisfaction, even if the service is delivered as designed
§ Effective communication is key in eliminating misalignment
• Quality is an increasingly important element that
differentiates between competing services
• Many services are not easily measured or tested for quality
unlike the tangible products
• Customer can only assess the service quality until they
consumed
• All across the service economy,
the leading companies are obsessed with
providing service excellence:
• use to increase productivity;
• to be different among the competitors;
• to earn customers’ loyalty; and
• to seek some shelter from price competition
 Defining
Expectation:
 Defining
Expectati
What wou
ld ha p pe n
tance
u
s
n
;
der the
use ful as on:
rcums
best of ci f e x c ellence
te r o
a barome
 Defining
Expectati
on:
rs fe el
c u s tome th e
Wha t e fro m
s e rv
de
they t io n
s ac
tran
 Defining
Expectati
on:

Average level of quality

that is predicted based on
all known information
 Defining
Expectati
on:

The threshold at w
hich
mere satisfaction
is
achieved
 Categories of Quality
Definitions

Manufacturing-
Transcendent Product-based User-based based Value-based

§ Innate § Measurable § Defines from § An outcome of § Incorporates

excellence quantities to an individual engineering value and
and can be define consumer’s and price into the
recognized quality perspective production definition of
through § Goods-length § Quality is in processes quality
experience of useful life the eyes of § Conformance § Balance
§ You only § Service- the beholder to between
can define length of requirements performance
it when time before § How well does and an
you see it. service is the output acceptable
provided match the price to
design customer
 Service Quality: Overview
• Service quality has emerged as an important area in hospitality
• Product features enhance customer satisfaction and adds to the
cost of a product
• Freedom from deficiencies increases customer satisfaction
 Implementing Quality Service
• Technical quality refers to what the
customer is left with after the customer
– employee interactions have been
completed
• Functional quality is the process of
delivering the service or product
• Societal quality (also known as ethical
quality) means firms must consider
ethical responsibilities when developing
products
Good customer service and high customer
satisfaction requires the commitment of:

Management
Good customer service and high customer
satisfaction requires the commitment of:

Management

Supervisors
Good customer service and high customer
satisfaction requires the commitment of:

Management

Supervisors

Front-Line
employees
Good customer service and high customer
satisfaction requires the commitment of:

Management

Supervisors

Front-Line
employees
Good customer service and high customer
satisfaction requires the commitment of:

Management

To create
& maintain
Supervisors strong
business
philosophy

Front-Line
employees
Good customer service and high customer
satisfaction requires the commitment of:

Management

To create
& maintain
Supervisors strong
business
philosophy

Front-Line
employees
Good customer service and high customer
satisfaction requires the commitment of:

Management

To create Becoming more

& maintain competitive in today
Supervisors strong marketplace
business
philosophy

Front-Line
employees
Measures of
Customer
Satisfaction
 Total Quality Management:

• Managing the entire organization so that it excels

on all dimensions of products and services that are
important to the customer.
• Improving the quality of services is more difficult
than improving the quality of products.
• The rule of TQM is to know your customer.
• TQM movement has shifted to Return on Quality
(ROQ)
• Within TQM, the drivers are too often defined
internally.
• With ROQ, the customer set the parameters and
the market selects those quality improvements
that lead to the greatest return on investment.
Measures of Customer
Satisfaction:
1. Purpose of every service business
2. What is a customer?
3. Common measurement tools used
1.Purpose of Every Service
Business
To identify and fulfill customers
needs companies must find out:
• What the customers needs
are
• Whether they are being met
• How to meet them better
2. What is a Customers?
• A customer is the most important person…
• A customer is not dependent on us…
• A customer is not an interruption of our
work…
• A customer is not someone to argue with...
• A customer is a person who brings us
his/hers wants…
Asking Guests the Right Questions
• Informal queries by employees
• Formal inquiries by employees
• Professional interviews
Finding and Using the Technique
that Fits
• Best evaluators:
• Guests

• Improvement cycle
continues
• Continuous improvement
Measuring Service Quality After
the Experience
• Comment cards
• Toll-free 1800 numbers
• New technologies for gathering feedback
• Focus groups
• Customers evaluating service on their own
• Mystery shoppers
Measuring Service Quality After
the Experience

• Surveys:
• Mail/Web
• Telephone
• Critical-incidents
• SERVQUAL
Gaps in Service Quality:
q Differences between customers expectation and
perceptions of what was actually delivered
q The difference is known as a “gap”
Gaps Problem Causes
Gaps 1: The service offered do § Lack of marketing
Consumer expectation- not meet customer research
management needs § Inadequate upward
perception gap communications
§ Too many levels between
contact personnel &
management
Gaps 2: The service § Resource constraints
Management specification defined § Management
perception-service do not meet indifference
quality specification management’s § Poor service design
gap perception of
customers expectation
SERVQUAL:
A multi-dimensional model
and multiple-item scale to
measure customers’
assessments of service
quality
Determinants of Service Quality proposed by
Parasuraman, Zeithaml and Berry (1985)
Access

• Involves approachability and ease of contact.

• It means:
• The service is easily accessible by telephone (lines are not busy and they not
put you on hold)
• Waiting time to receive service
• Convenient hours of operation
• Convenient location of service facility

Communication

• Means keeping customers informed in language they can understand and

listening to them.
• It may mean that the company has to adjust its language for different
consumers
• Increasing the level of sophistication with a well-educated customer and
speaking simply and plainly with a in voice
• It involves:
• Explaining the service itself
• Explaining how much the service will cost
• Explaining the trade-offs between service and cost
• Assuring the consumer that a problem will be handled
Competence

• Means possession of the required skills and knowledge to perform the

service.
• It involves:
• Knowledge and skill of the contact personnel
• Knowledge and skill of operational support personnel
• Research capability of the organization

Courtesy

• Involves politeness, respect, consideration and friendliness of contact

personnel (including receptionists, telephone operators, etc.).
• It includes:
• Consideration for the consumer’s property (e.g., No muddy shoes on the
carpet)
• Clean and neat appearance of public contact personnel.
Credibility

• Involves trustworthiness, believability, honesty.

• It involves having the customer’s best interests at heart.
• Contributing to credibility are:
• Company name
• Company reputation
• Personal characteristics of the contact personnel
• The degree of hard sell involved in interactions with the customer

Reliability

• Involves consistency of performance and dependability.

• It means that the firms performs the service a right time the first time.
• It also means that the firms honors its promises.
• Specifically, it involves:
• Accuracy in billings
• Keeping records correctly
• Performing the service at the designated time
Responsiveness

• Concerns the willingness or readiness of employees to provide

service.
• It involves timeliness of service:
• Mailing a transaction slip immediately.
• Calling the customer back quickly.
• Giving prompt service (e.g., setting up appointments quickly)

Security

• Freedom from danger, risk, or doubt.

• It involves:
• Physical safety
• Financial security
• confidentiality
Tangibles

• The physical evidence of the services, includes:

• Physical facilities
• Appearance of personnel
• Tools of equipment used to provide the service
• Physical representations of the service such as credit card and
a bank statement
• Other customers in the service facility

Understanding/Knowing the customer

• Making the effort to understand the customers’ needs

• It involves:
• Learning the customer’s specific requirements
• Providing individualized attention
• Recognizing the regular customer
SERVQUAL Model: Measuring Service
Quality Proposed by Parasuraman et al.
(1988)
Reliability
• Ability to perform the promised service dependably and
accurately
• Consistency of performance and dependability
• Accuracy in billing, keeping records correctly

Responsiveness
• Willingness to help customers and provide prompt service
• The willingness or readiness of employees to provide service
• Calling the customer back quickly

Empathy
• Caring, individualized attention the firm provides its customers
• The caring and individual attention provided by the service
provider to customers
• Trying their best to understand customer’s needs
Assurance
• The knowledge, competence and courtesy of
service employees and their ability to convey trust
and confidence
• Honesty of service employees

Tangibles
• Physical evidence of the service
• E.g., appearance of service providers, physical
facilities, equipment, personnel, and
communication materials
Developing a Culture of Service
Quality:
q Companies who regularly deliver service usually have a corporate
culture philosophy that encourages and supports quality
throughout the company (e.g., The Ritz-Carlton hotel and The
Walt Disney Company)
q Among the corporate culture philosophy that “live and breathe”
in these companies are H.E.A.R.T
• Hire the right people
• Educate and train them well
• Allow them to fix anything
• Recognize and reward them regularly
• Tell them everything, everyday
 Hire the Best Educate and Train
People: them well:

• Hire the right people and treat • A common theme at companies with
them with respect. a quality culture is an excellent
• Hire the best people who ongoing training program.
already support corporate
• Training program is very important
values and then train them as
because the employee will learn
needed.
about the company’s culture and
• Find people with the right become a valued team member.
spirit, are other people
oriented, are outgoing, and
work hard.
 Recognize and
Allow Them to
Reward them
Fix Anything: Regularly:
• Quality cultures require the • Rewards are key element in
empowerment of developing a quality culture.
employees to do whatever • Recognition should be more
is required to create a symbolic than material.
satisfactory customer
• E.g., celebrate everything
service experience.
together, on-the-spot type
rewards (i.e., dinners, gift
certificates)
 Tell them Everything, Everyday:
• In large organization, communication is vital.
• Upper management should communicate with
their employees everyday.
• This is because the employees is the people
closest to the customers and ease to get the
complaints, feedback or suggestion from them for
system improvement.
What is service guarantee?
• A service guarantee is a statement that clarifies what the customer
can expect from a service, and what the company will do to resolve
the situation if the service does not meet expectations.
• What a guarantee does?
• Forces an organization to explicitly define its customers needs
• To understand all the elements of its service-delivery process
• To determine the root causes of its operational problems
 The Benefit of Service
Guarantee is Higher When:
• The price of the service ↑

• The customer ego is on the line

• The level of customer expertise

with the service is ↓

• The negative consequences of

service failure are ↓
Service guarantees and refunds:
• Guarantees can be a powerful
marketing tools to increase sales,
but the primary objectives of the
guarantee should be too get a
repeat business.
• E.g.,: Pizza hut former guarantee
17 minutes for deliver the pizza
to customers. Thus, customer’s
does not have to pay the pizza if
they deliver late than 17
minutes.
 Hart (1988) indicated the service guarantees work best when the
service provider include the following 5 characteristics:
• Unconditional: Customers’ satisfaction without exceptions
• Easy to understand and communicate: Written in simple, concise
language that find the promise
• Meaningful: Important to customers’ and financially significant
without being overly generous
• Easy to invoke: No red tape or runaround to obstacle, no guilt
involved
• Easy to collect: The procedure needs to be quick and disturb free
• Some service firms will not benefit from a guarantee when they
already have reputation for sterling service
§ E.g., Ritz Carlton Hotel & Four Season Hotel – guess at this hotel
don’t need a guarantee, because it is assumed that the service
will absolutely marvelous. When it is not, employees will fix it
• The downsize of guarantees, is their implication that the service
may fail
• Customers resort to cheating only when they feel they are not
receiving value for their money
5 Reasons Why a Guarantee Provides a
Powerful Marketing and Service Quality:
• It forces the service to focus on the customers’ definition of good
service
• It set up clear performance standards
• It generates reliable data when performance is poor
• It forces an organization to examine its entire service delivery system
for possible failure points
• It build customer loyalty, sales and market share
SERVICE RECOVERY
• All service providers experience moments of
service failure at some point.
• Equipment failure, delivery failure, severe
weather, all human weakness like no shows,
forgetful or careless employees can affect a
service profoundly.
• Gartner Research-through 2007, more than 75% of
business will fail to fully meet expectation for
customers service excellent.
There are 7 ways of recovery approach
recommended by Hart et al. (1990):
1. Measure the cost – Service failures cost both the
customers and service organization
2. Break the silence and listen closely for
complains – ‘please take complain into
consideration’
3. Anticipate the needs for recovery – Re-plan
again together to recover the service
4. Act fast – Acts quickly to correct the situation
so that can make the customer forget the
incident
5. Trained employees – Train employees with good
communication and develop awareness of
customer’s consent
6. Empower the front line – Give lower
management to make decision
7. Close the loop – Admit the mistake and then
take action to repair it