Gaps Model of Service Quality

CUSTOMER

Expected

Service
Customer Gap

Perceived Service
External Communications to Customers

COMPANY

Service Delivery
GAP 3
Customer-Driven Service Designs and Standards

GAP 4

GAP 1

GAP 2
Company Perceptions of Consumer Expectations 1

Gaps Model of Service Quality

Customer Gap:
difference between expectations and perceptions

Provider Gap 1:
not knowing what customers expect

Provider Gap 2:
not having the right service designs and standards

Provider Gap 3:
not delivering to service standards

Provider Gap 4:
not matching performance to promises
2

The Customer Gap

Expected Service
GAP

Perceived Service

Customer Gap
Difference between customer expectation and perception Expectation may be standards or reference points Expectations are made by price, advertising, sales promotion, personal needs Customer perception is subjective assessment of actual service experiences The goal of marketing is to bridge or close the gap
4

Differences in the Service Experience

Authenticity Caring Control Courtesy Formality Friendliness Personalization Promptness
5

Services Consumers
have a more difficult time evaluating and choosing services than goods because: Evaluation Processes for Services

Search Qualities
Experience Qualities Credence Qualities
6

Evaluating Services

Easy to evaluate

Most Goods

Most Services

Difficult to evaluate

High in search qualities

High in experience qualities

High in credence qualities

7

Consumer Decision-Making Process for Services

(1) Information Search (2) Evaluation of Alternatives (3) Purchase and Consumption

(4) Post purchase Evaluation

8

(1) Information Search

greater use of
mass media is less word-of-mouth communication may not be available professional restrictions small firms may lack resources/expertise

higher perceived
types of economic social physical performance

(2) Evaluation of Alternatives (3) Purchase and Consumption of Services (4) Post-Purchase Evaluation
attribution of
who should be blamed if expectations not met

brand
service consumers are often more greater costs:
search, learning loyal consumer discounts, customer habit emotional costs

smaller number
10

Dual Customer Expectation Levels

Desired Service Zone of Tolerance

Adequate Service

11

The Zone of Tolerance

Desired Service

Zone of Tolerance
Adequate Service

12

Zones of Tolerance for Different Service Dimensions

Desired Service

Level of Expectation

Zone of Tolerance
Adequate Service

Desired Desired Service Service Zone of Tolerance Adequate Adequate Service Service

Most Important Factors Least Important Factors Source: Berry, Parasuraman, and Zeithaml (1993)

13

Zones of Tolerance for First-Time and Recovery Service

First-Time Service Outcome Process

Recovery Service Outcome Process LOW

Source: Parasuraman, Berry and Zeithaml (1991)

Expectations

HIGH
14

Factors that Influence Desired Service

Enduring Service Intensifiers

Desired Service Personal Needs Zone of Tolerance

Adequate Service

15

Factors that Influence Adequate Service

Transitory Service Intensifiers
Desired Service Zone of Tolerance Adequate Service

Perceived Service Alternatives

Self-Perceived Service Role

Situational Factors

16

Factors that Influence Desired and Predicted Service

Explicit Service Promises Implicit Service Promises Word-of-Mouth

Desired Service Zone of Tolerance Adequate Service

Past Experience

Predicted Service

17

Customer Perceptions of Service Quality and Customer Satisfaction

Reliability Responsiveness Assurance
Service Quality
Situational Factors

Empathy
Tangibles

Product Quality

Customer Satisfaction

Price

Personal Factors

18

Factors Influencing Customer Satisfaction

Product/service quality Product/service attributes or features Consumer Emotions Attributions for product/service success or failure Equity or fairness evaluations
19

Outcomes of Customer Satisfaction

Increased customer retention Positive word-of-mouth communications Increased revenues

20

Relationship between Customer Satisfaction and Loyalty in Competitive Industries

100%

Loyalty (retention)

80% 60% 40% 20% 0%

Very dissatisfied Dissatisfied Neither satisfied nor dissatisfied Satisfied Very satisfied

Satisfaction measure
Source: James L. Heskett, W. Earl Sasser, Jr., and Leonard A. Schlesinger, The Service Profit Chain, (New York, NY: The Free Press, 1997), p. 83.

21

Service Quality
The customers judgment of overall excellence of the service provided in relation to the quality that was expected. Process and outcome quality are both important.

22

The Five Dimensions of Service Quality

Reliability
Ability to perform the promised service dependably and accurately. Assurance Knowledge and courtesy of employees and their ability to convey trust and confidence. Tangibles Physical facilities, equipment, and appearance of personnel. Empathy Caring, individualized attention the firm provides its customers. Responsiveness Willingness to help customers and provide prompt service.

23

Exercise to Identify Service Attributes

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 customers point of view.

Reliability: Assurance: Tangibles: Empathy: Responsiveness:

24

SERVQUAL Attributes
ASSURANCE

RELIABILITY

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

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

EMPATHY

RESPONSIVENESS

Keeping customers informed as to when services will be performed Prompt service to customers Willingness to help customers Readiness to respond to customers requests

Giving customers individual attention Employees who deal with customers in a caring fashion Having the customers best interest at heart Employees who understand the needs of their customers Convenient business hours Modern equipment Visually appealing facilities Employees who have a neat, professional appearance Visually appealing materials associated with the service

TANGIBLES

25

The Service Encounter

is the moment of truth occurs any time the customer interacts with the firm can potentially be critical in determining customer satisfaction and loyalty types of encounters: remote encounters phone encounters face-to-face encounters is an opportunity to: build trust reinforce quality build brand identity increase loyalty
26

A Service Encounter Cascade for a Hotel Visit

Check-In Bellboy Takes to Room Restaurant Meal Request Wake-Up Call Checkout

27

A Service Encounter Cascade for an Industrial Purchase

Sales Call

Delivery and Installation

Servicing Ordering Supplies

Billing

28

Common Themes in Critical Service Encounters Research

Recovery:
Employee Response to Service Delivery System Failure

Adaptability:
Employee Response to Customer Needs and Requests

Coping:
Employee Response to Problem Customers

Spontaneity:
Unprompted and Unsolicited Employee Actions and Attitudes
29

Recovery
DO Acknowledge problem Explain causes Apologize Compensate/upgra de Lay out options Take responsibility DONT Ignore customer Blame customer Leave customer to fend for him/herself Downgrade Act as if nothing is wrong
30

Adaptability
DO
Recognize the seriousness of the need Acknowledge Anticipate Attempt to accommodate Explain rules/policies Take responsibility Exert effort to accommodate

DONT
Promise, then fail to follow through Ignore Show unwillingness to try Embarrass the customer Laugh at the customer Avoid responsibility

31

Spontaneity
DO
Take time Be attentive Anticipate needs Listen Provide information (even if not asked) Treat customers fairly Show empathy Acknowledge by name

DONT Exhibit impatience Ignore Yell/laugh/swear Steal from or cheat a customer Discriminate Treat impersonally
32

Coping
DO

DONT Take customers dissatisfaction personally Let customers dissatisfaction affect others
33

Listen Try to accommodate Explain Let go of the customer

Evidence of Service from the Customers Point of View

Operational flow of activities Steps in process

Contact employees Customer him/herself Other customers

People

Flexibility vs. standard

Technology vs. human

Process

Physical Evidence

Tangible communication

Servicescape
Guarantees Technology
34

Provider GAP 1
CUSTOMER

Expected Service

GAP 1 Company Perceptions of Consumer Expectations

COMPANY

35

 Inadequate marketing research orientation

Insufficient marketing research Research not focused on service quality Inadequate use of market research

Not Knowing What Customer Expect

Lack of upward communication

Lack of interaction between management and customer Insufficient communication between contact employees and managers Too many layers between contact personnel and top management

Insufficient relationship focus

Lack of market segmentation Focus on transaction rather than relationships Focus on new customers rather than relationship customers

Inadequate service recovery

Lack of encouragement to listen to customer complains Failure to make amends when things go wrong No appropriate recovery mechanisms in place to service failures
36

Common Research Objectives for Services

To identify dissatisfied customers To discover customer requirements or expectations To monitor and track service performance To assess overall company performance compared to competition To assess gaps between customer expectations and perceptions To gauge effectiveness of changes in service To appraise service performance of individuals and teams for rewards To determine expectations for a new service To monitor changing expectations in an industry To forecast future expectations
37

Criteria for An Effective Services Research Program

Occurs with Appropriate Frequency

Includes Perceptions and Expectations of Customers

Research Objectives

Measures Priorities or Importance

Includes Statistical Validity When Necessary

Includes Measures of Loyalty or Behavioral Intentions

38

Portfolio of Services Research

Research Objective
Identify dissatisfied customers to attempt recovery; identify most common categories of service failure for remedial action Assess companys service performance compared to competitors; identify service-improvement priorities; track service improvement over time Obtain customer feedback while service experience is still fresh; act on feedback quickly if negative patterns develop Use as input for quantitative surveys; provide a forum for customers to suggest service-improvement ideas Measure individual employee service behaviors for use in coaching, training, performance evaluation, recognition and rewards; identify systemic strengths and weaknesses in service Measure internal service quality; identify employeeperceived obstacles to improve service; track employee morale and attitudes Determine the reasons why customers defect To forecast future expectations of customers To develop and test new service ideas

Type of Research
Customer Complaint Solicitation Relationship Surveys Post-Transaction Surveys Customer Focus Groups Mystery Shopping of Service Providers Employee Surveys Lost Customer Research Future Expectations Research
39

Stages in the Research Process

Stage 1 : Stage 2 : Stage 3 : Stage 4 : Stage 5 : Stage 6 : Define Problem Develop Measurement Strategy Implement Research Program Collect and Tabulate Data Interpret and Analyze Findings Report Findings

40

Importance/Performance Matrix
HIGH

High Leverage
Attributes to Improve

Attributes to Maintain

Importance

Low Leverage

Attributes to Maintain

Attributes to De-emphasize

LOW

Performance

HIGH 41

Provider GAP 2
CUSTOMER

COMPANY

Customer-Driven Service Designs and Standards

GAP 2

Company Perceptions of Consumer Expectations

42

Not having right service quality designs and standards Poor service design
Unsystematic new service development process Vague, unidentified service designs Failure to connect service design to service positioning

Absence of customer driven standards

Lack of customer-driven service standards Absence of process management to focus on customer requirements Absence of formal process for setting service quality goals

Inappropriate physical evidence and services cape

Failure to develop tangibles in line with customer expectations servicescape design that does not meet customer and employees needs Inadequate maintenance and updating of the servicescape
43

Risks of Relying on Words Alone to Describe Services

Oversimplification Incompleteness Subjectivity Biased Interpretation

44

New Service Development Process

Business Strategy Development or Review New Service Strategy Development

Front End Planning

Idea Generation Screen ideas against new service strategy Concept Development and Evaluation Test concept with customers and employees Business Analysis Test for profitability and feasibility Service Development and Testing Conduct service prototype test

Implementation

Market Testing
Test service and other marketing-mix elements Commercialization Postintroduction Evaluation 45

Source: Booz-Allen & Hamilton, 1982; Bowers, 1985; Cooper, 1993; Khurana & Rosenthal 1997.

New Service Strategy Matrix for Identifying Growth Opportunities

Markets

Offerings
Existing Services

Current Customers

New Customers

SHARE BUILDING

MARKET DEVELOPMENT

New Services

SERVICE DEVELOPMENT

DIVERSIFICATION
46

Provider GAP 3
CUSTOMER

Service Delivery
COMPANY

GAP 3

Customer-Driven Service Designs and Standards

47

Not Delivering to Service Designs and Standards Deficiency in human resource policies
Ineffective requirement Role ambiguity and role conflict Poor technology job fit Inappropriate evaluation and compensation systems Lack of empowerment, perceived control and team work

Customers who do not fulfill roles

Customers who lack knowledge of their roles and responsibilities Customers who negatively impact each other 48

Not Delivering to Service Designs and Standards cot. Problems with service intermediaries
Channel conflict over objectives and performance Difficulty controlling quality and consistency Tension between empowerment and control

Failure to match supply and demand

Failure to smooth peaks and valleys of demand Inappropriate customer mix Over reliance on price to smooth demand

49

Service Employees
They are the service They are the firm in the customers eyes They are marketers Importance is evident in
The Services Marketing Mix (People) The Service-Profit Chain The Services Triangle

50

Service Employees
Who are they?
boundary spanners

What are these jobs like?

emotional labor many sources of potential conflict
person/role organization/client interclient quality/productivity

51

Boundary Spanners Interact with Both Internal and External Constituents

External Environment

Internal Environment

52

Sources of Conflict for Boundary-Spanning Workers

Person vs. Role
Organization vs. Client Client vs. Client Quality vs. Productivity

53

Human Resource Strategies for Closing GAP 3

Hire for Service Competencies and Service Inclination

Hire the Right People

Customeroriented Service Delivery
Develop People to Deliver Service Quality
Empower Employees

Treat Employees as Customers

Retain the Best People

Provide Needed Support Systems

Provide Supportive Technology and Equipment

54

Service Culture
A culture where an appreciation for good service exists, and where giving good service to internal as well as ultimate, external customers, is considered a natural way of life and one of the most important norms by everyone in the organization.

56

Provider GAP 4
CUSTOMER

COMPANY

Service Delivery
GAP 4

External Communications to Customers

Part 5 Opener

57

Not Matching Performance to Promises

Integrated services marketing communications
Tendency to view each external communication as independent Absence of interactive marketing in communication plan Absence of strong internal marketing program

Ineffective management of customer expectations

Absence of customer expectation management through all forms of communication Lack of adequate education for customers
58

Not Matching Performance to Promises Cont.

Overpromising
Overpromising in advertising Overpromising in personal selling Overpromising through physical evidences cues

Inadequate horizontal communication

Insufficient communication between sales and operations Insufficient communication between advertising and operations Differences between policies and procedures across branches or units.
59

Communications and the Services Marketing Triangle

Company
Internal Marketing
Vertical Communications Horizontal Communications

External Marketing Communication

Advertising Sales Promotion Public Relations Direct Marketing

Employees

Interactive Marketing
Personal Selling Customer Service Center Service Encounters Servicescapes

Customers

Source: Parts of model adapted from work by Christian Gronroos and Phillip Kotler

60

Approaches for Integrating Services Marketing Communication

Manage Customer Expectations

Manage Service Promises

Goal: Delivery greater than or equal to promises

Improve Customer Education

Manage Internal Marketing Communication

61

Approaches for Managing Service Promises

MANAGING SERVICE PROMISES

Create Effective Services Communications Coordinate External Communicatio n Offer Service Guarantees Goal: Delivery greater than or equal to promises

Make Realistic Promises

62

Approaches for Managing Customer Expectations

Offer Choices

Create Tiered-Value Offerings Communicate Criteria for Service Effectiveness

Negotiate Unrealistic Expectations
Goal: Delivery greater than or equal to promises
63

Approaches for Improving Customer Education

Goal: Delivery greater than or equal to promises

Prepare Customers for the Service Process

Confirm Performance to Standards

Clarify Expectations after the Sale

Teach Customers to Avoid Peak Demand Periods and Seek Slow Periods

64

Approaches for Managing Internal Marketing Communications

Goal: Delivery greater than or equal to promises
Create Effective Vertical Communications

Create Effective Horizontal Communications

Align Back Office Personnel w/ External Customers Create Cross-Functional Teams

65