Service Management –

Service Quality

Univ.-Prof. Dr.-Ing. Wolfgang Maass

Chair in Economics – Information and Service Systems (ISS)

Saarland University, Saarbrücken, Germany

WS 2011/2012
Thursdays, 8:00 – 9:30 a.m.
Room HS 024, B4 1
 General Agenda

1.  Introduction
2.  Service Strategy
3.  New Service Development (NSD)
4.  Service Quality
5.  Supporting Facility
6.  Forecasting Demand for Services (Part A)
7.  Forecasting Demand for Services (Part A)
8.  Managing Capacity and Demand
9.  Managing Waiting Lines
10.  Capacity Planning and Queuing Models
11.  Services and Information Systems
12.  ITIL Service Design
13.  IT Service Infrastructures
14.  Guest Lecture – Dr. Roehn, Deutsche Telekom
15.  Summary and Outlook

16.11.11 Univ.-Prof. Dr.-Ing. Wolfgang Maass Slide 2

   
 Agenda Lecture 4

•  Defining service quality

•  Identification of service gaps
•  Gap model
•  Measurement of service quality
•  SERVQUAL
•  Statistical process control: Control charts
•  -chart
•  p-chart
•  Handling service failures

16.11.11 Univ.-Prof. Dr.-Ing. Wolfgang Maass Slide 3

   
 Defining Service Quality

“Service quality is a measure of how well the service level delivered matches
customer expectations. ” (Lewis & Booms, 1983)

“Service quality is more difficult for the

consumer to evaluate than goods
quality.” (Parasuraman et al. ,1985)

“Quality evaluations are not made solely on

the outcome of a service; they also involve
evaluations of the process of service
delivery. ”
(Parasuraman et al.,1985)

16.11.11 Univ.-Prof. Dr.-Ing. Wolfgang Maass Slide 4

   
 Defining Service Quality

Perceived service quality: Service quality from the customer’s point of view
•  Comparison of expectations with perceptions
•  Perceived service quality is often different from expected service quality

Expectations versus Perceived Quality

Expectations < Perceived Service Quality Quality surprise

Expectations = Perceived Service Quality Satisfactory quality

Expectations > Perceived Service Quality Unacceptable quality

Factors of influence
- Perceived quality - Expected quality
•  Tangibles •  Service promises
•  Reliability •  Past experiences
•  Responsiveness •  Personal needs
•  Assurance •  Word-of-mouth
•  Empathy

(Parasuraman et al., 1985; Parasuraman et al., 1988; Zeithaml et al. 1993)

16.11.11 Univ.-Prof. Dr.-Ing. Wolfgang Maass Slide 5

   
 Agenda Lecture 4

•  Defining service quality

•  Identification of service gaps
•  Gap model
•  Measurement of service quality
•  SERVQUAL
•  Statistical process control: Control charts
•  X-chart
•  p-chart
•  Handling service failures

16.11.11 Univ.-Prof. Dr.-Ing. Wolfgang Maass Slide 6

   
 Identification of Service Gaps:
Gap Model
Gap Model: Framework to help formulating & implementing a high service quality
strategy, integrating customer‘s point of view (customer and company view)

5 Gaps between customer and company view

Gap 1: Expected service ǂ Company‘s perceptions of customer‘s expectations

Gap 2: Company‘s perceptions of customer‘s expectations ǂ Customer-driven service designs

Gap 3: Customer-driven service designs ǂ Service delivery

Gap 4: External communication ǂ Service delivery

Gap 5: Expected service ǂ Perceived service (Customer Gap)

Objective: Identification and reduction of the gaps

•  Customer gap (5): Main gap: Customer‘s expectations are not met
•  Gap 1-4: Reasons for failure of company to meet customer‘s expectations

(Bitner et al., 2010, Parasuraman et al. 1985)

16.11.11 Univ.-Prof. Dr.-Ing. Wolfgang Maass Slide 7

   
 Identification of Service Gaps:
Gap Model

Expected Service

Gap 5
Customer
Perceived Service
Gap 1

Service delivery External communication

Company Gap 4 to customers

Gap 3

Customer-driven
service designs
Gap 2

Company‘s perceptions : Gaps

of customer‘s : Influence
expectations : Separation between
customer & company view

(Bitner et al., 2010, Parasuraman et al. 1985)

16.11.11 Univ.-Prof. Dr.-Ing. Wolfgang Maass Slide 8

   
 Identification of Service Gaps: Gap Model
Strategies for Closing the Gaps

Gap 1:
•  Listening to customers: Customer research, employee communication
•  Building a relationship: Understand and fulfill customer’s wishes in the long run
Gap 2:
•  Employing “services R&D” : Well-defined practices regarding new service development
and innovation
•  Using customer-defined instead of company-defined standards
Gap 3:
•  Efficient integration of technology
•  Training of human resources (e.g., hiring, training, support systems) to deliver excellent
services
Gap 4:
•  Employment of integrated communication strategy among the whole company
•  Development of internal communication strategy to avoid overpromises to customers
Gap 5:
•  Employment of SERVQUAL

(Bitner et al., 2010, Parasuraman et al. 1985)

16.11.11 Univ.-Prof. Dr.-Ing. Wolfgang Maass Slide 9

   
 Identification of Service Gaps: Gap Model
Determinants of Service Quality

10 service quality determinants: Customer’s criteria for evaluating service quality

•  Refer to gap 5 (customer gap)
•  Influence expected & perceived service

Service quality determinants

1) Access 6) Reliability
•  Service easily available •  Consistency & dependability of service
•  Short waiting time
2) Communication 7) Responsiveness
•  Explain service itself •  Timeliness of service
•  Explain cost of service
3) Competence 8) Security
•  Knowledge & skills of personnel •  Physical & financial safety
•  Confidentiality
4) Courtesy 9) Tangibles
•  Politeness & friendliness of personnel •  Physical facilities & equipment
5) Credibility 10) Understanding the customer
•  Trustworthiness & honesty •  Learning of customer’s needs

(Parasuraman et al., 1985)

16.11.11 Univ.-Prof. Dr.-Ing. Wolfgang Maass Slide 10

   
 Brainteaser

5 •  Please read the case (will be handed

out) and identify the service gaps.
Minutes
•  How could you close these gaps?

•  Please write your solution down (one

person is going to present it to the others).

16.11.11 Univ.-Prof. Dr.-Ing. Wolfgang Maass Slide 11

   
 Agenda Lecture 4

•  Defining service quality

•  Identification of service gaps
•  Gap model
•  Measurement of service quality
•  SERVQUAL
•  Statistical process control: Control charts
•  -chart
•  p-chart
•  Handling service failures

16.11.11 Univ.-Prof. Dr.-Ing. Wolfgang Maass Slide 12

   
 Measurement of Service Quality:
SERVQUAL

SERVQUAL: Instrument for measuring perceived service

quality from the customer‘s point of view
•  Implementation of Gap model concept
•  Refers to Gap 5
•  Reduces10 service quality determinants to 5
•  Combines customer expectations with their perceptions of a service
•  Questionnaire with 22 items: Customers state their level of agreement
on a scale

Most important functions of SERVQUAL

Identification of departments offering low service quality: Sources for customer

dissatisfaction
Periodic surveys to discover trends in service quality

Identification of competitive advantages when comparing own services with competitors‘

(Parasuraman et al., 1988; Fitzsimmons & Fitzsimmons, 2011)

16.11.11 Univ.-Prof. Dr.-Ing. Wolfgang Maass Slide 13

   
 Measurement of Service Quality:
SERVQUAL

22 Items within 5 dimensions (service quality determinants)

Reduction of 10 service quality

determinants to 5 of SERVQUAL
1) Tangibles (4 items)
•  Appearance of personnel
•  Physical facilities & equipment
Expected Service
2) Reliability (5 items)
•  Ability to perform the promised service Customer
Gap 5
dependably & precisely
Perceived Service
3) Responsiveness (4 items) Gap 1
•  Willingness to help customers
•  Provision of a quick service
Service delivery External communication
4) Assurance (4 items) to customers
•  Knowledge and friendliness of Gap 3
Gap 4
employees Company
Customer-driven
•  Ability to inspire confidence service designs
5) Empathy (5 items) Gap 2
•  Caring & individualized attention Company‘s perceptions
regarding customers of customer‘s
expectations
(Bitner et al., 2010, Parasuraman et al. 1988)

16.11.11 Univ.-Prof. Dr.-Ing. Wolfgang Maass Slide 14

   
 Measurement of Service Quality:
SERVQUAL

Item (Q): Consist of 1 expectation statement (E) and 1 perception statement

(P)
e.g., “Reliability” consists of Q5, Q6, Q7, Q8, Q9
•  Q5: E5 “When these firms promise to do something by a certain time, they should do so.” and
P5 “When XYZ promises to do something by a certain time, it does so.”

Advantages of SERVQUAL:

•  High reliability & validity

•  Can be used to compare service quality across different departments
•  Can be used to compare service quality across different companies
•  Framework can be adopted to different industries
•  Companies can use it to better understand customer’s expectations & perceptions
•  Problems can be identified according to the different dimensions
•  Identification of service trends when used regularly

(Parasuraman et al. 1988)

16.11.11 Univ.-Prof. Dr.-Ing. Wolfgang Maass Slide 15

   
 Task

For the next exercise, please search and download the following paper:

Parasuraman, A., Zeithaml, V. A. & Berry, L. L. (1988), “SERVQUAL: A

multiple-item scale for measuring consumer perceptions of service quality”,
Journal of Retailing, 64(1), pp. 12-40.

16.11.11 Univ.-Prof. Dr.-Ing. Wolfgang Maass Slide 16

   
 Statistical Process Control

Service process control: Evaluation of the quality of service processes

Problem: Services …
•  … are intangible
•  … cannot be stored
•  … production and consumption occur at the same time
•  … quality can only be judged after consumption

Statistical process control: Evaluation of service processes by key indicators,

Ratios (e.g., police‘s crime prevention program: Crime rate)

True state of Take No action

2 types of error when controlling service corrective
services: action
Process is correct Type 1 error Correct action
•  Type 1 error: Process supposed to be working
incorrectly, but it is correct (Producer‘s risk) Process is incorrect Correct action Type 2 error
•  Type 2 error: Process supposed to be working
correctly, but it is incorrect (Consumer‘s risk)

(Fitzsimmons & Fitzsimmons, 2011)

16.11.11 Univ.-Prof. Dr.-Ing. Wolfgang Maass Slide 17

   
 Statistical Process Control:
Control Charts

Control chart = Visual display of average service performance over

time
•  Monitoring of service performance consistency
•  Discovering deviations from the norm: Processes where corrective action is
needed
•  Control limits to detect unusual performances (confidence interval)
•  Upper control limit (UCL)
•  Lower control limit (LCL)
Performance outside these is unusual, process is out of control
•  2 different types of control charts:
•  -chart (Variable control chart)
•  p-chart (Attribute control chart)

Steps for constructing a control chart:

1)  Decide on a measure of service system performance
2)  Collect historical data for calculation of mean and variance of the system
performance
3)  Choose sample size and calculate control limits (+/- 3 standard deviations: see
table for values)
4)  Create a control chart: (axis: time or number of sample; sample mean or fraction
of errors), plot sample means of a certain time span
5)  Check if processes are in or out of control

(Fitzsimmons & Fitzsimmons, 2011)

16.11.11 Univ.-Prof. Dr.-Ing. Wolfgang Maass Slide 18

   
 Statistical Process Control: Control
Charts ( -Chart)

-chart = Visual display of arithmetic mean of several service performances

(fractional values, e.g., time, length): Variable control chart
•  Calculating the mean: Historical data needed
•  Shows the performances above and below the mean
•  R-chart = Variable measure of process dispersion (process variability)

= mean
= estimated population mean
R = range
= estimate of population range

R = highest value - lowest value per observation period

(Fitzsimmons & Fitzsimmons, 2011)

16.11.11 Univ.-Prof. Dr.-Ing. Wolfgang Maass Slide 19

   
 Statistical Process Control: Control
Charts (X-Chart)

R-chart:
D4 = Upper Control Limit (UCL)-value for sample size n (standard values in table)
D3 = Lower Control Limit (LCL)-value for sample size n (standard values in table)

UCL = D4 *
LCL = D3 *

Check if process is under control: Sample mean

(e.g., mean
Compare UCL & LCL to
response time in UCL ( + 3 * standard
minutes) deviation)
-chart:
A2 = Value for calculating control limits 2
(standard values in table)
LCL ( - 3 * standard
UCL = + A2 * deviation)
LCL = - A2 *
Time (e.g., days)
Check if process is under control: 1 2 3 4 5
Compare UCL & LCL to

(Fitzsimmons & Fitzsimmons, 2011)

16.11.11 Univ.-Prof. Dr.-Ing. Wolfgang Maass Slide 20

   
 Statistical Process Control: Control
Charts (p-Chart)

p-chart = Visual display of population percentage p of several service

performances (discrete data, e.g., number of errors as percentage): Attribute
control chart
•  Shows the percentage of bad service performances: Values above UCL
•  Values on LCL: errorless (negative values are set to 0)

= estimated percentage of population, n = sample size

Fraction of
errors
(percentage) UCL ( + 3 * standard
deviation)

0,05 = 5%

LCL ( - 3 * standard
Check if process is under control: 0
deviation)
Compare UCL & LCL to 1 2 3 4 5
Random samples of
(Fitzsimmons & Fitzsimmons, 2011) observations

16.11.11 Univ.-Prof. Dr.-Ing. Wolfgang Maass Slide 21

   
 Agenda Lecture 4

•  Defining service quality

•  Identification of service gaps
•  Gap model
•  Measurement of service quality
•  SERVQUAL
•  Statistical process control: Control charts
•  -chart
•  p-chart
•  Handling service failures

16.11.11 Univ.-Prof. Dr.-Ing. Wolfgang Maass Slide 22

   
 Handling Service Failures:
Service Recovery

Failures: More often in service industry than in

manufacturing: Service characteristics (e.g., co-production
and intangibility) (Berry, 1980; Hess et al., 2003)
•  Costs of Service Failures = Customer dissatisfaction, switching
to competitor, negative word-of-mouth, negative image
(Johnston & Hewa, 1997)
•  Provision of a service recovery is very important
Reconstitute customer satisfaction (Berry, 1980; Hess et al., 2003)

Service Recovery: “A service [..] recovery encounter can

be viewed as an exchange in which the customer
experiences a loss due to the failure and the organization
attempts to provide a gain […] to make up for the
customer’s loss.” (Smith et al., 1999)
•  Good service recovery: Turn a service failure into a service
delight (Fitzsimmons & Fitzsimmons, 2011)

16.11.11 Univ.-Prof. Dr.-Ing. Wolfgang Maass Slide 23

   
 Handling Service Failures:
Service Recovery
Approaches to service recovery
Case-by-case approach Each complaint handled individually
Systematic-response Protocol and guidelines used to address complaints
approach
Early intervention approach Resolve problems in service process immediately before
they attain customers

Substitute service recovery Profit from service failure of competitor by offering recovery
(e.g. offering excellent service to customer from overbooked
rival hotel)

Examples:
•  Delay of flight or train: Provide complementary drinks and
snacks
•  Construction in front of hotel: Offer price discount
•  Long waiting time in restaurant: Offer coupon for further visit

Service recovery does not only comprise compensation, but

also a friendly, sensitive and quick complaint handling
(Fitzsimmons & Fitzsimmons, 2011)

16.11.11 Univ.-Prof. Dr.-Ing. Wolfgang Maass Slide 24

   
 Handling Service Failures:
Complaint Handling Policy

“A customer complaint should be treated as a

gift.” (Fitzsimmons & Fitzsimmons, 2011)

A complaint is an opportunity to …
•  … reconstruct customer satisfaction
•  … build a relationship between the company and the customer
•  … create customer loyalty

Policy examples:
•  Consumers are elated to complain in case of a service failure
•  Complaints are addressed quickly
•  Employees are entitled to deal with complaints
•  Every complaint handling is registered and used for further
complaint handling

(Johnston & Hewa, 1997; Fitzsimmons & Fitzsimmons, 2011)

16.11.11 Univ.-Prof. Dr.-Ing. Wolfgang Maass Slide 25

   
 Handling Service Failures:
Service Guarantee
Service Guarantee: States e.g., that customer will get his money back if he is not
100% satisfied with service.
Characteristics of a service guarantee
Unconditional
Meaningful
Easy to understand
Easy to invoke
Easy to collect
Consequences:
•  Company focused on customers expectations (e.g., British Airways: Customers
expect in particular care, initiative and problem solving)
•  Explicit standards are set (e.g., clear instructions given to staff if guarantee states
“Delivery until 10:00 AM“)
•  Customer feedback is received (information on improvements provided)
•  Company forced to analyse weaknesses in service delivery
•  Customer loyalty is enhanced (satisfied customers return and spread positive word-of-mouth)
(Hart, 1988)

16.11.11 Univ.-Prof. Dr.-Ing. Wolfgang Maass Slide 26

   
 Outlook

1.  Introduction
2.  Service Strategy
3.  New Service Development (NSD)
4.  Service Quality
5.  Supporting Facility
6.  Forecasting Demand for Services (Part A)
7.  Forecasting Demand for Services (Part A)
8.  Managing Capacity and Demand
9.  Managing Waiting Lines
10.  Capacity Planning and Queuing Models
11.  Services and Information Systems
12.  ITIL Service Design
13.  IT Service Infrastructures
14.  Guest Lecture – Dr. Roehn, Deutsche Telekom
15.  Summary and Outlook

16.11.11 Univ.-Prof. Dr.-Ing. Wolfgang Maass Slide 27

   
 Literature

Books:
•  Fitzsimmons, J. A. & Fitzsimmons, M. J. (2011), Service Management - Operations, Strategy, Information Technology, McGraw
– Hill.

Papers:
•  Berry, L.L. (1980), “Services marketing is different”, Business, 30 (May-June), pp. 24-28.
•  Bitner, M.J., Zeithaml, V.A. & Gremler, D.D. (2010), “Technology’s impact on the gaps model of service quality”, in: Maglio, P.P.,
Kieliszewski, C.A. & Spohrer, J.C. (eds.), “Handbook of service science”, pp. 197-218.
•  Chatterjee, S., & Chatterjee, A. (2005), “Prioritization of service quality parameters based on ordinal responses”, Total Quality
Management & Business Excellence, 16(4), pp. 477–489.
•  Chatterjee, A., Ghosh, C. & Bandyopadhyay, S. (2009), “Assessing students’ rating in higher education: A SERVQUAL
approach”, Total Quality Management, 29(10), pp. 1095-1109.
•  Hart, C. W. L. (1988), “The power of unconditional service guarantees“, Harvard Business Review, July-August , pp. 54-62.
•  Johnston, T. C. & Hewa, M. A. (1997), “Fixing service failures”, Industrial Marketing Management , 26, pp. 467-477.
•  Hess, R. L., Ganesan, S. & Klein, N. M. (2003), “Service failure and recovery: The impact of relationship factors of customer
satisfaction”, Journal of the Academy of Marketing Science, 31(2), pp. 127-145.
•  Lewis, R.C. & Booms, B.H. (1983), "The marketing aspects of service quality" in Berry, L., Shostack, G. and Upah, G. (eds.),
Emerging perspectives on services marketing, American Marketing Association Chicago, pp. 99-104.
•  Parasuraman, A., Zeithaml, V. A. & Berry, L. L. (1985), “A conceptual model of service quality and its implications for future
research”, Journal of Marketing, 49(4), pp. 41-50.

16.11.11 Univ.-Prof. Dr.-Ing. Wolfgang Maass Slide 28

   
 Literature

•  Parasuraman, A., Zeithaml, V. A. & Berry, L. L. (1988), “SERVQUAL: A multiple-item scale for measuring consumer
perceptions of service quality”, Journal of Retailing, 64(1), pp. 12-40.
•  Smith, A. K., Bolton, R. N. & Wagner, J. (1999), “A model of customer satisfaction with service encounters involving failure and
recovery”, Journal of Marketing Research , 36(3), pp. 356-372.
•  Zeithaml, V. A., Berry, L. L. & Parasuraman, A. (1993), “The nature and determinants of customer expectations of service”,
Journal of the Academy of Marketing Science, 21 (Winter), pp. 1-12.

16.11.11 Univ.-Prof. Dr.-Ing. Wolfgang Maass Slide 29

   
Univ.-Prof. Dr.-Ing. Wolfgang Maass

Chair in Information and Service Systems

Saarland University, Germany

Univ.-Prof. Dr.-Ing. Wolfgang Maass