Recap - The Gaps model (Zeithaml, Parasuraman &

Berry 1990)

Recap: Stages in Consumer Decision Making and Evaluation of Services

Models of service quality

The evolution of service quality

Disconfirmation of expectations The Nordic model The three component model The Gaps model of service quality & SERVQUAL

Disconfirmation of expectations (Oliver 1980)

Frequently Asked Questions About Customer Expectations

Should a company aim to delight the customer?

How does a company exceed customer service expectations?

Do customer service expectations continually escalate?

Is it a better strategy to under-promise and over-deliver?

How does a service company stay ahead of competition in meeting customer expectations?

The Nordic model

(Gronroos 1990)

Represents the service experience on the basis of functional and technical elements Technical quality refers to what the customer receives from the service Functional quality refers to service delivery Model emphasises companies must be careful what they promise

The three-component model Rust &

Oliver (1994)

Source: Rust & Oliver, 1994. p. 11

Customer expectations of service

Types of expectations customers hold for service performance Sources of customer expectations

Possible Levels of Customer Expectations

Dual customer expectations levels and the Zone of Tolerance

Desired Service

Zone of Tolerance

Adequate Service

Zones of Tolerance for Different Service Dimensions

Desired Service

Level of Expectation

Zone of Tolerance
Adequate Service

Desired Service Zone of Tolerance Adequate Service

Reliability

Tangibles

Source: L. L. Berry, A. Parasuraman, and V. A. Zeithaml, Ten Lessons for Improving Service Quality, Marketing Science Institute, Report No. 93-104 (May 1993).

Factors That Influence Desired Service

Lasting Service Intensifiers

Desired Service
Personal Needs

Zone of Tolerance

Adequate Service

Factors That Influence Adequate Service

Temporary Service Intensifiers

Desired Service
Perceived Service Alternatives

Zone of Tolerance
Adequate Service
Predicted Service

Self-Perceived Service Role

Situational Factors

Factors That Influence Desired and Predicted Service

Explicit Service Promises

Implicit Service Promises

Desired Service

Word-of-Mouth

Zone of Tolerance Adequate Service

Past Experience

Predicted Service

Customer perceptions

Factors which influence consumers perceptions Factors which influence satisfaction Dimensions of service quality Service encounters

Customer Perceptions of Quality and Customer Satisfaction

Factors Influencing Customer Satisfaction

Product/service

quality Specific product or service features Consumer emotions Attributions for service success or failure

Factors Influencing Customer Satisfaction

Perceptions of equity or fairness Other consumers, family members, and coworkers Price Personal factors

the customers mood or emotional state situational factors

Outcomes of Customer Satisfaction

Increased

customer retention Positive word-of-mouth communications Increased revenues

ASCI and Annual Percentage Growth in S&P 500 Earnings

Source: C. Fornell Customer Satisfaction and Corporate Earnings, commentary appearing on ACSI website, May 1, 2001, http://www.bus.umich.edu/research/nqre/Q1-01c.html.

Relationship between Customer Satisfaction and Loyalty in Competitive Industries

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.

Service Quality
The

customers judgment of overall excellence of the service provided in relation to the quality that was expected. Service quality assessments are formed on judgments of:
outcome quality interaction quality physical environment quality

The SERVQUAL dimensions Perceived Service Quality

(Parasuraman, Zeithaml & Berry 1988)

Reliability (dependability, accurate performance) Assurance (competence, courtesy, credibility & security) Tangibles (appearance of physical elements) Empathy (easy access, good communications & customer
understanding)

Responsiveness (promptness & helpfulness)

The Five Dimensions of Service Quality

Reliability
Assurance
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.

Tangibles
Empathy Responsiveness

Willingness to help customers and provide prompt service.

Exercise to Identify Service Attributes

In groups of five, 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:

RELIABILITY

SERVQUAL Attributes
EMPATHY

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

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

TANGIBLES

ASSURANCE

Modern equipment Visually appealing facilities Employees who have a neat, professional appearance Visually appealing materials associated with the service

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

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

A Service Encounter Cascade for a Hotel Visit

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

A Service Encounter Cascade for an Industrial Purchase

Sales Call

Delivery and Installation

Servicing

Ordering Supplies Billing

Critical Service Encounters Research

GOAL:

understanding actual events and behaviors that cause customer dis/satisfaction in service encounters Critical Incident Technique stories from customers and employees

METHOD:

DATA:

OUTPUT:

identification of themes underlying satisfaction and dissatisfaction with service encounters

Sample Questions for Critical Incidents Technique Study

Think of a time when, as a customer, you had a particularly satisfying (dissatisfying) interaction with an employee of ______________.
When did the incident happen? What specific circumstances led up to this situation? Exactly what was said and done?

What resulted that made you feel the interaction was satisfying (dissatisfying)?

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

Recovery
DO
Acknowledge

DONT
Ignore

problem Explain causes Apologize Compensate/upgrade Lay out options Take responsibility

customer Blame customer Leave customer to fend for him/herself Downgrade Act as if nothing is wrong Pass the buck

Adaptability
DO
Recognize

DONT
Ignore Promise,

the seriousness of the need Acknowledge Anticipate Attempt to accommodate Adjust the system Explain rules/policies Take responsibility

but fail to follow

through Show unwillingness to try Embarrass the customer Laugh at the customer Avoid responsibility Pass the buck

Spontaneity
DO
Take

DONT
Exhibit
Ignore Yell/laugh/swear Steal

time Be attentive Anticipate needs Listen Provide information Show empathy

impatience

from customers Discriminate

Coping
DO
Listen
Try

DONT
Take

to accommodate Explain Let go of the customer

customers dissatisfaction personally Let customers dissatisfaction affect others

Evidence of Service from the Customers Point of View

Contact employees Customer him/herself Other customers

Operational flow of activities Steps in process

People

Flexibility vs. standard

Technology vs. human

Process

Physical Evidence

Tangible communication

Servicescape
Guarantees Technology

Source: From Managing the Evidence of Service by M. J. Bitner from The Service Quality Handbook, eds. E. E. Scheuing and W. F. Christopher (1993), pp. 358-70.

Website

Customer perceptions of service

Customer Perceptions of Service

Influences

on customer perceptions of service and the relationships among customer satisfaction, service quality, and individual service encounters. of customer satisfactionwhat it is, the factors that influence it, and the significant outcomes resulting from it. quality and its five key dimensions: reliability, responsiveness, empathy, assurance, and tangibles. encounters or moments of truth are the essential building blocks from which customers form their perceptions.

Importance

Service

Service

Customer Perceptions of Quality and Customer Satisfaction

Factors Influencing Customer Satisfaction

Product/service

quality Specific product or service features Consumer emotions Attributions for service success or failure Perceptions of equity or fairness Other consumers, family members, and coworkers Price Personal factors

the customers mood or emotional state

Outcomes of Customer Satisfaction

Increased

customer retention Positive word-of-mouth communications Increased revenues

ASCI and Annual Percentage Growth in S&P 500 Earnings

Source: C. Fornell Customer Satisfaction and Corporate Earnings, commentary appearing on ACSI website, May 1, 2001, http://www.bus.umich.edu/research/nqre/Q1-01c.html.

Relationship between Customer Satisfaction and Loyalty in Competitive Industries

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.

Service Quality
The

customers judgment of overall excellence of the service provided in relation to the quality that was expected. Service quality assessments are formed on judgments of:
outcome quality interaction quality physical environment quality

The Five Dimensions of Service Quality

Reliability
Assurance
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.

Tangibles
Empathy Responsiveness

Willingness to help customers and provide prompt service.

Exercise to Identify Service Attributes

In groups of five, 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:

SERVQUAL Attributes
RELIABILITY

EMPATHY

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 customers best interest at heart Employees who understand the needs of their customers Convenient business hours

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 Employees who instill confidence in customers Making customers feel safe in their transactions Employees who are consistently courteous Employees who have the knowledge to

TANGIBLES

Modern equipment Visually appealing facilities Employees who have a neat, professional appearance Visually appealing materials associated with the service

ASSURANCE

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

A Service Encounter Cascade for a Hotel Visit

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

A Service Encounter Cascade for an Industrial Purchase

Sales Call

Delivery and Installation

Servicing

Ordering Supplies Billing

Critical Service Encounters Research

GOAL:

understanding actual events and behaviors that cause customer dis/satisfaction in service encounters Critical Incident Technique stories from customers and employees

METHOD:

DATA:

OUTPUT:

identification of themes underlying satisfaction and dissatisfaction with service encounters

Sample Questions for Critical Incidents Technique Study

Think

of a time when, as a customer, you had a particularly satisfying (dissatisfying) interaction with an employee of ______________. did the incident happen?

When What

specific circumstances led up to this situation? what was said and done?

Exactly

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

Recovery
DO
Acknowledge

DONT
Ignore

problem Explain causes Apologize Compensate/upgrade Lay out options Take responsibility

customer Blame customer Leave customer to fend for him/herself Downgrade Act as if nothing is wrong Pass the buck

Adaptability
DO
Recognize

DONT
Ignore Promise,

the seriousness of the need Acknowledge Anticipate Attempt to accommodate Adjust the system Explain rules/policies Take responsibility

but fail to follow

through Show unwillingness to try Embarrass the customer Laugh at the customer Avoid responsibility Pass the buck

Spontaneity
DO
Take

DONT
Exhibit
Ignore Yell/laugh/swear Steal

time Be attentive Anticipate needs Listen Provide information Show empathy

impatience

from customers Discriminate

Coping
DO
Listen
Try

DONT
Take

to accommodate Explain Let go of the customer

customers dissatisfaction personally Let customers dissatisfaction affect others

Evidence of Service from the Customers Point of View

Contact employees Customer him/herself Other customers

Operational flow of activities Steps in process

People

Flexibility vs. standard

Technology vs. human

Process

Physical Evidence

Tangible communication

Servicescape
Guarantees Technology

Source: From Managing the Evidence of Service by M. J. Bitner from The Service Quality Handbook, eds. E. E. Scheuing and W. F. Christopher (1993), pp. 358-70.

Website

Part 3

UNDERSTANDING CUSTOMER REQUIREMENTS

Provider Gap 1
CUSTOMER Expected Service

COMPANY

Listening Gap Company Perceptions of Consumer Expectations

Part 3 Opener

Listening to customers through market research

Using Marketing Research to Understand Customer Expectations Elements in an Effective Services Marketing Research Program Analyzing and Interpreting Marketing Research Findings Model Services Marketing Research Programs Using Marketing Research Information Upward Communication

Objectives for Chapter 6: Listening to Customers through Research

Present

the types of and guidelines for marketing research in services. how marketing research information can and should be used for services. the strategies by which companies can facilitate interaction and communication between management and customers. ways that companies can and do

Show

Describe

Present

Common Research Objectives for Services

To

discover customer requirements or expectations for service. To monitor and track service performance. To assess overall company performance compared with that of competition. To assess gaps between customer expectations and perceptions. To identify dissatisfied customers, so that service recovery can be attempted. To gauge effectiveness of changes in service delivery. To appraise the service performance of individuals and teams for evaluation, recognition, and rewards. To determine customer expectations for a new

Criteria for an Effective Service Research Program

Includes

both qualitative and quantitative

research Includes both expectations and perceptions of customers Balances the cost of the research and the value of the information Includes statistical validity when necessary Measures priorities or importance of attributes Occurs with appropriate frequency Includes measures of loyalty, behavioral

Stages in the Research Process

Stage Stage Stage Stage Stage Stage

1 : Define Problem 2 : Develop Measurement Strategy

3 : Implement Research Program

4 : Collect and Tabulate Data 5 : Interpret and Analyze Findings 6 : Report Findings

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 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 Forecast future expectations of customers; 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

Figure 6.3

Tracking of Customer Expectations and Perceptions of Service Reliability

Source: E. Sivadas, Europeans Have a Different Take on CS [Customer Satisfaction] Programs, Marketing News, October 26, 1998, p. 39.

Figure 6.4

Service Quality Perceptions Relative to Zones of Tolerance

9 8 7 O O

6
5 4 3

2
1 0
Reliability Responsiveness Assurance Empathy Tangibles

Retail Chain

= Zone of Tolerance Perception

O = Service Quality

Service Quality Perceptions Relative to Zones of Tolerance

10 8

6
4 2 0
Reliability Responsiveness Assurance Empathy Tangibles

Computer Manufacturer

= Zone of Tolerance O = S.Q. Perception

Figure 6.5

Importance/Performance Matrix
HIGH

High Leverage
Attributes to Improve

Attributes to Maintain

Importance

Low Leverage

Low Leverage

Attributes to Maintain LOW

Attributes to De-emphasize HIGH

Performance