Recap - The Gaps model (Zeithaml, Parasuraman & Berry 1990)

Recap: Stages in Consumer Decision Making and Evaluation of Services

Models of service quality

The evolution ofservice 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 QuestionsAbout 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

Adequate Service

Desired Service

Zone ofTolerance

Reliability Tangibles

Level of

Expectation

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).

Adequate Service

Desired Service

Desired Service

Adequate Service

Zones of Tolerance for DifferentService Dimensions

Zone of

Tolerance

Zoneof

Tolerance

Lasting ServiceIntensifiers

Personal Needs Zone of

Tolerance

Desired Service

Adequate Service

Factors That Influence Desired Service

Self-PerceivedService Role

Situational Factors

Perceived ServiceAlternatives

Temporary ServiceIntensifiers

Zone of

Tolerance

Desired Service

Adequate Service

Factors That Influence Adequate Service

PredictedService

Predicted Service

Explicit ServicePromises

Implicit ServicePromises

Word-of-Mouth

Past ExperienceZone of

Tolerance

Desired Service

Adequate Service

Factors That Influence Desired and 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 SatisfactionProduct/service qualitySpecific product or service featuresConsumer emotionsAttributions for service success or failure

Factors Influencing Customer Satisfaction Perceptions of equity or fairness Other consumers, family members, and

coworkers Price Personal factors

the customer’s mood or emotional state situational factors

Outcomes of Customer SatisfactionIncreased customer retentionPositive word-of-mouth communicationsIncreased revenues

ASCI and Annual Percentage Growthin 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 customer’s 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 qualityphysical 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

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.

Willingness to help customers and provide prompt service.

Tangibles

Reliability

Responsiveness

Assurance

Empathy

Exercise to Identify Service AttributesIn 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 customer’s point of view.

Reliability:

Assurance:

Tangibles:

Empathy:

Responsiveness:

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

Keeping customers informed as to when services will be performed

Prompt service to customers Willingness to help customers Readiness to respond to customers’

requests

RELIABILITY

RESPONSIVENESS

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

ASSURANCE

Giving customers individual attention Employees who deal with customers in a

caring fashion Having the customer’s best interest at heart Employees who understand the needs of

their customers Convenient business hours

EMPATHY

Modern equipment Visually appealing facilities Employees who have a neat,

professional appearance Visually appealing materials

associated with the service

TANGIBLES

SERVQUAL Attributes

The Service Encounteris the “moment of truth”occurs any time the customer interacts with the firmcan 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

Check-In

Request Wake-Up Call

Checkout

Bellboy Takes to Room

Restaurant Meal

A Service Encounter Cascadefor a Hotel Visit

Sales Call

Ordering Supplies

Billing

Delivery and Installation

Servicing

A Service Encounter Cascade for an Industrial Purchase

Critical Service Encounters ResearchGOAL:

understanding actual events and behaviors that cause customer dis/satisfaction in service encounters

METHOD:Critical Incident Technique

DATA:stories from customers and employees

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 CriticalService Encounters Research

Recovery: Adaptability:

Spontaneity:Coping:

employee responseto service delivery

system failure

employee responseto customer needs

and requests

employee responseto problem customers

unprompted andunsolicited employeeactions and attitudes

Recovery

Acknowledge problemExplain causesApologizeCompensate/upgradeLay out optionsTake responsibility

Ignore customerBlame customerLeave customer to fend

for him/herselfDowngradeAct as if nothing is wrong “Pass the buck”

DO DON’T

Adaptability

Recognize the seriousness of the need

AcknowledgeAnticipateAttempt to accommodateAdjust the systemExplain rules/policiesTake responsibility

IgnorePromise, but fail to follow

throughShow unwillingness to tryEmbarrass the customerLaugh at the customerAvoid responsibility “Pass the buck”

DO DON’T

Spontaneity

Take timeBe attentiveAnticipate needsListenProvide informationShow empathy

Exhibit impatience IgnoreYell/laugh/swearSteal from customersDiscriminate

DO DON’T

Coping

ListenTry to accommodateExplainLet go of the customer

Take customer’s dissatisfaction personally

Let customer’s dissatisfaction affect others

DO DON’T

Evidence of Service from theCustomer’s Point of View

People

Process PhysicalEvidence

Contact employees Customer him/herself Other customers

Operational flow of activities Steps in process Flexibility vs. standard Technology vs. human

Tangible communication Servicescape Guarantees Technology WebsiteSource: 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.

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.

Importance of customer satisfaction—what it is, the factors that influence it, and the significant outcomes resulting from it.

Service quality and its five key dimensions: reliability, responsiveness, empathy, assurance, and tangibles.

Service encounters or “moments of truth” are the essential building blocks from which customers form their perceptions.

Customer Perceptions of Quality and Customer Satisfaction

Factors Influencing Customer SatisfactionProduct/service qualitySpecific product or service featuresConsumer emotionsAttributions for service success or failurePerceptions of equity or fairnessOther consumers, family members, and coworkersPricePersonal factors

the customer’s mood or emotional statesituational factors

Outcomes of Customer SatisfactionIncreased customer retentionPositive word-of-mouth communicationsIncreased revenues

ASCI and Annual Percentage Growthin 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 customer’s 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 qualityphysical environment quality

The Five Dimensions of Service Quality

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.

Willingness to help customers and provide prompt service.

Tangibles

Reliability

Responsiveness

Assurance

Empathy

Exercise to Identify Service AttributesIn 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 customer’s point of view.

Reliability:

Assurance:

Tangibles:

Empathy:

Responsiveness:

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

Keeping customers informed as to when services will be performed

Prompt service to customers Willingness to help customers Readiness to respond to customers’

requests

RELIABILITY

RESPONSIVENESS

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

ASSURANCE

Giving customers individual attention Employees who deal with customers in a

caring fashion Having the customer’s best interest at heart Employees who understand the needs of

their customers Convenient business hours

EMPATHY

Modern equipment Visually appealing facilities Employees who have a neat,

professional appearance Visually appealing materials

associated with the service

TANGIBLES

SERVQUAL Attributes

The Service Encounter

is the “moment of truth”occurs any time the customer interacts with the firmcan 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 trustreinforce qualitybuild brand identity increase loyalty

Check-In

Request Wake-Up Call

Checkout

Bellboy Takes to Room

Restaurant Meal

A Service Encounter Cascadefor a Hotel Visit

Sales Call

Ordering Supplies

Billing

Delivery and Installation

Servicing

A Service Encounter Cascade for an Industrial Purchase

Critical Service Encounters ResearchGOAL:

understanding actual events and behaviors that cause customer dis/satisfaction in service encounters

METHOD:Critical Incident Technique

DATA:stories from customers and employees

OUTPUT: identification of themes underlying satisfaction and

dissatisfaction with service encounters

Sample Questions for Critical Incidents Technique StudyThink 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 CriticalService Encounters Research

Recovery: Adaptability:

Spontaneity:Coping:

employee responseto service delivery

system failure

employee responseto customer needs

and requests

employee responseto problem customers

unprompted andunsolicited employeeactions and attitudes

Recovery

Acknowledge problemExplain causesApologizeCompensate/upgradeLay out optionsTake responsibility

Ignore customerBlame customerLeave customer to fend

for him/herselfDowngradeAct as if nothing is wrong “Pass the buck”

DO DON’T

Adaptability

Recognize the seriousness of the need

AcknowledgeAnticipateAttempt to accommodateAdjust the systemExplain rules/policiesTake responsibility

IgnorePromise, but fail to follow

throughShow unwillingness to tryEmbarrass the customerLaugh at the customerAvoid responsibility “Pass the buck”

DO DON’T

Spontaneity

Take timeBe attentiveAnticipate needsListenProvide informationShow empathy

Exhibit impatience IgnoreYell/laugh/swearSteal from customersDiscriminate

DO DON’T

Coping

ListenTry to accommodateExplainLet go of the customer

Take customer’s dissatisfaction personally

Let customer’s dissatisfaction affect others

DO DON’T

Evidence of Service from theCustomer’s Point of View

People

Process PhysicalEvidence

Contact employees Customer him/herself Other customers

Operational flow of activities Steps in process Flexibility vs. standard Technology vs. human

Tangible communication Servicescape Guarantees Technology WebsiteSource: 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.

Part 3

UNDERSTANDING CUSTOMER REQUIREMENTS

Company Perceptions of

Consumer Expectations

Expected Service

CUSTOMER

COMPANYListening

Gap

Provider Gap 1

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 ResearchPresent the types of and guidelines for marketing research in services.

Show how marketing research information can and should be used for services.

Describe the strategies by which companies can facilitate interaction and communication between management and customers.

Present ways that companies can and do facilitate interaction between contact people and management.

Common Research Objectives for ServicesTo 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 service.To monitor changing customer expectations in an industry.To forecast future expectations of customers.

Criteria for an EffectiveService Research ProgramIncludes both qualitative and quantitative researchIncludes both expectations and perceptions of customers

Balances the cost of the research and the value of the information

Includes statistical validity when necessaryMeasures priorities or importance of attributesOccurs with appropriate frequencyIncludes measures of loyalty, behavioral intentions, or actual behavior

Stages in the Research ProcessStage 1 : Define Problem

Stage 2 : Develop Measurement Strategy

Stage 3 : Implement Research Program

Stage 4 : Collect and Tabulate Data

Stage 5 : Interpret and Analyze Findings

Stage 6 : Report Findings

Portfolio of Services Research

Customer Complaint Solicitation

“Relationship” Surveys

Post-Transaction Surveys

Customer Focus Groups

“Mystery Shopping” of Service Providers

Employee Surveys

Identify dissatisfied customers to attempt recovery; identify most common categories of service failure for remedial action

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

Assess company’s service performance compared to competitors; identify service-improvement priorities; track service improvement over time

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 employee-perceived obstacles to improve service; track employee morale and attitudes

Determine the reasons why customers defect

Research Objective Type of Research

Lost Customer Research

Future Expectations ResearchForecast future expectations of customers; develop and test new service ideas

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.

Retail Chain

9 8 7 6 5 4 3 2 1 0 Reliability Responsiveness Assurance Empathy Tangibles

OO

= Zone of Tolerance = Service Quality Perception

O

OOO

Figure 6.4

Service Quality Perceptions Relative to Zones of Tolerance

Computer Manufacturer

10

8

6

4

2

0Reliability Responsiveness Assurance Empathy Tangibles

OO O OO

= Zone of Tolerance = S.Q. PerceptionO

Service Quality Perceptions Relative to Zones of Tolerance

Figure 6.5

Importance/Performance Matrix

HIGH

HIGHLOW Performance

Impo

rtan

ce

Attributes to Improve Attributes to Maintain

HighLeverage

Attributes to De-emphasizeAttributes to Maintain

LowLeverage Low

Leverage