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Chapter 06 Service Quality

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1 Chapter 06 Service Quality
McGraw-Hill/Irwin Service Management: Operations, Strategy, and Information Technology, 6e Copyright © 2008 by The McGraw-Hill Companies, Inc. All Rights Reserved.

2 Moments of Truth Each customer contact is called a moment of truth.
You have the ability to either satisfy or dissatisfy them when you contact them. A service recovery is satisfying a previously dissatisfied customer and making them a loyal customer. 6-2

3 Dimensions of Service Quality
Reliability: Perform promised service dependably and accurately. Example: receive mail at same time each day. Responsiveness: Willingness to help customers promptly. Example: avoid keeping customers waiting for no apparent reason. 6-3

4 Dimensions of Service Quality
Assurance: Ability to convey trust and confidence. Example: being polite and showing respect for customer. Empathy: Ability to be approachable. Example: being a good listener. Tangibles: Physical facilities and facilitating goods. Example: cleanliness. 6-4

5 Perceived Service Quality
Word of mouth Personal needs Past experience Service Quality Dimensions Reliability Responsiveness Assurance Empathy Tangibles Service Quality Assessment 1. Expectations exceeded ES<PS (Quality surprise) 2. Expectations met ES~PS (Satisfactory quality) 3. Expectations not met ES>PS (Unacceptable quality) Expected service Perceived service 6-5

6 Service Quality Gap Model
6-6

7 Quality Service by Design
Quality in the Service Package Budget Hotel example Poka-yoke (fail-safing) Height bar at amusement park Quality Function Deployment House of Quality 6-7

8 Classification of Service Failures
Server Errors Task: Doing work incorrectly Treatment: Failure to listen to customer Tangible: Failure to wear clean uniform Customer Errors Preparation: Failure to bring necessary materials Encounter: Failure to follow system flow Resolution: Failure to signal service failure 6-8

9 Achieving Service Quality
Cost of Quality (Juran) Statistical Process Control (Deming) Unconditional Service Guarantee 6-9

10 Costs of Service Quality (Bank Example)
Failure costs Detection costs Prevention costs External failure: Process control Quality planning Loss of future business Peer review Training program Negative word-of-mouth Supervision Quality audits Liability insurance Customer comment card Data acquisition and analysis Legal judgments Inspection Recruitment and selection Interest penalties Supplier evaluation Internal failure: Scrapped forms Rework Recovery: Expedite disruption Labor and materials 6-10

11 Control Chart of Departure Delays
expected Lower Control Limit 1998 1999 6-11

12 Unconditional Service Guarantee: Customer View
Unconditional (L.L. Bean) Easy to understand and communicate (Bennigan’s) Meaningful (Domino’s Pizza) Easy to invoke (Cititravel) Easy to collect (Manpower) 6-12

13 Unconditional Service Guarantee: Management View
Focuses on customers (British Airways) Sets clear standards (FedEx) Guarantees feedback (Manpower) Promotes an understanding of the service delivery system (Bug Killer) Builds customer loyalty by making expectations explicit 6-13

14 Customer Satisfaction
All customers want to be satisfied. Customer loyalty is only due to the lack of a better alternative Giving customers some extra value will delight them by exceeding their expectations and insure their return 6-14

15 Customer Feedback and Word-of-Mouth
The average business only hears from 4% of their customers who are dissatisfied with their products or services. Of the 96% who do not bother to complain, 25% of them have serious problems. The 4% complainers are more likely to stay with the supplier than are the 96% non-complainers. About 60% of the complainers would stay as customers if their problem was resolved and 95% would stay if the problem was resolved quickly. A dissatisfied customer will tell between 10 and 20 other people about their problem. A customer who has had a problem resolved by a company will tell about 5 people about their situation. 6-15

16 Service Recovery Framework
Severity Of Failure Perceived Service Quality Psychological -empathy -apology Tangible -fair fix -value add Psychological -apology -show interest Patronage Loyalty Satisfaction Retention Service Recovery Expectations Follow-up Service Recovery Service Recovery Customer Loyalty Service Guarantee Speed of Recovery Provider Aware of Failure Frontline Discretion Fair Restitution Tangible -small token Service Failure Occurs Pre-recovery Phase Immediate Recovery Phase Follow-up Phase 6-16

17 Approaches to Service Recovery
Case-by-case addresses each customer’s complaint individually but could lead to perception of unfairness. Systematic response uses a protocol to handle complaints but needs prior identification of critical failure points and continuous updating. Early intervention attempts to fix problem before the customer is affected. Substitute service allows rival firm to provide service but could lead to loss of customer. 6-17

18 Clarification of some terms:
Service Winner – customers have choices – dimension that won the customer over Service Success – delivered at or above the expected level of service (may even be a Surprise) Service Loser – Failure to deliver at or above the expected level of service (sometimes called a Service Failure) Service Recovery – what might the service provider do after a Failure

19 3/25/08 3/27/08 Service Failure Service Recovery

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