1. 自我介紹 蘇怡今 臺北人 姚銘忠老師實驗室 看棒球、數獨 1

2. 0053219 蘇怡今 指導老師 : 任維廉 教授 Return on Quality(ROQ):Making Service Quality Financially Accountable Roland T. Rust, Anthony J. Zahorik, & Timothy L. Keiningham Journal of Marketing (1995) 2

3. Outline  Abstract  Literature Review  The ROQ Approach  Evaluating Financial impact  The ROQ Quality Improvement Process  Summary of Managerial inputs  An Illustrative Application and results  Discussion and Conclusions 3

4. Abstract Many companies have been disappointed by a lack of results from their quality efforts Justify their quality improvement efforts financially “Return on quality” approach Provide a managerial framework can be used to guide quality improvement efforts 4

5. Literature Review Quality revolution (Dean and Evans 1994) Its not suited to all culture (Arnold and Plas 1993) High spending on Quality produced unsustainable losses (Hill 1993) They do not necessarily reduce costs and often increase them, in short term (Griliches 1971) The benefits of quality improvements come in two firms - The improved ability of the firm to attract new customers - Customers become repeat customers when they are satisfied with products 5

6. Literature Review Suggest a link between quality and profitability might exist (Buzzell and Gale 1987) A statistical link between patient satisfaction and hospital profitability (Nelson and colleagues 1992) Show link between product quality, service quality, and market share (Kordupleski, Rust, and Zahorik 1993) Customer satisfaction and service quality have measurable impact on customer retention, market share, and profitability 6

7. The ROQ Approach Assumptions:  Quality is an investment  Quality efforts must be financially accountable  It is possible to spend too much on quality  Not all quality expenditures are equally valid 7

8. A Model of Service Quality Improvement and Profitability AQ=f 1 (X)+  1 S=f 2 (AQ,E)+  2 CR=f 3 (AQ)+  3 R=f 4 (S)+  4 MS=f 5 (R,MV)+  5 PROFIT=f 6 (MS,CR)+  6 8

9. Evaluating Financial Impact 9 Net present value (NPV) Net present value of additional spending (NPVAS) ROQ=(NPV-NPV 0 )/NPVAS Market size Financial discounting rateGrowth rate Average price and contribution margin Current level of annual expenditure Annual maintenance expenditure Upfront expenditure Expenditure level

10. Measurement Alternatives Repurchase intention Service quality Customer satisfaction Disconfirmation Customer delight Cumulative focus versus transaction focus 10

11. The ROQ Quality Improvement Process 11

12. Summary of Managerial inputs The key management process must be indentified Key dimensions of each process must be obtained Customer retention (or repurchase intention) must be measured Customer satisfaction (or a suitable substitute) must be measured Market size must be measured Current market share must be estimated Churn must be estimated The company’s current retention rate must be estimated The attraction percentage must be obtained The market growth rate must be estimated 12

13. Summary of Managerial inputs The contribution margin from an average customer must be estimated The cost of capital must be determined The time horizon must be specified A specific quality improvement alternative must be identified The additional expenditures related to this improvement effort must be estimated Cost savings must be estimated The satisfaction shift must be estimated Market test data may be obtained 13

14. An Illustrative Application and results A National Hotel Chain Questionnaire has 15 dimensions In this case 45% probability disappointed customers return, 95% probability satisfied customers return Improve customer satisfaction is important 14

15. An Illustrative Application and results 15 Calculate ROQ=44.6%, is a healthy return

16. Discussion and Conclusions 16 This article presented a financial approach to quality improvement (ROQ) Made quality improvement financially accountable Let manager determine where to spend on service quality

17. 17