1. Fisk/Grove/John-4e, Copyright © Cengage Learning. All rights reserved. 1 | 1 Chapter 10 Building Customer Loyalty Through Services Quality

2. Fisk/Grove/John-4e, Copyright © Cengage Learning. All rights reserved. 1 | 2 Objectives 1.To examine the concept of customer loyalty with service providers 2.To examine the concept of service quality 3.To discuss how customers evaluate service quality 4.To discuss the role of service guarantees in relation to quality 5.To examine the design of effective service guarantees and their payoff

3. Fisk/Grove/John-4e, Copyright © Cengage Learning. All rights reserved. 1 | 3 Outline I.Introduction II.What Is Service Quality? III.How Customers Evaluate Service Quality IV.Why and When to Guarantee a Service V.What Makes an Extraordinary Service Guarantee? VI.How to Design a Service Guarantee VII.Summary and Conclusion

4. Fisk/Grove/John-4e, Copyright © Cengage Learning. All rights reserved. 1 | 4 Introduction Customer delight occurs when customer expectations are significantly exceeded.

5. Fisk/Grove/John-4e, Copyright © Cengage Learning. All rights reserved. 1 | 5 Introduction (cont’d)

6. Fisk/Grove/John-4e, Copyright © Cengage Learning. All rights reserved. 1 | 6 What is Service Quality? Service quality from the provider’s perspective means the degree to which the service’s features conform to the organization’s specifications and requirements; from the customer’s perspective it means how well the service meets or exceeds expectations.

7. Fisk/Grove/John-4e, Copyright © Cengage Learning. All rights reserved. 1 | 7 What is Service Quality? (cont’d)

8. Fisk/Grove/John-4e, Copyright © Cengage Learning. All rights reserved. 1 | 8 How Customers Evaluate Service Quality Service quality is more difficult to evaluate than goods quality Service quality perceptions result from a comparison of consumer expectations with actual service performance Quality evaluations are not made solely on the outcome of a service; they also involve evaluations of the process of service delivery

9. Fisk/Grove/John-4e, Copyright © Cengage Learning. All rights reserved. 1 | 9 How Customers Evaluate Service Quality (cont’d) SERVQUAL is a scale designed to measure customer perceptions of service quality along five key dimensions: Reliability Assurance Tangibles Responsiveness Empathy of the service provider

10. Fisk/Grove/John-4e, Copyright © Cengage Learning. All rights reserved. 1 | 10 How Customers Evaluate Service Quality (cont’d)

11. Fisk/Grove/John-4e, Copyright © Cengage Learning. All rights reserved. 1 | 11 How Customers Evaluate Service Quality (cont’d)

12. Fisk/Grove/John-4e, Copyright © Cengage Learning. All rights reserved. 1 | 12 How Customers Evaluate Service Quality (cont’d)

13. Fisk/Grove/John-4e, Copyright © Cengage Learning. All rights reserved. 1 | 13 Why and When to Guarantee a Service A service guarantee is a promise to compensate customers if the service delivery fails to meet established standards

14. Fisk/Grove/John-4e, Copyright © Cengage Learning. All rights reserved. 1 | 14 What Makes an Extraordinary Service Guarantee? Unconditional Easy to understand and communicate Meaningful Simple to invoke Easy and quick to collect on (Hart,1988)

15. Fisk/Grove/John-4e, Copyright © Cengage Learning. All rights reserved. 1 | 15 How to Design a Service Guarantee Three major decisions: –Degree of explicitness –Scope of what is covered –Conditions of coverage

16. Fisk/Grove/John-4e, Copyright © Cengage Learning. All rights reserved. 1 | 16 Web Sites Jordan’s Furniture (http://www.jordans.com), p. 145 Strategic Planning Institute (http://www.pimsonline.com), p. 147 Doubletree Hotel (http://www.doubletree.com), p. 148 Ritz-Carlton Hotel (http://www.ritzcarlton.com), p. 150 L.L. Bean (http://www.llbean.com), p. 156

17. Fisk/Grove/John-4e, Copyright © Cengage Learning. All rights reserved. 1 | 17 Web Sites (cont’d) Radisson Hotels (http://www.radisson.com), p. 156http://www.radisson.com British Airways (http://www.british-airways.com), p. 157 Meineke (http://www.meineke.com), p. 158 FedEx (http://www.fedex.com), p. 158