1. Provide Top-Notch Service: Pitfalls & Successes of Service QualityBy
Dr. Azizah Omar
Phd (Monash, Aust) MBA (USM) BSc (Curtin, Aust)
Deputy Dean
Industry & Community Network
School of Management
Universiti Sains Malaysia
Pulau Pinang

2. Why Services Matter?
dominate U.S. and worldwide economies including Malaysia.
are growing dramatically
leads to customer retention and loyalty
leads to profits
help manufacturing companies differentiate themselves from competitors

3. Standing Apart from the Competition
A business must set itself apart from its competition.
To be successful it must identify and promote itself
as the best provider of attributes that are
important to target customers
George S. Day

4. Percent of U.S. Gross Domestic Product by Industry

5. Contribution of Services Industries to global GDP
Employability sectors in Malaysia
Services
6.17 million
57.9%
Manufacturing
1.94 million
18.2%
Agriculture
1.49 million
14.0%
Construction
1.0 million
9.4%
Mining
0.05 million
0.5%

6. Forces Transforming the Service Economy
Government
Policies
Business
Trends
Social
Changes
Advances in IT
Globalization
New markets and product categories
Increase in demand for services
More intense competition
Innovation in service products & delivery systems, stimulated by better technology
Customers have more choices and exercise more power
Success hinges on:
Understanding customers and competitors
Viable business models
Creation of value for customers and firm

7. What is Service? The New View
Service includes every interaction between any customer and anyone representing the company, including:
Dealers
Salespeople
Receptionists and Schedulers
Management and Executives
Service Employees
Billing and Accounting Personnel
Web site and any e-channel Interaction
Customer 7

8. The customer is . . .
Anyone who receives the company’s services, including:
external customers (outside the organization, business customers, suppliers, partners, end consumers)
internal customers (inside the organization, e.g., other departments, fellow employees)

9. The Services Marketing Triangle

10. Stages in Consumer Decision Making and Evaluation of Services

11. Comparing Goods and Services

12. Challenges for Services
Defining and improving quality
Ensuring the delivery of consistent quality
Designing and testing new services
Communicating and maintaining a consistent image
Accommodating fluctuating demand
Motivating and sustaining employee commitment
Coordinating marketing, operations, and human resource efforts
Setting prices
Finding a balance between standardization versus customization

13. Traditional Marketing Mix
All elements within the control of the firm that communicate the firm’s capabilities and image to customers or that influence customer satisfaction with the firm’s product and services:
Product
Price
Place
Promotion

14. Expanded Mix for Services – The 7 Ps
Product
Price
Place
Promotion
People
All human actors who play a part in service delivery and thus influence the buyer’s perceptions: namely, the firm’s personnel, the customer, and other customers in the service environment.
Physical Evidence
The environment in which the service is delivered and where the firm and customer interact, and any tangible components that facilitate performance or communication of the service.
Process
The actual procedures, mechanisms, and flow of activities by which the service is delivered—the service delivery and operating systems.

15. Expanded Marketing Mix for Services

16. Gaps Model of Service Quality
difference between customer expectations and perceptions
not delivering to service standards
not knowing what customers expect
not matching performance to promises
not having the right service designs and standards

17. The Zone of Tolerance Delights Desirables Musts Desired Service
Adequate Service
Musts

18. Factors That Influence Desired and Predicted Service

19. Customer Perceptions of Quality and Customer Satisfaction

20. How Customers Judge the Five Dimensions of Service Quality

21. SERVQUAL Attributes RELIABILITY EMPATHY RESPONSIVENESS TANGIBLES
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 customer’s best interest at heart
Employees who understand the needs of their customers
Convenient business hours
RESPONSIVENESS
TANGIBLES
Keeping customers informed as to when services will be performed
Prompt service to customers
Willingness to help customers
Readiness to respond to customers’ requests
Modern equipment
Visually appealing facilities
Employees who have a neat, professional appearance
Visually appealing materials associated with the service
ASSURANCE
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

22. Evidence of Service from the Customer’s Point of View

23. Relationship Marketing
is a philosophy of doing business, a strategic orientation, that focuses on keeping current customers and improving relationships with them
does not necessarily emphasize acquiring new customers
is usually cheaper (for the firm)
keeping a current customer costs less than attracting a new one
thus, the focus is less on attraction, and more on retention and enhancement of customer relationships

24. The “Bucket Theory of Marketing”

25. Customer Goals of Relationship Marketing

26. Benefits of Relationship Marketing
Benefits for Customers:
Receipt of greater value
Confidence benefits:
trust
confidence in provider
reduced anxiety
Social benefits:
familiarity
social support
personal relationships
Special treatment benefits:
special deals
price breaks
Benefits for Firms:
Economic benefits:
increased revenues
reduced marketing and administrative costs
regular revenue stream
Customer behavior benefits:
strong word-of-mouth endorsements
customer voluntary performance
social benefits to other customers
mentors to other customers
Human resource management benefits:
easier jobs for employees
social benefits for employees
employee retention

27. The Customer Pyramid

28. The Customer Pyramid Platinum Tier Gold Tier Iron Tier Lead Tier
Company’s most profitable customers, typically heavy users of the product, not overly price sensitive, willing to invest in and try new offerings, and committed customers of the firm
Gold Tier
Profitability levels are not as high, perhaps because customers want price discounts that limit margins or are simply not as loyal. May be heavy users who minimize risk by working with multiple vendors.
Iron Tier
Essential customers that provide the volume needed to utilize the firm'’ capacity but their spending levels, loyalty, and profitability are not substantial enough for special treatment
Lead Tier
Customers who are costing the firm money. They demand more attention than they are due given their spending and profitability and are sometimes problem customers—complaining about the firm to others and tying up firm resources.

29. Levels of Relationship Strategies

30. Causes Behind Service Switching

31. Service Recovery Strategies

32. Eight Most Common Remedies Customers Seek with Serious Problems
Have the product repaired or service fixed
Be reimbursed for the hassle of having experienced a problem
Receive a free product or service in the future
Explanation by the firm as to what happened
Assurance that the problem will not be repeated
A thank you for the customer’s business
An apology from the firm
An opportunity for the customer to vent his or her frustrations to the firm

33. Service Blueprinting
A tool for simultaneously depicting the service process, the points of customer contact, and the evidence of service from the customer’s point of view.

34. Service Blueprint Components

35. Building a Service Blueprint

36. Benefits of Service Blueprinting
Provides a platform for innovation.
Recognizes roles and interdependencies among functions, people, and organizations.
Facilitates both strategic and tactical innovations.
Transfers and stores innovation and service knowledge.
Designs moments of truth from the customer’s point of view.
Suggests critical points for measurement and feedback in the service process.
Clarifies competitive positioning.
Provides understanding of the ideal customer experience.

37. Common Issues in Blueprinting
Clearly defining the process to be blueprinted
Clearly defining the customer or customer segment that is the focus of the blueprint
Who should “draw” the blueprint?
Should the actual or desired service process be blueprinted?
Should exceptions/recovery processes be incorporated?
What is the appropriate level of detail?
Symbology
Whether to include time on the blueprint
NOTES:

38. Blueprint for Overnight Hotel Stay Service

39. The Critical Importance of Service Employees
They are the service.
They are the organization in the customer’s eyes.
They are the brand.
They are marketers.
Their importance is evident in:
the services marketing mix (people)
the service-profit chain
the services triangle
They are the service.
in many cases, the contact employee is the service
- we often DO NOT DISTINGUISH between the person and the firm
(haircutting, child care, counseling, legal services)
in these cases, the offering is the employee
- other examples?
They are the organization in the customer’s eyes.
employees represent the firm to the client
may be the ONLY contact they have with the firm
e.g., Dixon Pest Control
everything they say and do can influence perceptions of the organization
even “off-duty” employees can influence perceptions
They are marketers.
they are walking “billboards”
they represent the company and influence customer satisfaction
they are salespersons
(waiters selling dessert; AT&T operators cross-selling)

40. The “Power of One” Every encounter counts Employees are the service
Every employee can make a difference
Through their actions, all employees shape the brand

41. Traditional Organizational Chart
Manager
Supervisor
Supervisor
Front-line Employee
Front-line Employee
Front-line Employee
Front-line Employee
Front-line Employee
Front-line Employee
Front-line Employee
Front-line Employee
Customers

42. Customer-Focused Organizational Chart

43. Human Resource Strategies for Delivering Service Quality through People

44. Theater as a Metaphor for Service Delivery
“All the world’s a stage and all the men and women merely players. They have their exits and their entrances and each man in his time plays many parts”
William Shakespeare
As You Like It

45. WOOING SHOPPERS: MAKING SHOPPING A JOY
CASE STUDY DISCUSSION
WOOING SHOPPERS: MAKING SHOPPING A JOY
(Sunday 10 January2010, TheStar, pp.4-5)