自我介紹
1
 蘇怡今
 臺北人
 姚銘忠老師實驗室
 看棒球、數獨
Return on Quality(ROQ):Making
Service Quality Financially
Accountable
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Roland T. Rust, Anthony J. Zahorik, & Timothy L. Keiningham
Journal of Marketing (1995)
0053219 蘇怡今
指導老師:任維廉 教授
Outline
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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
Abstract
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 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
Literature Review
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 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
Literature Review
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 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
The ROQ Approach
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 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
A Model of Service Quality Improvement and
Profitability
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AQ=f1(X)+1
S=f2(AQ,E)+ 2
R=f4(S)+ 4
MS=f5(R,MV)+ 5
CR=f3(AQ)+ 3
PROFIT=f6(MS,CR)+ 6
Evaluating Financial Impact
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 Net present value (NPV)
Average price and contribution margin
P
 (1 I ) [YM
k
K 1
Market size
(1G) N  X
k
t k
Financial discounting rate
t
Growth rate
t k
]
Expenditure level
 Net present value of additional spending (NPVAS)
Upfront expenditure
P
F'
  (F  F
k 1
)(1 I )
k
0
 F'
Current level of annual expenditure
(F  F )[(1(1 I ) / I )]
P
0
Annual maintenance expenditure
 ROQ=(NPV-NPV0)/NPVAS
Measurement Alternatives
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 Repurchase intention
 Service quality
 Customer satisfaction
 Disconfirmation
 Customer delight
 Cumulative focus versus transaction focus
The ROQ Quality Improvement Process
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Summary of Managerial inputs
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 The key management process must be indentified
 Key dimensions of each process must be obtained
 Customer retention (or repurchase intention) must be
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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
Summary of Managerial inputs
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 The contribution margin from an average customer must



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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
An Illustrative Application and results
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 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
An Illustrative Application and results
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 Calculate ROQ=44.6%, is a healthy return
Discussion and Conclusions
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 This article presented a financial approach to quality
improvement (ROQ)
 Made quality improvement financially accountable
 Let manager determine where to spend on service
quality
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