Customer vs Company Defined
Standards
• Customer- defined service standards
are not sufficient to bring
effectiveness to an organization.
• There is a place in an organization
for company defined standards
because these standards
promote productivity and efficiency.
Hard vs Soft Standards
• Hard standards are operational
standards
• Soft standards are perceptual standards
• Employees tend to accept operational
standards more than perceptual
standards
• because they trust the measurement of
operational standards to a greater degree.
• Perceptual standards are considered to
be subjective
• and more biased than operational standards
Hard Standards
• Things that can be counted, timed,
or observed through audits
– delivery time
– response time
• number of times a phone rings before it is
answered
• on time appointments
– order correctly filled
– number of sales calls per month per
customer
Soft Standards
• Standards that must be documented using
perceptual measures.
– Courteous
– Trustworthy
– Communication skills
• Opinion based measures that cannot be
observed and must be collected by talking to
customers, employees, or others
Examples of Soft Customer-Defined Standards
Developing Standards
• Standards are most difficult to develop in
professional service.
• For professional services specific, concrete and
standardized behaviors can rarely be stated as
standards because their service is complex and
depends on the expertise of providers.
• Nevertheless, some standards can be specified.
Mayo Clinic Example
• Every patient will be
weighed and have their
blood pressure
checked.
• Each patient must
complete a personal
history form.
• Each patient will
pay for services
upon receipt.
Obtaining Compliance
• These particular standards would not be
hard to obtain compliance for because
they deal with staff rather than experts.
• However, the professionals and experts
would resist standards for themselves
– believe their work can not be reduced to
repetitive actions and behaviors.
– believe their work relies on their expertise
and may argue that each patient is different.
• Any standards developed for experts
must be shown to have value
Template for Process Map for
Customer-Driven Standards and Measurements
Service Encounter
Service
Quality
Customer Requirements
Measurements
AT&T’s Process Map for Measurements
Business Process
30% Product
30% Sales
Total
Quality 10% Installation
15% Repair
15% Billing
Source: AT&T General Business Systems
Internal Metric
Customer Need
Reliability
Easy To Use
Features / Functions
(40%)
(20%)
(40%)
% Repair Call
% Calls for Help
Knowledge
Responsive
Follow-Up
(30%)
(25%)
(10%)
Supervisor Observations
% Proposal Made on Time
% Follow Up Made
Delivery Interval Meets Needs
Does Not Break
Installed When Promised
(30%)
(25%)
(10%)
Average Order Interval
% Repair Reports
% Installed On Due Date
No Repeat Trouble
Fixed Fast
(30%)
(25%)
Kept Informed
(10%)
% Repeat Reports
Average Speed Of Repair
% Customers Informed
Accuracy, No Surprise
Resolve On First Call
Easy To Understand
(45%)
(35%)
(10%)
% Billing Inquiries
% Resolved First Call
% Billing Inquiries
Functional Performance Test
Process for Setting
Customer-Defined Standards
1. Identify Existing or Desired Service Encounter Sequence
2. Translate Customer Expectations Into Behaviors/Actions
3. Select Behaviors/Actions for Standards
4. Set Hard or Soft Standards
Measure by
Audits or
Operating Data
Hard
5. Develop Feedback
Mechanisms
6. Establish Measures and Target Levels
7. Track Measures Against Standards
8. Update Target Levels and Measures
Soft
Measure by
TransactionBased Surveys
1. Identify Existing or Desired Service
Encounter Sequence
• Describe the service encounter
– Scripts
– Blueprinting
2. Translate Customer Expectations
into Behaviors and Actions
• Conduct marketing research to
identify customer expectations
• Translate expectations into concrete
specific behaviors and actions
– Responsiveness: phones are
answered in three or fewer rings.
– Access: location is open 7 days
a week
3. Select Behaviors and Actions for Standards
• Prioritize the behaviors and actions into
those for which customer defined
standards will be established.
4. Decide Whether Hard or Soft Standards
are Appropriate
• Hard
• Soft
• Both
5. Develop Feedback Mechanisms for
Measurement Standards
Capture the process
from a customer’s
point of view rather
than the company’s
Aligning Company Processes with Customer
Expectations
Customer Expectations
Customer
Process
Blueprint
Company
Process
Blueprint
A
B
Lost Card
Reported
48 Hours
Report Lost Card
Receive New
Card
Company Sequential Processes
C
D
E
10 Business Days ?
F
G
New Card
Mailed
H
6. Establish Measures and Target
Levels
• Benchmarking
• Without this step a company
cannot determine if the standard
has been met.
7. Track Measures
Against Standards
• Gather data
• Analyze data
• Act on the information
8. Provide feedback about Performance
to Employees
• Service requirements
must be communicated
through the
organization.
• Determine the
communication
mechanisms
• How frequently will
information be shared?
9. Periodically Update Target Levels and
Measures
In order to keep up with
customer expectations
revise the target levels,
measures, and
customer requirements
on a regular basis.
Importance/Performance Matrix
HIGH
10.0
Improve
Maintain
Does whatever it takes to
correct problems (9.26, 7.96)
 Delivers on promises specified in proposal/contract (9.49, 8.51)

Gets project within budget, on time (9.31, 7.84)


Gets price we originally agreed upon (9.21, 8.64)
 

Tells me cost ahead of time (9.06, 8.46)
 

Provides equipment that operates as vendor said it would (9.24, 8.14)
Completes projects
correctly, on time (9.29, 7.68)
9.0
Gets back to me when
promised (9.04, 7.63)
Importance
Takes responsibility for their mistakes (9.18, 8.01)
Delivers or installs on
promised date (9.02, 7.84)
8.0
LOW
7.0
8.0
Performance
9.0
10.0
HIGH
Service Performance Index
Service performance indexes are comprehensive composites
of the most critical performance standards.
– Helps the company to understand the most important requirements
of the customer.
– Links the service requirements to tangible and measurable aspects
of the service.
– Companies use feedback to identify and improve service problems.
– Companies should develop reward and recognition systems based
on performance.
Benefits of Customer Satisfaction
and Service
Insulates customers
from competition
Can create sustainable
advantage
Reduces failure costs
Encourages repeat
patronage and loyalty
Customer
Satisfaction
and Service
Quality
Enhances/promotes
positive WOM
Lowers costs of attracting
new customers
Return on Quality (ROQ)
ROQ approach is based on four assumptions:
1. Quality is an investment
2. Quality efforts must be financially
accountable
3. It’s possible to spend too much on quality
4. Not all quality expenditures are equally valid
Implication: Quality improvement efforts may
benefit from being related to
productivity improvement programs
Service Quality
• Service quality is the customer’s judgment of overall
excellence of the service provided in relation to the
quality that was expected.
• Process and outcome quality
are both important.
Evidence of Service from the
Customer’s Point of View
Process
Operational flow of activities
 Steps in process
 Flexibility vs. standard
 Technology vs. human
People
People
 Contact employees
 Customer him/herself
 Other customers
Physical Evidence
Process
Physical
Evidence
 Tangible communication
 Servicescape
 Guarantees
 Technology
What Customers Expect:
Getting to Actionable Steps
Satisfaction
Relationship
Dig
deeper
Value
Solution Provider
Diagnosticity:
Requirements:
Abstract
Low
General
concepts
Reliability Empathy
Assurance Tangibles
Responsiveness Price
Dimensions
Delivers on time
Returns calls quickly
Knows my industry
Dig
deeper
Dig
deeper
Attributes
Delivers by Wednesday
Returns calls in two hours
Knows strengths of my competitors
Concrete
Behaviors
and actions
High
Building a Service Quality
Information System
•
•
•
•
•
•
•
•
•
Complaint analysis
Post-transaction surveys
Ongoing customer surveys
Customer advisory panels
Employee surveys/panels
Focus groups
Mystery shopping
Total market surveys
Capture of service operating data
How Customers Widen the
Service Performance Gap
• Lack of understanding of their roles
• Not being willing or able to perform their roles
• No rewards for “good performance”
• Interfering with other customers
• Incompatible market segments
Customer Roles in Service Delivery
Productive Resources
Contributors to Service
Quality and Satisfaction
Competitors
Customers as Productive Resources
• customers can be thought of as “partial
employees”
– contributing effort, time, or other resources to the
production process
• customer inputs can affect organization’s
productivity
• key issue:
– should customers’ roles be expanded? reduced?
Services Production Continuum
Customer Production
1
Joint Production
2
3
Firm Production
4
5
6
Gas Station Illustration
1. Customer pumps gas and pays at the pump with automation
2. Customer pumps gas and goes inside to pay attendant
3. Customer pumps gas and attendant takes payment at the pump
4. Attendant pumps gas and customer pays at the pump with automation
5. Attendant pumps gas and customer goes inside to pay attendant
6. Attendant pumps gas and attendant takes payment at the pump
Customers as Contributors to
Service Quality and Satisfaction
• Customers can contribute to:
– their own satisfaction with the service
• by performing their role effectively
• by working with the service provider
– the quality of the service they receive
• by asking questions
• by taking responsibility for their own satisfaction
• by complaining when there is a service failure
Importance of Other (“Fellow”) Customers
in Service Delivery
• Other customers can detract from satisfaction:
–
–
–
–
disruptive behaviors
overly demanding behaviors
excessive crowding
incompatible needs
• Other customers can enhance satisfaction:
– mere presence
– socialization/friendships
– roles: assistants, teachers, supporters, mentors
Overcoming Customers’ Reluctance to Accept
Changes in Environment & Behavior
•
•
•
•
•
Develop customer trust
Understand customers’ habits and expectations
Pretest new procedures and equipment
Publicize the benefits
Teach customers to use
innovations &
promote trial
• Monitor performance,
continue
to seek improvements
Customers as Competitors
• customers may “compete” with the service
provider
• “internal exchange” vs. “external exchange”
• internal/external decision often based on:
–
–
–
–
–
–
–
expertise capacity
resources capacity
time capacity
economic rewards
psychic rewards
trust
control
Strategies for Enhancing Customer Participation
Outcomes of
Customer Satisfaction
• Increased customer
retention
• Positive word-ofmouth
communications
• Increased revenues