Service Quality
Learning Objectives
 Describe
the five dimensions of service quality.
 Use the service quality gap model to diagnose
quality problems for a service firm.
 Illustrate how Taguchi methods and poka-yoke
methods are applied to service design.
 Construct a statistical process control chart.
 Develop unconditional service guarantees.
 Plan for service recovery.
Moments of Truth
 Each
customer contact is called a moment
of truth.
 You
have the ability to either satisfy or
dissatisfy them when you contact them.
A
service recovery is satisfying a
previously dissatisfied customer and
making them a loyal customer.
Dimensions of Service Quality
 Reliability:
Perform promised service
dependably and accurately. Example:
receive mail at same time each day.
 Responsiveness: Willingness to help
customers promptly. Example: avoid
keeping customers waiting for no apparent
reason.
Dimensions of Service Quality
 Assurance:
Ability to convey trust and
confidence. Example: being polite and
showing respect for customer.
 Empathy: Ability to be approachable.
Example: being a good listener.
 Tangibles: Physical facilities and
facilitating goods. Example: cleanliness.
Perceived Service Quality
Word of
mouth
Service Quality
Dimensions
Reliability
Responsiveness
Assurance
Empathy
Tangibles
Personal
needs
Expected
service
Perceived
service
Past
experience
Service Quality Assessment
1. Expectations exceeded
ES<PS (Quality surprise)
2. Expectations met
ES~PS (Satisfactory quality)
3. Expectations not met
ES>PS (Unacceptable quality)
Gaps in Service Quality
Word -of-mouth
communications
Personal needs
Past experience
Customer
Expected service
GAP 5
Perceived service
Service delivery (including
pre- and post-contacts)
GAP 1
GAP 3
GAP 4
Translation of perceptions into
service quality specifications
Provider
External communications
to consumers
GAP 2
Management perceptions of
consumer expectations
Quality Service by Design
 Quality
in the Service Package
Budget Hotel example
 Taguchi Methods (Robustness)
Notifying maids of rooms for cleaning
 Poka-yoke (fail-safing)
Height bar at amusement park
 Quality Function Deployment
House of Quality
Classification of Service Failures
Server Errors
Task:
Doing work incorrectly
Treatment:
Failure to listen to customer
Tangible:
Failure to clean facilities
Customer Errors
Preparation:
Failure to bring necessary
materials
Encounter:
Failure to follow instructions
Resolution:
Failure to learn from
experience
Service Fail-safing
Poka-Yokes (A Proactive Approach)
 Keeping
a
mistake from
becoming a
service defect.
Task
Treatment
 How
can we failsafe the three Ts?
Tangibles
Have we compromised one of the 3 Ts?
Achieving Service Quality
 Cost
of Quality (Juran)
 Service
Process Control
 Statistical
Process Control (Deming)
 Unconditional
Service Guarantee
Costs of Service Quality
Failure costs
Detection costs
Prevention costs
External failure:
Customer complaints
Warranty charges
Liability insurance
Legal judgments
Loss of repeat service
Process control
Peer review
Supervision
Customer comment card
Inspection
Quality planning
Training program
Quality audits
Data acquisition and analysis
Preventive maintenance
Supplier evaluation
Recruitment and selection
Internal failure:
Scrap
Rework
Recovery:
Expedite
Labor and materials
Service Process Control
Customer
input
Service
process
Resources
Take
corrective
action
Identify reason
for
nonconformance
Service
concept
Customer
output
Monitor
conformance to
requirements
Establish
measure of
performance
Percentage of flights on time
Control Chart of Departure Delays
100
expected
90
Lower Control Limit
80
70
60
UCL  p  3
1998
p(1  p
n
1999
LCL  p  3
p(1  p
n
Unconditional Service Guarantee:
Customer View
 Unconditional
(L.L. Bean)
 Easy to understand and communicate
(Bennigan’s)
 Meaningful (Domino’s Pizza)
 Easy to invoke (Cititravel)
 Easy to collect (Manpower)
Unconditional Service Guarantee:
Management View
 Focuses
on customers (British Airways)
 Sets clear standards (FedEx)
 Guarantees feedback (Manpower)
 Promotes an understanding of the service
delivery system (Bug Killer)
 Builds customer loyalty
Customer Satisfaction
 All
customers want to be satisfied.
 Customer
loyalty is only due to the lack of
a better alternative
 Giving
customers some extra value will
delight them by exceeding their
expectations and insure their return
Expressing Dissatisfaction
Public Action
Action
Seek redress directly from
the firm
Take legal action
Dissatisfaction
occurs
Complaint to business, private,
or governmental agencies
Private Action
Stop buying the product or
boycott the seller
No Action
Warn friends about the product
and /or seller
Customer Feedback and Wordof-Mouth

The average business only hears from 4% of their customers who are
dissatisfied with their products or services. Of the 96% who do not bother
to complain, 25% of them have serious problems.

The 4% complainers are more likely to stay with the supplier than are the
96% non-complainers.

About 60% of the complainers would stay as customers if their problems
was resolved and 95% would stay if the problem was resolved quickly.

A dissatisfied customer will tell between 10 and 20 other people about
their problem.

A customer who has had a problem resolved by a company will tell about
5 people about their situation.
Number of People Told Based
on Level of Dissatisfaction
average number of people told
30
25
20
15
10
5
0
Slight
diss
Annoyed
Very
Ext
Abs
annoyed
annoyed
furious
Action Taken Based on Level of
Dissatisfaction
100
Tell friends
80
Complain
60
Make a fuses
40
Not use again
Dissuade others
20
Complain against
0
Slightly
diss
Annoyed
Very
annoyed
Ext
annoyed
Abs
furlous
Approaches to Service Recovery
Case-by-case addresses each customer’s
complaint individually but could lead to
perception of unfairness.
 Systematic response uses a protocol to handle
complaints but needs prior identification of
critical failure points and continuous updating.
 Early intervention attempts to fix problem before
the customer is affected.
 Substitute service allows rival firm to provide
service but could lead to loss of customer.

Making Customers into Champions
easy
Champions
Active in providing
British Airways with
information on quality
of its services; loyal
Remain Loyal
How easy customers feel it is to
contact British Airways
Walking wounded
Could complain but don’t;
not happy but repurchase
Defect
Missing in action
Defected;
non-complaining
Detractors
Defected;
vocally critical
not easy
don’t complain
Propensity to contact British Airways
complain
Topics for Discussion
 How
do the dimensions of service quality differ
from those of product quality?
 Why is measuring service quality so difficult?
 Illustrate the four components in the cost of
quality for a service of your choice.
 Why do service firms hesitate to offer a service
guarantee?
 How can recovery from a service failure be a
blessing in disguise?
The Complaint Letter
 Briefly
summarize the complaints and
compliments in Dr. Loflin’s letter.
 Critique the letter of Gail Pearson in reply
to Dr. Loflin. What are the strengths and
weaknesses of the letter?
 Prepare an “improved” response letter from
Gail Pearson
 What further action should Gail Pearson
take in view of this incident?