Service Quality & Productivity

1. KEVAL GOYANI

2. Service quality can be viewed form multiple
perspectives:
Product based –
Based on measurable parameters.
Suitable for goods.
E.g. no. of times a telephone rings before being picked by a
service provider?
E.g.. Delivery of Domino’s Pizza

3. User based
From customer’s perspectives
“quality is in the eyes of beholder (customers).”
E.g. excellent movie made by director but not found enjoyable
by viewers
Challenges:
• What the customer expects
• Which attributes to be included for garnering the largest appeal from the
largest group of customers
• How to differentiate between those attributes that provide satisfaction
and those that imply quality

4. Manufacturing based
Based on conformance (how well something)
Quality is perceived as an outcomes of production process
Quality perceived high, if it conforms to design specification
Controlled by service firm but does not take into consideration
customer satisfaction

5. Value Based
Equate quality with value
Provider has to maintain balance between conformance and
performance, evaluating benefits and price to customer
satisfaction
Transcendental
Quality can be only experienced but cannot either be spoken or
documented about, render it impractical for quality managers
E.g. tourism

6. Service quality has two window view:
Internal quality is all about entire service delivery process.
While external quality is all about the conformance and
compliance to design standards, its about customer’s
perception.
Definition of Service Quality
Quality is the totality of features and characteristics of product
of service that bears on its ability to satisfy given needs of
customers.

7. Customers from opinions about service quality not just
from a single reference but from a host of contributing
factors .
Service marketers need to understand all the dimensions
used by customers to evaluate service quality.
David Garvin in the article “competing on the eight
dimensions of quality” identified the following eight
dimensions of quality:

8. Dimensions Definition Example
Credibility Trustworthiness,
believability, honesty
• Can I trust the hospital to give an honest
opinion?
• My mechanic will only change parts when it
is essential.
• He will not bill me for parts that he has not
changed.
Security Safety, freedom from risk • Can I use my credit card on the internet
without disclosing the detail to others?
• Can I use my ATM card without fear of
others finding out my secret code number?
Access Approachability and ease
of contact
• I want my faculty to be available when I
need to clear my doubts about the subject.
• Will the doctor be available to respond to
my queries before the operation?

9. Dimensions Definition Example
Communicati
on
Listening to customers
and keeping them
informed
• The engineer at the government electricity
board never takes customer complains
seriously.
• When they schedule the power cut, the
customer is the last one to know about it.
Understandin
g the
customer
Making the efforts to
know the customers and
their need.
• I wish the receptionist at the dental clinic
would not force on me a 4 pm appointment
because my office close only at 5 pm.
Tangibles Physical facilities,
equipment, signage,
environment, etc.
• Is the driver of the hired car dressed in a
uniform?
Reliability Delivery of promised
service dependably and
accurately
• Will the baby-sitter feed the baby at the
right time?
• Will the bus hired for taking my child to
school reach safely and on time?

10. Dimensions Definition Example
Responsiveness Willingness to help and
provide prompt service
• Good taxi divers help carry the baggage.
• Will the bus conductor help me get a seat
when I am travelling with the child?
Competence Possession of skills ad
knowledge to do the
job
• Will the travel agent be able to find the
cheapest fare for me?
Courtesy Politeness, respect,
consideration and
friendliness of the
contact person
• Will the travel agent be able to find the
cheapest fare for me?
• I like the bus service from Mumbai to
Pune because the divers drive safely and
are so courteous.

11. In further refinement of their earlier factor identification,
Parasuraman, Zeithmal & Berry (1998) have identify
following five dimensions:
Reliability
Responsiveness
Assurance
Empathy
Tangibles

12. This dimensions is shown to have the highest influence
on the customer perception of quality.
It is ability to perform the promised service dependably
and accurately.
E.g. federal express
When service delivery fails the first times, a service
provider may get a second chance to provide the same
service in the phase called “Recovery”.
High expectation come under greater scrutiny, 
increase possibility of customer dissatisfaction,
It ensure timely delivery of service time after time.

13. Customers may have queries, special requests,
complaints, their own problems, etc.
Thus, front line employees may have been trained or
equipped to deliver standardised services.
It is the willingness to help the customers or willingness
to go that extra distance that is called responsiveness.
Understand the customer’s viewpoint and then respond
accordingly
Speedy response to a customers request

14. It is ability of company to inspire trust and confidence in
the service delivery.
Important for service involves high risk
E.g. medical service, financial securities, legal affairs,
property developer/ builders, etc.
When the customer hear from previous customers about
the company and its service delivery, they feel assured
and develop a more positive attitude towards company.

15. When a service provider puts himself in the shoes of the
customers, he may see the customer’s viewpoint better.
When customers feel that the provider is making his best
effort to see their viewpoint, it may be good enough for
most customers.
E.g. special treatment to old age customer or physically
disable customers or female.

16. The job of the tangible and physical evidence of a
service is multi-functional.
E.g. waiting area of clinic
Doctor’s certificate
Uniforms
Interior designing
Other tangibles thing
Tangibles provide the customer proof of the quality of
service.

17. Parsuraman, Zeithamal and Berry has conducted survey
of 1900 customer of five well known national companies
to allocate 100 points across the five service dimensions.
They developed a model of service quality called the gap
model.
They came up with a way to measure service quality by
measuring these gaps through a 22 item questionnaire
called SERVQUAL.

20. There are two broad categories of gaps that occur during
the service delivery process:
Provider Gap
Customer Gap

21. Gap 1: Not Knowing What Customers Want, Unwillingness or
un-preparedness to ask
Gap 2: Inability to Set Right Standards, Absence of QC Goals or
Vague Design
Gap 3: Not Delivering to Set Standards, Problems of
Empowerment or Training
Gap 4: Mismatch Between Promises and Delivery, Over Promises
The provider gap are underlying causes behind the customer gap
 Not knowing what customer expect
 Not selecting the right service design and standards.
 Not delivering to service standards.
 Not matching performance to promises

22. Its management inability to perceive what the customer
wants and is the main reason why a firm cannot meet a
customer’s expectation.
Reasons:
1. Inadequate marketing research orientation-insufficient marketing
research, research not focused on service quality, inadequate use of
market research
2. Lack of upward communication-lack of interaction between
management and customer; insufficient communication between
contact personnel and top management, too many layers between
contact personnel and top management.
3. Insufficient relationship focus-lack of market segmentation, focus on
transaction rather than relationship; focus on new customers
4. Inadequate service recovery

23. This gap is created in the design process of service
product and laying down of specifications for service
quality during service transaction.
Reasons:
 Poor service design-
unsystematic process,
undefined service designs
 Absence of customer-defined standards-
absence of process management to focus on customer
requirements,
absence of formal process for setting service quality goals
Inappropriate physical evidence and servicescape

24. This occurs at the service provider level when there is
deviation from service standards specified and actually
delivered to the customers.
Reasons:
Deficiency in human resource policies-
• ineffective recruitment; role ambiguity and role conflict; poor
employee-technology job fit; inappropriate evaluation and
compensation systems, lack of empowerment, perceived control and
teamwork
Failure to match demand and supply- inappropriate customer
mix
Customers not fulfilling roles
Problems with service intermediaries

25. This is essentially a communication gap.
The gap is the difference between service delivery
intention and capacity and what is being communicated
to the customers.
Reasons:
 Lack of integrated services marketing communications
 Ineffective management of customer expectations
 Over promising-in advertising, personal selling, over promising
through physical evidence cues
 Inadequate horizontal communications - insufficient
communication between sales and operations, advertising and
operations

26. The customer suffers from a gap between the service that
he expected and which was delivered or what he
experienced.
The service from the provider’s perspective is delivered
while the same offer, from the customer’s viewpoint is
received.
The expectation of the customer is built up due to the
followings:
Past experience
Word- of mouth communication
Personal need
Company controlled communication

27. The customer Gap is caused by the totality of all the
provider gaps
Gap 5 = Gap 1 + Gap 2 + Gap 3 + Gap 4
The gap model helps a marketers to locate service
failures, isolate them, measure their intensity ad attempt
service recoveries.

28. Soft measures—not easily observed, must be collected by
talking to customers, employees, or others
Provide direction, guidance, and feedback to employees on
ways to achieve customer satisfaction
Can be quantified by measuring customer perceptions and
beliefs
• For example: SERVQUAL, surveys, and customer advisory panels
Hard measures—can be counted, timed, or measured through
audits
Typically operational processes or outcomes
Standards often set with reference to percentage of occasions
on which a particular measure is achieved
Control charts are useful for displaying performance over time
against specific quality standards

29. It includes decisions of followings two aspects:
Key objectives of effective customer feedback system
Key customer-centric SQ measures (Use of mix of customer
feedback collection tools) include:
• Total market surveys, annual surveys, transactional surveys
• Service feedback cards
• Mystery shopping
• Analysis of unsolicited feedback—complaints and compliments
• Focus group discussions, and service reviews

30. Many strategies have included that in increasing
competitive markets, it is very important to learn change
that happens in market.
Specific objectives of effective customer feedback
system includes three major categories:
Assessment and benchmarking of service quality and
performance
Customer driven learning and improvements
Creating a customer oriented service culture

31. How satisfied are our customers?
This objectives includes learning about how well a firm
performed in comparison to its main competitors,
How it performed in comparison to the previous year
Whether investments in certain service aspects have paid off in
terms of customer satisfaction
Where firm wants to be in coming years?
Objective: motivate managers and service staff to
improvement of performance

32. Objective is to answer the question:
What makes out customers happy or unhappy?
What are out strengths we want to represent?
What are our weakness we need to improve?
This helps to firm to identify the areas where more
investment can be made for improvement of service
quality.

33. It is concerned with the
organisation on customer needs and
customer satisfaction and
focus on the entire organisation towards a service quality
culture.

34. There are various tools for collecting feedback of
customers.
Each tools have their own strengths and weakness,
service marketer can used any one or combination of
tools for collection of feedback from customers.
Total market surveys, annual surveys, transactional surveys
Service feedback cards
Mystery shopping
Analysis of unsolicited feedback—complaints and
compliments
focus group discussions, and service review

35. Market and annual survey measure satisfaction with
all major customer service processes and products.
It could be based on indexed or weighted data.
While transactional surveys are conducted after
customers have completed a specific transaction.
Such a survey is more actionable and can tell the firm
why customers are happy or unhappy with the process.
The potential for service recovery is important and
should be designed into feedback collection tools.

36. This is powerful and inexpensive tool involves giving
customers a feedback card at the end of completion of
service.
This is used through email or other central customer
feedback unit.

37. Service marketers often use it to determine whether
frontline staff are displaying desired behaviours.
Banks, retailers, car rental firms and hotels are used it
more actively.
It gives highly actionable and in-depth insights for
coaching, training and performance evaluation.

38. Customer complaints, compliments and suggestions
can be transformed into a stream of information that can
be used to help monitor quality and highlight
improvements needed to the service design and delivery.
It is sources of detailed feedback on what makes
customer unhappy and what delights them.

39. It give great specific insights on potential service
improvements and ideas.
Focus groups are organised by key customer segments or
user groups to focus on the needs of these users.
In depth and one-to-one interview has been conducted
once in a year by senior executive of the firm.
It provides insight about service quality as well as help
to retain most valuable customers and get potentials for
service recovery.

40. Hard measures refers to operational process or outcomes
and include such data as time, service response times,
failure rate and delivery cost of service.
In complex service multiple measures of service
quality will be recorded at different points.
In low contact service, many operational measures apply
to backstage activities.
Two measures:
Service quality index
Control charts

41. To improve service quality, organisation can examine
Types of service failure,
Number of times that occur
Reasons of it.
Service quality index measures daily the occurrence of
different activities that lead to customer dissatisfaction.
An annual goal is set for the average SQI, based on
reducing the occurrence of failure over the previous year.

42. Late delivery—right day
Late Delivery—wrong day
Tracing request unanswered
Complaints reopened
Missing proofs of delivery
Invoice adjustments
Missed pickups
Lost packages
Damaged packages
Aircraft delays (minutes)
Overcharged (packages missing label)
Abandoned calls
1
5
1
5
1
1
10
10
10
5
5
1
Failure Type
Total Failure Points (SQI) =
Weighting
Factor
XXX,XXX
Daily
PointsX
Number of
Incidents =

43. It helps to displaying performance on hard measures
over time against specific quality standards.
It use to monitor and communicate individual variables
or an overall index.
Offer a simple method of displaying performance over time
against specific quality standards
Are only good if data on which they are based is accurate
Enable easy identification of trends

45. After having assessed service quality using soft and hard
measures, the service marketers needs to analyse the
service quality problems and take corrective actions.
The tools for analyse and address service quality
problems are as follows:
Root Cause analysis
Pareto analysis
Blueprinting
Return on Quality

46. Developed by Japanese quality expert – Kaoru Ishikawa
Brainstorming for all possible reasons for specific
problems  groups of managers and staff.
Resulting factors can be divided in five categories:
 Equipment
Manpower
• Front stage
• Back stage
Material
Procedure
Information
Known as fishbone diagram because of its shape.

47. Aircraft late to
gate
Late food
service
Late fuel
Late cabin
cleaners
Poor announcement of
departures
Weight and balance
sheet late
Delayed
Departures
Delayed check-in
procedure
Acceptance of late
passengers
Facilities,
Equipment
Front-Stage
Personnel
Procedures
Materials,
Supplies
Customers
Gate agents
cannot process
fast enough
Late/unavailable
airline crew
Frontstage
Personnel
Procedures
Materials,
Supplies
Backstage
Personnel
Information
Mechanical
Failures
Late pushback
Late baggage
Arrive late
Oversized bags
Weather
Air traffic
Customers
Other Causes

48. Developed by Italian economist
To identify the principal causes of observed outcomes.
Based on the 80/20 Rule
Consumer needs formulated into a standard
Firm aims at achieving this standard
But due to variation in the factors of production (men, material,
methods, and machinery), of some items that do not conform
to this standard is inevitable.
Defectives - may not be of the same severity
Pareto Principle applied in defect analysis - to identify the vital
few defects, which result in many numbers of defectives so that
more effort could be made to concentrate on eliminating
these vital few defects.

49. Late passengers
Waiting for pushback
Waiting for
fuelling
Late weight and balance sheet
Late cabin cleaning/supplies
Other
Airport - A
All Airport
Airport - B
23.1%
23.1%
23.1%15.3%
53.3%
15%
11.3%
8.7%
11.7%
33.3%
33.3%
19%
9.5%
4.9
%
23.1%
23.1%
23.1%15.3%
15.4%

50. Depicts sequence of front-stage interactions experienced
by customers plus supporting backstage activities
Used to identify potential fall points—where failures are
most likely to appear
Shows how failures at one point may have a ripple effect
later in process
Managers can identify points which need urgent
attention
Important first step in preventing service quality problems

51. To understand the financial implications, ROQ has been
used by service marketers.
Assess costs and benefits of quality initiatives
ROQ approach is based on four assumptions:
– Quality is an investment
– Quality efforts must be financially accountable
– It’s possible to spend too much on quality
– Not all quality expenditures are equally valid
Implication: Quality improvement efforts may benefit from
being related to productivity improvement programs
To determine feasibility of new quality improvement efforts,
determine costs and then relate to anticipated customer
response

52. Determine optimal level of reliability
How far should we go in improving service quality?
A company with poor service quality can achieve big
jumps in reliability with relatively modest investments
in quality improvements.
Initial investment in reducing service failure bring
dramatic results.
But after some point diminishing returns set in as
improvements require higher investments
Know up to when improving service reliability
• Up to the point when incremental improvements equals the
cost of service recovery or cost of service failure.

53. Satisfy Target
Customers through
Service Recovery
Optimal Point of
Reliability: Cost of
Failure = Service
Recovery
Satisfy Target
Customers through
Service Delivery as
Planned
100%
ServiceReliability
Investment
Small Cost,
Large Improvement
Large Cost,
Small Improvement
A B C D

54. A firm need to ensure that it can deliver quality
experience more efficiently to improve its long term
profitability.
Defining productivity in service
Productivity measures amount of output produced
relative to the amount of inputs.
Improvement in productivity means an improvement in
the ratio of outputs to inputs.
Improvements in productivity require an increase in the
ratio of output to inputs ;
Cutting resources required to create a given volume of output
Increasing the output obtained from a given level of inputs

55. Intangible nature of many service elements makes it hard to
measure productivity of service firms, especially for
information-based services
Difficult in most services because both input and output are
hard to define
Relatively simpler in possession-processing services, as
compared to information- and people-processing services
In people processing service, such as hospital  no. of
patients treated in year, average bed occupy
Consideration of different variables – difference in
patients, difference in outcomes.

56. Efficiency: Involves comparison of actual performance with
standard, usually time-based (for example: how long employee
takes to perform specific task)
Problem: Focus on outputs rather than outcomes
May ignore variations in service quality/value
Productivity: Involves financial valuation of outputs to inputs
Consistent delivery of outcomes desired by customers
should command higher prices
Effectiveness: Degree to which firm meets goals
Cannot divorce productivity from quality and customer
satisfaction

57. Traditional measures of service output tend to ignore
variations in quality or value of service
Focus on outputs rather than outcomes
Stress efficiency but not effectiveness
Firms that consistently deliver outcomes desired by
customers can command higher prices; loyal customers
are more profitable
Measures with customers as denominator include:
Profitability by customer
Capital employed per customer
Shareholder equity per customer

58. Generic Productivity Improvement Strategies
Controlling cost at every step in the process
Reducing waste of materials and labor
Matching productivity capacity to average level of demand
Replacing workers by automated machines and customer
operated self services technologies
Provide employees with equipment and data
Training employees to work more productively
Broadening the array of tasks that a service worker can
perform
Installing Expert Systems

59. Customer-Driven Strategies
Change timing of customer demand
By shifting demand away from peaks, managers can make
better use of firm’s productive assets and provide better service
Involve customers more in production
Get customers to self-serve
Encourage customers to obtain information and buy from
firm’s corporate websites
Ask customers to use third parties
Delegate delivery of supplementary service elements to
intermediary organizations

60. Front Stage efforts to improve productivity
High contact services : enhancements are visible
• Passive acceptance
• Customers to adopt to new patterns
• Market research (loss of business, cancel out productivity gains)
Back stage efforts to improve productivity
Depend on whether they affect or are noticed by customers
Ripple effect (extends front stage and affect customer)
Prepare customers for the changes
Promote as a service enhancement

61. Caution on Cost Reduction Strategies
Tends to center on efforts to eliminate waste and reduce
labor costs ;
Cutback on frontline staff (remaining work hard/fast)
Insufficient personnel to serve customers
Staff exhausted, make mistakes, treat customers badly
Multi-tasking : poor job at each task
Caught between trying to meet customer needs and achieve
management’s productivity goals