Defining Service Quality Evaluating Quality Technical & Functional Quality Researching Service Quality The SERVQUAL instrument

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Services
Marketing
Service Quality
Tom Chapman
www.marketing101.co.uk
Twitter @idlehans
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Introduction
 Defining Service Quality
 Evaluating Quality
 Technical & Functional Quality
 Researching Service Quality
 The SERVQUAL instrument
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What do you think?
 Define Quality
 Why is Quality important?
 How do you evaluate it?
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Defining Quality
 quality is an ambiguous term
 “although we cannot define quality, we know what
quality is” (Pirsig, 1987)
 “quality is fitness for use, the extent to which the
product successfully serves the purpose of the user
during usage” (Juran, 1974)
 “quality is zero defects - doing it right the first time”,
Parasuraman, Zeithaml and Berry, 1985)
 “quality is exceeding what customers expect from the
service”, Zeithaml, Parasuraman and Berry, 1990)
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Service Quality - early writings
‘service quality results from a comparison of what
customers feel a service provider should offer (i.e. their
expectations) with the provider’s actual performance’
(Parasuraman, 1996: 145)
‘Service quality is a measure of how well the service level
delivered matches customer expectations. Delivering
quality service means conforming to customer
expectations on a consistent basis’
Lewis and Booms (1983)
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Why is Quality Important?
 Superior product/service quality relative to
competitors is the single most important factor
affecting profitability (PIMS study)
 Premium prices
 Customer preference
 Customer retention
 Market expansion/market share
 Other benefits:
 productivity, advertising, distribution/access
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Changing management focus
Creating better value
2000+ for customers and
the organisation
1990’s
Quality
1980’s
1970’s Productivity
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Service Quality - shifting focus
 in
the past, industry focused particularly on
defining and meeting internal quality or
technical standards
 today the focus has shifted to quantifying
customers’ assessments of services and
products (external measurement) and then
translating these into specific internal
standards
 delivering quality service is fundamental to
corporate success because research shows it is
closely linked to profits
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Service Quality –
a major business concern
 Quality is an elusive concept not easily articulated by
consumers
 can lead to better market share, profitability, lower costs and
improve productivity
 performances, not objects, which may vary with quality
evaluations not made solely on service outcome but also on
service process
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Service Quality – profits/costs
 increased profits found to be due particularly
to:
 fewer customer defections
 stronger customer loyalty
 more cross-selling of products and services
 higher margins (due to service enhancements of core
products)
 improved service quality cuts costs
 fewer customers to replace
 less corrective work to do
 fewer inquiries and complaints to handle
 lower staff turnover and dissatisfaction
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Enhancing service value
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What is Quality?
 Conformance quality
 producing the product/service according to
specification every time, with no correction required
 Quality-in-use
 customer judgements about quality received and
resultant level of customer satisfaction
 Technological quality
 superior performance features of product/service
derived from advanced new technologies
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Service Quality
Total quality
Image (corporate/local)
Technical Relational
quality of the Functional quality: by
outcome: WHAT quality of the WHOM is the
offered/receive process: HOW service
d delivered
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Evaluating Quality
 access (physical approachability of service location, ease of
finding way around the service environment and route clarity)
 aesthetics (extent to which service package components are
agreeable or pleasing to the customer, including appearance
and ambience of the service environment, appearance and
presentation of service facilities, goods and staff)
 attentiveness/helpfulness (extent to which service, especially
contact staff help the customer, interested in them and show a
willingness to serve)
 availability (of service facilities, staff and goods available to the
customer)
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Evaluating Quality
 care (concern, consideration, sympathy and patience shown
to customer, including putting at ease and feeling emotionally
comfortable)
 cleanliness/tidiness (of the tangible components of the
service package)
 comfort (physical comfort of the service environment and
facilities)
 commitment (staff’s apparent commitment to their work,
including pride and satisfaction, diligence and thoroughness)
 communication (ability of service provider to communicate
in a way the customer will understand; ability of staff to listen
and understand the customer)
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Evaluating Quality
 competence (skill, expertise, professionalism with which
service is executed; correct procedures, execution of
customer instructions, product knowledge displayed by staff,
giving sound advice)
 courtesy (politeness, respect, propriety shown by the
service - usually staff)
 flexibility (willingness and ability to amend/alter the
service to meet customer needs)
 friendliness (warmth and personal approachability of
service providers, especially contact staff)
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Evaluating Quality
 functionality (fitness for purpose)
 integrity (honesty, justice, fairness, trust in treating
customers)
 reliability (and consistency of performance of service
facilities, goods and staff; keeping agreements)
 responsiveness (speed and timeliness of service delivery,
responding promptly to customer requests, minimal waiting/
queuing time)
 security (personal safety of customers and possessions
while participating in the service process)
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Zeithaml, Parasuraman and Berry
Ten dimensions Five dimensions
tangibles tangibles
reliability reliability*
responsiveness responsiveness*
competence
courtesy
credibility assurance
security
access
communication
empathy
understanding the
customer
18 Zeithaml, Parasuraman and Berry

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Expectations
 little
known about what determines
expectations and how formed
 Individualistic
 own norms, values, wishes, needs
 changing over time
 changes in aspiration
 changes in need
 do customers know what is expected of them?
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Expectations
 expectations
can be formulated in terms of “what
should be done” and “what will be done”
 fourdifferent performance standards
distinguished:
 deserved or equitable performance
 ideal or desirable performance
 expected performance
 minimal tolerable performance
 the
difference between the desired service level
and adequate service level is the …………
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Perceptions
 “perception is defined as the process by
which an individual selects, organizes and
interprets stimuli into a meaningful and
coherent picture of the world” (Schiffman
and Kanuk, 1987)
 subjective and selective
 resulting
attitudes about a particular
service provider may change over time
(long-term attitudes may be more stable
than immediate attitudes)
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Satisfiers and Dissatisfiers
 critical incidents
 courtesy
 Behaviour
 understanding
 Responsiveness
 communication
 negative experiences
 competence
 reliability
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Satisfiers and Dissatisfiers
 greater perceived control by the customer may decrease the
sources of customer dissatisfaction
 consumers check whether their expectations are in line with
actual experiences of the service and service delivery
 looking for gaps between expectations and perceptions is
important in detecting what needs to be improved
 satisfaction emerges when actual service meets expectations
or when it exceeds expectations (positive disconfirmation)
 dissatisfaction occurs when actual service is below expected
level (negative disconfirmation)
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Customer Perceptions of Quality
 Critical incidents
 events throughout service delivery impact on perceived quality
 Evaluation
 customers check whether their expectations are in line with actual
experiences of the service
 Satisfaction
 actual service meets or exceeds expectations (positive disconfirmation)
 Dissatisfaction
 actual service is below expected level (negative disconfirmation)
 Gap analysis
 looking for gaps between expectations and perceptions is important in
guiding quality improvement
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Dimensions of Service Quality
 Reliability
 ability to perform the promised service dependably
and accurately – delivering what is promised
 Responsiveness
 willingness to help customers and provide prompt
service
 adapting the service to customer needs
 Assurance
 employees knowledge and courtesy
 ability to inspire trust and confidence
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Dimensions of Service Quality
 Empathy
 caring, individualised
attention
 customers are unique and special
 customers are understood and valued
 Tangibles
 appearance of physical facilities, equipment,
personnel and communication materials
 continuity
 perceived quality
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(Parasuraman, Zeithaml & Berry, 1988)

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Gaps Model of Service Quality
Customer
Gap
Customer
Company
Gap 1 Gap 4
Gap 3
Gap 2
(Parasuraman, Zeithaml &
27 Berry, 1985)

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Service Quality Gaps
Gap 1 – Not knowing what customers expect
 Inadequate market research
 Poor market segmentation
 Lack of upward communication (contact employees to
managers)
 Insufficient customer relationship focus
 Inadequate service recovery
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Service Quality Gaps
Gap 2 – incorrect service design & standards
 Inability to translate customer expectations into clear quality
specifications
 Lack of management commitment to service quality
 Customer expectations thought to be unreasonable or unfeasible
 Absence of a formal quality programme (guidelines, standards)
 Poor service design
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Service Quality Gaps
Gap 3 – Not delivering to service standards
 Employees unwilling or unable to perform the service at the desired level
 Poor internal organisation
 ineffective recruitment, inadequate teamwork, employees not motivated, role conflict,
role ambiguity, poor supervision
 Poor employee-technology job fit (appropriate tools to perform roles)
 Failure to match supply and demand
 Customers unaware of roles and responsibilities
 Problems with service intermediaries
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Service Quality Gaps
Gap 4 – Promises do not match performance
 Over-promising in advertising, personal selling or physical
evidence cues
 Management wants to show services offered in best possible light
 Poorly-integrated marketing communications
 Insufficient communication between marketing/sales & operations
 Ineffective management of customer expectations
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Service Quality - attributes
 in 1988 PZB operationalised the construct (of
perceptions and expectations differences) as the
difference measured between two 7 point rating scales
-
 one scale measuring customers’ expectations about service
companies in general within the service sector/category
being investigated
 the other scale measuring customers’ perceptions about a
particular company whose service quality is being assessed
 PZB measured the extent to which customers felt
companies should possess a specified service attribute
and the extent to which customers felt a given company
did possess the attribute
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33. + Service Quality - expectations and
perceptions statements
 attributes were put as statements, with which customers were
asked to express the degree of agreement/disagreement on
a 7 point scale
 expectations statements:
 e.g. the physical facilities at hotels should be visually
appealing
 the behaviour of hotel employees should instil confidence
in customers
 hotels should give customers individual attention
 corresponding perceptions statements:
 the physical facilities at ABC Hotel are visually appealing
 the behaviour of ABC Hotel employees instils confidence
in customers
 ABC Hotel gives customers individual attention
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SERVQUAL construction
 PZB thus developed a comprehensive set of statements
to represent facets of the 10 service quality dimensions
 this yielded 97 statements (approx. 10 per dimension)
 a two part instrument developed - part 1 consisted of 97
expectations statements, part 2 - 97 perceptions
statements
 roughly half the statements were worded negatively
 instrument piloted on a sample of 200 customers
resulting in a reduced 34 item instrument with 7 rather
than 10 dimensions (PZB 1988)
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SERVQUAL five dimensions
 reliability and validity of the reduced instrument was assessed
further - data collected of 4 US service companies, samples of
200 customers of each - this produced consistent results
 further elimination of items created a 22 item instrument,
grouping the 22 items into just 5 general dimensions
 3 of the original 10 dimensions remained intact in the final 5
dimensions (tangibles, reliability and responsiveness) plus the
remaining 7 original dimensions clustered into 2 broader
dimensions:
 (1) assurance (knowledge and courtesy of employees and
their ability to inspire trust and confidence) basically a
combination of the original dimensions of competence,
courtesy, credibility and security
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36. + Service Quality - SERVQUAL
refinements
 (2) empathy (caring, individualised attention the firm
provides its customers) represents access, communication
and understanding the customers
“SERVQUAL is most valuable when it is used periodically to
track service quality trends, and when it is used in
conjunction with other forms of service quality
measurement” (PZB, 1988:31)
In 1991 PBZ further refined SERVQUAL:
 three types of services and 5 companies
 data collected through mail surveys of independent samples
of customers of each company, giving combined sample size
of 1,936
 the distribution of expectations ratings obtained was highly
skewed toward the upper end of the 7 point scale
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SERVQUAL refinements
 the statements were revised to capture what customers will
expect from companies delivering excellent service e.g.
original expectations statement was “hotels should give
customers individual attention” was revised to read “excellent
hotels will give customers individual attention”
 the negatively worded statements in the original SERVQUAL
instrument were problematic - they were awkward, could have
confused respondents and may have lowered the reliabilities for
dimensions containing them - so they were changed to a
positive format
 finally, 2 original items (one under tangibles and assurance)
were replaced with 2 new items, to capture more fully the
dimensions
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SERVQUAL usage
 despite refinements, reliability always emerges as the
most critical dimension and tangibles the least critical
 SERVQUAL can be used:
 to determine the average gap score (between
customers’ perceptions and expectations) for each
service attribute
 to assess a company’s SQ along each of the 5
SERVQUAL dimensions
 to compute a company’s overall weighted SERVQUAL
score which takes account of the SQ gap on each
dimension and the relative importance of the dimension
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SERVQUAL usage
 usedto track customers’ expectations and
perceptions on individual service attributes
and SERVQUAL dimensions over time
 to
compare a company’s SERVQUAL scores
against those of competitors
 toidentify and examine customer segments
that significantly differ in their assessments of
a company’s service performance
 to
assess internal service quality - i.e. quality of
service provided by one dept/division to
others within the company
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SERVQUAL concerns
 questions raised about SERVQUAL’s expectations
components (Babakus & Mangold, 1992, Cronin &
Taylor, 1992)
 the interpretation and operationalisation of
expectations (Teas, 1993)
 the reliability and validity of SERVQUAL’s difference
score formulation (Babakus & Mangold, 1992, Brown,
Churchill & Peter, 1993)
 SERVQUAL’s dimensionality (Carmen, 1990, Finn
( Lamb, 1991)
 but counter-arguments by PBZ 1991, 1993, and 1994,
and Parasuraman, 1996
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SERVQUAL concerns
 is it necessary to measure expectations? - studies show
scores on the perceptions-only component of SERVQUAL
explain significantly more variance in customers’ overall
evaluations of a co’s SQ (measured on a single item
overall perceptions rating scale) than are perception-
expectation difference scores. PZB argue that measuring
expectations has diagnostic value (i.e. pinpoints SQ
shortfalls)
 how should the expectations construct be
operationalised? multiple ways the term “expectations”
can be interpreted - SQ researchers have generally
viewed expectations as normative standards (customer
beliefs about what a service provider should offer) but
customer satisfaction/dissatisfaction researchers have
typically considered expectations to be predictive
standards (what customers feel a service provider will
offer)
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SERVQUAL operationalisation
 but both “should” and “will” expectations have been used in
measuring SQ although ZBP in 1993 went on to develop a
conceptual model of expectations
 can we operationalise SQ as a difference score?
operationalising any construct as a difference between 2
other constructs is questioned on psychometric grounds;
critics suggest that direct measures (i.e. non-difference
scores) of the expectations-perceptions gap may be
psychometrically superior - but this issue is not resolved
 does SERVQUAL have 5 distinct dimensions that cross
different contexts? replication studies have not been able to
reproduce a clean 5 dimensional factor structure as the
original PZB 1988 study - differences may be due to data
collection and analysis procedures
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further SERVQUAL criticisms
(see Buttle 1996)
 SERVQUAL is based on a disconfirmation paradigm rather
than an attitudinal paradigm
 little evidence that customers assess SQ in terms of P-E gaps
 process orientation rather than service encounter outcomes
 SERVQUAL’s five dimensions are universals with high
intercorrelation between 5 RATER dimensions (reliability,
assurance, tangibles, empathy and responsiveness)
 don’t consumers use standards other than expectations to
evaluate SQ? and yet it fails to measure absolute SQ
expectations
 4 or 5 items cannot capture the variability within each SQ
dimension
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Further considerations
 customer assessments of SQ may vary from “moment of truth” to
“moment of truth”
 using a 7 point Likert scale is flawed
 reversing polarity of items in the scale causes respondent error
 Cronin & Taylor (1992, 1994) say SERVQUAL is flawed, with
perceived quality is best thought of as an attitude
 PZB describe satisfaction as more situation or encounter specific
and quality as more holistic, being developed over a longer time
period
 argued that PZB are inductive, and take no account of the literature
in economics, psychology and statistics
 arguments about the marginal revenue of SQ improvements always
exceeding the marginal cost
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Dynamics
 interdependencies among the dimensions of quality are
difficult to describe
 also is the customer value of improvements a linear or non-
linear function?
 SERVQUAL fails to capture the dynamics of changing
expectations (customers learn from experiences) indeed,
Gronroos (1993) says we need to know more about how
expectations are formed and change over time
 from the customer’s viewpoint, failure to meet expectations
often is more significant than success in meeting or
exceeding expectations
 while process of service delivery focused, it’s argued that
outcome quality is already contained within reliability,
competence and security
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Service Quality - other models
 Richard & Allaway (1993) tested an augmented SERVQUAL
model which incorporates both process and outcome
components - they concluded that process and outcome is a
better predictor of consumer choice than process or
outcome alone
 the number of SQ dimensions may be dependent on the
particular service being offered (Babakus & Boller, 1992)
 Teas (1993b) believes respondents may be using one of six
interpretations of expectations:
 service attribute importance (customers may respond by
rating the expectations statements according to the
importance of each attribute)
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Performance specification
 forecasted performance (customers may respond
by using the scale to predict the performance they
would expect)
 ideal performance (the optimal performance, what
performance “can be”)
 deserved performance (the performance level
customers feel performance should be)
 equitable performance (the level of performance
customers feel they ought to receive given a
perceived set of costs)
 minimum tolerable performance (what
performance “must be”)
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Standards
 Lacobucci et al (1994) would drop the word “expectations”
and prefer the word “standards”; they believe several
standards may operate simultaneously, among them “ideals”,
industry standards etc.
 Gronroos (1993) refers to the bad service paradox - a
customer may have low expectations based on previous
experience with the service provider - if these expectations
are met, there is no gap and SQ is deemed satisfactory
 so, do customers always evaluate SQ in terms of expectations
and perceptions or are there other forms of SQ evaluation?
 what form do customer expectations take, how best (if at all)
they can be measured) and are expectations common across
a class of service providers?
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Attitudes
 do attitude-based measures of SQ perform better than the
disconfirmation model and which attitudinal measure is most
useful?
 can we integrate outcome evaluations into SQ measurement and
how can this be done?
 is the predictive validity of perception measures of SQ better
than P-E measures?
 what are the relationships between SQ, customer satisfaction,
behavioural intention, purchase behaviour, market share, word-
of-mouth and customer retention?
 what is the role of context in determining E and P evaluations?
what context markers do consumers employ?
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Evaluation
 are analytical context markers (such as tangibility and consumer
involvement)useful in advancing SQ theory?
 do evaluative criteria in intangible-dominant services (e.g.
consulting) differ from those in tangible-dominant services (e.g.
hotels)?
 how does customer involvement influence the evaluation of SQ?
 how do customers integrate transaction-specific or moment of truth
(MOT) specific evaluations of SQ? To what extent are some MOTs
more influential in final evaluation than others?
 what are the relationships between the five RATER factors? How
stable are these relationships across contexts?
 what is the most appropriate scale format for collecting valid and
reliable SQ data? and to what extent can customers correctly
classify items into their a priori dimensions?
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SERVQUAL additions
 ZBP (1993) conceptual model of expectations - customers
have 2 different service levels that serve as comparison
standards in assessing SQ:
 Desired Service (a level of service representing a blend of
what customers believe “can be” and “should be”
provided
 Adequate Service (the minimum level of service customers
are willing to accept)
 separating these 2 levels is a Zone of Tolerance that
represents the range of service performance a customer
would consider satisfactory
 because SERVQUAL expectations component measures
normative expectations, the construct represented by it
reflects the desired service construct
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SERVQUAL additions
 theSERVQUAL structure did not capture the
adequate service construct so PZB (1994b)
augmented and refined SERVQUAL to:
 capture not only the discrepancy between
perceived service and desired service - called a
measure of service superiority but also
 the discrepancy between perceived service and
adequate service, labelled a measure of service
adequacy
 PZBtherefore, rated desired, adequate and
perceived service, and went on to label “adequate
service” as minimum service
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Diagnostic value
 tests have shown that measuring perceptions alone should
suffice if the sole purpose of SQ measurement on individual
attributes is to try to maximise the explained variance in overall
service ratings but
 from a practical viewpoint, it is important to pinpoint SQ
shortfalls and take appropriate corrective actions (therefore,
there is diagnostic value in measuring perceptions against
expectations)
 clearly operationalising customer expectations as a zone or
range of service levels is feasible empirically and diagnostically
 using the zone of tolerance as a comparison standard in
evaluating service performance can help companies in
understanding how well they are at least meeting customer’s
minimum requirements and how much improvement is needed
before they achieve service superiority
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Measuring Service Quality
 SERVQUAL:
 One scale measuring customer expectations about
service companies in general within the relevant
service sector
 One scale measuring customer perceptions about a
particular company
 Based on five dimensions of service quality
 Compare expectation scores with perceived quality
achieved
 Used for internal performance management,
benchmarking versus competitors, customer
segmentation, tracking expectations/perceptions
over time
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Measuring Service Quality
 SERVQUAL criticisms:
 Doubts over conceptual foundation & methodology
 Only measures technical (outcome) & functional (process)
service quality
 Results not re-producible over time (lacks stability)
 Risks in assessing customer satisfaction relative to prior
expectations (if expectations low, even “poor” service might
seem good)
 Only valid for services with high search or experience
characteristics – problems with credence characteristics
 better to use questions about performance (= perception)
only (Cronin and Taylor, 1992 and 1994 - SERVPERF) - higher
predictive validity
 Measuring expectations has only diagnostic value
(pinpointing service quality shortfalls)
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