Improving Service Quality and Productivity

Chapter 14
Improving Service Quality and Productivity
Importance of Productivity and Quality for Service Marketers

Productivity
Helps to keep costs down

lower prices to develop market, compete better increase margins to permit larger marketing budgets raise profits to invest in service innovation
May impact service experience (must avoid negatives) May require customer involvement, cooperation
Quality
Gain competitive advantage, maintain loyalty Increase value (may permit higher margins) Improve profits
Perspectives on Service Quality

Transcendental: Product-Based: User-Based: ManufacturingBased:
Quality = excellence. Recognized only through experience
Quality is precise and measurable

Quality lies in the eyes of the beholder Quality is conformance to the firms developed specifications Quality is a trade-off between price and value
Value-Based:
Dimensions of Service Quality

Tangibles Reliability Responsiveness Assurance

competence, courtesy credibility security
Empathy
access communication understanding of customer
Seven Service Quality Gaps (Fig. 14.1)

Customer needs and expectations
CUSTOMER
1. Knowledge Gap
Management definition of these needs
MANAGEMENT
2. Standards Gap
Translation into design/delivery specs
3. Delivery Gap
Execution of design/delivery specs
4. I.C.Gap
Advertising and sales promises
5. Perceptions Gap
Customer perceptions of product execution
6. Interpretation Gap
Customer interpretation of communications
7.
Service Gap
Customer experience relative to expectations
Prescriptions for Closing Service Quality Gaps (Table 14.3)

Knowledge: Learn what customers expect--conduct research, dialogue, feedback Standards: Specify SQ standards that reflect expectations Delivery: Ensure service performance matches specs-consider roles of employees, equipment, customers Internal communications: Ensure performance levels match marketing promises Perceptions: Educate customers to see reality of service delivery Interpretation: Pretest communications to make sure message is clear and unambiguous.
Hard measures refer to standards and measures that can be counted, timed or measured through audits
typically operational processes or outcomes e.g. how many trains arrived late?
Hard and Soft Measures of Service Quality
Soft measures refer to standards and measures that cannot easily be observed and must be collected by talking to customers, employees or others
e.g. SERVQUAL, surveys, and customer advisory panels.
Control charts are useful for displaying performance over time against specific quality standards.
Hard Measures of Service Quality

Control charts to monitor a single variable Service quality indexes Root cause analysis (fishbone charts) Pareto analysis
Composition e of FedExs Service Quality Index (SQI) (Table 14.4)

Failure Type
Weighting Factor
1 5 1 5 1 1 10 10 10 5 5 1
No of = Incidents
Daily Points
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
Total Failure Points (SQI) =
XXX,XXX
Control Chart: Percent of Flights Leaving within 15 Minutes of Schedule

(Fig. 14.2)
100% 90% 80% 70% 60%

J F M A M J J A S O N D
Month
Tools to Address Service Quality Problems

Fishbone diagrams: A cause-and-effect diagram to identify potential causes of problems. Pareto charts: Separating the trivial from the important. Often, a majority of problems is caused by a minority of causes i.e. the 80/20 rule.
Blueprinting: A visualization of service delivery. It allows one to identify fail points in both the
Cause and Effect Chart for Airline Departure Delays (Fig. 14.3)
Facilities, Equipment
Arrive late Oversized bags
Frontstage Front-Stage Personnel Personnel
Procedure Procedures
Customers Customers
Delayed check-in Gate agents Aircraft late to procedure cannot process fast gate enough Mechanical Acceptance of late Failures passengers Late/unavailable airline crew Late pushback
Delayed Departures Other Causes

Weather Air traffic Late food service Late baggage Late fuel
Materials, Materials, Supplies Supplies
Late cabin cleaners
Poor announcement of departures Weight and balance sheet late
Backstage Personnel
Information
Analysis of Causes of Flight Departure Delays (Fig. 14.4)

15.3% 15.4% 23.1% 23.1% 23.1%
All stations, excluding Chicago-Midway Hub

11.7% 8.7%
4.9 % 19% 9.5% 33.3% 33.3%
11.3%
15%
53.3%
Washington Natl.
Newark
Late passengers Waiting for pushback Waiting for fueling
Late weight and balance sheet Late cabin cleaning / supplies Other
Return on Quality (ROQ)

ROQ approach is based on four assumptions:
Quality is an investment Quality efforts must be financially accountable Its 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
When Does Improving Service Reliability Become Uneconomical?

(Fig. 14.5)
100%
Satisfy Target Customers Through Service Recovery Optimal Point of Reliability: Cost of Failure = Service Recovery Satisfy Target Customers Through Service Delivery as Planned
Service Reliability
D Investment
Small Cost, Large Improvement
Large Cost, Small Improvement
Assumption: Customers are equally (or even more) satisfied with the service recovery provided than with a service that is delivered as planned.
Productivity in a Service Context

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. Intangible nature of many service elements makes it hard to measure the productivity of service firms, especially for information based services.
Efficiency: comparison to a standard--usually time-based (e.g., how long employee takes to perform specific task)
Problem: focus on inputs rather than outcomes
May ignore variations in quality or value of service
Efficiency, Effectiveness, and Productivity
Effectiveness: degree to which firm is meeting its goals

Cannot divorce productivity from quality/customer satisfaction
Measuring Service Productivity

Traditional measures of service output tend to ignore variations in quality or value of service
That is, they focus on outputs rather than outcomes, and stress efficiency but not effectiveness.
Firms that are more effective in consistently delivering outcomes desired by customers can command higher prices. Furthermore, loyal customers are more profitable. Measures with customers as denominator include:
How to transform inputs into outputs efficiently? Will improving productivity hurt quality? Will improving quality hurt productivity? Are employees or technology the key to productivity? Can customers contribute to higher productivity?
Questions to Ask When Developing Strategies to Improve Service Productivity
Operations-driven strategies Set productive capacity to match average demand
Operations-driven vs. Customerdriven Actions to Improve Service Productivity
Control costs, reduce waste
Automate labor tasks

Upgrade equipment and systems Train employees Leverage less-skilled employees through expert systems
Customer-driven strategies Change timing of customer demand Involve customers more in production Ask customers to use third parties
Backstage and Frontstage Productivity Changes: Implications for Customers

Backstage improvements can ripple to the front stage and affect customers
e.g., new printing peripherals may affect appearance of bank statements.
Front-stage productivity enhancements are especially visible in high contact services.

Some may just require passive acceptance by customers Others require customers to change their scripts and behavior.
Overcoming Customers Reluctance to Accept Changes in Environment and trust Behavior Develop customer
Understand customers habits and expectations Pretest new procedures and equipment Publicize the benefits Teach customers to use innovations and promote trial Monitor performance, continue to seek improvements
Six Sigma Methodology to Improve and Redesign Customer Service Processes Process Improvement Process Design/Redesign
Define Measure Analyze
Improve
Control
Identify the problem Define requirements Set goals Validate problem/process Refine problem/goal Measure key steps/inputs Develop causal hypothesis Identify root causes Validate hypothesis Develop ideas to measure root causes Test solutions Measure results Establish measures to maintain performance Correct problems if needed
Identify specific or broad problems Define goal/change vision Clarify scope & customer requirements Measure performance to requirements Gather process efficiency data Identify best practices Assess process design Refine requirements Design new process Implement new process, structures and
systems
Establish measures & reviews to maintain performance Correct problems if needed

Improving Service Quality and Productivity

Uploaded by

Copyright:

Available Formats

Improving Service Quality and Productivity

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Improving Service Quality and Productivity

Uploaded by

Copyright:

Available Formats

Chapter 14

Improving Service Quality and Productivity

Importance of Productivity and Quality for Service Marketers

Helps to keep costs down

Perspectives on Service Quality

Quality is precise and measurable

Dimensions of Service Quality

competence, courtesy credibility security

Seven Service Quality Gaps (Fig. 14.1)

Advertising and sales promises

Prescriptions for Closing Service Quality Gaps (Table 14.3)

Hard and Soft Measures of Service Quality

Hard Measures of Service Quality

Composition e of FedExs Service Quality Index (SQI) (Table 14.4)

Total Failure Points (SQI) =

Control Chart: Percent of Flights Leaving within 15 Minutes of Schedule

100% 90% 80% 70% 60%

Tools to Address Service Quality Problems

Frontstage Front-Stage Personnel Personnel

Delayed Departures Other Causes

Late cabin cleaners

Poor announcement of departures Weight and balance sheet late

Analysis of Causes of Flight Departure Delays (Fig. 14.4)

All stations, excluding Chicago-Midway Hub

4.9 % 19% 9.5% 33.3% 33.3%

Late passengers Waiting for pushback Waiting for fueling

Return on Quality (ROQ)

When Does Improving Service Reliability Become Uneconomical?

Small Cost, Large Improvement

Large Cost, Small Improvement

Productivity in a Service Context

Efficiency, Effectiveness, and Productivity

Effectiveness: degree to which firm is meeting its goals

Measuring Service Productivity

Questions to Ask When Developing Strategies to Improve Service Productivity

Operations-driven strategies Set productive capacity to match average demand

Operations-driven vs. Customerdriven Actions to Improve Service Productivity

Control costs, reduce waste

Automate labor tasks

Backstage and Frontstage Productivity Changes: Implications for Customers

Front-stage productivity enhancements are especially visible in high contact services.

Establish measures & reviews to maintain performance Correct problems if needed

You might also like