Notes

Outline

Managing Service Quality

Why service quality Reliance upon easily copied tactics results in only momentary advantage sustainable competitive advantage is only achieved when a firm is able to prevent competitors from easily duplicating its portfolio of products and services quality service is one of the value adding competitive methods that are difficult for competitors to duplicate

"Service provides a value for..." Service provides a value for the customer for which they are willing to pay the firm at a level greater than it costs the firm to provide it, thereby creating a positive cash flow per share So, service is capable of : producing sustainable competitive advantage creating value for the firm in the form of cash flow per share customers buy from the firm they believe offers the highest customer delivered quality customers define value based on the quality they perceive in relation to the price they pay

"Value creating organisations often differentiate..." Value creating organisations often differentiate themselves on one key attribute, but must meet acceptable threshold levels with respect to quality, pricing and service these 3 are the heart of value

Factors influencing service quality Service quality depends on : proper training execution quality control sufficient resource allocation focus on those core competencies necessary to ensure that the service transaction is completed successfully

Factors underlying service delivery Understand how customers derive utility from the service understand how the organisation can produce and deliver that utility understand how the organisation must be managed to add value and produce the rate of return required enable the organisation to meet its objectives to both customers and owners

The service process The product service transaction contains a behavioural dimension that reflects the personality of both parties and the milieu in which the transaction is occurring : role playing front stage vs back stage

Role playing When there is a misconception of these roles, ambiguity and discontinuity degrade the service delivery employees need to be trained in : how to play the various roles how to know which is appropriate for the situation read customer cues, choose the correct role and play it to the satisfaction of the cusotmer also provide customers with cues as to what role they are expected to play eg type of service (quick, limited or full)

Front stage vs back stage Personnel who are “back stage” are as important since they support the people on stage it is important for each employee to understand that it is not only the customer contact employees who are important in the service quality process

The service process... There is customer involvement in every service system the short distribution channel creates challenges to quality control because customers are involved in every encounter, they are  immediately aware when the service is not being performed correctly

Defining Quality The management of quality includes : an appropriate definition of what it means in an organisation an understanding of the difference between perceived quality and perceived value recognising that quality is a proces appreciating the link between culture and quality

"Many companies have defined quality..." Many companies have defined quality in terms of conformance to standards or specifications. In order for quality to exist, the standards must be met consistently this is fine at the operations level, but at higher levels of management, it is important to identify the products and services that respond to customer needs and recognise that conformance is only one of many measures needed to ensure quality

"Quality is a target that..." Quality is a target that moves as customer needs change. The organisation must design services which are capable of modification or complete change as is dictated by customer needs either now or in the future Customers assess quality on the following dimensions : reliability courtesy responsiveness communication competence credibility access security understanding tangibles

"Juran defines quality along two..." Juran defines quality along two dimensions features that respond to customer needs : adds to the cost of the product customers must be willing to pay for the added costs or these features must make them more loyal freedom from defects : that increase customer satisfaction

"Gronroos : quality is what..." Gronroos : quality is what guests perceive. Defines quality along two dimensions : technical or outcome related : easy to measure objectively functional or process related : how the service is delivered; subjective judgements by customers

"Definition along 3 dimensions :" Definition along 3 dimensions : doing the right thing : competitive methods the right way : core competencies doing it consistently : good implementation

The service quality process Functional dimension may cause measurement difficulties : customers may not make a judgement concerning the quality of an experience until after its conclusion guests may have divergent reactions to the same intangible idea the idea of managing the process makes better sense than trying to manage each individual experience identifying and understanding the individual tasks of a process are essential to understanding and improving the entire process

"In order to ensure satisfactory..." In order to ensure satisfactory quality, services must be designed from the perspective of the guest before they are produced managers must be knowledgeable of : service quality goals : target market needs to bemet operating conditions : under which the service will be provided variations can occur during execution. Develop a service recovery process

The 3 levels of service quality Core benefit : most fundamental level hygiene factors : minimum acceptable level of service satisfiers : differentiate and exceed customer expectations prerequisite : hygiene factors need to be delivered at an acceptable level before satisfiers become important

The 5 gap model of quality Gap 1 : consumer expectations vs management perception Gap 2 : management perception vs service quality specifications Gap 3 : service quality specifications vs service delivery Gap 4 : service delivery vs external communication Gap 5 : expected service vs perceived service

Managing Service Quality

Base decisions on what the customer wants and expects If customers don’t like the experience provided, don’t value it, and don’t think it meets their needs and expectations, they won’t come back Eg. Southwest Airlines : asked customers what they wanted customers : low fares, on time flights, gourmet meals with wine, large comfortable seats, inflight movies etc if you simply ask people what they want, they are likely to ask for everything In depth : low fares and ontime flights with friendly service

"Completely understand why customers seek..." Completely understand why customers seek to do business with you how customers behave in their purchase relationship with the organisation what they expect from both the product and service how to meet customer expectations

Think and act in terms of the entire customer experience The service itself, the setting and the delivery systems are all important moments of truth determine what problems can occur at the moments of truth fix them before a failure learn to recover from failures

Case study : Ritz Carlton The problem room service breakfasts arriving late and cold the traditional solution : call in the room service manager and reprimand for negligence, inadequate supervision etc what actually happened : the manager organised a team of room service employees and asked them to study the problem and suggest solutions the actual cause : unavailability of elevators for room service staff at breakfast time

"An employee spent half a..." An employee spent half a day with a stopwatch in an elevator the problem was : a management decision about how many bedsheets each floor was allowed to stock the decision frequently left some floors with too few sheets and housekeepers were using elevators to hunt for extra sheets therefore elevators were unavailable for room service

"Another example of the “..." Another example of the “how” in customer experience : studying, understanding and managing occasions when the customer has to wait study every step in the customer experience looking for the times when a customer is waiting for some or all of the experience to take place study customer psychology to determine what makes the wait feel longer, shorter or just right study the mathematics of the queue to ensure that customers get whatever they expect in a timely fashion

Case study : How Disney manages waits Know the exact relationship between guest satisfaction and wait times make sure they have sufficient attractions, food service, and merchandise capacity available to handle guests without unacceptable waits know that guests want to be kept informed, so post estimated times send mobile entertainment teams to long lines Fastpass : allows people to make a reservation and go elsewhere

"The quality of the “..." The quality of the “where”, the environment in which the experience occurs has an important effect on the customers’ opinion of the firm if the environment is not in keeping with the rest of the experience, customer satisfaction diminishes

Continuously improve all parts of the customer experience Competitive advantage is difficult to achieve and sustain need to continuously improve quality to survive on an integrated organisation wide level continuously refresh, renew and revise all parts of the customer experience

"Start with the customer and..." Start with the customer and find out what the customer expects to see improved consider all parts of the customer experience as potential areas for improvement reassess quality, review setting and delivery system review everything that affects customers

Leadership Vision communicating the vision transformational leadership

A quality culture Obsession with quality at all levels providing employees with tools to achieve the vision

Hire and reward people who can effectively build customer relationships Employees not only need the skills to do the job, but also the skills to manage customers : fix customer problems train customers in how to enjoy the experience seek employees with a positive attitude have employees do not only their jobs but also other things that can make a difference in creating an excellent customer experience front line customer contact employees must be empowered to fix problems

Train employees in how to cope with their emotional labour costs Deal with customers in a way that is consistent with customer expectations about : what the customer experience should be how the experience should be how the employees who deliver it should act eg. not only the technical aspects of the job, but also expectations of levels of employee caring, consistency and enthusiasm

"Find ways to help employees..." Find ways to help employees cope with the emotional cost of appearing happy all the time to be happy, pleasant and attentive takes a lot out of most people especially with customers who are not happy and pleasant in turn

"Every one in every job..." Every one in every job has some emotional involvement that must be managed how organisations help their employees deal with this part of the job may be as important as how well they train employees to perform the job task

Teamwork Shared responsibility cross training understanding the business

Create and sustain a strong service culture Organisational culture a customer focussed culture can achieve 3 goals : helps guide the employee in making the intangible service tangible gives meaning and value to work helps fill the gaps between what the organisation can train the employee to do and what the employee must actually do to meet customer expectations across a variety of situations

"The more intangible a product" The more intangible a product, the stronger the cultural values, beliefs and norms must be no service organisation can anticipate the different things its customers will do, ask for, and expect the power of the culture to “do the right thing” for the customer becomes important culture ensures that each front line employee does what the organisation wants done in unanticipated situations

"Formal programmes for training new..." Formal programmes for training new employees in the organisation’s cultural values reward systems to reinforce positive behaviours behaviours damaging to the culture should be strongly discouraged

Standards For timeliness for completeness

Avoid failing your customers twice Emphasis on the cost of failure and recognition of the importance of repeat customers to organisational success work hard to identify problems and find satisfactory solutions for them quickly customers may accept failures, but most people will not forgive organisations that can’t or won’t fix them

Empower customers to co-produce their own experiences Customer involvement cost and convenience benefits for organisation and customer the greater the customer involvement, the greater the likelihood that the experience will meet expectations if it does not, the customer bears part of the responsibility gain loyalty from customers who think of themselves as part of the organisation’s family

Get managers to lead from the front, not the top The value of visible leaders message : everyone is responsible for maintaining high service standards and quality role model for what excellent really means

Treat all customers as if they were guests Treat each customer as a guest create a hospitable experience instead of merely selling a product or service

Bibliography Robert C. Ford, Cherrill P. Heaton & Stephen W. Brown, Delivering Excellent Service : Lessons from the Best Firms, California Mangement Review, 2001 Michael Olsen, Joseph West, Eliza Ching & Yick Tse, Strategic Management in the Hospitality Industry, 2nd Ed, John Wiley & Sons, 1998; Ch 9, “ Managing Service Quality”, Pp 259-280