Gap 1

Name, def, cause

Expectations Gap

Firms assume they know what customers want or should want

Caused by not talking to customers

Service Expecations

def

beliefs about how service should be performed that serve as standards of measurement for the customer

-along 5 dimensions of service quality

What service should or could be

highest level in eyes of customer

What it will be

What customer will accept without negative thoughts

If not present, customer will be dissatisfied

-often assumed to exist/ taken for granted

-Factors that influence level of satisfaction

-Rational, Logical

-Firms must be competitive on these

-If a firm excels on these, can reach customer's desired levels

-Not expected

-If not present, will not create dissatisfaction

-If present, will create delight

-Unexpected, valuable, memorable

-Emotional rather than logical

Factors that influence service expectations

(List and Definitions)***

Past Experience

-With company and competitors

Personal Service Philosophy

-(Personal needs)- customer's generic underlying attitude about service quality

-usually personality-based

Transitory Service Needs

-Situation-specific customer needs

Enduring Service Intensifiers

-General business/industry factors that increase a customer's sensitivity to how a service should be performed

Perceived service alternatives

Explicit/Implicit Service Promises

-company statements, guarantees, advertising, word of mouth

Determining Expectations**

(Closing Gap 1)

Research is critical

Surveys and consumer panels

Complaint Analysis

Competitive analysis

Employee Reporting

Research reveals "Problem" expectations

(list and define)

-Fuzzy

-can't define

-Implied (must-be's)

-customers don't voice, but expect these

-Unrealistic

-unfeasible given service/price expectations

-educate consumers

Gap 2

name, def, cause

-Service system design gap

-diff between mgmt knowledge and design of service

-mgmt doesn't use customer research in designing procedures

-service system (processes and technology)

-Service performance standards

Service system

def, parts

-activities, processes, people, and facitlities through which service is delivered

-invisible components (backstage)

-visible components (front stage)

-core and supplemental services (visible or invisible)

The Service System:**

List diagram

Back stage

-technical core (necessary, invisible)

-support personnel

Front Stage

-physical support (tangibles)

-contact personnel

Customers

Focus on reliability and responsiveness

(food cooked right, right faculty hired, etc.)

Technical core, support personnel

-Focus on empathy, assurance, tangibles

-Key point: customer-employee interface (CSE)

-Physical support, contact personnel

Critical Service Encounters- Interaction or point in process which is likely to create either significant dissatisfaction or satisfaction

OTSU- Opportunity to Screw Up

-If first one is bad, perception of entire experience affected

-Very strong final CSE can help overcome earlier problems

-Have opportunity to create apostle or terrorist

basic activity/product being purchased and where reliability is measured

-doing well on this is necessary for survival

Supplemental Services **

(definition)

Supplemental Services**

Common across all cores (list and defs)

Information

-useful, current data

Consultation

-problem solving, tailored solution

Order-taking

-accepting and processing

Hospitality

-care while customers wait

Safe-keeping

-caring for possessions

Exceptions

-activities that fall outside normal service delivery

Billing

-itemizing amount due, accurately, on time

Payment

-options available to submit payment

-self-pay, automated, extended

Doing well on the core is necessary for survival

Performance on supplemental determines loyalty

Design should be flowcharted and tested before introduction

-Operational guidelines for employees that direct their actions so that customer receive the level of service described in the service standard

-Must be quantifiable, actionable, measurable

-start with customer need and develop specific standard

-Ex- "Be friendly"- bad; "Greet each customer by name"- good

Gap 3

name, def, cause

Service Execution Gap

difference between system design and actual service

-employees do not deliver/execute service in accordance with service standards

Quality Service

Importance of execution

Customers share bad experiences

Improving reliability has significant impact on profitability

Importance of Reliability***

Chart

Improved Reliability

Higher Customer Loyalty; Increased word of mouth; Reduced cost of rework; higher morale

Ability to charge higher prices; higher sales revenue

Lower employee turnover; increased productivity and reduce costs

Improved profits

Service Leadership- Internal Quality

The right and motivated employees

Customer and employee engagement

Management:

-Believes in Quality

-Monitors, measures, and rewards

-Provides resources

-Service leadership leads to internal quality

Internal Quality

Employee Satisfaction

Employee Loyalty

Employee Productivity

Value as Perceived by Customer

Customer Satisfaction

Customer Loyalty

Profitability and Growth

Well-matched with job requirements

Care about the customer

Want to perform their best

Technical Skills

Human Skills

Emotional Intelligence

Significant Emotional Labor

Significant Discretionary Effort

Relational Competency

Firmly believes that 100% reliability is feasible and a worthwhile goal

Frequently and effectively communicates this belief

Tracks performance and knows when it is out of bounds

Regularly tracks performance internally and externally

Have set control limits that lead to action

Pay, incentives, and bonuses tied to performance

Processes, technology, support

Empowerment where appropriate

Good workplace environment

Includes conditions, pay, processes, co-workers

Evidenced by employees' positive response to their jobs, colleagues, and companies

Can be taught

Physical and mental activities

Processes and procedures

Functional Knowledge

Cannot be taught

must be "hired in"

Emotional responses like empathy, stress tolerance

Personality, aptitude, attitude

Emotional Intelligence*

Requirement to express professionally appropriate (sometimes false) emotions during service transactions

Smiling, being polite when you don't feel like it

Difference between maximum effort and amount needed to "get by"

Extra step that makes your service stand out

Ability to interact with others and work as part of a team

Degree to which employee understands and values other employees

Hire Intelligently

-know skills required and test during process

Train Intensively

-specific systems and processes

Monitor Incessantly

Reward Inspirationally

Retain Indefinitely

-Firms that do well on both customer and employee engagement benefit financially

-Engaged customers deliver 23% premium over average customer

-Org needs internal quality so people are engaged

-good workplace environment

-evidenced by employees' positive response

-Results from effective leadership

-Apostles

-Highly Satisfied

-Emotionally Attached

-Measured on loyalty dimensions, plus:

Confidence in company

Integrity

Pride

Passion

-Same as customers

-Energized and Committed

Encouraging front line employees to use their best judgment to satisfy customers while meeting needs of organization

-Red rules vs. Green rules

-Service is generally customized

-Business environment is unpredictable

-Service has high human component

-Employees are thinkers and like a challenge

-Long-term relationships with customers are desired

Greater employee satisfaction

Greater customer satisfaction

Better generation of ideas for improvement

Cost savings and productivity improve

Increased labor costs (over min wage)

Training costs

Cost of errors

Cost of service inefficiencies and inequities (not standardized)

Increased stress

Passives

Voicers

Irates

Activists

14%

Only hint at a problem to the company

usually not even recognized as a complaint

37%

Tell front line person or manager at time of service failure

Tend not to bad mouth to others

21%

Complain loudly inside and outside of company

Objective is not to get the problem fixed but to let the world know

28%

Complain to company and friends, family

Take legal action, notify the media, call better business bureau

Mishandling is a "double deviation" from customer's expectations

Customers who complain are generally loyal customers

Service recovery paradox

(Proper handling can turn the customer into an advocate for the company)

Level one: to company

Level two: to other people

Level three: to third party, authorities

Complaint Management

(def)

Planning, execution, and control

of processes and measures

which the firm uses when dealing with complaints

Restore customer satisfaction

Gain info to identify weak spots and improve quality

Prevent customers from quietly switching or loudly bad mouthing

Tease out complaints

Strategic initiative

Top management involvement

No-blame culture

Customers must know how to lodge complaint

Employees must know how to respond

Complainants should be kept informed of progress of resolution

Speed with a human face

Decentralized handling (talk to one person)

Create closure

Ensure customer is satisfied

Focus on communication and improvement

1. Thank you

2. Apologize

3. Promise to take action

4. Get information

5. Correct and compensate

6. Fix the problem that caused the complaint

say thank you and explain why you appreciate the complaint

a complaint is a "gift"

Use I, not We

Be sincere

Promise to do something about the problem immediately

I will take care of this

I will get you a new ____

Ask for necessary information

"In order to help you better, may I ask you a few questions?"

Correct the mistake

Do as promised and respond quickly

Exceed the customer's expectation

5. Correct and Compensate*

Customers Expect:

Distributive Justice (Outcome Fairness)

-Compensation should match level of dissatisfaction

Procedural Fairness

-Opportunity for customer to present concerns

-Easy access, no hassle, responsiveness

Interactional Fairness

-Treated Politely, with care and honesty

Follow up to ensure the problem was resolved

Unresolved complaints create activists

Determine cause, and fix it

Collect and analyze complaints

Regular review at a management level

Focus on those high in relevance and frequent

Classify by company or customer failure

Determine cause of failure and fix

Create additional inconvenience for the customer

Blame the customer

Question the customer's honesty

Action by customers that has a negative impact on their experience, others' experiences, or company productivity

Many customers are unaware

Most difficult to successfully recover from customer failure

Understand customer fail points

determine causes of failure

establish preventative solutions (redesign)

Manage customers

Encourage customer citizenship

1. Complaint-Soliciting Culture

2. Easily understood and accessed complaint procedures

3. Process simplicity

4. Systematic Follow-up

1. Speed but with a human face

2. Tease out complaints appropriately

3. No-blame culture

4. Create closure

5. Proactive top-level involvement

Processes for speedy response

Common standard:

-24 hrs, acknowledge; 5 days, reply with actions

Made point of Calling (human element)

Encourage complaints and comments

Systems in place to make it easy

Mistakes inevitable and acceptable

Staff allowed to take initiative and look for solutions

Go beyond follow-ups

Closure involves:

-External- customer satisfied

-Internal- firm has learned from experience

1. Collect diagnostic data on customer failure

2. Identify root cause

3. Establish Preventative solutions

1. Redesign Processes

2. Implement technological solutions

3. Manage customer behavior

4. Encourage customer citizenship

5. Improve the servicescape 

Redesign Processes*

def and ex

Redesign of customer's role and process changes can reduce failures

Ex: Blockbuster removed late fees, opted instead for one-week grace period, after which customer is assumed to have bought the item

Implement technological solutions*

def and ex

Either implemented internally, to support employees, or externally, for customer use

Ex: Glitz! Prom dress registry so customers can buy with greater confidence

Manage Customer Behavior*

def and ex

Leverage 3 factors that shape employee performance (role clarity, ability, motivation) to create high-performing customers

Role Clarity- clearly communicate performance expectations to customers

Ex: Saturn trains new buyers about proper car maintenance

Motivation- Penalize customer for violating rules

Ex: Financial service companies charge late fee for late credit card payments

Encourage Customer Citizenship*

def and ex

Voluntary, discretionary behavior by customers that supports company and/or other customers

Customers helping one another prevent failures

Ex: Weight Watchers clients support one another and frequently prevent failures form encouragement at meetings

Improve the ServiceScape*

def and ex

Service environment affects how customers think, feel, and behave, and contribute to both positive experience and customer failure

Ex: Golf- customers responsible for timing and maintenance; course helps by:

chart at first tee to pick correct tee-off

signs indicate ETA and clocks indicate pace

GPS to eliminate decision-making time

Free tool for repairing divits

Internal Quality*

ex

Employee Satisfaction*

ex

Employee Loyalty*

why important

Cost of turnover is due to loss of productivity and decreased customer satisfaction

Cost of losing a sales rep with 5-8 years experience is $36,000 in sales

Employee Productivity*

ex

Southwest:

deplanes and reloads 2/3 of its flights in 15 min

pilots fly 70 hours per month vs. 50 for others

reasons why they can charge low fares

Value as perceived by the customer*

def and ex

The results they receive in relation to the total costs

Progressive:

Processes and pays claims quickly with little customer effort

Catastrophe team flies to major accidents

Reduces legal costs

Customer Satisfaction*

ex.

Xerox

Customers giving them 5s on the scale were 6 times more likely to repurchase than those giving 4s

Customer Loyalty*

ex

Banc One

Conducts quarterly measures of customer retention,

depth of relationship, level of satisfaction

Helped to explain why they have received more of a return on assets than competitors

Profitability and Growth*

def