Relationship Between Customer Perceptions of Quality and Customer

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					        Relationship Between Customer
Perceptions of Quality and Customer Satisfaction
                                                   Chapter
Customer Perceptions of Service                      5
 Customer Perceptions
   Transaction vs. cumulative perceptions
     Transaction-specific encounters = building
     block for cumulative perceptions
     Customer loyalty results from customer’s
     assessment of all experiences, not just one
     single encounter
                                                   Chapter
Customer Perceptions of Service                      5

 What is customer satisfaction?
   Customer’s evaluation of a product or
    service in terms of whether that product or
    service has met the customer’s needs and
    expectations
   Dissatisfaction = an outcome of a failure to
    meet needs and expectations
   A dynamic, moving target that may evolve
    over time
                                                    Chapter
Customer Perceptions of Service                       5

 What determines customer satisfaction?
     Product and service features
     Consumer emotions
     Attributions for service success or failure
     Perceptions of equity or fairness
     Other consumers, family members, and
      coworkers.
                                                     Chapter
Customer Perceptions of Service                        5
 Customer Satisfaction
   National Customer satisfaction Indexes
     Measure and track customer satisfaction at a
     macro level
     Get at the quality of economic output
   American Customer satisfaction Index (ACSI)
     Measure of quality of goods and services as
     experienced by consumers
     U.S. consumers are least satisfied with
     services
                                            Chapter
Customer Perceptions of Service               5

 Outcomes of Customer Satisfaction
   Increased customer retention
   Positive word-of-mouth communications
   Increased revenues
Relationship between Customer Satisfaction and
        Loyalty in Competitive Industries




Source: James L. Heskett, W. Earl Sasser, Jr., and Leonard A. Schlesinger, The Service Profit Chain, (New York, NY: The Free Press, 1997), p. 83.
                                                     Chapter
Customer Perceptions of Service                        5

 Service Quality
   The customer’s judgment of overall
    excellence of the service provided in relation
    to the quality that was expected.
                                              Chapter
Customer Perceptions of Service                 5

 Service quality assessments are formed on
  judgments of:
   Outcome
   Interaction
   Physical Environment Quality
              The Five Dimensions of
                  Service Quality

Reliability
                          Five dimensions which act as
                           drivers of service quality.
Assurance
                          Represent how consumers organize
                           information about service quality in
Tangibles                  their minds.

Empathy                   Sometimes customers will use all of
                           the dimensions to determine service
                           quality…sometimes not.
Responsiveness
                  SERVQUAL Attributes
RELIABILITY                                       EMPATHY
   Providing service as promised                     Giving customers individual attention
   Dependability in handling customers’              Employees who deal with customers in a
    service problems                                   caring fashion
   Performing services right the first time          Having the customer’s best interest at heart
   Providing services at the promised time           Employees who understand the needs of their
   Maintaining error-free records                     customers
                                                      Convenient business hours
RESPONSIVENESS
   Keeping customers informed as to when         TANGIBLES
    services will be performed                        Modern equipment
   Prompt service to customers                       Visually appealing facilities
   Willingness to help customers                     Employees who have a neat, professional
                                                       appearance
   Readiness to respond to customers’
    requests                                          Visually appealing materials associated
                                                       with the service
ASSURANCE
   Employees who instill confidence in customers
   Making customers feel safe in their transactions
   Employees who are consistently courteous
   Employees who have the knowledge to answer
    customer questions
         Costs of Service Quality

 Failure costs            Detection costs         Prevention costs

External failure:         Process control         Quality planning
 Customer complaints      Peer review             Training program
 Warranty charges         Supervision             Quality audits
 Liability insurance      Customer comment card   Data acquisition and analysis
 Legal judgments          Inspection              Preventive maintenance
 Loss of repeat service                           Supplier evaluation
                                                   Recruitment and selection
Internal failure:
   Scrap
   Rework

Recovery:
  Expedite
  Labor and materials
                                                   Chapter
Customer Perceptions of Service                      5

 Service Encounters: The Building Blocks
  for Customer Perceptions
   Service encounters or moments of truth
     When the customer interacts with the
     service firm
     can potentially be critical in determining
     customer satisfaction and loyalty
       A Service Encounter Cascade
              for a Hotel Visit


Check-In

   Bellboy Takes to Room

                  Restaurant Meal

                           Request Wake-Up Call

                                              Checkout
                The Service Encounter
 Types of service encounters:
   remote encounters – no direct human contact
   phone encounters
   face-to-face encounters - encounter between an employee
    and a customer in direct contact

 A Service encounter is an opportunity to:
     build trust
     reinforce quality
     build brand identity
     increase loyalty
 Critical Service Encounters Research

 GOAL:
   understanding actual events and behaviors that cause
    customer dis/satisfaction in service encounters
 METHOD:
   Critical Incident Technique
 DATA:
   stories from customers and employees
 OUTPUT:
   identification of 4 common themes underlying satisfaction and
    dissatisfaction with service encounters
 Common Themes in Critical
Service Encounters Research



   Recovery:
employee response
 to service delivery
   system failure
                          Recovery

          DO                          DON’T
   Acknowledge problem        Ignore customer
   Explain causes             Blame customer
   Apologize                  Leave customer to fend for
   Compensate/upgrade          him/herself
   Lay out options            Downgrade
   Take responsibility        Act as if nothing is wrong
                               “Pass the buck”
 Common Themes in Critical
Service Encounters Research



   Recovery:            Adaptability:
employee response      employee response
 to service delivery   to customer needs
   system failure         and requests
                       Adaptability

        DO                                DON’T
 Recognize the seriousness of    Ignore
  the need                        Promise, but fail to follow
 Acknowledge                      through
 Anticipate                      Show unwillingness to try
 Attempt to accommodate          Embarrass the customer
 Adjust the system               Laugh at the customer
 Explain rules/policies          Avoid responsibility
 Take responsibility             “Pass the buck”
 Common Themes in Critical
Service Encounters Research



   Recovery:             Adaptability:
employee response      employee response
 to service delivery   to customer needs
   system failure         and requests


                         Spontaneity:
                         unprompted and
                       unsolicited employee
                       actions and attitudes
                          Spontaneity

          DO                              DON’T
   Take time                      Exhibit impatience
   Be attentive                   Ignore
   Anticipate needs               Yell/laugh/swear
   Listen                         Steal from customers
   Provide information            Discriminate
   Show empathy
 Common Themes in Critical
Service Encounters Research



   Recovery:             Adaptability:
employee response      employee response
 to service delivery   to customer needs
   system failure         and requests


     Coping:             Spontaneity:
 employee response       unprompted and
to problem customers   unsolicited employee
                       actions and attitudes
                             Coping

          DO                            DON’T
   Listen                       Take customer’s dissatisfaction
   Try to accommodate            personally
   Explain                      Let customer’s dissatisfaction
   Let go of the customer        affect others
                         Evidence of Service from the
                          Customer’s Point of View


     Operational flow of
    activities
     Steps in process
     Flexibility vs.
    standard
     Technology vs.
    human                                 Process




Source: From “Managing the Evidence of Service” by M. J. Bitner from The Service Quality Handbook,
eds. E. E. Scheuing and W. F. Christopher (1993), pp. 358-70.
                         Evidence of Service from the
                          Customer’s Point of View

                                                                                            Contact employees
                                                                                            Customer him/herself
     Operational flow of                                                                   Other customers
    activities                                                 People
     Steps in process
     Flexibility vs.
    standard
     Technology vs.
    human                                 Process




Source: From “Managing the Evidence of Service” by M. J. Bitner from The Service Quality Handbook,
eds. E. E. Scheuing and W. F. Christopher (1993), pp. 358-70.
                         Evidence of Service from the
                          Customer’s Point of View

                                                                                            Contact employees
                                                                                            Customer him/herself
     Operational flow of                                                                   Other customers
    activities                                                 People
     Steps in process
     Flexibility vs.
    standard
     Technology vs.                                                                                  Tangible
    human                                 Process                        Physical
                                                                                                     communication
                                                                         Evidence
                                                                                                      Servicescape
                                                                                                      Guarantees
                                                                                                      Technology

Source: From “Managing the Evidence of Service” by M. J. Bitner from The Service Quality Handbook,
                                                                                                      Website
eds. E. E. Scheuing and W. F. Christopher (1993), pp. 358-70.