Service Engineering and
Lecture 4: Service Quality
Research Staff Member
IBM Almaden Research Center
Almaden Services Research group
12+ years experience in software research,
architecture, design, and implementation
Research interests in SOA, Web services,
mashups, OOD/P, SE, and Agile methods
Ph.D. in computer science from NC State
Project on web
Due 13 Feb
Make sure you get confirmation from
Algorithm for Project
Traveling Salesman-type problems very
common in services
Delivery of goods
Given the distance between each city pair, visit all N
cities in some order, ending back at the base
• Objective: Minimize total distance traveled
Standard problem is very difficult to solve (NP –
We will use the Clarke-Wright Algorithm (page 499 of
C-W algorithm intuition:
Start with the path that returns to base between every node
Add links between nodes instead of returning in order of distance
Stop when no gain can be made
Note: This is a good heuristic
Performs well in practice, but not guaranteed to find the best
Describe the five dimensions of service
Use the service quality gap model to
diagnose quality problems.
Illustrate how Taguchi methods and poka-
yoke methods are applied to quality design.
Perform service quality function deployment.
Construct a statistical process control chart.
Develop unconditional service guarantees.
Plan for service recovery.
Perform a walk-through audit (WtA)
How to we ensure that our customers are
having a good experience?
Customer Feedback and
The average business only hears from 4% of their customers who
are dissatisfied with their products or services. Of the 96% who do
not bother to complain, 25% of them have serious problems.
The 4% complainers are more likely to stay with the supplier than
are the 96% non-complainers.
About 60% of the complainers would stay as customers if their
problem was resolved and 95% would stay if the problem was
A dissatisfied customer will tell between 10 and 20 other people
about their problem.
A customer who has had a problem resolved by a company will tell
about 5 people about their situation.
Moments of Truth
Each customer contact is called a moment
Youhave the ability to either satisfy or
dissatisfy them when you contact them.
A service recovery is satisfying a
previously dissatisfied customer and
making them a loyal customer.
Dimensions of Service Quality
Reliability: Perform promised service dependably and
accurately. Example: receive mail at same time each
Responsiveness: Willingness to help customers
promptly. Example: avoid keeping customers waiting for
no apparent reason.
Assurance: Ability to convey trust and confidence.
Example: being polite and showing respect for customer.
Empathy: Ability to be approachable. Example: being a
Tangibles: Physical facilities and facilitating goods.
Perceived Service Quality
Word of Personal Past
mouth needs experience
Service Quality Expected Service Quality Assessment
Dimensions service 1. Expectations exceeded
Reliability ES<PS (Quality surprise)
Responsiveness 2. Expectations met
Assurance Perceived ES~PS (Satisfactory quality)
Empathy service 3. Expectations not met
Tangibles ES>PS (Unacceptable quality)
Service Quality Gap Model
Service Quality Gap Customer
Customer Customer Satisfaction
Managing the Customer / Understanding
Evidence Marketing Research the Customer
GAP 4 GAP 1
Delivery of Customer
Design GAP 2
Conformance Service Design
Quality Service by Design
Quality in the Service Package
Budget Hotel example
Taguchi Methods (Robustness)
Notifying maids of rooms for cleaning
Height bar at amusement park
Quality Function Deployment
House of Quality
Classification of Service Failures
with Poka-Yoke Opportunities
Server Errors Customer Errors
Doing work incorrectly Failure to bring necessary
Failure to listen to customer Encounter:
Tangible: Failure to follow system
Failure to wear clean flow
Failure to signal service
House of Quality
* * Customer Perc eptions
Servic e Elements
o Village Volvo
+ Volvo Dealer
Customer Expectations 1 2 3 4 5
Reliability 9 8 5 5 + o
Responsiveness 7 3 9 3 2 o +
Assurance 6 5 9 6 + o
Empathy 4 7 + o
Tangibles 2 2 3 + o
Comparison with Volvo Dealer o o
Weighted score 127 82 63 102 65
Improvement difficulty rank 4 5 1 3 2
Achieving Service Quality
Cost of Quality (Juran)
Service Process Control
Statistical Process Control (Deming)
Unconditional Service Guarantee
Costs of Service Quality
Failure costs Detection costs Prevention costs
External failure: Process control Quality planning
Loss of future business Peer review Training program
Negative word-of-mouth Supervision Quality audits
Liability insurance Customer comment card Data acquisition and analysis
Legal judgments Inspection Recruitment and selection
Interest penalties Supplier evaluation
Labor and materials
Service Process Control
Take Monitor Establish
corrective conformance to measure of
action requirements performance
Control Chart of Departure Delays
Percentage of flights on
Lower Control Limit
p (1 p p(1 p
UCL p 3 LCL p 3
Unconditional Service Guarantee:
Unconditional (L.L. Bean)
Easy to understand and communicate
Meaningful (Domino’s Pizza)
Easy to invoke (Cititravel)
Easy to collect (Manpower)
Unconditional Service Guarantee:
Focuses on customers (British Airways)
Sets clear standards (FedEx)
Guarantees feedback (Manpower)
Promotes an understanding of the service
delivery system (Bug Killer)
Builds customer loyalty by making
All customers want to be satisfied.
Customer loyalty is only due to the lack of
a better alternative
Giving customers some extra value will
delight them by exceeding their
expectations and insure their return
Service delivery system should conform to
Customer impression of service influenced
by use of all senses.
Service managers lose sensitivity due to
Need detailed service audit from a
Severity Perceived Psychological Tangible Psychological
Of Service -empathy -fair fix -apology
Failure Quality -apology -value add -show interest
Service Provider Fair
Failure Aware of Restitution
Service Follow-up Loyalty
Patronage Recovery Satisfaction
Customer Service Speed of Frontline Tangible
Loyalty Guarantee Recovery Discretion -small token
Pre-recovery Phase Immediate Recovery Phase Follow-up Phase
Service Recovery Framework
Approaches to Service
Case-by-case addresses each customer’s
complaint individually but could lead to
perception of unfairness.
Systematic response uses a protocol to
handle complaints but needs prior
identification of critical failure points and
Early intervention attempts to fix problem
before the customer is affected.
Substitute service allows rival firm to provide
service but could lead to loss of customer.
What are the advantages and
disadvantages of delivering high service
quality, when the service is delivered by
web or information systems?
The Service Encounter
Chapter 7 Learning Objectives
Use the service encounter triad to describe a
service firm’s delivery process.
Discuss the role of organizational control
systems for employee empowerment.
Prepare abstract questions and write situational
Discuss the role of customer as coproducer.
Describe how elements of the service profit
chain lead to revenue growth and profitability.
The Service Encounter Triad
The Service Organization
ServiceMaster (Service to the Master)
Disney (Choice of language)
Invest in people
Use IT to enable personnel
Recruitment and training critical
Pay for performance
Beliefs To Core values Identify core
Systems contribute & mission values
Boundary To do right Specify and Risks to be
Systems enforce avoided
Diagnostic To achieve Build clear Critical
Control targets performance
Interactive To create Encourage Strategic
Control learning Uncertainties
Difficult Interactions with
Unrealistic customer expectations Unexpected service failure
1. Unreasonable demands 1. Unavailable service
2. Demands against policies 2. Slow performance
3. Unacceptable treatment of 3. Unacceptable service
5. Breaking of societal norms
6. Special-needs customers
Use scripts to train for proper response
Service Encounter Success
Customer Service Provider
Employee selection User friendly
Interpersonal skills Verification
Human Support technology Security
Engender trust Easy to access
Easy to access Compatibility
Fast response Tracking
Machine Verification Verification
Remote monitoring Security
Employee Perceptions of Customer
Service at a Branch Bank
Custom er 5
1 2 3 4 5 6
More More Familiarity with
Repeat Customer Needs and
Purchases Ways of Meeting
Stronger Tendency Greater Opportunity
to Complain about for Recovery
Service Errors from Errors
Higher Customer Higher Employee
Lower Costs Higher Productivity
Better Results Improved Quality
Is attitude emphasized?
Are job previews utilized?
Are customers screened?
Are employees Careful Employee
encouraged to and Customer Selection
refer friends? Is training for job and life?
Are referrals from Is it an important element
the “best” employees of quality of work life?
Referrals of Training
measured Do they reflect
Well-Designed needs of the
Support Systems service encounter?
Are measurements Satisfied Cycle Information
Employees of Capability Facilities Are they designed to
linked to other
functions on foster relationships?
Appropriate Greater Latitude
Rewards to Meet
and Frequent Customer’s Needs Does it reflect top
Are they linked to Recognition management “talk”?
Clear Limits on, Is it enough to allow
Are they balanced and Expectations delivery of results to
between monetary of, Employees customers?
Do they limit the “right” risks?
Are they logical to employees?
Service Profit Chain
Operating strategy and Service
concept Target market
service delivery system
Employees Satisfaction Loyalty
Customer orientation/quality emphasis Quality & productivity Attractive Value Lifetime value
Allow decision-making latitude improvements yield Service designed Retention
Selection and development higher service quality & delivered to Repeat Business
Rewards and recognition and lower cost meet targeted Referrals
Information and communication customers’ needs
Provide support systems Solicit customer
Foster teamwork feedback