A Study on the application of 6-Sigma on the enhancement of service quality of fitness club

8/7/2019 A Study on the application of 6-Sigma on the enhancement of service quality of fitness club

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Qual Quant

DOI 10.1007/s11135-010-9424-7

RESEARCH NOTE

A Study on the application of 6-Sigma

on the enhancement of service quality of fitness club

Kuei-Mei Cheng Chin-Hsien Hsu

Chin-Huang Huang

Springer Science+Business Media B.V. 2011

Abstract The service industry plays an essential role in economic globalization and a

determining factor in strengthening industrys competitiveness. Targeting fitness industry,

this study intends to explore ways to minimize customer complaints, understand customer

expectation, and enhance service quality by applying the five steps of 6-Sigma: (1) Defini-

tion; (2) Measurement; (3) Analysis; (4) Improvement; and (5) Control, to effectively solve

the root causes of customer complaints, raise customer satisfaction and minimize possible

future complaints.

Keywords Service industry Fitness industry Fitness club Service quality 6-Sigma Customer complaints

1 Introduction

The increasingly dense urban population, the short supply of sports and leisure space, and

the importance of leisure activities advocated by the government have generated a Fitness

club boom in recent years. To attract a wider variety of consumers and to gain a competi-

tive edge, fitness clubs as a whole are promoting a diverse programs including body-build-

ing, SPA therapy, sauna, ball games, cosmetology and skin-care, yoga, and aerobic dance,

and so on. Furthermore, health clubs are transforming themselves into customer-oriented

to strengthen service quality, elevate customers satisfaction, and create a customer-corpo-

rate win-win situation. Customer complaints usually result from the unfulfilled expecta-

tion customer experiences from service or product during various functional commercial

K.-M. Cheng (B) C.-H. HuangDepartment of Sport Management, National Taiwan College of Physical Education,

Taichung, Taiwan, R.O.C.

e-mail: [email protected]; [email protected]

C.-H. Hsu

Department of Recreation and Sports Management, National Chi-Yi University of Technology,

Taichung, Taiwan, R.O.C.

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activities, or the sensational or emotional reaction customer has in response to the perceived

dissatisfaction against his/her purchasing behavior. Parasuraman et al. (1985) suggest that

customer may sometimes voice complaints of dissatisfaction with certain part of the service

provided by the company, in spite of the satisfaction gained from the overall service quality.

Generally speaking, customer satisfaction ranking can affect the market share, total profits,and words of mouth effect of the corporate, even plays an important factor in determining

the sustainable development of the corporate. Any enterprise will experience a decline in

customers overall satisfaction if it neglect or fails to solve the root cause of customer com-

plaints. In view of this, International Organization for Standardization (ISO) promulgated

in July 2004, ISO 10002-Guideline for Complaint Handling in Organization, as the norms

for global enterprises in handling customer complaints. Therefore, the main purpose of this

study is to explore ways to minimize customer complaints, understand customer expecta-

tion, and enhance service quality to effectively solve the root causes of customer complaints

existing in the fitness industry, to raise customer satisfaction and minimize possible future

complaints.

The overall root causes for customer complaints can be divided into three categories: (1)

Dissatisfaction with service; resulting from customers dissatisfaction with the low service

quality, poor service management and communication between customers and service per-

sonnel; (2) Dissatisfaction with the club site and facilities; caused by the messiness and old or

damaged equipments; (3) Dissatisfaction with discrepancy between reality and anticipated

benefits customers get from over exaggerated TV commercials, different recognitions on

contract, and the dishonest promise made by the sales personnel. According to Peter et al.s

study (2000), many multi-nationals such as Motorola, GE, and Sony have all experienced

great effect through introducing the5-step6-Sigma into their management. Cases in point are:1. GE increased a profit of USD 750,000,000 at final settlement in 1998 resulted from

adopting 6-Sigma, and related profit was predicted to reach up to USD 1,500,000,000

in the following 1999.

2. Motorola enjoys a 21% annual increase of stock price since adopting 6-Sigma.

An increasing number of scholars or industries are joining in the rank of researching

6-Sigma, concentrating on how to apply 6-Sigma to promote organizational performance

and/or product quality (Hoerl 2001; Han and Lee 2002; Linderman et al. 2003). This has

caused an extending application of 6-Sigma into the fields beyond industrial engineering;

hence, the study will apply 6-Sigma to explore the issue of improving customer complaintsand the service quality in fitness club industry.

The first step of 6-Sigma methodology is Define, namely, to reduce the frequency of

customer complaints. The next step is to define the measurement index and establish the

standard and method of Measurement. Then, by following the DMAIC mode of 6-Sigma

described by Michael (2002) and Pyzdek(2001) mode, and by taking cause-and-effect dia-

gram as the tool to Analyze, we move on to the 3rd step and analyze the causes that give rise

to the customer complaints. Based on the causes analyzed and taking the relationship matrix

diagram as the concept, an improvement team is formed following assignment of duties and

missions to each department, to achieve the target to Improve at step 4. Finally, the 5th stepof Control, based on the principle and concept of control chart, the study will establish a set

of modes to control and monitor the number of customer complaints. Through the process of

this approach, employees will be trained on a continuous basis on how to handle customer

complaints, and normalize the handling methods, so that the enterprises can promptly solve

any arising complaint andeventually increase customer satisfaction andcut down the number

of customer complaints.

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Enhancement of service quality of fitness club

1.1 Definition of six sigma

The 6-Sigma was firstly adopted as a set of improvement approach in 1980, by Motorola

Company. Several other multi-internationals, such as GE andSony followed suit and beganto

introduce this improvement technique into their organizations. According to Michael (2002),DMAIC, the main procedural steps of 6-Sigma are defined as follows:

Define: To define the problems and the project.

Measure: To measure the actual condition of performance.

Analyze: To analyze the causes of the problems.

Improve: To propose related countermeasures.

Control: To establish control mechanism to ensure the achieved precision and stability are

maintained.

Peter et al. (2000) suggested taking into consideration of customer demands when defining

problems, and uncovering the problems from customer demands. Service provided in thisway, he suggests, can meet customer demands, and win customer satisfaction and loyalty.

2 Define and measure

As mentioned before, consumers are continuously raising their demand for service quality

with their increasing level of knowledge and education. And also because each customer

has different characteristics, the occurrence of customer complaint is inevitable. However,

customer complaints, if left unattended or treated inappropriately, will lead to drop of cus-

tomers loyalty and speeding up customer loss. Schibrowsky and Lapidus (1994) pointed outthat to maintain a smooth business operation, a company tends to seek out a new customer

to fill in the vacancy a lost customer left; nevertheless, the expense invested in marketing

amounts approximately five times as large as those spent in maintaining said customer. Tax

et al. (1998) indicated that the effective steps a company takes in dealing with customer

complaints, can not only reduce customer loss, but also offset the tarnished corporate image

caused by negative criticism.

2.1 Define

By applying 6-Sigma, the 1st step of the study is to Define the problem as to decreasethe number of customer complaints. In general, customer will voice complaints if any of

the following conditions occurs: dissatisfaction with service, dissatisfaction with facilities,

or dissatisfaction with the promised benefits. Here, N is used to represent the total number

of customer complaints; apparently, N, as the random variable of attributes, may also be

regarded as the defects number the product possesses. Therefore, according to Montgomery

(2001), the attributes random variable N obeys Poisson (POIS) distribution, and the proba-

bility density function is:

P(N = x) =ex

x! , x = 1, 2, 3, . . .Parameter is the mean value and the variance, that is, = E(xi ) and = Var(xi ).Although cutting down customer complaints is of the most importance, it is inevitable that

customer will complain from time to time. To reach such goal, an up-limit T is set up for the

maximum number of customer complaints, based on the companys self-expectation, number

of consumers owned, and the external competitive environment and conditions. The mean

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value and the variance of Poisson distribution coefficient are equal; however, the variance

between the numbers of customer complaint may vary greatly. Therefore, Hausman et al.

(1984) proposed negative binomial (NB) distribution to revise the problem of over expanded

dispersion. The log of the mean from Poisson model can be shown as follow:

log(E(xi )) = zi + i (1)where, i is the unobservable difference. We can take zi + i at the right side of the equa-tion as the random variable, and show the distribution of the number of customer complaints

under the conditional probability ofi with Poisson probability distribution; therefore, it can

be re-written as:

P(xi |i ) = exp(exp(zi + i )) exp(zi + i )n

x ! (2)

Suppose the unobservable heterogeneous error is i , and exp(i )

=vi , E(vi )

=1; then, a

new NB model obeying Gamma distribution can be written as (Sarker and Surry 2004):

P(xi ) = (xi + v)(xi + 1)(v)

v

v +

v

v +

xi(3)

The expected value and the variance are and + 2/v respectively; v = 1a

, then

Var(xi |zi ) = i + a2i (4)when = 0, the POIS model indicating the expected value equals to the variance. Therefore,the suitable distribution mode may be tested before conducting the measurement.

2.2 Measure

Then, based on :, the average number of customer complaints, and T, the up-limit of cus-

tomer complaints, the measurement index used in the study is thus defined as follows:

MIndex =

T 100% (5)

We learn from the preceding equation that when the average number of customer complaints

equals to the up-limit of customer complaints, that is, when

=T, then the measurement

index MIndex = 100%, indicating that the proprietor has reached its full capacity of customercomplaints; when the average number of customer complaints is greater than the up-limit of

customer complaints, that is, when >T, then the measurement index MIndex > 100%, indicat-

ing that the proprietor is overloaded with excessive customer complaints; when the average

number of customer complaints is less than the up-limit of customer complaints, namely,

when < T, then the measurement index MIndex < 100%, indicating that customer com-

plaints is within the proprietors capacity of tolerance. Obviously the measurement index

MIndex is the increasing function of the mean value and the variance of customer complaint.

The smaller value is, the smaller the mean value and the variance of the number of customer

complaints are, indicating a better service quality. Hence, the smaller the measurement indexMIndex is, the better the service quality. By adopting the measurement proposed by Chen

et al. (2002), we suppose that A company demands that the measurement index MIndex must

be smaller than the performance of customer complaint service quality f (0 < f < 1), then

the smaller the f value is, the stricter the demand for customer complaint service quality;

the bigger the f value the looser the demand for customer complaint service quality. We will

first describe the hypothesis for measurement as follows:

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H0 : MIndex f(good performance of customer complaint service quality)Ha : MIndex > f(poor performance of customer complaint service quality.)

H0 is of null hypothesis, that is, when measurement index MIndex has a demand smaller than

or equal to the service quality performance parameter f, it satisfies the null hypothesis, and

it also means the service quality meets the demand; otherwise, it satisfies the alternative

hypothesis of Ha, indicating the service quality fails the demand.

2.3 The uniformly minimum variance unbiased estimator of the measurement index

and the procedures of measurement

Then, thestudy uses theuniformlyminimum varianceunbiasedestimatorof themeasurement

index MIndex as the measurement statistic. Uniformly minimum variance unbiased estimator

refers to the mathematical formula of the smallest variance in all unbiased estimators. The

definition is shown as follows:

Mindex =N

T 100% (6)

N =k

i=1 xi

/k is the sample mean of the number of customer complaints. We can

easily derive the following mean value and the variance of the uniformly minimum variance

unbiased estimator:

E(Mindex ) =

T 100% (7)

Var(Mindex ) =Mindex

kT (8)

Suppose, we calculate from observation of the random sample, and get the value of test

statistic as Mindex =w, and calculate P-value of the measurement index shown as follows:P value = P

Mindex w|Mindex = f

(9)

Because EMindex

= Mindex and Var

Mindex

= Mindex

kT, therefore, we can assume:

Z=

kT Mindex MindexMindex (10)

when thesamplesize is large enough, according to Central Limit Theorem, randomvariableZ

is close to standard normal distribution. Hence, P value = PMindex w|Mindex = f

can be rewritten as follows:

P value = PZ

kT(w f)

f

(11)

Based on the above-mentioned theories, the procedures of 6-Sigma measurement steps are

set up as follows:

(1) Choose the appropriate probability distribution.

(2) Calculate the indexs estimate value Mindex = w according to the number of samplesk.

(3) Select f value and calculate P-value, and then compare with the determined significant

level (generally speaking, = 0.05 or 0.01).

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(4) Judge whether the service quality meets the demand; the method is as follows:

(a) If P-value , the service quality meets the standard.(b) If P-value , the service quality fails to meet the standard.

3 Analyze

After defining the problem and establishing the standard and method of measurement, the

study will follow Pyzdek (2001) mode, and take cause-and-effect diagram as the tool for

Step 3 Analyze. As described before, the increasing number of competitors in the market

results in higher service quality demanded by the customers. The most direct and effective

approach to upgrade companys service quality is by targeting at handling customer com-

plaints. Among all the factors that may give rise to customer complaint, the study attempts,

based on cause-and-effect diagram, to analyze four constructs: personnel, facilities, commu-nication and anticipated benefits respectively (Fig. 1):

Personnel: The personnel of a fitness club can be divided into the coach department, the busi-

ness department, and the marketing department. A coach with ample professional knowledge

on sports instruction and equipment usage, and with patience and friendliness can provide

the customers with correct, safe, and efficient/effective instructions, amiable service attitude,

promote customer satisfaction with sports courses and teaching skill, and eventually min-

imize customer complaints. The marketing and sales personnel should strictly observe the

occupational ethics of sincerity and honesty. Personnel who put personal achievement over

the overall benefits of the company by making irresponsible promises to the customer willcause future disputes. The counter personnel should pay attention to the service attitude to

heighten customer satisfaction and reduce the occurrence of customer complaints.

Communication Personnel

Customer and

counter personnel

Anticipatedbenefits Facilities

Professional

knowledge

Sport

facilities

Oral

consent Lounge

Customer and

coachManager and

employee

Serviceattitude

Occupational

ethics

Advertisement

Contract

Parking lot

Customercomplaint

Sanitary

equipments

Fig. 1 Cause and effect diagram of fitness club service quality

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Facilities: The facilities include sports facilities, parking lot, lounge, and sanitary equip-

ments. The quantity, diversification, comfort, and safety of sports facilities are essential to

how sports courses are carried out. To offer the customers a good sports environment, sports

facilities should at least contain aerobic dance classroom, yoga classroom, SPA pool, ball

game courts, and body-building area, and so forth. Parking lot design should consider thelocation, space, lightings, safe management, and the non-barrier space etc. The lounge is the

venue where customers may engage in social activitiesandrest, therefore, it must incorporate

the concepts of comfort, quietness, spaciousness, elegance, and good ambient/natural light,

and meanwhile, provides clean meals and beverages. As for the sanitary facilities, the key

points for consideration are the quantity, cleanness, air ventilation, and adequate supply of

washing/bathing articles.

Communication: As the frontline player of the team, counter personnel not only must have

an ample understanding of the fitness club, but also must have a good communication and

expression skill, as well as patience to avoid providing inferior service quality to the custom-ers. Coachs ability of communication and expression affects the teaching quality and the

customers safe use of the equipments. Poor communication skills will influence customer

satisfaction with teaching and the possible injury, resulting in grumble or filing complaint.

Company policy and goal is usually transmitted to the customers top down from manager,

through store manager to employees. Any misinformation during the transmission process

will cause misconception at the customer end and discrepancy in legal rights recognition

between the contractory parties, and eventually customer grumbles.

Anticipated benefits: A fitness club may make its promises in the form of written contract,

advertisement, or oral consent. The written contract should be produced in a reasonable andlegible format followed by an open and transparent explanation. A poorly structured contract

will easily lead both contractory parties to generate discrepancy in their acknowledgment

of the terms and conditions. Advertisement shall be based on facts, and contains no exag-

geration just for the purpose of wooing the customers. Company image will be tarnished if

any consequential lawsuit or disputes arising out of untrue advisement content. Oral promise

made by the marketing and sales personnel shall not exceed the scope authorized by the

company; otherwise, company liability, except customer complaints, will be involved once

any exaggeration or untruthfulness is exposed.

We have learned that the four major root causes for customer complaint are personnel,

facilities, anticipated benefits, and communication. With each department of a certain fitnessclub as cross-section, and by introducing Quality Function Deployment Diagram, the study

will now analyzes the correlation between each department (Table 1). Then, improvement

strategy and control methods will be set up on the basis of individual department.

4 Improve and control

Marketing Department:

Personnel:

To strengthen the personnels orientation training, to promote the personnels recognition of

the products; and to provide regular marketing workshops and marketing contests to eventu-

ally intensify the marketing personnels professional ability.

Communication:

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Table 1 Correlation coefficient matrix analysis

Sector Body-Building Dept. Dept. of General Affairs Marketing Dept.

Cause and effect

Personnel Facilities Communication

Anticipated benefits

refers to direct relevance; refers to indirect relevance

Customers cognition of the products is usually affected by the marketing and sales per-

sonnel. Besides enhancing the marketing and sales personnels cognition on the rights and

obligations of the customers and the fitness club, the marketing and sales personnels inter-

personal management and self-management, conversational skill, and the repartee should bereinforced. If necessary, product presentationmayalso be held to allowdirect communication

between customers and the executives.

Anticipated benefits:

To enhance the marketing and sales personnels cognition on the rights and obligations of the

customers and the fitness club, avoid exaggerated and untruthful advertisement, and impose

penalties in accordance with the companys rewards and penalties system on personnel mak-

ing oral promise(s) to the customers beyond companys authorization to lower the number

of customer complaints.

Department of General Affairs:Personnel:

To familiarize the personnel with the check in and check out operations, phone answering

skill, environment introduction, handling of customer complaints and reservation process to

ensure a stabile service quality.

Communication:

To strengthen the counter personnels emotion management and training of deportment, and

maintain a cheerful and friendly attitude; furthermore, the counter personnel should memo-

rize the name and title of club members, extend amiable greetings, and pay attention to the

attitude when answering the phone to offer the customers a sense of respect.Body-Building Department:

Personnel:

The club coach should be selected from those with related educational background, profes-

sional certificate, and of good conduct; regular participation in the related on-the-job training

andtimelyrenewal of professional certificateare also requirements to elevate theprofessional

capability.

Facilities:

The club should conduct regular check and maintenance on all sports facilities, post instruc-

tion and danger signs, and purchase of new sports equipment should be made to maintaincustomers safety and rights and interests.

Communication:

Before conducting a class, the coach should introduce himself/herself to the customers,

explain the course content, the teaching method/style, and the desired achievements, and

understand customers basic data and health conditions.

Anticipated benefits:

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Coach should preside the course on time, follow the announced time schedule, no switch of

course or absent without cause should be allowed; and shall conduct the course in accordance

with the announced course content.

According to the above-mentioned improvement method and strategy, the study defines

the problem, establishes the standard and method of measurement, and then uses the mea-surement method proposed in step 2 to insure that the outcome of improvement conforms

to the required criteria. If they have tallied with the demands, it can be used as standard

to control and monitor. If they do not accord with the requirements, we can enter step 3 to

continue analyze the causes of customer complaints, and keep discovering more advanced

improvement method and strategy until the demands are met.

5 Conclusion

In a market situation where new entrant of competitors are increasing and the service qualitycustomers demand is getting higher, the fitness industry is facing a tough challenge of how to

reduce customer complaints and boost customer satisfaction in a timelyandeffective manner.

The study applies the five steps of 6-Sigma as the improvement method. step 1, Define, that

is, to reduce the number of customer complaints; step2, to define the measurement index with

the construction error number, and establish the standard and method of measurement. By

following Pyzdek(2001) mode and taking cause-and-effect diagram as the tool of analysis

at step 3, to analyze the causes that produce customer complaints. Then, based on the causes

analyzed by cause-and-effect diagram, and by means of the concept of Quality Function

Deployment diagram to assign responsibility to each department, and organize the improve-

ment team to accomplish the improvement target at step 4. At step 5, to use the measurementmethod put forward in step 2 to insure the improvement method and strategy proposed in

step 4 meet the demands. If they have conformed to the requirements, they can be taken

as the standards to control and monitor. Finally, by adopting this method, the researchers

hope fitness club proprietors can decrease the number of customer complaints efficiently and

promote the service quality to achieve sustainable management.

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A Study on the application of 6-Sigma on the enhancement of service quality of fitness club