SERVICE QUALITY DIMENSIONS

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SERVICE QUALITY DIMENSIONS:ANTECEDENTS OF CONSUMER SWITCHING COSTS IN CUSTOMER RELATIONSHIPS

Juan (Gloria) Meng, Minnesota State University, Mankato, Minnesota, USAKevin M. Elliott, Minnesota State University, Mankato, Minnesota, USA

ABSTRACT

Recent research has increasingly examined customer switching costs in regards to antecedents andrelational outcomes. This study extends current research by testing a framework for understanding theunderlying relationships between perceived service quality dimensions and perceived switching costs.The findings of this study suggest that there is a significant and positive relationship between servicequality dimensions and switching costs. Implications are also provided that should be beneficial to servicefirms.

Keywords: Service Quality, Switching Costs, Customer Relationships, SERVQUAL.

1. INTRODUCTION

Service quality has been associated with positive customer relational outcomes such as increasedcustomer retention, market shares, and profitability (Ib n ez, Hartman, and Calvo, 2006;Sureshchandar, Rajendran, and Anantharaman, 2002). This study extends the research related to servicequality by examining the influence specific service quality dimensions have on the perceived costscustomers associate with switching service providers. The marketing literature is currently void of suchexamination. Specifically, the purpose of this study is to assess the structural relationship betweenservice quality dimensions and the various types of switching costs.

2. LITERATURE REVIEW

2.1 Service QualityService quality can be defined as the conformance to customer requirements in the delivery of a service(Chakrabarty, Whitten, and Green, 2007). Service quality is important to service firms because it hasbeen shown to increase profit levels, reduce costs, and increase market shares (Parasuraman, Zeithaml,and Berry, 1985). Moreover, service quality has been shown to influence purchase intentions (Sullivanand Walstrom, 2001), and is used by some firms to strategically position themselves in the marketplace(Brown and Swartz, 1989).

Service quality is an abstract and elusive construct, and in the absence of objective measures,consumers perception of service quality is commonly assessed. Among the measurement instrumentsused to assess service quality, SERVQUAL (Parasuraman and Zeithaml, 1988), SERVPERF (Cronin andTaylor, 1992), and RSQS (Dabholkar, Thorpe, and Rentz, 1996) have been the most prominent and mostwidely used instruments. Parasuraman et al., (1988) introduced SERVQUAL, a 22-item instrument thatassesses five dimensions of service quality. The five dimensions are: 1) Tangibles - physical facilities,equipment, and appearance of personnel, 2) Reliability - ability to perform the promised servicedependably and accurately, 3) Responsiveness - willingness to help customers and provide prompt

service, 4) Assurance - knowledge and courtesy of employees, and their ability to inspire trust andconfidence, and 5) Empathy - caring, individualized attention the firm provides its customers.

The SERVQUAL instrument has demonstrated both excellent validity and reliability (Babakus and Boller,1992; Bolton and Drew, 1991; Cronin and Taylor, 1992) and applied to different industries, such asprofessional services (Freeman and Dart 1993), health care (Lam 1997), tourism (Tribe and Snaith 1998),business school (Pariseau and McDaniel 1997), and information systems (Kettinger and Lee 1994).

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SERVPERF was proposed as a variant of the SERVQUAL measurement scale. SERVPERF uses thesame 22 items that comprise the SERVQUAL scale; however, while SERVQUAL focuses on the gapbetween expectation and perception, SERVPERF takes a performance-only approach. SERVQUAL hasbeen shown to have superior diagnostic power, with SERVPERF demonstrating more convergent anddiscriminate validity and explaining more variance (Jain and Gupta 2004).

Dabholkar et al. (1996) developed RSQS, a multi-item scale measuring five dimensions of retail servicequality. The scale is comprised of 28 items, 17 of which come from the SERVQUAL scale. The RSQSscale has been applied to numerous studies of retail management, and exhibited strong validity andreliability scores as a measure of retail service quality.

2.2 Customer Switching CostsSwitching costs are commonly defined as the sacrifices or penalties consumers feel they may incur inmoving from one provider to another (Jones et al., 2007). While switching costs are associated withchanging providers, they are not always incurred immediately upon switching. Current research hassuggested that switching costs are multidimensional. Switching costs can include search costs,transaction costs, emotional costs, cognitive effort, as well as social and psychological risk on the part ofthe buyer.

Burnham et al. (2003) developed a switching cost typology that identified three types of switching costs:

1) procedural switching costs the time and effort associated with changing to a new provider, 2)financial switching costs the loss of financially quantifiable resources, and 3) relational switching costs emotional discomfort due to the loss of identity and the breaking of bonds.

Jones et al. (2007) recently identified three dimensions of switching costs that are similar to those ofBurnham et al. (2003). Social switching costs are costs associated with the potential loss of personalrelationships that customer develop with a firm and its employees. Lost benefits costs are the potentialloss of special discounts and unique benefits if the consumer switched from one provider to another.Procedural switching costs relate to the time, effort, and hassle the consumer anticipates would beinvolved in switching providers.

2.3 Negative vs. Positive Switching CostsJones et al. (2007) also argue that it is important to classify switching costs based on the underlying

nature of constraint involved. Negative switching costs are costs derived primarily from negative sourcesof constraint (e.g., the time and hassle of finding anew provider). Positive switching costs, on the otherhand, are costs derived primarily from positive sources of constraint (e.g., the loss of personal bond or theloss of special discounts). Procedural switching costs are types of negative switching costs, while lostbenefit switching costs and social switching costs are examples of positive switching costs. The key to thedistinction between negative and positive switching costs is whether or not the switching cost derivesprimarily from benefits and value the customer will have to give up.

Jones, Mothersbaugh, and Beatty (2002) found that lost benefits and social switching costs are theprimary value drivers in service relationships. Therefore, lost benefits and social switching costs are likelyto be associated with positive value enhancement (Reynolds and Beatty, 1999). Conversely, proceduralswitching costs are likely to be viewed as binding elements, causing customers to feel like hostages in therelationship (Sharma and Patterson, 2000). This distinction between negative and positive switching costs

is important to understand the different mechanisms through which different types of switching costsinfluence relational outcomes such as retention and customer satisfaction.

3. PROPOSED RELATIONSHIP BETWEEN SERVICE QUALITY AND SWITCHING COSTS

Research has not reported a direct link between service quality and switching costs; however, servicequality has been shown to have a positive impact on a consumers intention to remain with a serviceprovider, as opposed to switching to another (Zeithaml, Berry, and Parasuraman, 1996). Some studieseven suggest that the creation of switching costs can be used to complement customer retentionstrategies, as switching costs help businesses to overcome fluctuations in service quality (Jones,



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Mothersbaugh, and Beatty, 2000). Therefore, organizations may be able to get away with poor servicequality at times as customers perceive high costs of changing to another service provider.

The overall framework for the hypothesized relationships is presented in Figure 1. All five service qualitydimensions are hypothesized to have a direct and positive influence on all three types of switching costs(social, lost benefits, and procedural).

Figure 1Proposed Theoretical Model

4. METHODOLOGY

4.1 Data CollectionData for this study were collected by junior/senior undergraduate business students from a Midwestuniversity who were enrolled in a Marketing Research and Analysis course. Each student was trained toserve as data collectors. A convenience sampling technique was used. Noting that consumers oftenleave relationships where they had a negative experience, thus leading to bias samples in a generalsample of consumers asked about a relationship with a specific type of firm (Jones et al., 2002),respondents were broken into two groups. Roughly half of the respondents were asked to complete thequestionnaire with regards to a service provider they have done business with for quite awhile and feelpositive about. The other half of respondents were asked to complete the questionnaire about a serviceprovider they have done business with for quite awhile and feel negative about.

A total of 525 usable questionnaires were collected, with 264 respondents having a positive experiencewith a service provider and 261 respondents having a negative experience. Male respondents made up51% of the sample, with 49% being female. The ages of respondents ranged from teenagers to seniorcitizens, with the most common age groups consisting of 21-25 year olds (45% of respondents) and over50 (13% of respondents). The vast majority of respondents were Caucasians (94%).

4.2 Measurement of ConstructsThe survey instrument used was comprised of 35 items. All scales were sourced from existing literature.Twenty-two items were used to evaluate the level of perceived service quality (Parasuraman, Zeithaml,

Tangible

Reliability

Responsiveness

Assurance

Empathy

Procedural

Benefit ofSta in

Social

Relational



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and Berry, 1988). Three items each were used to assess social switching cost, lost benefits switchingcosts, and procedural switching costs, for a total of nine items (Jones et al., 2007). The final four itemsincluded demographic characteristics of respondents: gender, age, marital status and occupation. Allconstructs were measured using a 5-point Likert-type scale, with 1 indicating strongly disagree and 5indicating strongly agree. (See Appendix)

4.3 Statistical AnalysisThe theoretical model proposed in this study was applied to both positive and negative experiencesample data, and was tested utilizing LISREL 8.72. The measurement and structural models wereestimated simultaneously using summed indicators for the constructs. Three types of information wereconsidered in assessing model fit: 1) chi-square, 2) measurement error - RMSEA (root-mean-square errorof approximation) and RMR (root mean-square residual), and 3) fit indices - CFI (Comparative Fit Index),IFI (Incremental Fit Index), and NNFI (Non-Normed Fit Index).

5. RESULTS

Given the limited number of items in the measurement model, both the measurement model and thestructural model were tested simultaneously for overall fit. The fit indices indicated an acceptable fit forthe pooled sample. More specifically, although chi-square statistic was significant (

2=1002.70, df = 409,

p < .00), fit indices indicated an acceptable fit (RMSEA = .055; RMR = .049; CFI = .98; IFI =.98; NNFI =

.98; NFI = .97). In addition, reliabilities (Cronbachs alpha) for all measurement scales ranged from .72 to

.93, indicating satisfactory levels of reliability.

Path analysis was conducted by freeing up the paths between the five dimensions of service quality andthe three types of switching costs. The results are shown in Figure 2. Five out of 15 paths between thefive service quality dimensions and the three switching costs were significant.

Figure 2Significant Paths between SERVQUAL Dimensions and Switching Costs

Tangible

Reliability

Responsiveness

Assurance

Empathy

Procedural

Benefit of

Sta in

SocialRelational.45

.46

.50

.39

.48



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The reliability dimension of service quality had significant influence on both social switching cost ( = .45,p < .01) and lost benefits switching costs ( = .50, p < .01). In addition, the responsiveness dimension ofservice quality significantly impacted social switching costs ( = .39, p < .01) and procedural costs ( =.46, p < .01). Finally, the service quality dimension of empathy positively impacts social switching costs (= .48, p < .01).

6. DISCUSSION

The current study proposes and tests a framework for understanding the underlying relationshipsbetween perceived service quality dimensions and the potential costs of consumers switching from oneservice provider to another. This study extends existing research related to service quality and switchingcosts by examining the influence service quality dimensions have on the various types of switching costs.This goes beyond recent research that has examined the multidimensionality of switching costs (Burnhamet al., 2003; Jones et al., 2007) by assessing the relationships of service quality dimensions asantecedents of the various types of switching costs.

The findings of this study show that three out of five service quality dimensions influence perceivedswitching costs. Reliability had a significant impact on two types of switching costs - social and benefit ofstaying. In addition, the service quality dimension of responsiveness appears to impact social andprocedural costs. Finally, empathy has a direct influence on social switching costs. Interestingly, the

magnitudes of the path coefficients for all relationship are relatively similar.

The results of this study have clear implications for service firms. First, enhancing service quality may bea way to also increase the perceived cost to customers of switching to another service firm. Sinceperceived switching costs have been recognized as a way to keep customers in relationships (Bansal, etal., 2004; Jones et al., 2007), service firms should carefully consider the use of service quality to increasein the minds of their customers the potential costs associated with changing service firms.

Although service quality in general has significant influence on different types of switching costs,managers should realize that different dimensions of service quality play different roles on consumersperceptions of switching costs. For example, making service quality more reliable will enhanceconsumers perceived benefits of staying, as well as their psychological attachment to the serviceprovider, thus makes them feel hard to leave. In addition, responsive service providers may also lead to

high levels of perceived social and procedural costs. Consumers may not want to take the risk ofswitching to other service if they believe that they may not get the same degree of responsive service. Inaddition, empathy definitely helps keep customers, as consumers perceive the relationship with currentservice provider is valuable, and they will perceive a huge cost if losing it.

7. CONCLUSIONS

Up to this point,research has not reported a direct link between service quality dimensions and switchingcosts. However, it does appear that enhancing specific service quality dimensions seemingly willincrease the perceived costs to consumers of switching from one service firm to another. Consumersmay not want to take the risk of switching to other service providers if they believe that they may not getthe same degree of service quality. Managers should realize that different dimensions of service qualitydo not impact all switching costs the same. In fact, not all dimensions of service quality have an impact on

switching costs. The service quality dimensions of tangibility and assurance do not significantly influenceswitching costs. What is important for service providers is know what dimensions of service quality tendto influence perceived switching costs, and to enhance those service dimensions.

8. LIMITATIONS AND FUTURE RESEARCH

One limitation of this study relates to the sampling method. A convenience sample of consumers wasused; therefore, generalizing the findings to the general consuming public should be done with care. Asecond limitation relates to the scope of this study. This study examined only three types of switchingcosts. There are a number of other types of switching costs that research should investigate as they



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relate to service quality and customer satisfaction. Finally, we assessed the relationship between servicequality, switching costs, and customer satisfaction at a single point in time. This relationship may changeover time.

Additional research might examine the influence service quality dimensions have on switching costsacross different types of service providers such as banks, hotels, restaurants, and phone companies. Alongitudinal study might also provide insight into how different types of switching costs change over timefor the same service provider. Finally, additional research is needed on the relationship between servicequality dimensions and switching costs across cultural boundaries. Do the relationships between theseconstructs change depending on cultural values and norms, or are they universal in nature?

REFERENCES:

Bansal, H.S., Irving, P.G. and Taylor, S.F. (2004) A three-component model of customer commitment toservice providers. Journal of the Academy of Marketing Science, Vol. 32 (3), 234-250.

Bolton, R.N. and Drew, J.H. (1991). A longitudinal analysis of the impact of service changes on customerattitudes. Journal of Marketing, Vol. 55 (1), 1-9.

Brown, S.W. and Swartz, T.A. (1989). A gap analysis of professional service quality. Journal ofMarketing, Vol. 53 (2), 92-98.

Burnham, T.A., Freis, J.K. and Mahajan, V. (2003). Consumer switching costs: A typology, antecedents,and consequences. Journal of the Academy of Marketing Science, Vol. 31 (2), 109-126.

Chakrabarty, S., Whitten, D. and Green, K. (2007). Understanding service quality and relationship qualityin IS outsourcing: Client orientation & promotion, project management effectiveness, and the task-technology-structure fit. Journal of Computer Information Systems, (Winter 2007-2008), 1-15.

Cronin Jr., J.J. and Taylor, S.A., (1992). Measuring service quality: A reexamination and extension.Journal of Marketing. Vol. 56 (3), 55-68.

Dabholkar, P.A., Thorpe, D.I. and Rentz, J.O. (1996). A measure of service quality for retail stores:

Scale development and validation. Journal of the Academy of Marketing Science, Vol. 24 (1), 3-16.

Freeman, K.D. and Dart, K. (1993). Measuring the perceived quality of professional business services.Journal of Professional Services Marketing, Vol. 9 (1), 27-47.

Ib n ez, V.A., Hartman, P. and Calvo, P.Z. (2006). Antecedents of customer loyalty in residentialenergy markets: service quality, satisfaction, trust and switching costs The Services IndustriesJournal, Vol. 26 (6), 633-650.

Jain, S.K. and Gupta, G. (2004). Measuring service quality: SERVQUAL vs. SERVPERF scales.VIKALPA, Vol. 29 (2), 25-35.

Jones, M.A., Mothersbaugh, D.L. and Beatty, S.E. (2000). Switching barriers and repurchase intentions

in services. Journal of Retailing, Vol. 76 (2), 259-274.

Jones, M.A., Mothersbaugh, D.L. and Beatty, S.E. (2002). Why customers stay: Measuring theunderlying dimensions of services switching costs and managing their differential outcomes. Journalof Business Research, Vol. 55 (6), 441-450.

Jones, M.A., Reynolds, K.E., Mothersbaugh, D.L. and Beatty, S.E. (2007) The positive and negativeeffects of switching costs on relational outcomes. Journal of Service Research, Vol. 9 (4), 335-355.



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Kettinger, W.J. and Lee, C.C. (1994). Perceived service quality and user satisfaction with the informationservices function. Decision Sciences, Vol. 25 (5, 6), 737-766.

Lam, S.K. (1997). SERVQUAL: A tool for measuring patients opinions of hospital service quality inHong Kong. Total Quality Management, Vol. 8 (4), 145-152.

Parasuraman, A., Zeithaml, V.A. and Berry, L.L. (1985). A conceptual model of service quality and itsimplications for future research. Journal of Marketing, Vol. 49 (4), 41-50.

Parasuraman, A., Zeithaml, V.A. and Berry, L.L. (1988). SERVQUAL: A multiple-item scale formeasuring consumer perceptions of service quality. Journal of Retailing, Vol. 64 (1), 12-40.

Pariseau, S.E. and McDaniel.J.R. (1997). Assessing service quality in schools of business. InternationalJournal of Quality and Reliability Management, Vol. 14 (3), 204-218.

Reynolds, K.E. and Beatty, S.E. (1999). Customer benefits and company consequences of a retail-customer relationship. Journal of Retailing, Vol. 75 (1), 11-32.

Sharma, N. and Patterson, P.G. (2000). Switching costs, alternative attractiveness and experiences asmoderators of relationship commitment in professional, consumer services. International Journal of

Service Industry Management, Vol. 11 (5), 470-490.

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APPENDIXMeasurement Items

Service Quality - (SERVQUAL Parasuraman, Zeithaml, and Berry, 1988)1. This company has up-to-date equipment2. This companys physical facilities are visually appealing.3. This companys employees are well dressed and appear neat.4. The appearance of physical facilities is in keeping with the type of services provided.5. When this company promises to do something by a certain time, it does so.6. When I have problems, this company is sympathetic and reassuring.7. This company is dependable.8. This company provides its services at the times it promises to do so.9. This company keeps its records accurately.

10. This company does not tell customers exactly when services will be performed.11. I do not receive prompt service from this company's employees.12. Employees of this company are not always willing to help customers.13. Employees of this company are too busy to respond to customer requests promptly.14. I can trust the employees of this company.15. I feel safe in my transactions with this company's employees.16. Employees of this company are polite.

17. Employees get adequate support from this company to do their jobs well.18. This company does not give me individual attention.19. Employees of this company do not give me personal attention.20. Employees of this company do not know what my needs are.21. This company does not have my best interests at heart.22. This company does not have operating hours convenient to all their customers.

Social Switching Costs - (Jones, Reynolds, Mothersbaugh, and Beatty, 2007)1. If I switched to using a different company, I might lose the friendships I have

developed with this company.2. If I switched to using a different company, I might lose an important personal

relationship with this company.3. If I switched to using a different company, it might be very uncomfortable to tell

the employees of this company that I am leaving.

Lost Benefits Switching Costs (Jones, et al., 2007)1. Staying with this company allows me to get discounts and special deals.2. Staying with this company saves me money.3. Staying with this company allows me to get extra service benefits.4.

Procedural Switching Costs (Jones, et al., 2007)1. If I switched to using a different company, I might have to learn new routines and ways of doing

things.2. If I switched to using a different company, it might be a real hassle.3. If I switched to using a different company, I might have to spend a lot of time finding a new one.



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SERVICE QUALITY DIMENSIONS