Services marketing service quality

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Service Quality

Services Marketing

Tom Chapmanwww.marketing101.co.ukTwitter @idlehans

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Introduction

Defining Service Quality

Evaluating Quality

Technical & Functional Quality

Researching Service Quality

The SERVQUAL instrument

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What do you think?

Define Quality

Why is Quality important?

How do you evaluate it?

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Defining Quality

quality is an ambiguous term

“although we cannot define quality, we know what quality is” (Pirsig, 1987)

“quality is fitness for use, the extent to which the product successfully serves the purpose of the user during usage” (Juran, 1974)

“quality is zero defects - doing it right the first time”, Parasuraman, Zeithaml and Berry, 1985)

“quality is exceeding what customers expect from the service”, Zeithaml, Parasuraman and Berry, 1990)

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Service Quality - early writings

‘service quality results from a comparison of what customers feel a service provider should offer (i.e. their expectations) with the provider’s actual performance’ (Parasuraman, 1996: 145)

‘Service quality is a measure of how well the service level delivered matches customer expectations. Delivering quality service means conforming to customer expectations on a consistent basis’

Lewis and Booms (1983)

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Why is Quality Important?

Superior product/service quality relative to competitors is the single most important factor affecting profitability (PIMS study)

Premium pricesCustomer preferenceCustomer retentionMarket expansion/market shareOther benefits:

productivity, advertising, distribution/access

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Changing management focus

1970’s

1980’s

1990’s

Productivity

Quality

2000+Creating better valuefor customers andthe organisation

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Service Quality - shifting focus

in the past, industry focused particularly on defining and meeting internal quality or technical standards

today the focus has shifted to quantifying customers’ assessments of services and products (external measurement) and then translating these into specific internal standards

delivering quality service is fundamental to corporate success because research shows it is closely linked to profits

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Service Quality – a major business concern Quality is an elusive concept not easily articulated by

consumers

can lead to better market share, profitability, lower costs and improve productivity

performances, not objects, which may vary with quality evaluations not made solely on service outcome but also on service process

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Service Quality – profits/costs

increased profits found to be due particularly to: fewer customer defections stronger customer loyalty more cross-selling of products and services higher margins (due to service enhancements of

core products)

improved service quality cuts costs fewer customers to replace less corrective work to do fewer inquiries and complaints to handle lower staff turnover and dissatisfaction

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Enhancing service value

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What is Quality?

Conformance quality producing the product/service according to

specification every time, with no correction required

Quality-in-use customer judgements about quality received and

resultant level of customer satisfaction

Technological quality superior performance features of product/service

derived from advanced new technologies

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Service Quality

Total quality

Image (corporate/local)

Technical quality of the

outcome: WHAT

offered/received

Functional quality of the process: HOW

Relational quality: by

WHOM is the service

delivered

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Evaluating Quality

access (physical approachability of service location, ease of finding way around the service environment and route clarity)

aesthetics (extent to which service package components are agreeable or pleasing to the customer, including appearance and ambience of the service environment, appearance and presentation of service facilities, goods and staff)

attentiveness/helpfulness (extent to which service, especially contact staff help the customer, interested in them and show a willingness to serve)

availability (of service facilities, staff and goods available to the customer)

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Evaluating Quality

care (concern, consideration, sympathy and patience shown to customer, including putting at ease and feeling emotionally comfortable)

cleanliness/tidiness (of the tangible components of the service package)

comfort (physical comfort of the service environment and facilities)

commitment (staff’s apparent commitment to their work, including pride and satisfaction, diligence and thoroughness)

communication (ability of service provider to communicate in a way the customer will understand; ability of staff to listen and understand the customer)

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Evaluating Quality

competence (skill, expertise, professionalism with which service is executed; correct procedures, execution of customer instructions, product knowledge displayed by staff, giving sound advice)

courtesy (politeness, respect, propriety shown by the service - usually staff)

flexibility (willingness and ability to amend/alter the service to meet customer needs)

friendliness (warmth and personal approachability of service providers, especially contact staff)

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Evaluating Quality

functionality (fitness for purpose)

integrity (honesty, justice, fairness, trust in treating customers)

reliability (and consistency of performance of service facilities, goods and staff; keeping agreements)

responsiveness (speed and timeliness of service delivery, responding promptly to customer requests, minimal waiting/queuing time)

security (personal safety of customers and possessions while participating in the service process)

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Zeithaml, Parasuraman and Berry

Ten dimensions

tangibles

reliability

responsiveness

competencecourtesycredibilitysecurity

accesscommunication

understanding the customer

Five dimensions

tangibles

reliability*

responsiveness*

assurance

empathy

Zeithaml, Parasuraman and Berry

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Expectations

little known about what determines expectations and how formed

Individualistic own norms, values, wishes, needs

changing over time changes in aspiration changes in need

do customers know what is expected of them?

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Expectations

expectations can be formulated in terms of “what should be done” and “what will be done”

four different performance standards distinguished: deserved or equitable performance ideal or desirable performance expected performance minimal tolerable performance

the difference between the desired service level and adequate service level is the …………

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Perceptions

“perception is defined as the process by which an individual selects, organizes and interprets stimuli into a meaningful and coherent picture of the world” (Schiffman and Kanuk, 1987)

subjective and selectiveresulting attitudes about a particular

service provider may change over time (long-term attitudes may be more stable than immediate attitudes)

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Satisfiers and Dissatisfiers

critical incidents courtesy Behaviour understanding Responsiveness communication

negative experiences competence reliability

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Satisfiers and Dissatisfiers

greater perceived control by the customer may decrease the sources of customer dissatisfaction

consumers check whether their expectations are in line with actual experiences of the service and service delivery

looking for gaps between expectations and perceptions is important in detecting what needs to be improved

satisfaction emerges when actual service meets expectations or when it exceeds expectations (positive disconfirmation)

dissatisfaction occurs when actual service is below expected level (negative disconfirmation)

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Customer Perceptions of Quality Critical incidents

events throughout service delivery impact on perceived quality

Evaluation customers check whether their expectations are in line with actual

experiences of the service

Satisfaction actual service meets or exceeds expectations (positive disconfirmation)

Dissatisfaction actual service is below expected level (negative disconfirmation)

Gap analysis looking for gaps between expectations and perceptions is important in

guiding quality improvement

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Dimensions of Service Quality

Reliability ability to perform the promised service

dependably and accurately – delivering what is promised

Responsiveness willingness to help customers and provide

prompt service adapting the service to customer needs

Assurance employees knowledge and courtesy ability to inspire trust and confidence

(Parasuraman, Zeithaml & Berry, 1988)

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Dimensions of Service Quality

Empathy caring, individualised attention customers are unique and special customers are understood and valued

Tangibles appearance of physical facilities, equipment,

personnel and communication materials continuity perceived quality


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Gaps Model of Service Quality


Customer

Company

Gap 1

Gap 2

Gap 3Gap 4

Customer Gap

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Gap 1 – Not knowing what customers expect

Inadequate market research

Poor market segmentation

Lack of upward communication (contact employees to managers)

Insufficient customer relationship focus

Inadequate service recovery

Service Quality Gaps

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Gap 2 – incorrect service design & standards

Inability to translate customer expectations into clear quality specifications

Lack of management commitment to service quality

Customer expectations thought to be unreasonable or unfeasible

Absence of a formal quality programme (guidelines, standards)

Poor service design


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Gap 3 – Not delivering to service standards

Employees unwilling or unable to perform the service at the desired level

Poor internal organisation ineffective recruitment, inadequate teamwork, employees not motivated, role

conflict, role ambiguity, poor supervision

Poor employee-technology job fit (appropriate tools to perform roles)

Failure to match supply and demand

Customers unaware of roles and responsibilities

Problems with service intermediaries


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Gap 4 – Promises do not match performance

Over-promising in advertising, personal selling or physical evidence cues

Management wants to show services offered in best possible light

Poorly-integrated marketing communications

Insufficient communication between marketing/sales & operations

Ineffective management of customer expectations


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Service Quality - attributes

in 1988 PZB operationalised the construct (of perceptions and expectations differences) as the difference measured between two 7 point rating scales - one scale measuring customers’ expectations about

service companies in general within the service sector/category being investigated

the other scale measuring customers’ perceptions about a particular company whose service quality is being assessed

PZB measured the extent to which customers felt companies should possess a specified service attribute and the extent to which customers felt a given company did possess the attribute

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Service Quality - expectations and perceptions statements attributes were put as statements, with which

customers were asked to express the degree of agreement/disagreement on a 7 point scale

expectations statements: e.g. the physical facilities at hotels should be visually

appealing the behaviour of hotel employees should instil

confidence in customers hotels should give customers individual attention

corresponding perceptions statements: the physical facilities at ABC Hotel are visually

appealing the behaviour of ABC Hotel employees instils

confidence in customers ABC Hotel gives customers individual attention

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SERVQUAL construction

PZB thus developed a comprehensive set of statements to represent facets of the 10 service quality dimensions

this yielded 97 statements (approx. 10 per dimension)

a two part instrument developed - part 1 consisted of 97 expectations statements, part 2 - 97 perceptions statements

roughly half the statements were worded negatively

instrument piloted on a sample of 200 customers resulting in a reduced 34 item instrument with 7 rather than 10 dimensions (PZB 1988)

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SERVQUAL five dimensions

reliability and validity of the reduced instrument was assessed further - data collected of 4 US service companies, samples of 200 customers of each - this produced consistent results

further elimination of items created a 22 item instrument, grouping the 22 items into just 5 general dimensions

3 of the original 10 dimensions remained intact in the final 5 dimensions (tangibles, reliability and responsiveness) plus the remaining 7 original dimensions clustered into 2 broader dimensions: (1) assurance (knowledge and courtesy of employees

and their ability to inspire trust and confidence) basically a combination of the original dimensions of competence, courtesy, credibility and security

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Service Quality - SERVQUAL refinements

(2) empathy (caring, individualised attention the firm provides its customers) represents access, communication and understanding the customers

“SERVQUAL is most valuable when it is used periodically to track service quality trends, and when it is used in conjunction with other forms of service quality measurement” (PZB, 1988:31)

In 1991 PBZ further refined SERVQUAL:

three types of services and 5 companies

data collected through mail surveys of independent samples of customers of each company, giving combined sample size of 1,936

the distribution of expectations ratings obtained was highly skewed toward the upper end of the 7 point scale

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SERVQUAL refinements

the statements were revised to capture what customers will expect from companies delivering excellent service e.g. original expectations statement was “hotels should give customers individual attention” was revised to read “excellent hotels will give customers individual attention”

the negatively worded statements in the original SERVQUAL instrument were problematic - they were awkward, could have confused respondents and may have lowered the reliabilities for dimensions containing them - so they were changed to a positive format

finally, 2 original items (one under tangibles and assurance) were replaced with 2 new items, to capture more fully the dimensions

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SERVQUAL usage

despite refinements, reliability always emerges as the most critical dimension and tangibles the least critical

SERVQUAL can be used:

to determine the average gap score (between customers’ perceptions and expectations) for each service attribute

to assess a company’s SQ along each of the 5 SERVQUAL dimensions

to compute a company’s overall weighted SERVQUAL score which takes account of the SQ gap on each dimension and the relative importance of the dimension

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SERVQUAL usage

used to track customers’ expectations and perceptions on individual service attributes and SERVQUAL dimensions over time

to compare a company’s SERVQUAL scores against those of competitors

to identify and examine customer segments that significantly differ in their assessments of a company’s service performance

to assess internal service quality - i.e. quality of service provided by one dept/division to others within the company

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SERVQUAL concerns

questions raised about SERVQUAL’s expectations components (Babakus & Mangold, 1992, Cronin & Taylor, 1992)

the interpretation and operationalisation of expectations (Teas, 1993)

the reliability and validity of SERVQUAL’s difference score formulation (Babakus & Mangold, 1992, Brown, Churchill & Peter, 1993)

SERVQUAL’s dimensionality (Carmen, 1990, Finn ( Lamb, 1991)

but counter-arguments by PBZ 1991, 1993, and 1994, and Parasuraman, 1996

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SERVQUAL concerns is it necessary to measure expectations? - studies

show scores on the perceptions-only component of SERVQUAL explain significantly more variance in customers’ overall evaluations of a co’s SQ (measured on a single item overall perceptions rating scale) than are perception-expectation difference scores. PZB argue that measuring expectations has diagnostic value (i.e. pinpoints SQ shortfalls)

how should the expectations construct be operationalised? multiple ways the term “expectations” can be interpreted - SQ researchers have generally viewed expectations as normative standards (customer beliefs about what a service provider should offer) but customer satisfaction/dissatisfaction researchers have typically considered expectations to be predictive standards (what customers feel a service provider will offer)

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SERVQUAL operationalisation but both “should” and “will” expectations have been

used in measuring SQ although ZBP in 1993 went on to develop a conceptual model of expectations

can we operationalise SQ as a difference score?

operationalising any construct as a difference between 2 other constructs is questioned on psychometric grounds; critics suggest that direct measures (i.e. non-difference scores) of the expectations-perceptions gap may be psychometrically superior - but this issue is not resolved

does SERVQUAL have 5 distinct dimensions that cross different contexts? replication studies have not been able to reproduce a clean 5 dimensional factor structure as the original PZB 1988 study - differences may be due to data collection and analysis procedures

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further SERVQUAL criticisms(see Buttle 1996) SERVQUAL is based on a disconfirmation paradigm rather

than an attitudinal paradigm

little evidence that customers assess SQ in terms of P-E gaps

process orientation rather than service encounter outcomes

SERVQUAL’s five dimensions are universals with high intercorrelation between 5 RATER dimensions (reliability, assurance, tangibles, empathy and responsiveness)

don’t consumers use standards other than expectations to evaluate SQ? and yet it fails to measure absolute SQ expectations

4 or 5 items cannot capture the variability within each SQ dimension

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Further considerations customer assessments of SQ may vary from “moment of

truth” to “moment of truth”

using a 7 point Likert scale is flawed

reversing polarity of items in the scale causes respondent error

Cronin & Taylor (1992, 1994) say SERVQUAL is flawed, with perceived quality is best thought of as an attitude

PZB describe satisfaction as more situation or encounter specific and quality as more holistic, being developed over a longer time period

argued that PZB are inductive, and take no account of the literature in economics, psychology and statistics

arguments about the marginal revenue of SQ improvements always exceeding the marginal cost

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Dynamics interdependencies among the dimensions of quality are

difficult to describe

also is the customer value of improvements a linear or non-linear function?

SERVQUAL fails to capture the dynamics of changing expectations (customers learn from experiences) indeed, Gronroos (1993) says we need to know more about how expectations are formed and change over time

from the customer’s viewpoint, failure to meet expectations often is more significant than success in meeting or exceeding expectations

while process of service delivery focused, it’s argued that outcome quality is already contained within reliability, competence and security

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Service Quality - other models

Richard & Allaway (1993) tested an augmented SERVQUAL model which incorporates both process and outcome components - they concluded that process and outcome is a better predictor of consumer choice than process or outcome alone

the number of SQ dimensions may be dependent on the particular service being offered (Babakus & Boller, 1992)

Teas (1993b) believes respondents may be using one of six interpretations of expectations: service attribute importance (customers may respond

by rating the expectations statements according to the importance of each attribute)

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Performance specification forecasted performance (customers may

respond by using the scale to predict the performance they would expect)

ideal performance (the optimal performance, what performance “can be”)

deserved performance (the performance level customers feel performance should be)

equitable performance (the level of performance customers feel they ought to receive given a perceived set of costs)

minimum tolerable performance (what performance “must be”)

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Standards Lacobucci et al (1994) would drop the word

“expectations” and prefer the word “standards”; they believe several standards may operate simultaneously, among them “ideals”, industry standards etc.

Gronroos (1993) refers to the bad service paradox - a customer may have low expectations based on previous experience with the service provider - if these expectations are met, there is no gap and SQ is deemed satisfactory

so, do customers always evaluate SQ in terms of expectations and perceptions or are there other forms of SQ evaluation?

what form do customer expectations take, how best (if at all) they can be measured) and are expectations common across a class of service providers?

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Attitudes

do attitude-based measures of SQ perform better than the disconfirmation model and which attitudinal measure is most useful?

can we integrate outcome evaluations into SQ measurement and how can this be done?

is the predictive validity of perception measures of SQ better than P-E measures?

what are the relationships between SQ, customer satisfaction, behavioural intention, purchase behaviour, market share, word-of-mouth and customer retention?

what is the role of context in determining E and P evaluations? what context markers do consumers employ?

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Evaluation are analytical context markers (such as tangibility and

consumer involvement)useful in advancing SQ theory?

do evaluative criteria in intangible-dominant services (e.g. consulting) differ from those in tangible-dominant services (e.g. hotels)?

how does customer involvement influence the evaluation of SQ?

how do customers integrate transaction-specific or moment of truth (MOT) specific evaluations of SQ? To what extent are some MOTs more influential in final evaluation than others?

what are the relationships between the five RATER factors? How stable are these relationships across contexts?

what is the most appropriate scale format for collecting valid and reliable SQ data? and to what extent can customers correctly classify items into their a priori dimensions?

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SERVQUAL additions ZBP (1993) conceptual model of expectations -

customers have 2 different service levels that serve as comparison standards in assessing SQ: Desired Service (a level of service representing a

blend of what customers believe “can be” and “should be” provided

Adequate Service (the minimum level of service customers are willing to accept)

separating these 2 levels is a Zone of Tolerance that represents the range of service performance a customer would consider satisfactory

because SERVQUAL expectations component measures normative expectations, the construct represented by it reflects the desired service construct

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SERVQUAL additions

the SERVQUAL structure did not capture the adequate service construct so PZB (1994b) augmented and refined SERVQUAL to: capture not only the discrepancy between

perceived service and desired service - called a measure of service superiority but also

the discrepancy between perceived service and adequate service, labelled a measure of service adequacy

PZB therefore, rated desired, adequate and perceived service, and went on to label “adequate service” as minimum service

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Diagnostic value tests have shown that measuring perceptions alone should

suffice if the sole purpose of SQ measurement on individual attributes is to try to maximise the explained variance in overall service ratings but

from a practical viewpoint, it is important to pinpoint SQ shortfalls and take appropriate corrective actions (therefore, there is diagnostic value in measuring perceptions against expectations)

clearly operationalising customer expectations as a zone or range of service levels is feasible empirically and diagnostically

using the zone of tolerance as a comparison standard in evaluating service performance can help companies in understanding how well they are at least meeting customer’s minimum requirements and how much improvement is needed before they achieve service superiority

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Measuring Service Quality

SERVQUAL: One scale measuring customer expectations

about service companies in general within the relevant service sector

One scale measuring customer perceptions about a particular company

Based on five dimensions of service quality Compare expectation scores with perceived

quality achieved Used for internal performance management,

benchmarking versus competitors, customer segmentation, tracking expectations/perceptions over time

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Measuring Service Quality

SERVQUAL criticisms: Doubts over conceptual foundation & methodology Only measures technical (outcome) & functional

(process) service quality Results not re-producible over time (lacks stability) Risks in assessing customer satisfaction relative to prior

expectations (if expectations low, even “poor” service might seem good)

Only valid for services with high search or experience characteristics – problems with credence characteristics

better to use questions about performance (= perception) only (Cronin and Taylor, 1992 and 1994 - SERVPERF) - higher predictive validity

Measuring expectations has only diagnostic value (pinpointing service quality shortfalls)

Education

Services marketing service quality