March 6, 2015

Managing Service Quality

Kotler and Keller in Marketing Management, 14th Edition

We all know customers prefer quality or need quality. The product or service rated as the highest quality  one by the customers has maximum demand in the market provided it is made available within the affordability of the target market. In other words, the highest quality product has the top most demand curve when compared with demand curves of other brands of the same product. The customers pay a price premium and also demand a higher quantity.

How do you improve service Quality?

What is service quality?

Service quality is measured by the extent an offering satisfies customer needs related to offering.  It is more narrowly defined by using the term customer expectations. To improve the service quality, a service provider has to know customer expectations and design and deliver his service to match or exceed customer expectations.

Berry, Parasuraman, and Zeithaml recommended 10 activities for improving service quality.

1. Listening
2. Understand what is the basic service demanded and provide it.
3. Detailed service design - Take a holistic view, design it in detail and manage it.
4. Reliability - Make sure service is delivered as per promise every time.
5. Recovery - In case, there is slip, have a mechanism to discover it and correct it or to respond to a customer complaint instantly
6. Surprising customers - Always keep thinking of delivering more
7. Fair play
8. Team work
9. Employee research - Find out why service defects are occurring and help the employees by removing the causes of errors.
10. Servant leadership - Top management has to demonstrate the style of servant leader.

MIT Sloan Management Review

Five Imperatives for Improving Service Quality

Magazine: Summer 1990 July 15, 1990  Reading Time: 33 min
Leonard L. Berry, Valarie A. Zeithaml and A. Parasuraman

Customers are the sole judge of service quality.  A company can achieve a strong reputation for quality service only when it consistently meets customer service expectations.

The principal dimensions customers use to judge a company’s service:

Tangibles. The appearance of physical facilities, equipment, personnel, and communication materials.
Reliability. The ability to perform the promised service dependably and accurately.
Responsiveness. The willingness to help customers and to provide prompt service.
Assurance. The knowledge and courtesy of employees and their ability to convey trust and confidence.
Empathy. The provision of caring, individualized attention to customers.

What must every company interested in improving service do to actually improve it? In this paper, the answer is given  in terms of five service imperatives: define the service role, compete for talent (and use it), emphasize service teams, go for reliability, and be great at problem resolution.

Define the Service Role

Start with Research

Defining the service role effectively starts with formal research to identify customers’ principal service expectations. Marketing research  helps managers make choices among service standards and pare down the list of standards to the pivotal ones that will make a difference for customers. Customers judge a company’s service on the basis of a very few important service factors, and managers should establish a limited set of service standards for individual employees that contributes to the limited set of service goals for the organization.

Communicate and Reinforce Service Standards: The defined the service role has to be communicated and reinforced—in meetings and training sessions; in internal media such as wallet cards, desk signs, and wall posters; and in performance measurement, appraisal, and reward systems.

Defining employees’ service roles clearly, consistently, and credibly is important to any organization’s efforts to improve service. The behavior-guiding and motivational benefits of service standards are well worth the investment necessary to develop and reinforce them. Service employees need to know what excellent service means—and why they should care about delivering it.

Compete for Talent—and Use It

Any company needs personnel with the attitude, ability, and flexibility to fulfill the role designed by it.  Contact employees who believe their units are not meeting service standards disagree with the following statements:

My company hires people who are qualified to do their jobs.
I have the freedom in my job to truly satisfy my customers’ needs.

Services are performances, and most of the time it is people who render these performances. From the customer’s perspective, the people performing the service are the company.

Moreover, managers need to  a well-defined profile of people to hire. The profile has to be developed based on service standards specified by the company.

The problem of hiring the wrong people is getting worse due to labor-force shortfalls.

Service managers frequently add to their problems by not fully using the capabilities of those they do employ. The authors in this paper argue for giving flexibility to employees to servce the customer based on the need of the situation rather than by a strict rule book   People who are qualified will perform better and stay with the company longer if given room to maneuver, achieve, and grow.

The authors recommend: Market careers rather than jobs, market them in multiple ways, link hiring standards to service standards, and leverage the freedom factor. Companies that do these things will do just fine in the talent market.

To leverage the freedom factor, managers have to select their people well, provide them with a strong foundational culture in which to work, offer them strategic direction, and give them the company-specific training and education they need to perform their roles. And then managers need to get out of their way!

We agree with Robert Waterman, who writes in The Renewal Factor: “When managers guide instead of control, the sky’s the limit on what people can accomplish.” Managers must learn the dangers of overmanagement; they must learn to widen the solution boundaries for their people.

Emphasize Service Teams

Service work is frequently frustrating and demoralizing. Customers can be rude and insensitive. The sheer number of customers to be served can be psychologically and physically overwhelming. Control over service can be dispersed among multiple organizational units that function without cohesion or a unified spirit, limiting contact employees’ ability to come through for their customers.

One dynamic that is particularly important in kindling and sustaining service-mindedness is the presence of service “teammates.” An interactive community of coworkers who collaborate, overcome, and achieve together is a powerful antidote to service burnout. Membership on a team can be rejuvenating and inspirational. It can also raise the ante for individual performance. To let down the boss is bad, but to let down the team is often worse. Team participation can unleash one of the most potent of motivators—the respect of peers.

Service teamwork is also important because people in service organizations typically depend on one another. The end service the customer receives is commonly the result of many behind-the-scenes, internal services.

Our research shows convincingly that teamwork is a principal factor in delivering excellent service. Employees who indicate that their organizational units are not meeting service standards disagree with the following statements:

I feel that I am part of a team in my unit.
Everyone in my unit contributes to a team effort in serving customers.
I feel a sense of responsibility to help my fellow employees do their jobs well.
My fellow employees and I cooperate more than we compete.
I feel that I am an important member of this company.

Organizational teamwork is important. Service team building cannot be left to chance. Some degree of structuring, assigning, and facilitating is needed to overcome organizational inertia. Managers should strive to nurture teamwork within organizational units (intraunit teams) and between organizational units (interunit teams).  Creating the richest form of service teamwork requires long-lasting team membership; frequent team contact and communication; team leadership, direction, and goals; and team measurements and rewards (in addition to individual employee measurements and rewards).

Go for Reliability

Breaking the service promise is the single most important way service companies fail their customers. When a firm is careless in performing the service, when it makes mistakes, when it doesn’t do what it said it would do, customers lose confidence in the firm’s reliability; they lose confidence in the firm’s wherewithal to do what it promises to do dependably and accurately.

Service reliability is the service “core” to most customers. Little else matters to customers when a company is not dependable.

“Zero defects” attitude is as important in services as in manufacturing. And if more executives were to investigate the primary causes of service unreliability in their companies, they would find most of them rooted in poor service design, inattention to service details, and basic carelessness.

Reliability is the heart of excellent service.

Building a “Do-It-Right-First” Attitude

Managers should use every opportunity to build a “do-it-right-first” attitude. This means specifically addressing the reliability issue in company communications, including mission statements; setting reliability standards; teaching the why and how of reliability in training programs; appointing reliability teams to study specific services and recommend ways to improve reliability; measuring error rates; and rewarding error-free service.

Outstanding service reliability is the foundation on which to build a reputation for outstanding service quality. Companies that consider the service promise inviolate are most likely to earn the confidence of their customers. And the confidence of customers is the greatest asset a company can have.

Be Great at Problem Resolution

What happens after the service problem occurs—the firm’s response—becomes crucial. The firm can make things better with the customer—at least to some extent—or much, much worse.

All too often, service companies make things worse.

Three possibilities arise when a customer experiences a service problem:

The customer complains and is satisfied with the company’s response.
The customer complains and is not satisfied with the company’s response.
The customer does not complain to the company and remains dissatisfied.

Of these possible outcomes, the first one is good and the last two are very bad.

In effect, companies that do not respond effectively to customer complaints compound the failure; they fail to come through for the customer again.

Many dissatisfied customers do not complain and simply take their business elsewhere.  Managers need to come to grips with the seriousness of the lost business and negative word-of-mouth that occurs when customers cannot resolve problems with the firm, or do not even try. How a company handles service problems tells customers (and employees) a great deal about the firm’s service values and priorities.

Three Prescriptions

Being excellent in recovery is easier said than done. We offer these specific prescriptions.

Encourage customers to complain and make it easy for them to do so.

Make timely, personal communications with customers a key part of the strategy.

Encourage employees to respond effectively to customer problems and give them the means to do so.

Service employees need specific training about how to deal with angry customers and how to help customers solve service problems. In some cases, they need access to information systems that will tell them more about the customer, the situation causing the problem, and possible solutions.

Specifics aside, problem-resolution excellence requires that managers view services marketing as a way of cementing customer loyalty through service and trust that gives profits through repeat business, rather than focusing on acquiring new customers. Effective services marketing—and its cornerstone, service quality—requires that managers take the long view.

Excellent service is within reach if managers are willing to stretch for it.


2. L.L. Berry, D.L. Bennett, and C.W Brown, Service Quality— A Profit Strategy for Financial Institutions (Homewood, Illinois: Dow Jones-Irwin, 1989), p. 51.

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