The Weight and Importance of Service Quality - Case Study Example

Service Quality Definition Service quality, although highly used and essential to the success of almost all businesses, has become a problematic term that is hard to define and measure (Wisniewski, 2001 cited in Shahin, 2006). However, Langevin (1988, p. 4 quoted in Duffy and Ketchand, 1998) stated that “it is obvious that understanding customer expectations and meeting customer needs is the single most critical issue and determinant of service quality.” Parasuraman, Berry and Zeithamel (1988 cited in Duffy and Ketchand, 1998) agree with Langevin on this aspect, but added that this is not enough to delineate and measure service quality. Thus, service quality can be better defined as “the difference between customer expectations of service and perceived service” will be employed (Shahin, 2006). This means that when customer expectations exceed perceived service performance, customer dissatisfaction occurs (Shahin, 2006). This implies that service quality is directly related to customer satisfaction (Duffy and Ketchand, 1998). The Gap Model The weight and importance of service quality has led to the development of the Gap Service Quality Model (see diagram below) created by Parasurman, Zeithamel and Berry (1985, cited in Shahin, 2006 and Coppola, 2001), which measures and analyses the gaps between the desired levels and actual levels of performance. This is a good model to measure service quality as it aims to provide managers with ideas on which areas they need to improve on and/or correct. There are five gaps (Shahin, 2006; Effective Customer Service, n.d. and Coppola, 2001): 1. Customer Expectations vs. Management Perceptions – This measures the difference between the actual expectations of the customers and what the management perceives as their expectations. Could be a result of insufficient market research, inadequate relationship focus and lack of communication. 2. Management Perceptions vs. Service Quality Specifications – This gap arises when the management’s perceptions of customer expectations do not match their service quality specifications due to a weak service design, ineffective service leadership and the absence of a customer driven model of marketing. 3. Service Quality Specifications vs. Service Delivery – Due to poor training, lack of or insufficient communications and preparation, employees do not deliver the service as per the service quality specifications designed by the company. 4. Service Delivery vs. External Communications – There are a lot of times when, due to word-of-mouth, publicity and advertising, a company’s services gain a bad reputation even if the actual service delivery is in reality excellent. External communications can lead to both positive and negative results, depending on the type of publicity involved. 5. Expected Service vs. Perceived Service – Of course, every customer has his or her own expectations when going to different companies; and these expectations are directly related to how they perceive a specific company. For instance, if the customer at a restaurant she frequents experiences a waiter accidentally spilling a drink on her, then chances are that customer’s perceptions—and those of her friends—will take a nose-dive. It is important for a manager to keep the first four gaps to a minimum in order to create a balanced expected and perceived service—as when this is met, customer satisfaction is ensured (Coppola, 2001). (Shahin, 2006) Poor Service Experience There was this one time when I needed to accept a wire transfer. I was not familiar with this service at that time and so I went to one of the customer service representatives to inquire about it. The banking officer was nice at first as he started to explain to me the wire transfer procedure. However, there arrived a man in a suit that asked for the officer in person. The officer told me to wait while he attends to the VIP. I waited for him to come back for a long time, more than 20 minutes. But then I got impatient and went to another table. This negligence of a regular client demonstrates preferential treatment that makes clients like me feel bad. It is possible that the officer was trained in key account management wherein customers are identified by value and loyalty. Although my loyalty may have been valuable, the other client must be putting in big money in the bank and thus, he was labelled as more important. In the banking officer’s eagerness to nurture his and the bank’s relationship with the VIP, he neglected a loyal client. The bank clearly had a problem with Gap 3 as the employee clearly did not correctly deliver—at least to me—the service quality specifications inculcated to them by the bank. Recommendations for Extended Marketing Mix Decisions The traditional marketing mix of four Ps—Product, Price, Place and Promotion—was expanded by Booms and Bitner by adding three more Ps—people, process, and physical evidence—in order to make it more apt for the services industries (Kumar, 2004). In order to implement a solid service recovery plan, it is essential to tackle the following 4 Ps, which are relevant to the experience stated above. Promotions - It is highly recommended for the bank to advertise the high level of their service quality, while at the same time making sure that their advertisements are practised in real life. A simple yet memorable advertising campaign containing radio, TV, and print ads that encapsulates and highlights the mission vision of the bank—providing a high level of service quality—should be launched in order to raise awareness and encourage new clients to come in. People - It is essential to give importance to all the people involved in the consumption of a service—the consumer, the employees, the management, etc. Thus, a more in-depth market research is needed in order to have a more accurate data on what the consumer wants and needs. This will bring the management closer to knowing the actual expectations of their target market. Employee training and management should also be consistent with the aim and mission of the company. The service design should be clear and all the employees and management personnel should be aware of it and the objectives of the said design so that service delivery will coincide with consumer expectations. There should be a training program that an applicant must first pass in order to become an employee. Once an applicant has passé that program, he or she should enter a probationary period of at least 3 months wherein his or her progress will be monitored in line with service delivery. This will apply to all employees, including management. The bank should focus on this in order to maintain the quality of the services they provide. Processes - This is where the bank needs to also focus as there should be a clear process for handling VIPs and regular clients. The bank should have a clear procedure as to what an officer should do in certain instances like when a valued client arrives when the key account specialist assigned to that client is busy with another customer. The handling procedure should be made clear to all employees, especially the contact personnel. All the processes, especially crucial ones wherein a customer may be lost, must be included in the training program that should last for at least two weeks. Physical Evidence - The physical evidence pertains to both the tangible and intangible aspects of conveying to potential customers that the company’s high level of service quality is for real (Kumar, 2004). The tangible element points to the goods and the physical environment by which the service is provided—the premises, the logo, the computers, and other material things involved in the production and delivery of the service—while the intangible refers to the word-of-mouth effect (Kumar, 2004). The bank should develop a logo and a set of colours that are easily remembered and would be automatically associated with them. All the bank branches should maintain a uniformity of appearance, maintaining cleanliness and orderliness. All equipment, like computers and ATM machines, should be state of the art and should be maintained regularly in order to prevent unnecessary delays and problems that the customers would forever associate with the bank. Remember that customers hate to be kept waiting and keeping the equipment in good condition will help prevent this. Word-of-mouth is also very important and the bank needs to capitalise on this form of external communications. In this way, customer expectations will more or less match the perceived expectations. In order for other customers to keep on recommending the bank to their own circles, it is necessary for the bank to not only invest in state of the art equipment and a professional ambience, but more importantly, for the management to focus on maintaining the consistency of their service quality. It is highly recommended for all employees, especially contact personnel, to go through rigorous training before their actual work starts. In doing so, the high level of overall customer experience is maintained and this translates to a higher chance that these existing customers will recommend and promote the bank to their friends and colleagues. Total Word Count: 1,496 References Coppola, S. (2001). Gap Analysis. Retrieved May 10, 2008 from http://www.freequality.org/sites/www_freequality_org/documents/training/GapAnalysis%5B2%5D.ppt Duffy, J. M. and Ketchand, A. A. (1998). Examining the role of service quality in overall service satisfaction. Journal of Managerial Issues, Vol. 10, Issue 2, pp. 240+. Effective Customer Service. (n.d.). The Gap Model. Retrieved May 10, 2008 from http://www.degromoboy.com/cs/gap.htm Kumar, N. (2004). Marketing as Strategy: Understanding the CEOs Agenda for Driving Growth and Innovation. Boston, USA: Harvard Business School Press. Marketing Teacher, Ltd. (2008). Marketing Mix. Retrieved May 10, 2008 from http://marketingteacher.com/Lessons/lesson_marketing_mix.htm Shahin, A. (2001). SERVQUAL and Model of Service Quality Gaps: A Framework for Determining and Prioritizing Critical Factors in Delivering Quality Services. Iran: Department of Management, University of Isfahan. Read More