Evaluation of Service Quality Strategy - Essay Example

Evaluation of Service Quality Strategy Introduction The introduction of quality in the managerial agenda has progressed gradually from being an organizational function to the more recent and ambitious goal of describing the characteristics of quality-oriented organizations. The ‘quality revolution’ has been promoted within the manufacturing and service industries because the management realized that customer retention and market share growth are highly dependent upon the quality of the products/services provided. Service quality refers to an attitude formed by a long-term overall evaluation of a firm’s performance. Customer satisfaction and service quality are closely related. It can be said that satisfaction assists consumers in formulating a revised opinion about their service quality perception. The logic for this may be the following :  Consumer perceptions of the service quality of a firm with which he has no prior experiences are based on the consumer’s expectations.  Subsequent encounters with the firm lead the consumer through the disconfirmation process and revise perceptions of service quality.  Each additional encounter with the firm further revises or reinforces service quality perceptions; revised service quality perceptions modify future consumer purchase intentions towards the firm. High quality satisfying service requires that a firm understand the consumer needs in detail as also the operational constraints. It reminds the service provider to focus on quality, and the process should be designed to support this system by proper control and delivery. Service quality can be a way of achieving success among competing services. This can be particularly so when the competing service firms provide identical services and are located in a small area. Examples could be many bank branches in the same area in a city. Under such circumstances, service quality happens to be the only way of differentiating the different service providers. It could be derived that service quality is a form of a long-run overall evaluation, whereas customer satisfaction is a transaction specific measurement. In addition, service quality, is a function of the gap between perceived and desired or adequate service level. While experience is not required to build perception in service quality, customer satisfaction is purely experimental (Susan & David, 2005). Furthermore, the dimensions underlying service quality judgments are specifically quality related. Satisfaction judgments, however, can result from any dimension, whether or not quality related. Service Quality Evaluation : Evaluation is the process of identifying and collecting data about organization or its specific programs, operations, and/or services. These data, viewed within a decision making or policy setting context, provides insight into the effectiveness, efficiency, impact and value of a program, operation, or services; the data also provide a basis for making recommendations for improvements. In effect, decision makers view evaluation as a means to gain information useful in deciding whether to continue a program, service, or activity; in improving practices and procedures; in crafting program strategies and techniques; in instituting similar programs elsewhere; in allocating resources among competing programs or services; and in ensuring that the organization is responsive to the information needs and information gathering preferences of their clientele. Evaluation which “consists of comparing ‘what is’ with ‘what ought to be’” incorporates planning, research and change; ongoing evaluation is integral to maintenance of a dynamic, effective, and efficient organization in tune with its clientele. Evaluation supports a number of organizational and administrative activities. Many of these activities (e.g., decision making, needs assessment, development of goals and objectives, marketing and communication) are essential planning ingredients. Effective planning is impossible without an evaluation component, and evaluation has little practical utility unless its findings are integrated into the planning process. The concept of measurement is closely related to evaluation; however, while measurement may lead to evaluation and evaluation may require measurement, the two processes differ. Measurement is the process of assigning numbers to describe ore represents some object or phenomenon in a standardized manner (Gillian & Mark, 1998). Measurement of Service Quality : Comparisons of customer perception with expectations provide the key to measurement of customer satisfaction and service quality. Customer satisfaction compares consumer perceptions with what consumers would normally expect. Service quality compares customers expectations with what a consumer should expect from a service provider. Service quality, as can be seen from these definitions, refers to a higher standard of service delivery. SERVQUAL is a scale used frequently for measurement of service quality. It is a diagnostic tool and makes use of a 44 item scale based five service quality dimensions which are :  Tangibles dimension: refers to the SERVQUAL assessment of a firm’s ability to manage its tangibles.  Reliability dimension: refers to the SERVQUAL assessment of a firm’s consistency and dependability in service performance.  Responsiveness dimension: refers to the SERVQUAL assessment of a firm’s commitment to providing its services in a timely manner.  Assurance dimension: refers to the SERVQUAL assessment of a firm’s competence, courtesy to its customers, and security of its operations.  Empathy dimension: refers to the SERVQUAL assessment of a firm’s ability to put itself in its customers place. Most investigations using SERVQUAL have identified that reliability is by far the most important of these dimensions and the tangibles is the least important. This is indicated by specifying that in the human-to-human environment reliability is considered to be the foremost dimension used by the customer in evaluating service quality, with responsiveness the next most important. However, the conclusion should not be generalized to other cases as there are chances of these dimensions to change in the virtual or human-to-computer environment. Service Quality in the Banking/Financial Industry : Introdution : The assessment of the performance of financial institutions has been given unprecedented publicity over the last years, for reasons related to stringent market conditions, competitive pressures, the emergence of substitute channels of distribution, consumer demand and technological progress. Bank management is under constant pressure to improve the competitiveness of its operations, which includes issues of financing, product development, innovation, marketing, and human resource management. Recently, the redefinition of redistribution channels and service provision, a role historically played by bank branch networks, has resulted in new management challenges for large-scale networks. Background: The banking/financial industry is an important one in the United Kingdom’s economy by virtue of its sheer size and the central role it plays in the working of the national economy as a custodian of the payment system. The services of banks and other financial institutions are used by nearly all adult individuals and nearly 100 percent of all business and organizations in the country. Major problems facing the Banking/Financial Industry: Today the banking and financial services industry segments are experiencing historic challenges. Commercial banks have been through their most threatening years since the Great Depression, and now are emerging from a decade in the eighties of falling earnings, record numbers of closures, and the radical changes in industry economics brought about by “deregulation and reregulation” (Edward 1999). The plight of the Savings and Loan industry has been a national scandal. Brokerage companies had their share of difficulties prior to banking, resulting in numerous acquisitions, mergers, combinations, and failures. While many different factors account for the difficulties of each of these financial services industry sectors, some things are not common to all. These include “uneven regulation,” chaos in traditionally stable revenue/cost relationships, high-cost distribution systems that cannot compete with lower cost competitors from other sectors, and massive overcapacity leading to cut-throat price competition and its concomitant downward spiraling of earnings. Indeed, there is a critical need for improvement in every aspect of operations in these industries, from customer interface processes right along the whole length of the value-chain into the depth of back room operations. Comparison to Foreign Industries in the same field : While financial services markets have traditionally enjoyed some protection from competitors through regulation, these barriers are falling. Today, more than 25 percent of bank assets are held by foreign owned banks, and global competition in entering our traditionally “protected” financial services markets at an accelerating rate. Foreign competitors often have advantages over UK companies in UK markets. These include easier access for foreign companies to enter UK markets than vice versa, often a lower cost of funds for foreign competitors, and cooperative arrangements between foreign companies and their government, suppliers, and customers that favorably affect their operations in the UK market place. Structural differences also account for significant competitive disadvantages (Peter 2000). Quality and Productivity Measurements and Trends : Productivity and quality are important competitive factors in banking and financial services. These industries have a tradition of accuracy and reliability. But, historically, they have lagged manufacturing in developing measures and techniques for improvement. Productivity measures have been relatively crude, and driven by operational concerns – not centered on customer needs and expectations. For the majority of banks, productivity measures seldom go little beyond such general measures as the dollar amount of assets or deposits per employee, the number of customer relationships per employee, or the number of processing errors per thousand items. Until recently, quality initiatives primarily were based upon inspection and reducing errors in back room operations areas. Barclays Bank : Barclays is a UK-based financial services group, with a large international presence in Europe, the USA, Africa and Asia. It is engaged primarily in banking, investment banking and investment management. In terms of market capitalization, Barclays is one of the largest financial services companies in the world. The Group serves more than 16 million customers in over 60 countries, continuing a tradition of service started more than 300 years ago. UK Banking provides a wide range of financial products and services to both personal and business banking customers throughout the UK, and is a gateway to the expertise and services of other parts of Barclays including Barclays Stockbrokers, Barclays Financial Planning and for business customers, Barclays Capital.(www.Barclays.co.uk) Barclays wished to be positioned as a leading global player within the banking sector and recognized that its brand strategy should reflect this ambition. The company also recognized that if it were to respond to a changing market place, its people and organizational structure would also need to change, as would the Barclay’s corporate identity. The organizations vision was developed as: ‘To be the powerful enabler enhancing the customer’s lives and businesses”. The organizations brand strategy to support this vision is built upon four brand strengths, or distinctive capabilities, through which the Group believed competitive advantages, would be achieved both in service and non-service terms. 1. International stature – It aimed at being a world-class organization on which the clients or customers around the world can trust and rely on to fulfill the aspirations. 2. Accessible expertise - Barclays aimed at delivering the right solutions, to the right people at the right time in the way they want. 3. Individual recognition- It aimed at treating its clients as individuals by respecting the life time value of their relationships with the customer and responding to their changing needs. 4. Progressive – Finally they aimed at using their expertise and understanding the clients need to deliver relevant innovations and new ways of doing things. To support the organizations vision of providing great service to its clients, a new corporate visual identity was implemented. Also, an external communications campaign was launched using the word ‘BIG’ to emphasize the powerful, global intent of the Group, whilst providing the message that was meant to be aspiration for customers. Internally, the company needed to communicate its vision and service strategy, and develop the behaviors amongst its employees that would deliver them. An ‘employer of choice’ programme was developed that provided links between desired employee and customer experiences of the organization. The aim was to provide ‘a great people experience’ that would ultimately lead to a ‘great customer experience’. Barclays also faced challenges due to its external advertising campaign that promoted Barclays as a big bank. Some customers interpreted the campaign message as indicating that as they were ‘small’ customers. Barclays would not wish to have them as customers. Also, whilst the “big’ campaign was running Barclays announced it would be closing a significant number of branches in the United Kingdom and making a large number of people redundant. All this did lead to customer dissatisfaction. However, later the Big campaign was underpinned by a message that Big meant Barclay could make things happen. Big translated into resources, ability, expertise, sophistication, understanding, confidence, empowerment and security. The ‘Big’ message combines the four brand strengths that Barclays wished to develop by illustrating to customers that Barclays was providing access to a broad range of financial services through a variety of channels, including the internet. Barclays have invested heavily in bringing their brand to life by defining the desired customer experience and how leaders and team leaders can develop brand values through their behavior. Customers experience service in the way employees talk, behave and deal with them so that the company’s own culture and values shine through everything it does. In preparing a customer service strategy, therefore, it is essential to appraise the internal organizational environment. This led to the formulation of various strategies aiming at providing utmost service to the customers. This has involved moving away from a paternalistic and audit-controlled environment where the needs of the organization came far above those of the customer, and creating a culture where enterprise and service mindedness is promoted and the focus is on the customer. This had proved to be advantageous in keeping up the position in such a competitive market. CONCLUSION : Concern about quality issues has become heightened in all types of service organizations. Competitive service providers such as accounting firms, airlines, banks, import-export firms, insurance companies, and private hospitals, as well as regulated monopolies such as local governments, schools, and utilities, are being asked to demonstrate at least minimum Quality Implementation application. In most cases, success is still defined by the bottom-line return on investment, better customer satisfaction, and increased market share. The service quality revolution is impacting the daily operations of public and non-profit agencies as well as private organizations; definitions of service quality is emerging and business environments change almost daily. Thus, an awareness of the importance of service quality to the survival of a company in this competitive world has started to spread to more and more companies. The number of companies with service quality as a performance measure is definitely increasing with the development of economies and the globalization of the quality services.(Barry 2003). The financial sector, and particularly the banking system, plays a very important role in the process of economic development. Banks are the most important and vital financial intermediaries in any economy. They mobilize savings and idle funds from surplus economic units and transfer them to the deficit economic units, who can make better and fuller use of them (Jessica 1999). Service quality should be an important component of any banks strategy in creating value and increasing profit. The need for service quality will increase with continuing intensified competition, government legislation, and the growth of technology and increased awareness of consumers. REFERENCES :  Balloch Susan & Taylor David, 2005 – The Politics of Evaluation: participation and policy implementation. The Policy Press.  Dale Barry, 2003 – Managing Quality. Blackwell Publishing.  Gabbott Mark & Hogg Gillian, 1998 – Services Marketing: New Approaches. Routledge Publishers.  Keyes Jessica, 1999 – Banking Technology Handbook. CRC Press.  Melnick Edward, 1999 – Creating Values in Financial Services : Strategies, Operations and Technologies. Springer Publishers.  Roche Michael – Journal of Services Marketing. Emerald Group Publishing.  Whitman John & Hernon Peter, 2000 – Delivering Satisfaction and Service Quality. ALA Editions Publishers.  www.barclays.co.uk Read More