Management of Service Quality: Importance of Service Upgrading - Essay Example

Name: Tutor: Title: Management of Service Quality: Importance of service upgrading Institution: Date: Table of Contents Table of Contents 2 Importance of service upgrading 3 Importance of handling customer complains. 4 Impacts of service encounter 5 Perceived values 7 Adding new services 8 Challenges of adopting new technology 10 Importance of services in impacting today’s economy 12 Bibliography 14 Importance of service upgrading In the current business environment, the customers are considered as valuable assets. Their opinions will always be taken into consideration for the purpose of providing them with the services they require. A customer service provider in most cases has no choice but to upgrade the system of their businesses so as to satisfy the customers. Service upgrading involves changing seeking professional expertise to analyze the situation and give the best possible solution to the issue. The upgrading of the systems may take time for it to be fully functional. However it has many benefits after it is fully implemented. The main benefit is customer satisfaction through improved services. The upgrading of the system will also reduce the time taken for the customer to access the service. This is beneficial to both the company and the customer. Al-Hilal Bank in the UAE is an example of a business institution that undertakes service upgrading fro time to time since the process is continuous. The system is usually upgraded depending on the needs of the customers. After the bank was established in 2008, the system of signing transactions by customers took a lot of time since the system in place was very slow. However the system was upgraded and all the customers need to do is to place their finger prints on the sensor and the transaction is carried out. The ATM machines are always upgraded from time to time and most of them are know touch screen which is faster than those with ordinary key pads. It is for this reason that the bank was able to win an award for the best customer experience in 2008 during the East retail banking awards (Al-Hilal Bank, 2012). Importance of handling customer complains. Negative word of mouth is quite dangerous for any business. This is because the complains by customers will easily be believed once one or two people have complained to the organization and have been ignored. Once the complains have been ignored it will not mater whether they are true or false but they will turn into negativity which will be believed by many people (Barlow, 2009). This is considering the rate at which the information can currently be spread through the social media. The original information will be distorted and once it reaches the masses it will be quite negative and the company will greatly suffer from the negative word of mouth. The examples of the case study concerning Sears and Euro Disney is a testimony that negative word of mouth has the potential of damaging the reputation of a company. It may cause great financial losses and the customers as well. Sears Automotive was greatly affected by a law suite alleging fraud in the company. This greatly damaged the public image of the company and the company lost 15% of its national auto repair business plus $8 million on settlement (Testa, 2006). Such huge financial loss greatly affects the operations of the company. Negative word of mouth was the main contributing factor as the mater attracted the attention of the public. The complains had even reached 50% within two years and yet no action had been taken. The plans to provide incentives did not work for the company as the reputation had already been damaged. Deming 14 points are sets of goals that are mainly aimed at improving the quality of services provide by an organization. The fourteen points lays down the rules that the managers should apply incase they are to meet the needs of the customers. The fourteen points are closely associated with the total quality management (TQM). However, the fourteen points are not conclusive as they do not address the issues of the tools the managers should use to achieve the goals. Service quality model on the other hand is also an important tool used to achieve customer satisfaction. It mainly measures the gap between the customer expectations and the customer experience. The issues of negative word of mouth are applicable in the customer experience. The model has however been vied as unreliable and complex. Its main objective is however the issue of trying to bridge the customers perceived and expected service. This model has also been simplified to a model referred as RATER. The two models have currently been replaced with simpler ones due to their complexity in addressing the needs of the clients. Impacts of service encounter Due to the current nature f he business world, the customer satisfaction is a key priority. The service encounter is an important step for the business. In some instances, it is referred to as the moment of truth (Chanaka, 2010). The service encounter will influence the loyalty the customer will have on the firm. This is thus considered a huge step towards retaining the customer. In case the service encounter is not good enough for the customer, then it will be difficult for the company to retain the customer. This will also go along way in determining the success of the firm. It is also important to note that most of the customers will always base their attitudes judgment towards the service encounter. Once the customers are satisfied with the service encounter, then the firm will benefit from the loyalty of the customer. However, in the business to business context, the perception of service encounter is different from that of business to customer service encounter. In the business to business service encounter, more interaction is usually encountered by the two compared to the business to customer encounter. However, in most cases, the research on the business to business encounters shows that the managers overlook some issues when it comes to this encounter. It is also evident that firms may be able to attain their goals and objectives based on the service encounters with the customers. Although their is no real description of customer loyalty, it is evident that customer loyalty is directly related to service encounter. A client will always be loyal to the service provider once the encounter is good enough for them. The image of the firm will mainly depend on the service encounter by the customers. This will depend on how the customer is handled or treated by the firm. Service quality is also an important aspect of the customer encounter. Most of the customers will compare the quality of the service that the different firms are offering and that will determine whether they will be satisfied or not. In both the business to customer and business to business model, there is a relationship between the loyalty, quality service and customer satisfaction (DiJulius, 2008). The overall perception of the clients towards the firm towards the quality of service will be an important factor that will determine whether the clients will be loyal to the customer or not. The customers will only participate in constructive efforts for the company once they feel that the are getting what they want from the firm. This will also increase their loyalty. Perceived values Perceived value will always occur at different levels of the purchase. This includes the time before purchase, during purchase, at the time of use and after use. This perceived values will always affect the loyalty of the customers as well as developing long term perception towards the firm or service provider. Before the purchase the customer will always have certain perceptions toward the firm and the product but the customer’s expectations will always be high. This will lead to purchase of he product where the customer will come into direct contact with the firm through the employees. Depending on how the employees treat the customer there will be a perception by the customer towards the company a whole. If the employees win the attitude o the customer, then the situation will be good for the company. However, if the employees do not win the satisfaction of the client then the company is likely to loose the customer. After purchase is also an important phase, the customer will still have certain attitudes towards the firm. This will depend on factors like the pricing of the product and the conditions after the purchase. The perceived value at this stage will determine whether the client will be wiling to make purchases from the firm or not. If the customer is not satisfied with the services after the purchase then a negative perception towards the company will develop and it will greatly affect the firm. After the customer uses the product, there will be a certain perception towards the firm and its products. This is considering that the customer is fully aware of the product and its rate of satisfaction. If the customer will be satisfied with the products after the purchase then it will be beneficial to the firm. However, if the customer will not be satisfied, then it will be difficult to purchase from the firm again. The perceived value will thus affect the choice and behavior of the customer both at the pre-purchase stage and post purchase stage. This perception will also affect the long term plan of the client towards purchasing of the products from the specified firm. The long term decision may affect the operations of the firm if their products are not good enough. This is considering that the long term perception may mean that the customer will never purchase any product related to the firm again. This will greatly affect the profit margins of the company. Adding new services Adding new services is mainly for the benefits of the customers. However, this process may be quite complicated if the right procedures are not followed. This is considering that the new services will affect both the customers and the employees (Fitzsimmons, 2010). The employees may not be familiar on the operations involved in the new services while the clients may require guidance and assistance before full adapting to the new service. This may lead to complications if the service provider did not take the necessary steps before implementing the new service. This is considering that most of the new services are derived from the old ones after some modifications to make it better. However, in some instances, the new service may not be noticed by the clients considering its easy adaptability and use. It is however important for an organization to apply the elements of new service development cycle and measure the quality of the service so as to fully retain the clients and win their loyalty. When adopting a new service in the banking industry during ATM service upgrading, it is important to put the considerations of the customers first. Listening to their views will form the basis of new service. The technology analysis should then be done by carrying out a feasibility study to identify the opportunities. Application requirement analysis should then be carried out for the purpose of defining the requirements of the new service. The cost and the benefits of the new service should also be established. The functional specification should be defined by establishing the characteristics of the inputs and outputs of the system. After all the above specifications have been met, it is important to involve an engineer at this stage for the purpose of carrying out the required design of the new service that will satisfy the needs of the customers. Implementation should then be carried out after the design has been completed. After all the project planning and implementation has been completed, it is important to test the service the new service before the clients are able to use it. A comparison should then be made between the desired results and the actual results produced by the new product. The views of the customers should then be put into consideration once the new service is operational. These views will help the firm in terms of future designs and also eliminate potential problems (Edvardsson, 2008). The new service will also pay a critical role towards the retention of the clients together with their loyalty to the firm. This will be an important step in the development of the firm new strategies and also its operational methods while attending to the customers. The firm should ensure that it captures the habits of its members before the implementation. The habits could also create an opportunity for the firm over some period of time depending on the increased need for certain services. The new opportunities in the banking industry could be as a result of the client’s interest in shopping with their ATM cards in some selected stalls or companies. The bank therefore is required to create a service that will enable its customers to shop at the selected outlets. This new service will greatly benefit the customers as well as winning their loyalty and trust. The new service development will however require commitments from the firm for it to be successful. Challenges of adopting new technology The process is usually the product when it comes to the development of a new service. The service will require the approval of the customers since it will have a direct impact on them. The customers on the other hand will be directly involved in the service delivery. The customer will therefore have the final say. The customer may be required to learn new skills before fully appreciating the service. The service provider in most of the cases has to ensure that the service will not have negative impact on the customer (Barnes, 2009). In some instances, the customers have been affected by the new service and has caused them loses. This automatically leads to loss of credibility to the firm and the system. An example being the loss of money by the customers through electronic funds transfer. The firm may be forced to pay for the loss which can affect the revenue of the firm as well as its credibility. The internal employees also face challenges when the new services are put in place. This is because the employees were used to the old system while the new system may require some extra knowledge that the internal employees may lack. The firm may therefore need to retrain its employees on the operations of the new services for it to operate. This leads to extra expenses on the firm in situations where high numbers of employees have to be trained. An example being the phasing out of type writer which were used by secretaries and the replacement by computer. Most of the secretaries did not have the knowle3dge of the computer and the firms were forced to retrain them. This is mainly for the purpose of ensuring the new service benefits the customers. Some of the new services may not affect the customers as they may fail to realize it. This is mainly in the cases of back office innovations. Such innovations may have impacts on other related services but the customers may not use it since they are not allowed in some of the areas or some institutions may not recognize them. An example being the introduction of the magnetic ink recognition equipment in the banking industry. This service was only applicable in the cooperative banks only in the USA. It only became acceptable the entire banking industry after all the banks accepted its use. Before then, the service was almost unnoticed by most of the customers. Other incidences also include the failure of the new innovation to be accepted universally. An example being the Universal Product Code which was only recognized by few retailers and could be used in the computer. It only became effective after it was accepted universally in the world by other retailers. It is now possible to use the computer for the purpose of verifying the codes of the products from any part of the world. This challenge proves that some of the new services need to be acceptable universally for it to make a difference to the customers. Some of the ideas cannot be patented and hence the new service innovation does not take place. This causes the failure by most of the firms to implement the new services since without a patent the service can easily be forged by other competing firms (Evenson, 2007). Importance of services in impacting today’s economy A service is mainly defined as a time perishable intangible experience to the customer. The service firms on the other hand are mainly the organizations that facilitate the production of goods and services. The services have a huge impact on the economy of a country. The services that have impacts on the economy are divided into several sectors. The financial services play an important role in the leasing, financing and insurance. This service contributes directly to the growth of the economy by providing financial support. The financial services contribute to the economy by financing other services like the manufacturing services. The infrastructure services promote the growth of the economy by facilitating the transportation of good to the various locations by the distributors. The infrastructure services enables the goods to be distributed and hence generation of income through the sale of the goods. This contributes to the growth of the economy. Personal services have also made possible through the infrastructure and the distribution services. This is mainly because it enables individuals to receive the services they require and hence building the economy. The government services also depend on the infrastructure and the business services. Once the government services reach the people, it facilities the growth of the economy by enabling a business environment to thrive and grow well under any circumstance (Heineke, 2003). The government services like the military and police enable the people to operate their businesses freely and hence the growth of the economy. The education provided by the government equips the learners with skills and knowledge required for employment or establishment of business. This leads to automatic growth of the economy through the utilization of the knowledge and skills. The market today is very attractive to the service sector since the services in the market can be supported by the other services. One service supports the growth of another service since they are all linked together. An example being the infrastructure service supporting the distribution services by providing a clear means of transport for the goods to reach the market and the consumers. The financial service also supports the infrastructure by availing the financial support for its construction. This close links between the services enable the market to be very attractive in the world today. The government policies also play a big role in supporting the market and thus making it very attractive for those who are willing to venture into it. This has also played an important role in streamlining the market sector and hence increasing its attractiveness. The individuals and firms are able to operate freely since government initiatives like the provision of security provides assurances for the business owners and firms. The technology has widely penetrated into the market and has made it easy for the customers to access goods and services cheaply and at a faster rate. Bibliography Chanaka J, 2010, The impact of service encounter quality in service evaluation: evidence from a business-to-business context, Journal of Business & Industrial Marketing, Vol. 25 Iss: 5 pp. 338 – 348. Testa, M, et al, 2006, A Systems Approach to Service Quality, Cornell Hotel and Restaurant Administration Quarterly, Volume 47, Number 1 36-48. Fitzsimmons, J, et al, 2010, Service Management, 7th ed, McGraw-Hill, New York. Edvardsson, B, et al, 2008, Values Based Service for Sustainable Business: Lessons from IKEA, Routledge. Evenson, R, 2007, Award-Winning Customer Service: 101 Ways to Guarantee Great Performance, Amacom. Al-Hilal Bank, 2012, Retrieved on May 8, 2012, from, . Heineke, J, 2003, Managing Services: Using Technology to Create Value, McGraw-Hill, Boston. DiJulius, J, 2008, What's the Secret: to Providing a World-class Customer Experience, John Wiley & Sons. Barlow, J, 2009, A Complaint Is a Gift: Recovering Customer Loyalty When Things Go Wrong, 2nd ed., Berrett-Koehler, San Francisco. Barnes, C, et al, 2009,Creating and Delivering Your Value Proposition: Managing Customer Experience for Profit, Kogan Page. Read More