2. Customer Perceptions of Service Quality and
Customer Satisfaction
Service
Quality
Reliability
Responsiveness
Assurance
Empathy
Tangibles
Product
Quality
Price
Personal
Factors
Customer
Satisfaction
Situational
Factors
3. Factors Influencing Customer
Satisfaction
• Product/service quality
• Product/service attributes or features
• Consumer Emotions
• Attributions for product/service success
or failure
• Equity or fairness evaluations
5. Relationship between Customer Satisfaction and
Loyalty in Competitive Industries
0%
20%
40%
60%
80%
100%
Very
dissatisfied
Dissatisfied Neither
satisfied nor
dissatisfied
Satisfied Very
satisfied
Satisfaction measure
Loyalty(retention)
Source: James L. Heskett, W. Earl Sasser, Jr., and Leonard A. Schlesinger, The Service Profit Chain, (New York, NY: The Free Press, 1997), p.
83.
6. Service Quality
• The customer’s judgment of overall
excellence of the service provided in
relation to the quality that was
expected.
• Process and outcome quality are both
important.
7. The Five Dimensions of Service Quality
Tangibles: Physical facilities, equipment & appearance
of personnel.
Reliability: Ability to perform the promised service
dependably and accurately.
Assurance: Knowledge and courtesy of employees
and their ability to convey trust and confidence.
Empathy: Caring, individualized attention the firm
provides its customers.
Responsiveness: Willingness to help customers and
provide prompt service.
8. SERVQUAL AttributesSERVQUAL Attributes
Providing service as promised
Dependability in handling customers’
service problems
Performing services right the first time
Providing services at the promised time
Maintaining error-free records
RELIABILITY
9. RESPONSIVENESS
Keeping customers informed as to when
services will be performed
Prompt service to customers
Willingness to help customers
Readiness to respond to customers’
requests
11. Giving customers individual attention
Employees who deal with customers in a
caring fashion
Having the customer’s best interest at
heart
Employees who understand the needs of
their customers
Convenient business hours
EMPATHY
12. Employees who instill confidence in
customers
Making customers feel safe in their
transactions
Employees who are consistently courteous
Employees who have the knowledge to
answer customer questions
ASSURANCE
13. The Service Encounter
• is the “moment of truth”
• occurs any time the customer interacts with the
firm
• can potentially be critical in determining customer
satisfaction and loyalty
14. • types of encounters:
1. remote encounters
2. phone encounters
3. face-to-face encounters
• is an opportunity to:
1. build trust
2. reinforce quality
3. build brand identity
4. increase loyalty
The Service Encounter
16. Critical Service Encounters Research
• GOAL - understanding actual events and behaviors
that cause customer dis/satisfaction in service
encounters
• METHOD - Critical Incident Technique
• DATA - stories from customers and employees
• OUTPUT - identification of themes underlying
satisfaction and dissatisfaction with service
encounters
17. Common Themes in Critical Service Encounters
Research
Recovery: Adaptability:
Spontaneity:Coping:
Employee Response
to Service Delivery
System Failure
Employee Response
to Customer Needs
and Requests
Employee Response
to Problem Customers
Unprompted and
Unsolicited Employee
Actions and Attitudes
18. Recovery
• Acknowledge problem
• Explain causes
• Apologize
• Compensate/upgrade
• Lay out options
• Take responsibility
• Ignore customer
• Blame customer
• Leave customer to
fend for him/herself
• Downgrade
• Act as if nothing is
wrong
DO DON’T
19. Adaptability
• Recognize the
seriousness of the need
• Acknowledge
• Anticipate
• Attempt to
accommodate
• Explain rules/policies
• Take responsibility
• Exert effort to
accommodate
• Promise, then fail to
follow through
• Ignore
• Show unwillingness to try
• Embarrass the customer
• Laugh at the customer
• Avoid responsibility
DO DON’T
20. Spontaneity
• Take time
• Be attentive
• Anticipate needs
• Listen
• Provide information (even
if not asked)
• Treat customers fairly
• Show empathy
• Acknowledge by name
• Exhibit impatience
• Ignore
• Yell/laugh/swear
• Steal from or cheat a
customer
• Discriminate
• Treat impersonally
DO DON’T
21. Coping
• Listen
• Try to accommodate
• Explain
• Let go of the customer
• Take customer’s
dissatisfaction
personally
• Let customer’s
dissatisfaction affect
others
DO DON’T
22. Evidence of Service from the Customer’s Point of
View
People
Process Physical
Evidence
Contact employees
Customer
him/herself
Other customers
Operational
flow of activities
Steps in
process
Flexibility vs.
standard
Technology
vs. human
Tangible
communication
Services cape
Guarantees
Technology
24. Unhappy Customers’ Repurchase Intentions
95%
70%
46%
37%
82%
54%
19%
9%
Complaints Resolved Quickly
Complaints Resolved
Complaints Not Resolved
Minor complaints ($1-$5 losses) Major complaints (over $100 losses)
Unhappy Customers Who Don’t Complain
Unhappy Customers Who Do Complain
Percent of Customers Who Will Buy Again
Source: Adapted from data reported by the Technical Assistance Research Program.
25. Customer Response Following Service Failure
Service Failure
Do NothingTake Action
Stay with Provider
Switch Providers
Complain to
Provider
Complain to
Family & Friends
Complain to Third
Party
Stay with ProviderSwitch Providers
26. Service Recovery Strategies
Learn from
Recovery Experiences
Treat Custom
ers
Fairly
Learnfrom
LostCustomers
Welcome and Encourage
Complaints
Fail Safe
the
Service
ActQuickly
Service
Recovery
Strategies
27. Causes Behind Service
Switching
Service
Switching
Behavior
• High Price
• Price Increases
• Unfair Pricing
• Deceptive Pricing
Pricing
• Location/Hours
• Wait for Appointment
• Wait for Service
Inconvenience
• Service Mistakes
• Billing Errors
• Service Catastrophe
Core Service Failure
• Uncaring
• Impolite
• Unresponsive
• Unknowledgeable
Service Encounter Failures
• Negative Response
• No Response
• Reluctant Response
Response to Service Failure
• Found Better Service
Competition
• Cheat
• Hard Sell
• Unsafe
• Conflict of Interest
Ethical Problems
• Customer Moved
• Provider Closed
Involuntary Switching
Source: Sue Keaveney
28. Service Guarantees
• guarantee = an assurance of the fulfillment of a
condition (Webster’s Dictionary)
• for products, guarantee often done in the form of a
warranty
• services are often not guaranteed
–cannot return the service
–service experience is intangible
–(so what do you guarantee?)
29. Characteristics of an Effective Service Guarantee
Unconditional
• The guarantee should make its promise unconditionally
- no strings attached.
Meaningful
• It should guarantee elements of the service that are
important to the customer.
• The payout should cover fully the customer's
dissatisfaction.
Easy to Understand and Communicate
• For customers - they need to understand what to
expect.
• For employees - they need to understand what to do.
Easy to Invoke and Collect
• There should not be a lot of hoops or red tape in the
way of accessing or collecting on the guarantee.
.
30. Why a Good Guarantee Works
• forces company to focus on customers
• sets clear standards
• generates feedback
• forces company to understand why it failed
• builds “marketing muscle”
31. Service Guarantees
• Does everyone need a guarantee?
• Reasons companies do NOT offer guarantees:
–guarantee would be at odds with company’s
image
–too many uncontrollable external variables
–fears of cheating by customers
–costs of the guarantee are too high
32. Service Guarantees
• service guarantees work for companies who are
already customer-focused
• effective guarantees can be BIG deals - they put
the company at risk in the eyes of the customer
• customers should be involved in the design of
service guarantees
• the guarantee should be so stunning that it
comes as a surprise -- a WOW!! factor
• “it’s the icing on the cake, not the cake”
