CHAPTER 9 : Customer-Defined

Service Standards
Name : Nguyen Thanh Trúc Session 6 : 05/07

.1.FACTORS NECESSARY FOR

APPROPRIATE SERVICE
STANDARDS

-Standardization of Service Definition : Standardization usually implies a nonvarying sequential process—

Behaviors and Actions similar to the mass production of goods—in which each step is laid out in order
and all outcomes are uniform, whereas customization usually refers to some
level of adaptation or tailoring of the process to the individual customer.

=> The goal of standardization is for the service firm to produce a

consistent service product from one transaction to the next.
=> The goal of customization for the service firm is to develop a service
that meets each customer’s individual needs.

-Standardization of service can take three forms:

● (1) substitution of technology for personal contact and human
effort,
● (2) improvement in work methods, and
● (3) combinations of these two methods.

=> Standardization, whether accomplished by technology or by improvements

in work processes, reduces gap 2

-Companies that have been successful in delivering consistently high service

-Formal Service Targets and Goals quality are noted for establishing formal standards to guide employees in
providing service.
=> These companies have an accurate sense of how well they are performing
service that is critical to their customers

-One type of formal goal setting that is relevant in service businesses involves
specific targets for individual behaviors or actions. As an example, consider
the behavior “calls the customer back quickly,” an action that signals
responsiveness in contact employees

-Another type of formal goal setting involves the overall department or

company target, most frequently expressed as a percentage, across all
executions of the behavior or actio

-Virtually all companies possess service standards and measures that are
-Customer-, Not Company-, Defined company defined—they are established to reach internal company goals for
Standards productivity, efficiency, cost, or technical quality
=> However, to close gap 2, standards set by companies must be based on
customer requirements and expectations rather than just on internal company
goals
=>a company must set customerdefined standards: operational standards
based on pivotal customer requirements identified by customers.
2.TYPES OF CUSTOMER-
DEFINED SERVICE STANDARDS
- Hard Customer-Defined
Standards
-Soft Customer-Defined Standards
-One-Time Fixes
-The category of hard standards and measures: things that can be counted,
timed, or observed through audits
-To address the need for reliability, companies can institute a “do it right the
first time” and an “honor your promises” value system by establishing
reliability standards.
=>An example of a generic reliability standard that is relevant to virtually any
service company is “right the first time,” which means the service performed is
done correctly the first time according to the customer’s assessment.
-Not all customer priorities can be counted, timed, or observed through
audits.
- In contrast to hard measures, soft measures must be documented using
perceptual data. We call the second category of customer-defined standards
soft standards and measures because they are opinion-based measures and
cannot be directly observed.
=>They must be collected by talking to customers, employees, or others. Soft
standards provide direction, guidance, and feedback to employees in ways to
achieve customer satisfaction and can be examined by measuring customer
perceptions and beliefs.
=> Soft standards are especially important for person-to-person interactions
such as the selling process and the delivery process for professional services
-When customer research is undertaken to find out what aspects of service need
to be changed, requirements can sometimes be met using one-time fixes.
=>One-time fixes are technology, policy, or procedure changes that, when
instituted, address customer requirements.
-We include one-time fixes in our discussion of standards because
organizations with multiple outlets often must clearly define these standards to
ensure consistency
-One-time fixes are often accomplished by technology. Technology can
 simplify and improve customer service, particularly when it frees company
personnel by handling routine, repetitious tasks and transactions.

3. DEVELOPMENT OF
CUSTOMER-DEFINED SERVICE
STANDARDS

-Turning Customer Requirements

into
Specific Behaviors and Actions

Step 1: Identify Existing or Desired Service Encounter Sequence

-In establishing standards firms are concerned with service encounter quality
and thus want to understand the specific requirements and priorities of the
customer for each service encounter.
=>Therefore, the first step in establishing customer-defined standards is to
delineate the service encounter sequence.

-Standards that meet customer expectations for each interaction can then be
identified. Ideally, the company would be open to discovering customers’
desired service encounter sequences, exploring the ways customers want to
do business with the firm.

Step 2: Translate Customer Expectations into Specific Behaviors and

Actions

-Setting a standard in broad conceptual terms, such as “improve skills in the

company,” is ineffective because the standard is difficult to interpret,
measure, and achieve

● At the very abstract level are customer requirements too general to be

useful to employees: customers want satisfaction, value, and
relationships.
● The next level under these very general requirements includes abstract
dimensions of service quality already discussed in this text: reliability,
responsiveness, empathy, assurance, and tangibles.
● One level further are attributes which are more specific in describing
requirements.
● If we dig still deeper beneath the attribute level, we get to specific
behaviors and actions at the appropriate level of specificity for
setting standards.
Step 3: Determine Appropriate Standards

-The next step involves determining whether hard or soft standards should be
used to capture a given behavior and action.

One of the biggest mistakes companies make in this step is to

hastily choose a hard standard.
-The best way to decide whether a hard standard is appropriate is to first
establish a soft standard by means of trailer calls and then determine over time
which operational aspect most correlates to this soft measure

- The following are the most important criteria for creation of appropriate
service standards.
● 1. The standards are based on behaviors and actions that are very
important to customers.
● 2. The standards cover performance that needs to be improved or
maintained.
● 3. The standards cover behaviors and actions employees have control
over and can improve.
● 4. The standards are understood and accepted by employees.
● 5. The standards are predictive rather than reactive—based on current
and future customer expectations rather than past complaints.
● 6. The standards are challenging but realistic.

Step 4: Develop Measurements for Standards

-Two types of measures are hard measurements and soft measurements
-Hard measurements typically involve mechanical counts or technology-
enabled measurement of time or errors. =>What distinguishes these
measurements from soft measurements is that they can be measured
continuously and operationally without asking the customer’s opinion of
them

- To demonstrate, here are some of the actual measurements of hard

standards of the FedEx Express SQI:
● Missing packages: the number of packages that do not have a final
disposition scan or have no package status scans for two consecutive
business days after commit date.
● Damaged packages: the number of claims filed by customers for cost
 of contents for packages with visible or concealed damage.
● Wrong day, late deliveries: the number of packages delivered after
the commitment date.

Step 5: Establish Target Levels for the Standards

-Without this step the company lacks a way to quantify whether the
standards are being met.
-. They can also ask each customer his or her satisfaction with
the performance in resolving the complaint. The company can then plot the
information from each complaint to determine how well the company is
performing and where the company would like to be in the future.

-Another technique is a simple perception–action correlation study. When the

service consists of repetitive processes, companies can relate levels of
customer satisfaction with actual performance of a behavior or task.

Step 7: Provide Feedback about Performance to Employees

-Once companies have determined appropriate standards, developed specific

measures that best capture customer requirements, and set appropriate target
levels for the standards, they must develop mechanisms to provide feedback on
employee actions and behaviors.
-One example of such feedback is employee monitoring—in firms with
customer service departments, this involves the practice of supervisors listening
in on employee telephone interactions with customers.
- The purpose of such monitoring is often to provide feedback on employee
performance to the service standards set by the organization.
-One critical aspect of developing feedback mechanisms is ensuring that
performance captures the process from the customer’s view rather than the
company’s perspective.

Step 8: Periodically Update Target Levels and Measures

-The final step involves revising the target levels, measures, and even
customer requirements regularly enough to keep up with customer
expectations.
=> some flexibility in changing service standards may be necessary

-One outcome of following the process for developing customer-defined

-Developing Service Performance
Indexes
standards is a service performance index.
-Service performance indexes are comprehensive composites of the most
critical performance standards.
-Development of an index begins by identifying the set of customer-defined
standards that the company will use to drive behavior.

SUMMARY - To close the service design and standards gap, standards set by companies
must be based on customer requirements and expectations rather than just on
internal company goals. That is, company-defined standards are typically
not successful in driving behaviors that close provider gap 2 and a
company must set customer-defined standards based on key customer
requirements visible to and measured by customers.

-In this chapter we described two types of service standards: hard standards,
those that can be counted, timed, or observed through audits, and soft
standards, customer perceptions that cannot be directly observed.