THE INTEGRATED GAPS MODEL OF SERVICE QUALITY ‘As you have observed throughout this text, effective services marketing is a complex undertaking involving many different skills and tasks. Executives of services organi- zations have long been confused about how to approach this complicated topic in an organized manner. This text was designed around one approach: viewing services ina structured, integrated way called the gaps model of service quality. It was used to frame the entire text and to organize Chapters 2 through 16, Each of the first five part openers in the text focused on specific aspects of the model that were covered in the chapters following it. In this chapter we draw all of that material together in one place, reinforcing the peneral ideas and structure of the gaps model and thereby summariz- ing the text and course. The gaps model positions the key concepts, strategies, and decisions in services marketing in a manner that begins with the customer and builds the organization's tasks around what is needed to close the gap between customer expectations and per- ceptions. The integrated gaps model of service quality, which was first overviewed in the Part 1 opener, is shown in Figure 18.1." ‘The central focus of the gaps model is the customer gap, the difference between customer expectations and perceptions. Firms need to close this gap—between what customers expect and receive—in order to satisfy their customers and build fong-term relationships with them. To close this all-important customer gap, the model suggests that four other gaps—the provider gaps—need to be closed. The following four provider gaps, shown below the horizontal line in Figure 18.1, are the underlying causes behind the customer gap: Gap 1: Not knowing what customers expect. Gap 2: Not selecting the right service designs and standards. Gap 3: Not delivering to service standards. Gap 4: Not matching performance to promises.FIGURE 18.1 Gaps Model of Service Quality cusToMER [Expoctee] service customer | -———__—_— Gap Perceived ‘Seanss. |“ | t Service celvery _|+——| cowrany | gaps ‘cana Gap Gustomerdriven service designs and standards cope '——»[ Company perceptions of consumer expectations CLOSING THE CUSTOMER GAP ‘Above the center horizontal line in Figure 18.1 are the two boxes that correspond to ‘customer expectations and customer perceptions. Customer perceptions are subjective assessments of actual service experiences; customer expectations are the standards of, or reference points for, performance against which service experiences are compared. ‘The sources of customer expectations consist of marketer-controlled factors, such 2s advertising, as well as factors that the marketer has limited ability to affect, such as in- nate personal needs. Ideally, expectations and perceptions are identical: customers pet- ceive that they get what they think they will and should. In practice, a customer gap typically exists. Services marketing bridges this distance, and we devoted virtually the entire text to describing strategies and practices designed to close this customer gap. In this text, we attempted to show that the unique characteristics of services dis- cussed in Chapter |—-intangibility, heterogeneity, inseparebility of production and consumption, and perishability—necessitated different consumer evaluation processes from those used in assessing goods. ‘The key factors leading to the customer gap are shown in Figure 18.2. Each of these factors was discussed in Chapters 2, 3, and 4, and strategies used to address them were offered in those same chapters, PROVIDER GAP 1: NOT KNOWING WHAT CUSTOMERS EXPECT Provider gap 1 is the difference between customer expectations of service and com- pany understanding of those expectations. Many reasons exist for managers not being ‘aware of what customers expect: they may not interact directly with customers, be un- willing to ask about expectations, or be unprepared to address them. When people with the authority and responsibility for setting priorities do not fully understand. cus- tomers’ service expectations, they may trigger a chain of bad decisions and subopti- ‘mal resource allocations that result in perceptions of poor serviee quality. In this text,FIGURE 18,2 Key Factors Leading to the Customer Gap ‘Customer expectations * Provider gap 1 Not knowing what customers expect + Provider gap 2: Not selecting the right service designs and standards delivering to service standards matching performance fo promises Customer perceptions ‘we broadened the responsibility for the first provider gap from managers alone to any employee in the organization with the authority to change or influence service policies and procedures. In today’s changing organizations, the authority to make adjustments service delivery is delegated to empowered teams and front-line people. Figure 18.3 shows the key factors responsible for provider gap 1. An inadequate marketing research orientation is one of the critical factors. When management or em- powered employees do not acquire accurate information about customers’ expecta- tions, provider gap 1 is large. Formal and informal methods to capture information about customer expectations must be developed through market research. Techniques involving a variety of traditional research approaches must be used to stay close (0 the customer, among them customer visits, survey research, complaint systems, and cus- tomer panels. More innovative techniques—such as quality function deployment, structured brainstorming, and service quality gap analysis—are often needed. ‘Another key factor that is related to provider gap 1 is lack of upward communica- tion. Front-line employees often know a great deal about customers; if management is riot in contact with front-line employees and does not understand what they know, the FIGURE 18.3, ‘Customer expectations Key Factors Leading. to Provider Gap 1 + Inadequate marketing research orientation Insufficient marketing research ‘Research not locused an service qualty Inadequate use of markat resoarch + Lack of upward communication ‘Lack of interaction betwaen management and customers Inguticient communication between contac! employees and managers, ‘Teo many layers between contact perconnel and top management + Insufficient relationship focus Lack of market segmentation Focus on transactions rather than rolaienships. Focus on new customers rather than rotaionship customers + inadequate service =| [Company perceptions ef] ‘customor expectations‘Also related to provider gap | is a lack of company strategies to retain customers and strengthen relationships with them, an approach called relationship marketing, When organizations have strong relationships with existing customers, provider gap | is less likely to occur. Relationship marketing is distinct from transactional marketing. the term used to describe the more conventional emphasis on acquiring new customers rather than on retaining them. When companies focus too much on attracting new cus- tomers, they may fail to understand the changing needs and expectations of their cur- rent customers. One of the major marketing factors that is leveraged in relationship marketing, particularly in manufacturing companies, is service. Technology affords companies the ability to acquire and integrate vast quantities of data on customers that can be used to build relationships. Frequent flyer travel programs conducted by airlines, car rental companies, and hotels are among the most familiar programs of this type, The final key Factor associated with provider gap | is lack of service recovery. Even the best companies, with the best of intentions and clear understanding of their cus- tomers" expectations, sometimes fail. tis critical for an organization to understand the importance of service recovery—why people complain, what they expect when they ‘complain, and how to develop effective service recovery strategies for dealing with in- evitable service failures. This might involve a well-defined complaint-handling proce- dure and empowering employees to react on the spot. in real time, to fix the failure; other times it involves a service guarantee or ways to compensate the customer for the unfulfilled promise ‘To address the factors in provider gap 1. this text covered topics that included how to understand customers through multiple rescarch strategies (Chapter 5), how to build strong relationships and understand customer needs over time (Chapter 6), and how to implement recovery strategies when things go wrong (Chapter 7). Through these strategies, provider gap 1—the customer expectations gap—can be minimized, PROVIDER GAP 2: NOT HAVING THE RIGHT SERVICE QUALITY DESIGNS AND STANDARDS ‘A recurring theme in service companies is the difficulty experienced in translating cus- tomers’ expectations into service quality specifications. These problems are reflected in provider gap 2, the difference between company understanding of customer expecta- tions and development of customer-driven service designs and standards, Figure 18.4 shows the key factors leading to this gap. Customer-driven standards are different from the conventional performance standards that most services companies establish in that they are based on pivotal customer requirements that are visible to and measured by customers. They are operations standards set to correspond to customer expectations and priorities rather than to company concerns such as productivity or efficiency. Provider gap 2 exists in service organizations for a variety of reasons. Those re- sponsible for setting standards, typically management, sometimes believe that cus- tomer expectations are unreasonable or unrealistic. They may also believe that the de- gree of variability inherent in service defies standardization and therefore that setting standards will not achieve the desired goal. However, the quality of service delivered ‘by customer contact personnel is critically influenced by the standards against which they are evaluated and compensated. Standards signal to contact personnel what man- agement priorities are and which types of performance really count. When service standards are absent or when the standards in place do not reflect customers’ expecta-FIGURE 18.4 Key Factors Leading to Provider Gap 2 ‘Gustomerdriven service ‘designs and standards + Poor service design Unsystematic new service development process ‘Vague, undefined service designs Failure to connect service design to sorvice positioning + Absence of customeriefined standards Lack of customer-defined service standards ‘Absence ef process management to focus on customer requirements ‘Absonce of formal process for setting sorvice qualiy goals + Inappropriate physical evidence and servicescape | ‘Managoment perceptions ‘of customer expectations: tions, quality of service as perceived by customers is likely to suffer. In contrast, when there are standards reflecting what customers expeet, the quality of service they re- ceive is likely to be enhanced. Therefore, closing provider gap 2—by setting customer- defined performance standards—has a powerful positive effect on closing the cus- tomer gap. Because services are intangible, they are difficult to describe and communicate. This is particularly true when new services are being developed. It is critical that all people involved (managers, front-line employees, and behind-the-scenes support staff) be working with the same concepts of the new service, based on customer needs and expectations. For a service that already exists, any attempt to improve it will also suf- fer unless everyone has the same vision of the service and associated issues, One of the most important ways to avoid gap 2 is to design services clearly without oversim- plification, incompleteness, subjectivity, or bias. To do this, tools are needed to ensure that new and existing services are developed and improved in as careful a manner as possible. Another factor involved in provider gap 2 is physical evidence—the tangibles sur- rounding the service, including everything from business cards to reports, signage, In- ternet presence, equipment, and facilities used to deliver the service. The servicescape. the physical setting where the service is delivered, must be appropriate. Think of restaurant, a hotel, a theme park, a health club, a hospital, ot a school. The service- scape—the physical facility—is critical in these industries in terms of communicating, about the service and making the entire experience pleasurable, Service organizations ‘must explore the importance of physical evidence, the variety of roles it plays, and strategies for effectively designing physical evidence and the servicescape to meet customer expectations, Jn this text, you learned to develop effective strategies for new services and to use service blueprinting as an implementation tool (Chapter 8), to develop customer- defined (as opposed to company-defined) service standards (Chapter 9), and to effec- tively design physical evidence and the servicescape to meet customer expectations (Chapter 10). Through these strategies, provider gap 2—the service design and stan- dards gap—can be minimized.PROVIDER GAP 3: NOT DELIVERING TO SERVICE STANDARDS FIGURE 18.5 Key Reasons Leading to Provider Gap 3 Provider yap 3 is the discrepancy between development of customer-driven service standards and actual service performance by company employees. Even when guide- lines exist for performing services well and treating customers correctly, high-quality service performance is not a certainty. Standards must be backed by appropriate re- sources (people, systems, and technology) and also must be enforced to be effective— that is, employees must be measured and compensated on the basis of performance along those standards. Thus, even when standards accurately reflect customers’ ex- pectations, if the company fails to provide support for them—if it does not facilitate, encourage, and require their achievement—standards do no good. When the level of service delivery performance falls short of the standards, it falls short of what cus- tomers expect as well. Narrowing gap 3—by ensuring that all the resources needed to achieve the standards are in place—reduces the customer gap. Research and company experience have identified many of the critical inhibitors to closing gap 3 (see Figure 18.5). These include employees who do not clearly under- stand the roles they are to play in the company, employees who see contfict between ‘customers and company management, the wrong employees, inadequate technology, inappropriate compensation and recognition, and lack of empowerment and teamwork, These factors all relate to the company’s human resource function, involving internal practices such as recruitment, training, feedback, job design, motivation, and organi- zational structure. To deliver better service performance, these issues must be ad- dressed actoss functions (such as with both marketing and human resources) if they are to be effective ‘One of the difficulties associated gap 3 involves the challenge in delivering Gap 3 + Deficiencies in human resource policies Ineffective racrutmant Alle ambiguity and role confit, Poor employes-tacrnotogy job ft Inappropriate evaluation and compensation systems Lack of empowerment, perceived contro, and tgarwark + Fallure to match supply and demand Failure to smooth peaks and valleys of demand Inappropriata customer mix (verrekance on price to smooth demand + Customers net fuifling roles ‘Customer ignorance of roles and responsibilies Customers negatvoly affecting each other + Problems with service intermadiaries ‘Channel contict ver objectives and performance ‘Channel contict over costs and rewerds Diffcully controling quality and consistency ‘Tension betwoor. empowerment an control |, Custamer-drivan service, * designs and standards,service through such intermediaries as retailers, franchisees, agents, and brokers. Be- cause quality in service occurs in the hurnan interaction between customers and ser- vice providers, contrat over the service encounter by the company is crucial, yet it rarely is fully possible. Most service (and many manufacturing) companies face an even more formidable task: attaining service excellence and consistency in the pres- ence of intermediaries who represent them, interact with their customers. yet are not under their direct control. Among the intermediaries that play a central role in service delivery are retailers, franchisees, and dealers. Franchisers of services depend on their franchisees to execute service delivery as they have specified it. And it is in the execution by the franchisee that the customer evaluates the service quality of the company. With franchises and other types of inter- ‘mediacies, someone other than the producer is critically important tothe fulfillinent of quality service. The service delivery process is complicated by outside parties who are likely to embrace goals and values that do not directly align with those of the service organization. For this reason, a firm must develop ways to either control or motivate these intermediaries to meet company goals. ‘AS we have just discussed, part of the variability in provider gap 3 comes from ern ployees and intermediaries who are involved with service delivery. The other impor- tant variable is the customer. Even if contact employees and intermediaries are 100 percent consistent in their service delivery, the uncontrollable variable of the customer can introduce heterogeneity in service detivery. If customers do not perform their roles appropriately —if, for example, they fait to provide all ehe information necessary to the provider or neglect to read and follow instructions —service quality is jeopardized. Another issue in gap 3 is the need in service firms to synchronize demand and ca- pacity. Because services are perishable and cannot be inventoried. service companies frequently face situations of over- or underdemand, Lacking inventories to handle overdemand, companies lose sales when capacity is inadequate to handle customer neds. On the other hand, capacity is frequently underutilized in slow periods. Most companies rely on operations strategies such as cross-training or varying the size of the employee pool to synchronize supply and demand. The use of marketing strategies in maay companies is limited. Marketing strategies for managing demand—such as price changes, advertising, promotion, and alternative service offerings —can suppte- ‘ment approaches for managing supply. We discussed strategies to deal with the roles of employees in Chapter 11, cus- tomers in Chapter 12, intermediaries in Chapter [3, and demand and capacity in Chap- ter 14, PROVIDER GAP 4: WHEN PROMISES DO NOT MATCH PERFORMANCE Provider gap 4 illustrates the difference between service delivery and the service provider's external communications. Promises made by a service company through its media advertising, sales force, and other communications may potentially raise cus- tomer expectations that serve as the standard against which customers assess service ‘quality. The discrepancy between actual and promised service therefore has an adverse effect on the customer gap. Broken promises can occur for many reasons: over- promising in advertising or personal selling, inadequate coordination between opera~ tions and marketing, and differences in policies and procedures acrass service outlets. Figure 18.6 shows the key factors that lead to provider gap 4.FIGURE 18.6 Key Reasons for Provider Gap 4 Service delivery Gap + Lack of integrated sorvices marketing communications “Tendency to view each external eommunication as independent Not inclucing interactive markotng in communications plan ‘Absence ef strong internal matkeiing program + Ineffective management of customer expectations "Not managing customer expectations thraugh ll forms of communication Nol adequately educating customers + Overpromising Overpromising in advertising Quonpromising in personal seling Ouerpromising through plysical evidence cues + tmadequate horizontal communications: Insufcient communication between sales and operations Insuffciant communication between adverising and operations Diforences in policies and procedures across branches or units Extemal communications to customers. In addition to unduly elevating expectations through exaggerated claims, there are other, less obvious ways in which external communications influence customers’ ser- vice quality assessments. Service companies frequently fail to capitalize on opportu- nities 10 educate customers to use services appropriately. They also frequently fail to manage customer expectations of what they will receive in service transactions and re- lationships, One of the major difficulties associated with provider gap 4 is that communications to consumers involve issues that cross disciplinary boundaries. Because service ad- vertising promises what people do, and because what people do cannot be controlled in the way that machines that produce physical goods ean be controlled, this type of ‘communication involves functions other than the marketing department. This is what we called interactive marketing—the marketing between contact people and cus- tomers—and it must be coordinated with the conventional types of external marketing used in product and service firms. When employees who promote the service do not fully understand the reality of service delivery, they are likely to make exaggerated promises or fail to communicate to customers aspects of the service intended to serve them well, The result is poor service quality perceptions. Effectively coordinating ac~ tual service delivery with external communications, therefore, narrows provider gap 4 and favorably affects the customer gap as well. Another issue related to gap 4 is associated with the pricing of services. In pack- aged goods (and even in durable goods), many customers possess enough price know!- exige before purchase to be able to judge whether a price is fair or in line with com- petition. With services, customers often have no internal reference point for prices before purchase and consumption. Pricing strategies such as discounting, “everyday prices,” and couponing obviously need to be different with services in cases where the customer has no sense of the price to start with. Techniques for developing prices for services are more complicated than those for pricing of tangible goods.In summary, external communications—whether from marketing communivations or pricing—can create a larger customer gap by raising expectations about service de- livery, In addition to improving service delivery, companies must also manage all communications to customers so that inflated promises do not lead to higher expecta~ tions. Chapters 15 (which discussed integrated services marketing communications) and 16 (which covered pricing) of this text described methods to accomplish these ob jectives. PUTTING IT ALL TOGETHER: CLOSING THE GAPS The full conceptual model shown in Figure [8.1 conveys a clear message to managers wishing to improve the quality of service: the key to closing the customer gap is to close provider gaps 1 through 4 and keep them closed. To the extent that one or more of provider gaps 1 through 4 exist, customers perceive service quality shortfalls. The model, called the gaps model of service quality, serves as a framework for service o- ganizations attempting to improve quality service and services marketing. This model begins where the process of improving service quality begins: by gain- ing an understanding of the nature and extent of the customer gap. Given the strong focus on the customer and the need to use knowledge about the customer to drive busi- ness strategy, we believe this foundation of emphasis is warranted Summary The chapter presented the integrated gaps model of secvice quality (shown in Figure 18.1), a framework for understanding and improving service delivery. The entire text ‘was organized around this model of service quality, which focuses on five pivotal gaps in delivering and marketing services: The customer gap: Difference between customer expectations and perceptions. Provider gap 1: Not knowing what customers expect. Provider gap 2: Not selecting the right service designs and standards. Provider gap 3: Not delivering to service standards. Provider gap 4: Not'matching performance to promises. The gaps model positions the key concepts, strategies, and decisions in services mar- keting in a manner that begins with the customer and builds the organization’ tasks around what is needed to close the gap between customer expectations and percep- tions,