Operations Analytics/ Service Management

in Key Sectors

LECTURE 31-32
Service Quality
Total Service Quality
Total service quality goes beyond individual components and involves a holistic approach to
managing and improving the overall quality of the entire service delivery process. It considers the
interactions between different service components and emphasizes the importance of a seamless
and integrated service experience.

§ Integrated Approach: Total service quality looks at the

service as a whole, ensuring that all aspects work
together to create a positive customer experience.

For example, Amazon's seamless integration of online

shopping, fast delivery, and customer service.

§ Continuous Improvement: It involves ongoing efforts to

identify and address areas for improvement throughout
the entire service delivery system.

For example, Amazon’s regular updates to the website, introduction of new features, and
constant efforts to enhance delivery speed and reliability.

Gaps in Service Quality

Service quality gaps represent the disparities between customer expectations and perceptions of
the service. Identifying and addressing these gaps is crucial for enhancing service quality and
customer satisfaction. Typically, five service quality gaps are known as the ‘SERVQUAL’ model.

Gap 1: Knowledge Gap: The difference between

customer expectations and management's
perception of those expectations. This gap
highlights the importance of understanding
customer needs and expectations accurately.
Suppose Flipkart fails to understand customer
expectations accurately. In that case, there might
be a gap between what customers expect
regarding product variety, pricing, and delivery
times and what Flipkart perceives as customer
expectations.

Gap 2: Policy Gap: The difference between management's perceptions of customer expectations
and the translation of those perceptions into service quality specifications. This gap emphasizes
the need for effective communication and translating customer expectations into actionable
service standards.
For example, Flipkart needs to effectively translate customer expectations into service quality
specifications to ensure there is a gap between what customers want and the company's policies.

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Gap 3: Delivery Gap: The difference between service quality specifications and the service
delivered. This gap highlights the importance of consistent and effective service delivery.
For example, delays in deliveries or product damages could represent a gap between service
quality specifications and the actual service delivered.

Gap 4: Communication Gap: The difference between what is communicated to customers and what
is delivered. This gap underscores the need for clear, accurate communication about the service
offering.
For example, a lack of clear communication regarding product features, return policies, or delivery
updates could lead to a gap between what is communicated and what is delivered.

Gap 5: Perception Gap: The difference between customer expectations and perceptions of the
service received. This gap measures the extent to which customers perceive a difference between
what they expected and what was delivered.
For example, customer perceptions might differ from their initial expectations due to discrepancies
in the above gaps, leading to a gap between what customers expect and perceive.

Service Quality Model

A widely recognized model for understanding and managing service quality is the SERVQUAL
model. The SERVQUAL model identifies five key dimensions that customers use to evaluate service
quality:

§ Tangibles: Physical evidence of the service, including facilities, equipment, appearance of the
staff, and communication materials.
For example, SBI invests in modern and customer-friendly branches, digital banking interfaces,
and ATMs, providing tangible elements contributing to the overall service experience.

§ Reliability: The ability of the service provider to consistently deliver accurate and dependable
services.
For example, SBI is known for its extensive network and consistent service delivery, ensuring
customers can rely on the bank for various financial services.

§ Responsiveness: The willingness and ability of the service provider to help customers and
provide prompt service.
For example, the bank has customer service channels that promptly address queries and
concerns, demonstrating a commitment to responsiveness.

§ Assurance: The competence, courtesy, credibility, and confidence of the service providers.
For example, SBI emphasizes the competence of its staff through training programs and
communication, instilling confidence in customers about the bank's financial services.

§ Empathy: The ability to understand and care for the customer's individual needs and concerns.

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 For example, SBI's customer service approach reflects empathy, understanding the diverse
needs of its customers and offering personalized assistance.

Determinants of Service Quality

§ Employee Competence and Training: Well-trained and competent employees contribute
significantly to service quality. Ensuring that employees have the necessary skills and
knowledge to perform their roles enhances service delivery.

§ Technology and Processes: Efficient and well-designed service processes, supported by

appropriate technology, can positively impact service quality. Streamlined processes and the
use of advanced technology contribute to reliability and responsiveness.

§ Customer Feedback and Communication: Actively seeking and utilizing customer feedback is
vital for understanding and meeting customer expectations. Clear and effective communication
with customers helps manage expectations and build trust.

§ Service Environment: The physical environment and ambience where the service is delivered
shape customer perceptions. A clean, comfortable, and aesthetically pleasing environment can
enhance service quality.

§ Service Leadership and Culture: Leadership commitment to service excellence and a

customer-centric organizational culture is essential to service quality. When leaders prioritize
and demonstrate a commitment to quality service, it permeates throughout the organization.

Service Quality Design

Key considerations in service quality design include:
§ Understanding Customer Needs: Conducting market research and customer surveys to
understand the target audience's specific needs, preferences, and expectations.

§ Setting Service Standards: Establishing clear and measurable service standards based on
customer expectations and organizational capabilities. These standards can relate to response
times, product features, communication, etc.

§ Employee Training and Empowerment: Providing employees with the necessary training and
empowering them to make decisions that benefit the customer. Well-trained and empowered
employees are more likely to contribute to a positive service experience.

§ Continuous Improvement: Implementing mechanisms for continuous improvement, such as

regular feedback collection, performance measurement, and analysis of customer satisfaction
data. This helps in identifying areas for enhancement and refinement.

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§ Technology Integration: Leveraging technology to enhance service delivery, whether through
digital platforms, automation, or other innovative solutions. Technology can contribute to
efficiency, reliability, and overall service quality.

Service Quality Design

Key Elements of Customer Satisfaction:

§ Product or Service Quality: Customers expect the product or service to meet or exceed their
performance, reliability, and expectations.

§ Customer Service: The level of support and assistance the company provides before, during,
and after the purchase significantly influences satisfaction.

§ Timeliness: Delivering products or services on time and meeting deadlines contributes to a

positive customer experience.

§ Value for Money: Customers assess whether the perceived value of the product or service
justifies the cost.

Customer Satisfaction vs Customer Loyalty

While customer satisfaction and loyalty are related, they represent different aspects of the
customer-business relationship.

Basis Customer Satisfaction Customer Loyalty

Definition A measure of how well a product or A deeper, emotional connection that leads
service meets customer expectations. customers to choose a particular brand or
company over time consistently.

Focus Short-term, transactional, based on a Long-term, relationship-oriented, based on

specific interaction overall experiences and perceptions.

Outcome Satisfied customers may or may not Loyal customers are more likely to make
become loyal; satisfaction does not repeat purchases, engage in positive word-
guarantee repeat business. of-mouth, and resist switching to
competitors.

Example Customers may be satisfied with a
particular Starbucks coffee on a given
day, but this doesn't guarantee they will
exclusively choose Starbucks in the long
term.
Starbucks has successfully built customer
loyalty through its rewards program
(Starbucks Rewards), creating a deeper
connection that encourages repeat business
and brand advocacy.

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Achieving Customer Satisfaction
Achieving customer satisfaction requires a proactive and customer-centric approach. Key
strategies:

1. Understanding Customer Expectations:

§ Customer Feedback: Regularly collect feedback through surveys, reviews, and direct
communication to understand customer expectations and perceptions.
§ Market Research: Stay informed about industry trends and competitors to adapt and meet
evolving customer needs.

2. Consistent Service Quality:

§ Service Standards: Establish clear and measurable service standards to ensure consistency in
the quality of products or services.
§ Employee Training: Invest in employee training to enhance skills and ensure a customer-
focused mindset throughout the organization.

3. Effective Communication:
§ Transparent Communication: Provide clear and transparent information about products,
services, and policies to manage customer expectations effectively.
§ Feedback Communication: Act on customer feedback and communicate the improvements or
resolutions made based on their input.

4. Personalization:
§ Tailored Experiences: Personalize interactions based on customer preferences and history to
create a more individualized and satisfying experience.
§ Customized Solutions: Offer personalized solutions to address specific customer needs,
demonstrating a commitment to their satisfaction.

5. Relationship Building:
§ Customer Relationship Management (CRM): Implement CRM systems to track customer
interactions, preferences, and history, enabling more personalized and effective engagement.
§ Customer Engagement: Foster ongoing relationships through loyalty programs, exclusive
offers, and special promotions to build a sense of belonging.

6. Monitoring and Continuous Improvement:

§ Performance Metrics: Use key performance indicators (KPIs) to monitor customer satisfaction
regularly.
§ Continuous Improvement: Actively seek ways to enhance products, services, and processes
based on customer feedback and changing market dynamics.

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Reference:

§ Blindenbach-Driessen, F. (2023, May 30). Innovation, new service development, research; what is the difference?
Organizing for Innovation. https://www.organizing4innovation.com/innovation-new-service-development-
research-what-is-the-
difference/#:~:text=New%20service%20development%20are%20the,or%20problems%20are%20developed%20
proactively.