1. Group 07
Nuwan Ireshinie : 2010/MBA/WE/MKT/14
R Shyamali Dias : 2010/MBA/WE/MKT/15
Improving
Service Quality and Productivity

2. Integrating Service Quality and productivity
Service Quality
Disconfirmation Models Vs. Perception Models
Perspectives of Service Quality
Dimensions of Quality
Gaps Model – Identifying service quality problems
How Customers Evaluate Online Businesses
Measuring Service quality – Soft and Hard measures
Tools to Analyze and Address Quality Problems
Defining and Measuring Productivity
Improving Service Productivity
Conclusion
Agenda

3. • Quality and productivity are twin paths to creating
value for both customers and companies
• ƒQuality - focuses on the benefits created for
customers
• Productivity - addresses financial costs incurred by firm
Deliver Quality Experience to Customers
More Efficiently
Achieve Long term Profitability
Integrating Service Quality and Productivity Strategies

4. “A comparison of expectations with
performance”
What is Service Quality ?
However, there is debate
Disconfirmation Models Vs Perception Models

5. Expected Performance Perceived Performance
Comparison
P>E P<EP=E
Positive
Disconfirmation Confirmation
Negative
Confirmation
Satisfaction Neutral Dissatisfaction
Disconfirmation Models
SERVQUAL ( Parasuraman et al, 1985)

6. Satisfaction= f (Perception)
Perception Models
SERVPERF ( Cronin & Taylor, 1992)

7. • The Transcendent view of quality
• The Manufacture based approach
• User bases definitions
• Value based definitions
Perspectives of Service Quality

8. • Tangibles
• Reliability
• Responsiveness
• Competence
• Courtesy
• Credibility
• Security
• Access
• Communication
• Understanding the customer
Assurance
Empathy
Dimensions of Quality

9. Identifying and Correcting Service Quality Problems
Gaps Model in Service Design & Delivery

10. • Gap 1 - Knowledge Gap
• Gap 2 - The Policy Gap
• Gap 3 - The Delivery Gap
• Gap 4 - The Communication Gap
• Gap 5 - The Perception Gap
• Gap 6 - The Service Quality Gap
Strategies To Address Gaps in Service Quality

11. Strategies to close the gap
Educate Management about what customer expect
 Implement market research procedures.
 Implement an effective customer feedback system.
 Increase interactions between customers and
management.
 Facilitate & encourage communication between front
line staff and management.
Challenges
 Customers’ expectations are differ and changing
 Management ability to understand the customers’
expectations.
Gap 1- Knowledge Gap

12. Strategies to close the gap
Establish the right Service processes and specify standards
 Get the customer service process right
 Develop tiered service products that meet
customer expectations
 Set, Communicate & reinforce measurable
customer oriented service standards for all
divisions
Challenges
Gap 2 – The Policy Gap
 Gap 1 leads to create Gap 2
 Different Customer expectations

13. Strategies to close the gap
Ensure that performance meets standards
 Ensure that customer service teams are
motivated and able to meet service standards.
 Install the right technology, equipment, support
processes and capacity.
 Manage customers for service quality.
Challenges
Gap 3 – The Delivery Gap
 Can only customer service team do it?
 Right people to do it?
 Do every company do customer expectation management?

14. Strategies to close the gap
Close the internal communications gap by ensuring that communications
promises are realistic and correctly understood by customers.
 Educate managers responsible for sales and
marketing communications about operational
capabilities
 Ensure than communications content sets realistic
customer expectations.
 Be specific with promises and manage customers’
understanding of communication content.
Challenges
Gap 4 – The Communication Gap
 Understanding of business by advertising agency

15. Strategies to close the gap
Challenges
Tangibilize and communicate the service quality delivered.
 Make service quality tangible and
communicate the service quality.
Gap 5 – The Perception Gap
 Will it lead to higher expectations?

16. Strategies to close the gap
Challenges
Close gap 1 to 5 consistently meet customer
expectations
Gap 6 – The Service Quality Gap
 Individual customers are different and same customer changing

17. How Customers Evaluate Online
Businesses:
Seven Dimensions of E-S-QUAL

18. Accessibility : Is site easily found?

19. Navigation: How easy is it to move around the site?

20. ƒDesign & presentation: Image projected from site?

21. Content & purpose: Substance and Richness of site

22. ƒ
Currency & accuracy

23. ƒ Firm’s propensity to respond to e-mails, online chat and
other communication media
Responsiveness

24. Interactivity, customization & personalization

25. Reputation & security

26. • Soft measures—not easily observed, must be collected
by talking to customers, employees, or others
Provide direction, guidance, and feedback to employees on ways to
achieve customer satisfaction
Can be quantified by measuring customer perceptions and beliefs ―
For example: SERVQUAL, surveys, and customer advisory panels
• ƒHard measures—can be counted, timed, or measured
through audits
Typically operational processes or outcomes
Standards often set with reference to percentage of occasions on
which a particular measure is achieved
Control charts are useful for displaying performance over time against
specific quality standards
Measuring and Improving Service Quality

27. • Key customer-centric SQ measures include:
 Total market surveys, annual surveys, transactional surveys
 Service feedback cards
 Mystery shopping
 Analysis of unsolicited feedback—complaints and compliments, focus
group discussions, and service reviews
• Ongoing surveys of account holders to determine satisfaction in terms
of broader relationship issues
• Customer advisory panels offer feedback/advice on performance
• Employee surveys and panels to determine:
 Perceptions of the quality of service delivered to customers on specific
dimensions
 Barriers to better service
 Suggestions for improvement
Soft Measures of Service Quality

28. Unsolicited Customer Feedback :
• Customer Complaints
• Compliments
• Suggestions
Soft Measures (contd.,)

29. • Control charts to monitor a single variable
Offer a simple method of displaying performance over
time against specific quality standards
Are only good if data on which they are based is accurate
Enable easy identification of trends
• Service quality indexes
Embrace key activities that have an impact on customers
Hard Measures of Service Quality

30. Tools to Analyze and Address Service
Quality Problems and Productivity

31. Tools to Analyze and
Address
Service Quality
And Productivity problems

32. Root cause Analysis : Fishbone Diagram
Tools to analyze and address Service Quality
• Brainstorm
• Resulting factors / Causes are categorized
• 5 Categories – Equipment, Manpower, Material, Procedures, Other.
• Manufacturing 6M - Man power (People), Method
(Process), Machines
(Technology), Materials, Measurements, Mother nature
(Environment)
• Services – Extended to 8 categories - People -front/back stage
and Information
Causes can be traced back to root causes with the 5 WHYs
(who, what, when, where, and why, how) technique

33. Tools to analyze (contd.,)
Source : Adapted from Lovelock (1993)

34. • Based on the 80/20 Rule
– Consumer needs formulated into a standard
– Firm aims at achieving this standard
– But due to variation in the factors of production
(men, material, methods, and machinery), of some items that do
not conform to this standard is inevitable.
– Defectives - may not be of the same severity
– Pareto Principle applied in defect analysis - to identify the vital few
defects, which result in many numbers of defectives so that more
effort could be made to concentrate on eliminating these vital few
defects.
• Purpose – identify the principle causes of observed
outcomes
Tools to analyze (contd.,)
Pareto Analysis :

35. Examples for Pareto principle covering many fields are;
• Marketing - few customers account for the bulk of
the sales.
• HR - few percent of the employees are responsible
for most of the absenteeism.
• Purchasing - few percent of purchase orders account
for bulk of the purchase costs.
• A few countries account for most of the world’s
population.
Tools to analyze (contd.,)

36. The Pareto Principle represented in a diagram
Eg: Most common sources of defects, the highest occurring type of
defect, or the most frequent reasons for customer complaints etc.,
Tools to analyze (contd.,)

37. Tools to analyze (contd.,)
Combining fishbone diagram and Pareto analysis – highlights the main
causes of service failure

38. Tools to analyze (contd.,)

39. Tools to analyze (contd.,)

40. Blueprinting :
• Visualization of service delivery – sequence of front stage interactions
(by customers) and supporting back stage activities
• Identify points where failures are most likely to occur
• Ripple effect
• Identify specific failures that occur mostly which needs urgent
attention
Tools to analyze (contd.,)

41. • TQM – Total Quality Management
– A collection of principles, techniques, processes, and best practices that
over time have been proven effective
– Continuous improvement
– based on the premise that the quality of products and processes is the
responsibility of everyone - management, workforce, suppliers, and
customers
• Have processes that continuously collect,
analyze, and act on customer information.
• All of the TQM model's elements
work together to achieve results
Systematic approaches to quality and productivity
improvements and process standardization

42. TQM in Service - Twelve Critical Dimensions for
Implementation
• Top management commitment and visionary leadership
• Human resources management
• Technical system, including service process design and
process management
• Information and analysis system
• Benchmarking
• Continuous improvement
• Customer focus
• Employee satisfaction
• Union intervention and employee relations
• Social responsibility
• Servicescapes
• Service culture
Systematic approaches (contd.,)

43. • Internationally recognized standard of quality – facilitate int.trade
• Comprises: requirements, definitions, guidelines etc.,
• Registration process :
– document review by the registrar
– pre-assessment - which identifies potential noncompliance in the quality
system or in the documentation
– assessment - by a team of 2/3 auditors
– Surveillance / periodic re-audits - to verify conformity with the practices and
systems registered.
• ISO 9000 Principles ?
1. A Customer Focus
2. Good Leadership
3. Involvement of people
4. Process approach to quality management
5. Management system approach
6. Continual Improvement
7. Factual approach to decision making
8. Supplier relationships
Systematic approaches (contd.,)
ISO 9000 Certification

44. Malcolm Baldrige Model
• The Baldrige Criteria for Performance Excellence provide a systems perspective
for understanding performance management.
• Goal : Promoting best practices, achievements are publicized in US firms
• Assess firms on 7 areas ;
• Leadership commitment
• Planning priorities for improvement
• Information and analysis
• Human resources management
• Process Management
• Customer and Market focus
• Business Results
• Improve Organizational performance
• Award winners - Ritz Carlton, FedEx, AT&T
Systematic approaches (contd.,)
Baldrige Award

45. • Quality management initiative by Motorolla
• Approach to reduce defects , reduce cycle times, improve productivity
• Achieving a quality level of 3.4 DPMO
(Six standard deviations means 3.4 defects per million)
Six Sigma projects must be linked to the organization's business plan
• Defect reduction approach  overall business improvement approach
• 2 Strategies :
• Process improvement – aim at identifying and eliminating the root
cause , thereby improving service quality
• Process design / Redesign – act as a supplementary strategy to
improvement strategy
• DMAIC model – analyzing and improving business processes
Systematic approaches (contd.,)
Six Sigma

46. • Define opportunities
• Measure key steps / inputs
• Analyze to identify root causes
• Improve performance
• Control to maintain performance
Systematic approaches (contd.,)

47. Methodology to Improve and Redesign Processes
Systematic approaches (contd.,)

48. • Financial implications related to quality improvements
– Disappointed results
– Run into financial difficulties
– Poor / incomplete execution of quality programs
• CBA of quality initiatives
• ROQ based on assumptions;
– Quality is an investment
– Quality efforts must be financially accountable
– Possible to spend too much on quality
– Not all quality expenditure are equally valid
• TF, expenditure on quality improvement must be related to anticipated increase in
profitability
• Feasibility of new quality improvement efforts must be ;
– Costed in advance
– Related to anticipated customer response
ROQ – Return on Quality

49. When does improving service Reliability
Become Uneconomical ??
Determining the optimal level of Quality

50. Quality and productivity improvement strategies together.
Deliver quality experiences more efficiently to improve long-term
profitability.
• Defining Productivity in a service Context
– Productivity measures the amount of output produced
relative to the amount of inputs used.
– Improvements in productivity require an increase in the ratio
of output to inputs ;
» Cutting resources required to create a given
volume of output
» Increasing the output obtained from a given level
of inputs
Defining & Measuring Productivity

51. • Productivity, Efficiency and Effectiveness
– Productivity : financial valuation of outputs to the inputs
– Efficiency : comparison to a standard, time-based
– Effectiveness : degree to which an Organization is meeting its goals
• Classical technique :
– Focus on output and not outcome / efficiency and not effectiveness
– Variability – variation in quality / value of service
Eg: counting the number of calls answered per unit of time
– Increased customer throughout at the expense of perceived service
quality
Eg: hair dresser – productivity and efficiency achieved but not
effectiveness
Defining & Measuring Productivity (contd.,)

52. • Intangible nature of service performances
• Output is frequently difficult to define
– Output – labor (physical / intellectual), material, energy and
capital
Eg: Information based services – very difficult to measure
• People processing services – hospitals , garages, restaurants (fast
food), banks, consulting firms ??
• Organizations that consistently deliver higher effective outcomes
desired by the customers can demand ;
– a higher price
– Build a loyal and profitable customer base
Why measuring productivity in services is
difficult ?

53. • Controlling cost at every step in the process
• Reducing waste of materials and labor
• Matching productivity capacity to average level of demand
• Replacing workers by automated machines and customer
operated self services technologies
• Provide employees with equipment and data
• Training employees to work more productively
• Broadening the array of tasks that a service worker can
perform
• Installing Expert Systems
Improving Service Productivity
Generic Productivity Improvement Strategies

54. Productivity can be improved incrementally.
But, major gain require redesigning customer service processes.. .
WHEN ?
when customers face unbearably long wait times !
Long wait REDESIGN
Improving Service Productivity (contd.,)

55. Customer Driven Approaches to Improve
Productivity :
• Change the timing of customer demand
– Use service outside peak hours and give incentives
• Encourage use of alternative service delivery channels
– Internet / self-service machines
• Ask Customer to use third parties
– Specialist intermediaries
– Eg: insurance brokers, travel agencies
Improving Service Productivity (contd.,)

56. • Front Stage efforts to improve productivity
– High contact services : enhancements are visible
• Passive acceptance
• Customers to adopt to new patterns
• Market research (loss of business, cancel out productivity
gains)
• Back stage efforts to improve productivity
– Depend on whether they affect or are noticed by
customers
– Ripple effect (extends front stage and affect customer)
– Prepare customers for the changes
– Promote as a service enhancement
How Productivity Improvements Impact
Quality and Value

57. Implications :
• Tends to centre on efforts to eliminate waste and
reduce labor costs ;
– Cutback on frontline staff (remaining work hard/fast)
– Insufficient personnel to serve customers
– Staff exhausted, make mistakes, treat customers badly
– Multi-tasking : poor job at each task
– Caught between trying to meet customer needs and
achieve management’s productivity goals
Caution on Cost Reduction Strategies

58. • Better to look for Service process redesign opportunities that
leads to ;
– drastic improvements in productivity
– Increase service quality
• Key challenge for service firms :
– Deliver service quality and satisfaction to customer
– In cost effective ways for the firm
• Name of the game :
– Seek improvements that offer quantum leaps in service quality and
productivity at the same time
• Service Quality (efficiency and effectiveness) + Productivity 
Long term Profitability
Conclusion

59. Thank you
Improved Service Quality and Productivity  Profitability