Marketing assignment J 6-10

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Blueprinting

Depicts sequence of front-stage interactions experienced by customers plus supporting backstage activities

Used to identify potential fail points

where failures are most likely to appear

Shows how failures at one point can have a ripple effect

Managers can identify points which need urgent attention

Important first step in preventing service quality problems

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Return On Quality (ROQ)

Assess costs and benefits of quality initiatives

ROQ approach is based on four assumptions:

- quality is an investment

- quality efforts must be financially accountable

- it’s possible to spend too much on quality

- not all quality expenditures are equally valid

Implication: Quality improvement efforts may benefit from being related to productivity improvement programs

To determine feasibility of new quality improvement efforts, determine costs and then relate to anticipated customer response

Determine optimal level of reliability

Diminishing returns set in as improvements require higher investments

Know when improving service reliability becomes uneconomical

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Service Reliability

100%

A

B

Investment

Small Cost,

Large Improvement

Large Cost,

Small Improvement

C

D

Satisfy Target Customers Through Service Delivery as Planned

Satisfy Target Customers Through Service Recovery

Optimal Point of Reliability: Cost of Failure = Service Recovery

Assumption: Customers are equally (or even more) satisfied with the service recovery than with a service that is delivered as planned.

When Does Improving Service Reliability Become Uneconomical?

Productivity in a Service Context

Productivity: amount of output produced relative to amount of inputs

Improvement in productivity means an improvement in the ratio of outputs to inputs.

Intangible nature of service makes it hard to measure productivity of service firms, especially for information-based services

Both input and output are hard to define

Relatively simpler in possession-processing services, as compared to information- and people-processing services

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Service Efficiency, Productivity, and Effectiveness

Efficiency: involves comparison to a standard, usually time-based (e.g., how long employee takes to perform specific task)

Focus on inputs rather than outcomes and may ignore variations in service quality/value

Productivity: involves financial valuation of outputs to inputs

Consistent delivery of outcomes desired by customers should command higher prices

Effectiveness: degree to which firm meets goals

Cannot divorce productivity from quality and customer satisfaction

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Improving Service Productivity

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Generic Productivity Improvement Strategies

Careful control of costs

Efforts to reduce wasteful use of materials or labor

Matching productive capacity to average demand levels

Replacing workers by automated machines or self-service technologies

Teaching employees how to work more productively

Broadening variety of tasks that service worker can perform

Installing expert systems that allow paraprofessionals to take on work previously performed by professionals

Typical strategies to improve service productivity:

Although improving productivity can be approached incrementally, major gains often require redesigning entire processes

Customer-Driven Strategies to Improve Productivity

Change timing of customer demand

By shifting demand away from peaks, managers can make better use of firm’s productive assets and provide better service

Involve customers more in production

Get customers to self-serve

Encourage customers to obtain information and buy from firm’s corporate websites

Ask customers to use third parties

Delegate delivery of supplementary service elements to intermediary organizations

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Implications of Backstage and Front-Stage Changes for Customers

Backstage changes may impact customers

Keep track of proposed backstage changes, and prepare customers for them

e.g., new printing peripherals may affect appearance of bank statements

Front-stage productivity enhancements are especially visible in high contact services

Some improvements only require passive acceptance, while others require customers to change behavior

Must consider impact on customers and address customer resistance to changes

A Note of Caution on Mere Cost Reduction Strategies

Without new technology, firms improve service productivity by eliminating waste and reducing labor costs

Multitasking can reduce productivity

Excessive pressure breeds discontent and frustration among customer contact personnel

It is often better to search for service process redesign opportunities that lead to quantum leaps in improvements in productivity and service quality at the same time

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Summary

Service quality has five key dimensions: Tangibles, Reliability, Responsiveness, Competence, Courtesy

GAPS model can be used to diagnose and address service quality problems:

Customer feedback systems are used to:

Assess and benchmark service quality and performance

Institutionalize customer-driven learning and improvements

Create a customer-oriented service culture

Gap 1: The Knowledge Gap

Gap 2: The Policy Gap

Gap 3: The Delivery Gap

Gap 4: The Communications Gap

Gap 5: The Perceptions Gap

Gap 6: The Service Quality Gap

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Summary

Efficiency, productivity, and effectiveness need to be distinguished when measuring service quality

Customer-driven approaches to improving productivity include

Changing timing of customer demand

Involving customers more in production

Asking customers to use third parties

Use cost-reduction strategies with caution if they are not driven by new technology or process redesign - they may reduce service quality!

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Appendix

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SERVQUAL

Survey research instrument based on premise that customers evaluate firm’s service quality by comparing:

their perceptions of service quality actually received with

their prior expectations of companies in a particular industry

Poor Quality: Perceived performance ratings < expectations

Good Quality: Perceived performance ratings > expectations

Developed primarily in context of face-to-face service encounters

Scale contains 22 items reflecting five dimensions of service quality

Scale may have to be customized to the research context as recent research suggests that it is not generalizable

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Tools to Analyze and Address Service Quality Problems

Total Quality Management (TQM)

ISO 9000

Comprises requirements, definitions, guidelines, and related standards to provide an independent assessment and certification of a firm’s quality management system

Malcolm Baldrige Model Applied to Services

To promote best practices in quality management, and recognizing, and publicizing quality achievements among U.S. firms

Many countries around the world have adapted the Malcolm Baldrige Model

Six Sigma & Lean Six Sigma

Statistically, only 3.4 defects per million opportunities (1/294,000)

Has evolved from defect-reduction approach to an overall business-improvement approach

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