It is very common when customers dissatisfied and make complaints on your particular goods or services after using it. This is because every customer has their own perception based on their needs; it is very difficult to provide a product or service in the market which is well accepted by everyone. However, how many customers may take action in response to a service failure? Will they really complain informally at the customer service counter, seek for a manager, file a complaint or do nothing with it?
Most of the people fail to complain especially if they think it will do no good which is founded by research around the globe. (Lovelock.C, Writz.J, 2007)
Customer Response Options to Service Failures
Figure 1.1 showed that three courses of action may a customer take in response to a service failure.
(1) Take Some Form of Public Action: The customer can complain to the service firm, third party or take legal action to seek for compensations.
(2) Take Some Form of Private Action: The customer can switch to other service provider, or negative word of mouth to the others.
(3) Take No action: the customer will not take any action to response due with reason of wasting their time and energy, lazy to make complaints, or feeling deeply disappointment will not use on particular products or services for next time.
A company should aware those angry customers because they usually like to tell many other people about their problems that they faced. (Bougie.R et al, 2003) Some of the company has set up their own company home page with comment boards in order the customer to drop their comments by words which are publicize to everyone.
Take Some Form of Public Action
Complain to a Third Party
Complain to the Service Firm
Service Encounter is Unsatisfactory
Take Some Form of Private Action
Take Legal Action to Seek Redress
Defect (switch provider)
Take No Action
Negative Word of Mouth
Any One or a Combination of These Responses Is Possible
Figure 1.1:
Why Do Customers Expect Once They Have Made a Complaint?
After the customers had made a complaint, they usually expect to be adequately compensated in a fair manner. (Seiders.K, Berry.L,1990) According to Stephen Tax and Stephen Brown found that about 85 percent of the satisfaction with a service recovery was determined by three dimensions of fairness. (Tax and Brown,-) These three dimensions are explained below
Procedural justice concerns on the policies and rules that customers have to go through for seeking fairness. Responsibility and convenient recovery process are customer expectation which should included flexibility and consideration of customer inputs into the recovery process.
Interactional justice involves the employees who are representing of the firm to provide the service recovery and the behavioral toward the customer. The employees should be genuine, honest and polite when making an effort to resolve the service failures.
Outcome justice concerns the compensation that customer have to receive once a service failure occurs. Other than compensation, the time taken to resolve problems, effort, and energy spent during the process of service recovery. (Tax.S.S and Brown.W.S,2000)
Dealing with Consumer Fraud
Some of the dishonest customers may take advantage from the generous service recovery strategies. For example, they refuse to pay for a service, make fake dissatisfaction complaints, or purposefully cause service failures. How can a company to protect itself against to those dishonest customers to take advantages behaviors?
The research finding has shown that truly excellent services firms have less to worry about fraud customer compare to the average provider(Writz.J and Kum.D,2004) The suggestion to the firm is the manager can offers guarantees 100% to regular customers as a part of membership program privileges, because repeat customer tend to unlikely to cheat on service guarantees.
LEARNING FROM CUSTOMER FEEDBACK
Customer complaints is useful information to a firm as a stream of information that can be used for measuring service quality and make improvements to provide better quality in the future. “It is not the strongest species that survive nor the most intelligent, but the ones most responsive to change,” wrote Charles Darwin. In simple words mean in order to be gain competitive advantages among the competitors, a firm should learn and change faster than the competition. (Baker.W.E and Sinkulu.J.M,1999) There are three main specific objective categories of effective customer feedback systems:
1. Assessment and Benchmarking of Service Quality and Performance: The objective is to learn from other well performed firms in comparison to its main competitors, the differences in the performance from the previous and current years (or quarter, month).
2. Customer-Driven Learning and Improvements: The objective of customer-driven involves what had made your customers happy or unhappy after that to maintain or make improvement on particular areas in order to increase the satisfaction level of customer as quality investment.
3. Creating A Customer-Oriented Service Culture: The objective for an organization which is focusing customer-orientation based on their needs and customer satisfaction. The entire organization has to operate based on customer needs first rather than management process.
CUSTOMER FEEDBACK COLLECTION TOOLS
Firms need to listen to their customer’s voice through variety way of feedback. There is various types of feedback collection tools can reach through the voice of customers. Different type of tools has different advantages and limitations. Leonard Berry and Parasuraman(1997)state that “Combining approaches enables a firm to tap the strengths of each and compensate for weaknesses.”
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Total Market Surveys, Annual Surveys, and Transactional Surveys : typically used to measure the level of satisfaction by the customers on services or products. This survey could be done based on indexed such as using various attribute rating rate or weighted data according to core segments or products. There are limited questions that can ask about each individual based on process or product that they satisfied or not. When all three survey types are designed properly then representative and reliable level is higher. Before a survey form is sending out the manager make ensure the questionnaires in the survey must related to the objectives. Meanwhile tele-marketing research is slight difficult because the time for a survey must not more than 30minutes if not people will feel very annoyed.
Service Feedback Cards are given customers to response on certain service issues. For example feedback card can be attached on housing loan letter or insurance approval letter. However the number of the respondents is tend to be low. People may ignore or blank it when they receive particular feedback card because most of the service feedback cards are needed to return it. Some organizations send out their feedback by mail but most customer tick the mails as ‘Junk Mail’ or deleted it without reading.
Mystery Shopping also known as ‘ghost shoppers’ which used by service businesses to determine front line staff’s working behavior with customers. For example industries like banks, hotels and retailers are active in using mystery shoppers to collect information. Mystery shopping gives highly actionable and in-depth insights for coaching, training and performance evaluation (Lovelock.C and Writz.J,2007) .However due with the number of mystery calls or visits is typically small, the survey result is not reliable or representative. An addition, if the particularly staff performs well in month of Jan but poor in March, managers cannot confidence to judge the person’s performance is good or poor.
Focus Group : Typically, focus groups are organization customer segments or user groups, to interview them in order collect valuable information by customers. By using focus group interview, the firm can able to obtain in-depth feedback on what a firm performance should be maintained or changed. However, the time taken for focus group is usually longer about 2 months and above. The process for having focus group interview is much more complicated compare to surveys.
Service Quality
The meaning of quality can be varied by different things to different people. David Garvin has identified five perspectives on quality. (Gavin,D.A, 1988)
(1) The transcendent view of quality is synonymous with innate excellence: People learn to recognize quality once they experienced from the first time and repeated exposure.
(2)The product-based approach: People see quality as a precise and measurable variable such as the ingredients and the taste of the foods.
(3) User-based definitions that quality is depending on the different type of the customer have different wants and needs.
(4) The manufacturing-based approach normally applied in supply-based because they concerned on the engineering and manufacturing practices such as specifications of the machines and the productivity levels.
(5) Value-based define quality in term of price and the value. People will evaluate a service or a product’s quality in term of the performance and the price.
Service-Based Components of Quality
There is distinctive approach to define and measure service quality. It is very difficult to evaluate the quality of a service compare to a good because services are intangible goods which cannot been seen, tasted, felt, heard or smelled. Valarize Zeithaml, Leonard Berry, and A.Parasuraman identified 10 criteria used by consumers in evaluating service quality listed in Table1.1. There are five broad dimensions on service quality.
1. Tangibles: is appearance of physical facilities, equipment, personnel and communication materials.
2. Reliability: ability to perform the promised service dependably and accurately.
3. Responsiveness: willingness to help customers and provide prompt service.
4. Assurance: is a combination of competence, courtesy, credibility, and security.
5. Empathy: a combination of access, communication, and understanding the customers.
Capturing the Customer’s Perspective of Service Quality
According to Valarie Zeithaml and her colleagues developed a gaps model to measure the customer satisfaction based on various aspects of service quality-called SERVQUAL.For the SERVQUAL, the measurement of the service quality is based on the comparing the customer perception of its service and their expectation. SERVQUAL is seen popular as quality measurement tool that can applied to various service industries. From the Table 1.1 contains 22 perception elements and a series of expectation items that referring five broad dimensions of service quality described before this. (Lovelock.C and Writz.J,2007) In the survey form for the SERVQUAL model, the respondents are asked to complete a series of scales for a particular service industry according to wide specific service characteristics. The result is based on the rate of perceived performance compare with the expectation, when the perception level is higher than expectation then the result of the service quality is good. In contract, when the perception level is lower than the expectation, this is a sign of poor quality.
Limitation of SERVQUQAL
Although SERVQUAL model has been widely used by service organizations but been expresses limitation on both its conceptual foundation and methodological (Buttle.F,1996)).According to Gerhard Mels, Christo Boshoff, and Denon Nel(1997) analyzed in their findings among banks, insurance, brokers, vehicle repair firms, electrical repair firms and life insurance companies suggest the SERVQUAL measure only two factors which are intrinsic service quality ( functional quality)and extrinsic service quality (tangible aspects of service deliver ) as Gronroos refers to as technical quality. An addition, the SERVQUAL model is difficult to measure as customer perception divided into five main dimensions tangible, assurance, responsiveness, reliability and empathy.
The Gaps Model- A Conceptual Tool to Identify and Correct Service Quality Problems
According to Zeithaml, Berry and Parasuraman identify four gaps that will occur in service failure between what customers expected and what they perceived on the services. However the figure 1.2 showed 7 gaps model expanded by Christopher Lovelock and further refinement by Lauren Wright from the original 5-gaps model by Parasuraman, Valarie A Zeithaml, and Leonard L. Berry.
Gaps in Service Design and Deliver
CUSTOMER
Customer Needs and ExpectationsWith the total seven types of the gaps in the figure 1.2 maps that showed the gaps that occur at different points when the a service is delivered to the customer. The discussion from the gap 1 to gap 7 between the customer expectation and customer perceive level as following.
Management Definition of these needs 1. The Knowledge Gap
2. The Standards Gap
Transaction into Design/Delivery Spec
3.The Delivery Gap 4. The Internal Communication Gap
Advertising and Sales Promises
Execution of Design/Deliver Specs
Customer Interpretation of Communications
Customer Perceptions of Service Execution 5. The Perceptions Gap 6. The Interpretation Gap
Customer Experience Relative Expectations 7. The Service Gap
Source: The 7-gaps model by Christopher Lovelock, Product Plus (New York: McGraw-Hill,1994:112), with further refinement by Lauren Wright, adapts and expands the original 5-gaps model created by A.Parasuraman,Valarie A. Zeithaml, and Leonard L.Berry, ” A Conceptual Model Of Service Quality and Its Implications for Future Research,” Jounal of Marketing 49, Fall 1985,41-50.
GAP 1: Knowledge Gap
The first service quality gap is the difference between what customers expect and management perception of customer expectations. Many firms do not meeting customer needs or expectations because the firm lack of understanding accurately of exactly what those customer expectation are. This might cause of too many level of management, inadequate upward communication, lack of a marketing orientation.
GAP 2: Standards Gap
Second service quality gap is the difference between management perceptions of customer expectations and service quality specification. Gap 2 exists in service organizations for a variety of reason such as inadequate commitment to service quality, lack of perception of feasibility, inadequate task standardization and the absent of setting organization goals. When service standards are not existing, quality of service will be down grade as perceived by customers is likely to suffer. Customers will feel disappointed when they perceived the service that did not meet a standard of quality. For example
GAP 3: Delivery Gap
Provider gap 3 is the difference between service quality specifications and the service delivery in the actual performance on these standards. The firm must have specification systems, right processes with the right people in the right place to ensure that service deliver actually can matches the service designs and standards in place. The reasons happen gap 3 exist because of deficiencies in human resource policies, customers who do not fulfill roles, problems with service intermediaries and failure to match supply and demand. For example some of the employee failed to follow instructions when delivering a service to a customer therefore the quality of the service may be affected.
GAP 4 : Communication Gap
Provider gap 4 is the difference between service delivered and the internal communication within the organization between the up level of management and their employees. This is when the company advertising and sales personnel think the product’s features, performance and quality level of the service differ from what the company is actually can able to deliver. The reasons of communication gap exist because of inadequate coordination between departments, inadequate horizontal communication and overpromising in advertising. For example when employees do not fully understand the reality of service delivery, they will likely fail to communicate with customer in the aspect of service lead to the result customer will feel disappointed.
GAP 5: Perception Gap
The perception gap is the differences between what actually the company delivered and what customer perceive they received because they unable to judge accurately for the service quality exactly. The perception gap exists because lack of service environments and physical evidence, customer with high expectation and complexity of service delivery.
GAP 6: Interpretation Gap
Provide gap 6 is the difference between what communication efforts by a service provider’s company actually promise and what the customer thinks about the promises by these communication efforts. Broken promises might be happen when the perceptions from the customer think different from company actual performance. Some of the customers may think that the company’s service may not same as they promised specially on advertisements. This is the reason lead to the customer perceived that the company is not trusted.
GAP 7: Service Gap
This service gap is the most difficult among 1-6 gaps because there are differences between what customers expect to receive and their perception of the service that is actually delivered. This is the overall close gaps 1 to 6 to consistently meet customer expectation. The gaps can be narrow down once the Gaps 1-6 have been addressed.
Based on the discussion above from the gaps 1to 7, the gap 5 and gap 7 is quite similar however there is an advance in gap 7 which is overall perception and expectation of the service quality by the customers while gap 5 is only the perception of the customer that customer enable to judge the service quality either good or bad without a proper judgments methods. 4=6
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Gaps 1, 5, 6, and 7 are the gaps that between the organization and the external customers while gaps 2,3 and 4 is the within organization gaps between various function and departments. Anyone of the gaps that mentioned above can damage the relationships from an organization with their customer in a long term. Hence, service organizations want to improve their service quality by narrow and closer the gaps as much as possible.
Next section will discuss the strategies that organizations can overcome or close the gaps 1-6 as following:
Gap 1 – The Knowledge Gap
S1: Understanding what customers actually expect and their needs
Sharpen market research procedures such as questionnaire and interview sample group of customer in order to collect useful information regarding to their expectation on the service quality. An addition, repeat research for each year if necessary to capture the customer needs (are they changing in attitude or behavior) or perception in aspect of the service quality.
Customer feedback is one of the powerful sources for an organization to measure the satisfaction level. Implement effectively customer complaint system, research on customer satisfaction, or customer panels to know the area of poor service by an organization.
Increase the communication between front line employees and management. Manager can interact with front-line employees like having meeting in each of the month in order to discuss potential problem that they faced when dealing with customers. By doing this, manager can only know what actually customer dissatisfied on the service.
Gap 2: The Standards Gap
S2: Develop Effectively Service Processes and Specify Standards
Service processes must be systematic and effectively without too complexity to follow by the employee. Every step of the service process must be clear and realistic, therefore repetitive tasks for employees with supported technology to ensure consistency and reliability by reducing error.
Setting clear service quality goals to ensure employees understand and accept goals, standards and priorities in service standard specification that meet customer expectations.
Gap 3 Deliver Gap
S3:Ensure Performance reach standards
Staff Motivation: Providing training programs to improve technical skills, communication skills, and problem solving when dealing with complaints customers. Furthermore, manager have to ensure that employees are clear enough about their working tasks to provide good service to each of the customer without bias. Empower employees to make wisely decision when dealing problems with customers.
S3:Measurement Performance
Service quality affected by service delivers performance therefore regularly performance measurement, employees feedback and customer service department to work together for evaluating service quality goals.
S3Operational Management
Demand and supply must be balance so that productive capacity can fulfill the customer needs/ demand. If not, the operational may slow down or “stuck” at a point due with out-stock of materials. This will lead to disappointment or complaints by customer if they could not get what they want.
S3Educate customer for service quality
Manager should try to provide proper way for educating customers so that they can perform their roles and responsibilities in service delivery effectively.
Gap 4 : Internal Communication Gap
S4:Ensure the Communication Promises are Realistic
Manager’s Responsibility: Managers have to educate sales and marketing function department about the entire organization operational capabilities. An addition, operations staffs try to get involve with sales staff in face-to-face meetings with customers. Front-line employees and other service providers must preview and fully understand the contents before the advertisements and other communications forms exposed to customers. Integrated Marketing Communication (IMC) within an organization must have educational in which standardize service delivery across each other.
Gap 5: Perceptions Gap
S5: Provide Physical Evidence
Due with the service is intangible, most of the customers do not really know whether the problem has solved fully because they are unable to evaluate service quality accurately. For complex service, service provider can have brief and clear explanation how the service failure will be going to resolve in a proper ways in a certain period of time. Otherwise, simple service such as car repair, the repairer can show customer with the damaged components that were removed from the car and replacing a new.
Gap 6: Interpretation Gap
S6:Be specific with promises and customer understanding level toward the communication content
Pretest all the advertising, brochures, web site contents before expose to in the external release, to determine if the target audience interprets them as the firm intends. (if not, revise and retest) Advertising contents have to reflect to the most important of service characteristics to customer that concerned. Public relation is a powerful communication tool to explain the reasons for shortcomings in service performance, and highlight the uncontrolled incident by the firm.
S6: Price and Quality: Manager offer customers with different levels of service by charging different range of price. For example, manage have to explain what the distinctions between A are, B and C travel packages.
S6:Document precisely: All the promises must be “black and white” regarding to what tasks and performance guarantees are included in an agreement or contract with terms and conditions.
Gap 7: Service Gap
Close Gaps 1 to 6 to meet customer expectation consistently
Gap 7 is the overall from the gaps 1-6 outcome. The gaps can be narrow down once the Gaps 1 through 6 have been addressed.
*Source: Lovelock.C, Writz.J, 2007, ” Service Marketing,People, Technology, Strategy”, pg 424
Tools to Analyze and Address Service Quality Problem
When a problem in service organization is caused by controllable then there is no chance for allowing occurs it again. Prevention can increase customer’s goodwill for gaining a chance to get back their trust after a service failure. With prevention as a goal, some of the tools for determining the causes of service quality problems. Let’s look at each method.
The Service Recovery Parodox
The service recovery paradox showed that customer will likely to make future purchases once they experience a service failure and received resolution to full satisfaction compare to those customers who have no problem in the first transaction in purchasing. A study that the service recovery parodox happened at the first time service failure cans recovery full satisfaction from their customer. (Micheal.S, 2001) Unfortunately, when second time of service failure occur the paradox recovery disappeared. In another words, it seem that customers may like to give a chance for a firm to recovery to their service failure but not for second, third on forward. An addition, the study stated that customer expectation toward the service recovery were rise once the received a very good recovery. Thus, customers will expect higher for future service recovery even they perceived a very good recovery solution by right now.
Principles of Effective Service Recovery Systems
An effective service recovery procedures seen like very importance to any firms to turn their unsatisfied customer experiences into satisfied. There are three guiding principles for service recovery procedures: Make it easy for customers to give feedback, enable effective service recovery, and establish appropriate compensation levels (Lovelock.C and Writz.J,2007).
Make It Easy for Customer to Give Feedback
Many companies want to know the reason why their unhappy customers felt unsatisfied on their products or services. Hence, organizations have to make it easy ways for customer to complain or give feedback. Research even shows that a large number of customers are not aware of proper feedback system available that could help them get the ways for solving problems(Stiefbold.R,2003). This is the reason of some companies have improved their complaint method such as adding special too-free call, web sites, and displayed customer comment cards, or video terminals for recording complaints.
Enable Effective Service Recovery
To develop service recovery effectively must specifically to be (1) proactive, (2) planned, (3) trained, and (4) empowered.
Service Recovery Should Be Proactive: Service personnel should be sensitive with signs of unhappy customers and approach to customers which experiencing a problem. For example, a bank staff may ask a walk-in customer who is walking around there, “Yes, Sir. May I help you?” The customer might answer, “No, thanks” or ” I’m looking for customer service counter regarding to my credit card problem.” The latter response gives the bank staff a chance to provide the service to the customer immediately rather than have an angry face and feel disappointment.
Recovery Procedures Need to Be Planned: Contingency plan have to be developed for those can occur regularly service failure and cannot be designed out of the system. (Chistian Homburg and Andreas Furst,2005) For example for hotel industry in peak season, the manager have to identify common service problem like overbooking and develop a proper solution sets for the employees to overcome those problems.
Recovery Skills Must Be Taught: Customer look for employee for assistance when they are facing a service failure. Hence, manager should develop effective training program in order to build confidence and competence especially to the front-life staff, enabling them to turn distress into delight (Ron Zemke et al,2000)
Recovery Requires Empowered Employees: Service recovery should be flexible and empowered employees should use their own judgment and communication skills in order to resolve problem that can satisfy unhappy customers (Barbara R.Lewis,2000)
SERVICE GUARANTEES
The number of companies that offer service guarantee is increasing recently in which customers will be entitled to one or more type of compensation if the service delivery fails to meet a standard needs. Some companies will put terms and conditions on their guarantees, while other may offer service guarantees to customers with unconditionally.
The Power of Service Guarantees
Christopher Hart(1990) stated that service guarantees are powerful tools for achieving service quality because of following reasons.
Guarantees encourage firms to focus on the needs and expectation of their customers in each element of services
Guarantees set up clear standards list of services which telling customers and employees that company stands for. Compensation for poor service to customer cause manager to become seriously on guarantees service because it highlights the financial costs on the firms.
Guarantees require to development of systems for generating useful customer feedback and take action on it.
Guarantees encourage the service organization to learn from the past mistake and understand why they fail in order to identify solution to overcome the fail points.
Guarantees can build stronger relationship in term of marketing strategy between the customer and the firms by reducing the risk and long term loyalty.
Root-Cause Analysis: The Fishbone Diagram
The cause and effect analysis was developed by a Japanese quality expert called, Kaoru Ishikawa. The fishbone diagram combining the groups of managers and staff brainstorm all the possible factors that might cause a specific problem that can affect the service quality. This diagram is popular known as a fishbone diagram because of the shape .The resulting factors categorized into five grouping: equipment, manpower, material, procedures and other. In service organizations, the framework has been extended into right rather than previously five grouping by adding front-stage personnel, backstage personnel and information (Lovelock.C, 1994). In service, front-line employees have a high-contact with their customers. If they cannot performance their role correctly, they may reduce the service productivity and cause quality problems to other customers and the organizations. There is an example show in figure 1.3 displaying possible reasons for late departures of passenger aircraft (Wyckoff.D.D, 2001)
Front Stage Personnel
Late/Unavailable Cockpit Crew
Procedures
Acceptance of Late Passengers
Facilities Equipment
-Late Push Back Tug
Customers
Delayed Departures
Blueprinting- A powerful Tool for identifying fail points
Other causes
Weather Air Traffic
Information
Weight and balance Sheet Late
Backstage Personnel
Late Cabin Cleaners
Material Supplies
Late Fuel
lBlueprints can be used to identify potential fail points at which failures point are like
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