? Quality of the service is the degree of conformance of all the relevant features and characteristics of service to all the aspects of the consumers’ needs limited by the price and delivery s/he will accept. Quality can be viewed from two perspectives: ? Internal quality based on conformance to specifications External quality based on customer-perceived quality Gain competitive advantage, maintain loyalty Increase value (may permit higher margins) Improve profits Expected Service CUSTOMER Customer Gap Perceived Service Service Delivery External Communications to Customers COMPANY
Gap 3 Gap 1 Gap 4 Customer-Driven Service Designs and Standards Gap 2 Company Perceptions of Consumer Expectations Customer Expectations Gap 1 •Inadequate marketing research orientation •Lack of upward communication •Insufficient relationship focus •Inadequate service recovery Company Perceptions of Customer Expectations Customer-Driven Service Designs and Standards Gap 2 • Poor service design • Absence of customer-driven standards • Inappropriate physical evidence and services gap Management Perceptions of Customer Expectations Customer-Driven Service Designs and Standards Gap 3 Deficiencies in human resource policies •Customers who do not fulfill roles •Problems with service intermediaries • Failure to match supply and demand Service Delivery Service Delivery Gap 4 •Lack of integrated services marketing communications. •Ineffective management of customer expectations. •Overpromising. •Inadequate horizontal communications. External Communications to Customers Expected Service CUSTOMER Customer Gap COMPANY Perceived Service Service Delivery External Communications to Customers Gap 1 Gap 4 Gap 3 Customer-Driven Service Designs and Standards Gap 2 Company Perceptions of Consumer Expectations
The central focus of the gaps model is the customer gap, the difference between customer expectations and perceptions. ? Expectations are the reference points customers have coming in to a service experience. ? Perceptions reflect the service as actually received. ? Most goods Most services Easy to evaluate Difficult to evaluate High in search properties High in experience properties High in credence properties Desired Service ZONE OF TOLERANCE Adequate Service Desired Service Level Of Expectation ZONE OF TOLERANCE Desired Service Adequate Service ZONE OF TOLERANCE Adequate Service Reliability
Tangibles Lasting Service Intensifiers Desired Service Personal Needs ZONE OF TOLERANCE Adequate Service Lasting Service Intensifiers Desired Service Personal Needs Temporary Service Intensifiers ZONE OF TOLERANCE Perceived Service Alternatives Adequate Service Self Perceived Service Role Predicted Service Situational Factors Lasting Service Intensifiers Explicit Service Promises Desired Service Implicit Service Promises Word – Of – Mouth Personal Needs Temporary Service Intensifiers ZONE OF TOLERANCE Past Experience Perceived Service Alternatives Adequate Service Self Perceived Service Role
Predicted Service Situational Factors Customer satisfaction, a business term, is a measure of how products and services supplied by a company meet or surpass customer expectation. ? It is seen as a key performance indicator within business. ? “Customer loyalty is when an organization receives the ultimate reward for the way it interacts with its customers. “ ? Although customer loyalty is often achieved through offers, discount coupons, rebates and other kinds of rewards, long-term customer loyalty can only be created by making your customers feel that they are your number one priority. ? Customer satisfaction measures how well a customer’s expectations are met. Customer loyalty measures how likely customers are to return and their willingness to perform partner shipping activities for the organization. Customer satisfaction is a requisite for loyalty. ? ? ? Product/service features. ? Consumer emotions. ? Attributions for service success or failure. ? Perceptions of equity or fairness. ? Other consumers, family members. ? Price. ? Increased customer retention. ? Positive word-of-mouth communications. ? Increased revenues. ? Reliability: Delivering on promises.
Example: receive mail at same time each day. Responsiveness: Willingness to help customers promptly. Example: avoid keeping customers waiting for no apparent reason. ? ? Assurance: Inspiring trust and confidence. Example: Insurance, medical services, etc.. Empathy: Treating customers as individuals. Example: being a good listener. Tangibles: Representing the service physically. Example: Food. ? ? Occurs any time the customer interacts with the firm. ? Can potentially be critical in determining customer satisfaction and loyalty. ? Is an opportunity to: ? ? ? ? ? uild trust reinforce quality build brand identity increase loyalty ? ? ? Remote Encounters Phone Encounters Face-to-face Encounters Check-In Bellboy Takes to Room Restaurant Meal Request Wake-Up Call Checkout Sales Call Delivery and Installation Servicing Ordering Supplies Billing Recovery: employee response to service delivery system failure Adaptability: employee response to customer needs and requests Coping: employee response to problem customers Spontaneity: unprompted and unsolicited employee actions and attitudes ? Operational flow of activities ? Contact employees ?
Customer him/herself ? Other customers People ? Steps in process ? Flexibility vs. standard ? Technology vs. human Process Physical Evidence ? Tangible communication ? Servicescape ? Guarantees ? Technology ? Website Expected Service CUSTOMER Customer Gap Perceived Service Service Delivery External Communications to Customers COMPANY Gap 3 Gap 4 Gap 1 Gap 2 Customer-Driven Service Designs and Standards Company Perceptions of Consumer Expectations CUSTOMER Expected Service COMPANY Listening Gap Company Perceptions of Consumer Expectations Listen to customers through research.
Cover company strategy to retain and strengthen the relationship. ? Service recovery. ? ? ? ? ? ? By formal and informal method. Surveys. Critical incident studies. Complaint solicitation. ? ? ? ? ? ? ? ? ? To identify dissatisfied customers. To discover customer requirements or expectations. To monitor and track service performance. To assess overall company performance compared to competition. To assess gaps between customer expectations and perceptions. To appraise service performance of individuals and teams for rewards. To determine expectations for a new service. To monitor changing expectations in an industry.
To forecast future expectations. : Define Problem : Develop Measurement Strategy : Implement Research Program : Collect and Tabulate Data : Interpret and Analyze Findings : Report Findings 9 8 7 O 6 5 O O O O 4 3 2 1 0 Reliability Responsiveness Assurance Empathy Tangibles Retail Chain Zone of Tolerance O S. Q. Perception HIGH High Leverage Attributes to Improve ? ? ? ? Attributes to Maintain ? Importance ? ? ? Low ? Leverage ? Attributes to Maintain Attributes to De-emphasize LOW Performance HIGH Partners Friends Acquaintances Strangers Enhancing Retaining Satisfying Acquiring
The Customer Pyramid Most Profitable Customers Platinum What segment spends more with us over time, costs less to maintain, and spread positive word of mouth? Gold Iron What segment costs us in time, effort, and money yet does not provide the return we want? What segment is difficult to do business with? Least Profitable Customers Lead Volume and Frequency Rewards Integrated Information Systems Stable Pricing Bundling and Cross Selling Continuous Relationships I. Financial Bonds IV. Structural Bonds Excellent Service and Value Joint Investments II. Social Bonds Personal Relationships
Shared Processes and Equipment III. Customization Bonds Anticipation/ Innovation Customer Intimacy Social Bonds Among Customers Mass Customization ? The Customer is not always right ? ? The Wrong Segment Not Profitable in Long Term ? Difficult Customers Service Failure Take Action Do Nothing Switch Providers Complain to Provider Complain to Family & Friends Stay with Provider Complain to Third Party Switch Providers Stay with Provider Service Recovery Strategies Expected Service CUSTOMER Customer Gap Perceived Service Service Delivery External Communications to Customers COMPANY Gap 3 Gap 1 Gap 4
Customer-Driven Service Designs and Standards Gap 2 Company Perceptions of Consumer Expectations ? Oversimplification Incompleteness Subjectivity ? ? ? Biased Interpretation • Full-scale launch • Post-launch review Full Launch Enablers Development • Formulation of new services objective / strategy • Idea generation and screening • Concept development and testing People Services Technology Tools Systems • Service design and testing • Process and system design and testing • Marketing program design and testing • Personnel training • Service testing and pilot run • Test marketing Design Analysis Business analysis • Project authorization ? Radical Innovations – Major Innovation. Example: amazon. com. Start-up Business: new service for existing market. Example: online banking. New Services for the Market Presently Served: new services to customers of an organization. Example: health club offering nutrition classes. ? ? ? Service Line Extensions: augmentation of existing service line. Example: Airline offering new routes. Service Improvements: changes in features of currently offered service. Example: Trains. Style Changes: modest visible changes in appearances. Example: Videocon. ? ? ?
A service blueprint is a picture or a map that accurately portrays the service system so that the different people involved in providing it can understand and deal with it objectively regardless of their roles or their individual point of view. Process Service Blueprint Points Of Contacts Evidence CUSTOMER PHYSICAL EVIDENCE Hotel Exterior Parking Cart for Bags Desk Elevators Registration Hallways Papers Room Lobby Key Cart for Bags Room Amenities Bath Menu Delivery Tray Food Appearance Food Bill Desk Lobby Hotel Exterior Parking Arrive at Hotel Give Bags to Bellperson Check in Go to Room Receive Bags
Sleep Shower Call Room Service Receive Food Eat Check out and Leave (On Stage) CONTACT PERSON Greet and Take Bags Process Registration Deliver Bags Deliver Food Process Check Out (Back Stage) Take Bags to Room Take Food Order SUPPORT PROCESS Registration System Prepare Food Registration System Identify the process to be blueprinted Identify the customer or the customer segment Map the process from customer’s point of view Map contact employee’s actions, onstage and backstage, and/or technology actions Link contact activities to needed support functions Add evidence of service at each customer action step . Identify Existing or Desired Service Encounter Sequence 2. Translate Customer Expectations Into Behaviors/Actions 3. Select Behaviors/Actions for Standards 4. Set Hard or Soft Standards Measure by Audits or Operating Data Hard 5. Develop Feedback Mechanisms Soft Measure by TransactionBased Surveys 6. Establish Measures and Target Levels 7. Track Measures Against Standards 8. Update Target Levels and Measures Servicescape Facility Exterior Other Tangibles Business Cards • Exterior Design • Signage • Stationery • Billing Statements • Parking • Landscape • Reports • Employee Dress • Surrounding Environment
Facility Interior • Interior Design • Equipment • Uniforms • Brochures • Internet/ Web Pages • Signage • Layout • Air/ Quality Temperature Delivering and Performing Service Expected Service CUSTOMER Customer Gap Perceived Service Service Delivery External Communications to Customers COMPANY Gap 4 Gap 3 Gap 1 Customer-Driven Service Designs and Standards Gap 2 Company Perceptions of Consumer Expectations ? Who are they? ? “boundary spanners” ? What are these jobs like? ? emotional labor ? many sources of potential conflict ? person/role ? organization/client ? interclient ? quality/productivity
External Environment Internal Environment • Person vs. Role • Organization vs. Client • Client vs. Client • Quality vs. Productivity Hire for Service Competencies and Service Inclination Hire the Right People Customeroriented Service Delivery Develop People to Deliver Service Quality Treat Employees as Customers Empower Employees Retain the Best People Provide Needed Support Systems Provide Supportive Technology and Equipment ? Other customers can detract from satisfaction ? disruptive behaviors ? excessive crowding ? incompatible needs ? Other customers can enhance satisfaction ? mere presence ? ocialization/friendships ? roles: assistants, teachers, supporters ? ? ? ? ? Lack of understanding of their roles Not being willing or able to perform their roles No rewards for “good performance” Interfering with other customers Incompatible market segments Strategies for Enhancing Customer Participation Define Customer’s Jobs • Clarify level of participation • Indentify specific roles • Understand implications for productivity & quality Recruit, Educate & Reward Customers • Identify & recruit appropriate segment • Educate customers for their roles • Provide reasons to participate • Reward customer performance
Effective Customer Participation Define Customer’s Jobs • Clarify level of participation • Indentify specific roles • Understand implications for productivity & quality Demand Too High ? ? ? Shift Demand Demand Too Low ? ? Use signage to communicate busy days and times Offer incentives to customers for usage during non-peak times Take care of loyal or regular customers first Advertise peak usage times and benefits of non-peak use Charge full price for the service–no discounts • • • • •
Use sales and advertising to increase business from current market segments Modify the service offering to appeal to new market segments Offer discounts or price reductions Modify hours of operation Bring the service to the customer Demand Too High ? ? ? ? ? ? ? Adjust Capacity Demand Too Low Stretch time, labor, facilities and equipment Cross-train employees Hire part-time employees Request overtime work from employees Rent or share facilities Rent or share equipment Subcontract or outsource activities • • • • Perform maintenance renovations Schedule vacations Schedule employee training Lay off employees
Expected Service CUSTOMER Customer Gap Perceived Service Gap 4 COMPANY Gap 3 Gap 1 Gap 2 Company Perceptions of Consumer Expectations Service Delivery Customer-Driven Service Designs and Standards External Communications to Customers A number of media sources are used for service marketing communication. ? Need is to ensure that customers receive unified & consistent messages & promises. ? Company Internal Marketing Vertical Communications Horizontal Communications External Marketing Communication Advertising Sales Promotion Public Relations Direct Marketing Employees Interactive Marketing Personal
Selling Customer Service Center Service Encounters Services capes Customers Manage Customer Expectations Manage Service Promises Goal: Delivery greater than or equal to promises Improve Customer Education Manage Internal Marketing Communication ? Discrepancies b/w service delivery & external communications in the form of exaggerated promises & the absence of information about service delivery aspects intended to serve customers well can powerfully affect consumer perceptions of service quality. Inadequate management of service promises. Inadequate management of customer expectations. Inadequate customer education. ? Inadequate internal marketing communications. ? ? Approaches for Managing Service Promises MANAGING SERVICE PROMISES Create Effective Services Communications Coordinate External Communication Offer Service Guarantees Goal: Delivery greater than or equal to promises Make Realistic Promises Offer Choices Create Tiered-Value Offerings Communicate Criteria for Service Effectiveness Negotiate Unrealistic Expectations Goal: Delivery greater than or equal to promises ? Create effective vertical communication. Create effective horizontal communication.
Align back office & support personnel with external customers. ? ? ? Create cross functional teams. Goal: Delivery greater than or equal to promises Create Effective Vertical Communications Create Effective Horizontal Communications Align Back Office Personnel w/ External Customers Create Cross-Functional Teams Source: http://www. newdhl. com/advertising. asp? cid=dhlbt1hmpg1 INDIAN LOGISTICS INDUSTRY : AN OVERVIEW • Fastest growing industry. • Dominated by unorganized market. • Logistics cost is over 13% of GDP. ? Among the top 5 players in the country. ? Best domestic logistics company award. Network reaches up to 580 districts out of 590 districts. ? International operations. S E R V I C E G A P M O D E L CUSTOMER Customer needs & expectations Knowledge Gap (1) Management definition Of these needs Standard Gap (2) Translation into design/ Delivery specs Delivery Gap (3) Execution of design/delivery specs Perception Gap (5) Customer perceptions of product execution (4) Internal Communication Gap (4) Advertising & sales promises Interpretation Gap (6) Customer interpretation of communication Service Gap (7) Customer experience relative to expectations Customer needs & Expectations ?
Improper field level Information. KNOWLEDGE GAP ? Business Intelligence not available for decision making at all levels. ? Least attention paid to small customers. Management definition of these needs GATI’S SOLUTION: ? Customer’s information is collected through feedback forms. ? Appointment of executives to cater all types of customers. Management definition of these needs ? No proper service design for customers. STANDARD GAP ? Fluctuation in fuel prices. ? No Insurance for goods. ? Improper allocation of funds. Translation into Design GATI’S SOLUTION: ? Sharing the burden of increasing fuel prices. Insurance for goods. Translation into Design ? Poor employee-technology job fit. DELIVERY GAP ? Delay in delivering the service. ? Over pricing to match demand. Execution of Design GATI’S SOLUTION: ? Employees are properly trained. ? Promptness in delivery. Execution of Design ? Improper horizontal communication. COMMUNICATION ? Customer enquiry constraints. ? Absence of strong internal marketing. ? Lack of adequate education for customer. GAP Advertising And Sales Promises GATI’S SOLUTION: ? Toll Free Number available to provide information to the customers. ? Gati. net. Execution of Design Indifferent attitude towards customers. PERCEPTION GAP ? Improper design leading to negative perception. ? Improper information transparency to their supply chain partners to maintain competitiveness. Customer Perceptions of product execution GATI’S SOLUTION: ? Should have a positive attitude towards the customer. ? Proper market research to change design accordingly. Advertising And Sales Promises ? Overpromise, under delivery. INTERPRETATION GAP ? Main customers – Corporate customers. Hence interpretation of a local customer varies differently. Customer interpretation of communication GATI’S SOLUTION: Should focus on B to C advertising apart from B to B advertising. ? Provide services as promised . Customer perceptions Of product execution Customer Interpretation of communications ? Value added services. SERVICE GAP ? Ware housing facility. ? Reverse logistics. Customer experience Relative to expectations GATI’S SOLUTION: ? Started giving value added services in some areas. SERVICE RECOVERY ?Poor service recovery in the logistics industry. ?Effects customer loyalty. ?It should be Pro-active, Planned, Trained & Empowered GATI : SERVICE RECOVERY PARADOX Undertaking Service Recovery Seriously.