Features

Service quality: Balancing customer perceptions and expectations

10 Feb 2014 - {{hitsCtrl.values.hits}}

Providing satisfaction to customers is an intuitively sensible route to running a profitable business. But we have not been very good at measuring whether or not businesses are doing a right job in delivering satisfaction to their customers. Part of the problem is a lack of clarity about the meaning of some of the concepts involved.
For example, customer satisfaction is often linked to ‘service quality’. Some people argue that they are the same thing. There is some justification for this argument. The idea of providing excellent service to customers does have the potential to offer a competitive advantage. Yet, putting this idea into effect is a bit harder than just applying a handful of simple principles.

Fortunately, research is emerging on how organisations can make the creation and delivery of customer service their core competence. Take for example, three very useful models developed by Valarie Zeithaml, A Parasuraman and Leonard Berry in 90s after a five-year research. They help you to have a finely tuned understanding of what makes a satisfied customer and how to turn this into long-term satisfaction and loyalty.
The models are known as:

Quality gaps
Service quality, or SERVQUAL
Zone of tolerance

Service quality
With the SERVQUAL, managers were given a clear framework and a measurement tool they could apply in most situations. The SERVQUAL authors originally identified 10 elements of service quality: (1) Reliability (2) responsiveness (3) competence (4) access (5) courtesy (6) communication (7) credibility (8) security (9) understanding/knowing the customer (10) tangibles.
In later work, these 10 elements were collapsed into five factors:

Empathy: The provision of caring, individualized attention to customers.
Assurance: The knowledge and courtesy of employees and their ability to convey trust and confidence.
Reliability: The ability to perform the promised service dependably and accurately.
Tangibles: The appearance of physical facilities, equipment, personnel and communication materials.
Responsiveness: The willingness to help customers and to provide prompt service.

Survey questions were constructed for each of these factors, using a rating scale that enabled respondents to indicate what they expected from an industry in general and what they perceived they had received from a particular business. When customer expectations are greater than their perceptions of received delivery, service quality is deemed low.

In additional to being a measurement model, SERVQUAL is also a management model.

Gaps
SERVQUAL authors identify five ‘gaps’ that may cause customers to experience poor service quality.

GAP 1: Gap between consumer expectation and management perception: This gap arises when the management does not correctly perceive what the customers want. For instance – hospital administrators may think patients want better food but patients may be more concerned with the responsiveness of the nurse. Key factors leading to this gap are: (1) Insufficient marketing research, (2) poorly interpreted information about the audience’s expectations, (3) research not focused on demand quality, 4) too many layers between the front line personnel and the top level management

GAP 2: Gap between management perception and service quality specification: Here the management might correctly perceive what the customer wants but may not set an appropriate performance standard. An example here would be that hospital administrators may tell the nurse to respond to a request ‘fast’ but may not specify ‘how fast’. Gap 2 may occur due the following reasons: (1) Insufficient planning procedures, (2) lack of management commitment, (3) unclear or ambiguous service design, (4) unsystematic new service development process.

GAP 3: Gap between service quality specification and service delivery: This gap may arise owing to the service personnel; the reasons being poor training, incapability or unwillingness to meet the set service standard. The possible major reasons for this gap are: (1) Deficiencies in human resource policies such as ineffective recruitment, role ambiguity, role conflict, improper evaluation and compensation system, (2) ineffective internal marketing, (3) failure to match demand and supply, (4) lack of proper customer education and training.

GAP 4: Gap between service delivery and what customers were told would be delivered: Consumer expectations are highly influenced by statements made by company representatives and advertisements. For example – the hospital printed on the brochure may have clean and furnished rooms but in reality it may be poorly maintained – in this case the patient’s expectations are not met. The discrepancy between actual service and the promised one may occur due to the following reasons: (1) Over-promising in external communication campaign, (2) failure to manage customer expectations, (3) failure to perform according to specifications.

GAP 5: Gap between expected service and experienced service: This gap arises when the consumer misinterprets the service quality. The physician may keep visiting the patient to show and ensure care but the patient may interpret this as an indication that something is really wrong.

Zone of tolerance
It is said that customers have two levels of expectation:

Adequate - what they find acceptable
Desired - what they hope to receive

The distance between the adequate and the desired levels is known as the ‘zone of tolerance’. The two levels may vary from customer to customer and from one situation to another for the same customer.

Ideally businesses will always try to operate within a customer’s zone of tolerance. An example will make this theory clearer.

Let us study the following example. A small travel agency opens for work on a Monday morning to find that its broadband line is not functioning. It lodges a complaint with the telecom service provider and gets a complaint number. How soon should the telecom company repair the line? This is where the concept of Zone of Tolerance comes into play.

In an ideal world, the service provider would fix the problem (as an example) within six hours after the complaint is lodged. This is what would lead to customer delight.
However, there is going to be a cost attached to providing that level of service. The telecom company needs to maintain that many technical support staff and also equip them with requisite communication and transport. This cost will eat into the profits that the company can otherwise make. At the same time, the firm cannot afford to ignore the servicing element too much, since that could make customers unhappy forcing them to evaluate shifting their business elsewhere.

Clearly, the need is to maintain a balance between losing money through providing ‘ideal-world’ servicing and losing money through providing service that makes customers shy away.

The telecom company should therefore try to identify the level of service that customers find acceptable, though not great and which proves to be affordable for the company. This could be — purely for example — something between eight and 24 hours.

In other words, the customer would look for service between six to 12 hours but will accept for service between eight to 24 hours from the time of lodging the complaint. And this time lag up to 24 hours would mean a significant saving in the manpower and resources cost for the telecom service provider.

This range between the ideally desired level of service and the acceptable level of service is Zone of Tolerance.

Note: To make the three models a success, organisations need to listen to their customers on a continuous basis. Sampling customers for their perceptions should not be an occasional and isolated exercise. It should be built into day-to-day activities.

(Lionel Wijesiri, a corporate director with over 25 years’ senior managerial experience, can be contacted at [email protected])

Features

Service quality: Balancing customer perceptions and expectations

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