Managing Through Excellence Dr Ozge Ozgen DOKUZ EYLUL UNIVERSITY IZMIR, TURKEY IEMA TOURISM SUMMER SCHOOL 2012 Olympia, Greece

1. 04.11.2012
Basic Differences of Services
Customers do not obtain ownership
Olympian Summer School
Intangible performances
Managing through Excellence in Services Marketing Customer Involvement in the production process
People as part of the product
Greater variability in operational inputs and outputs
Harder for customers to evaluate
Importance of time factor
Assist. Prof. Dr. Ozge Ozgen
Department of International Business and Trade
Faculty of Business, Dokuz Eylul University, Izmir - Turkey
July 29, 2012 - Olympia Summer Schools - 2012
Service Excellence
Being in a journey, not a destination
requires insistence and consistence
A goal that you attain with people, not something that you do
to people
Hard to grasp
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2. 04.11.2012
Service Excellence Understanding of Service Excellence (Johnston, 2004)
Meeting customers’ present needs, anticipating prospective Delivering the promise Service Quality
needs and enhancing on-going relationship
 Achieving customer delight Providing personal touch Customization
Satisfaction vs. delight Going the extra mile Understanding the Customer Needs
Satisfaction is judgement (perfomance>expectations)
Dealing with problems Service Recovery
Emotions, such as delight, are human affects resulting from
judgements about satisfaction with a service.
Delight is “an expression of very high satisfaction” resulting
from surprisingly good performance (Oliver, Rust and Varki, 1997)
Delight = Joy + Surprise (Plutchik, 1980)
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Different Perspectives of Service Quality Service Quality and Understanding Customer Needs:
Three Models
Product-based: Quality is precise and measurable
User-based: Quality lies in the eyes of the beholder SERVQUAL (Parasuraman, Zeithaml and Berry, 1988)
Manufacturing-based: Quality is in conformance to the firm’s KANO (Kano, Seraku, Takahashi and Tsjui, 1984)
developed specifications
QUALITY FUNCTION DEPLOYMENT (Akao, 1990)
Value-based: Quality is a trade-off between price and value
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Components of Quality: Manufacturing-based Components of Quality: Service-based
Performance: Primary operating characteristics Tangibles: Appearance of physical elements
Features: Bells and whistles Reliability: Dependable and accurate performance
Reliability: Probability of malfunction or failure Responsiveness: Promptness; helpfulness
Conformance: Ability to meet specifications Assurance: Competence, courtesy, credibility, security
Durability: How long product continues to provide value to Empathy: Easy access, good communication, understanding of
customer customer
Serviceability: Speed, courtesy, competence
Esthetics: How product appeals to users
Perceived Quality: Associations such as brand name
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Other Considerations in
Capturing the Customer’s Perspective of Service Quality: Service Quality Measurement
SERVQUAL (1)
Services high in credence characteristics may cause consumers
Survey research instrument based on premise that customers to use process factors and tangible cues as proxies to evaluate
evaluate firm’s service quality by comparing
quality—halo effect
Their perceptions of service actually received
Their prior expectations of companies in a particular industry
Time constraints
Process factors: Customers’ feelings
Perceived performance ratings vs. expectations
Scale contains 22 items reflecting five dimensions of service
quality
Subsequent research has highlighted some limitations of
SERVQUAL
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4. 04.11.2012
Seven Service Quality Gaps
(5-Gaps Model created by Parasuraman, Zeithaml, and Berry, 1985)
Customer needs and CUSTOMER
expectations
1. Knowledge Gap
MANAGEMENT
Management definition of
these needs
The Gaps Model—A Conceptual Tool to 2. Standards Gap
Identify and Correct Service Quality Translation into
design/delivery specs
4. Internal Communications
Problems 3. Delivery Gap
Execution of
Gap
Advertising and sales
4.
design/delivery specs promises
5. Perceptions Gap 6. Interpretation Gap
Customer perceptions of Customer interpretation of
service execution communications
7. Service Gap
Customer experience
relative to expectations
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KANO Model Quality Function Deployment
Eg: Gas consumption
Eg: MP3 Player 1. What are the qualities the customer desire?
according to driver’s
mood
2. What function(s) must this product serve and what functions
must we use to provide this product or service?
3. Based upon the resources we have available, how can we
Eg: Good brakes
best provide what our customer wants?
Source: Berger, C., Blauth R., Boger D., et al. (1993), “A Special Issue on
Kano’s Methods for Understanding Customer-defined Quality”, Center for
Quality of Management Journal, 2 (4), p. 4.
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5. 04.11.2012
Go to GEMBA,
Listen Your Customer
GEMBA: the place where the real action takes place,
where a consumer puts the good or service that he/she
House of Quality
bought into use
See customers in action to understand their unknown
unspoken needs.
If you will analyze the Olympia,
where is GEMBA?
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Soft and Hard Measures of Service Quality
Soft measures— not easily observed, must be collected by talking
Measuring and Improving to customers, employees, or others
Service Quality Hard measures— can be counted, timed, or measured through
audits
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6. 04.11.2012
Cause-and-Effect Chart for Improving Service Productivity:
Flight Departure Delays (1) Operations-driven Strategies
Facilities, Frontstage Procedures
Control costs, reduce waste
Front-Stage Procedures
Equipment Personnel
Personnel
Set productive capacity to match average demand
Aircraft late to Gate agents Delayed check-in Automate labor tasks
Arrive late gate cannot process procedure
Oversized bags Mechanical fast enough Acceptance of late Upgrade equipment and systems
Customers Failures
Customers Late/unavailable passengers
Late pushback airline crew
Train employees
Delayed Broadening array of tasks that a service worker can perform
Departures
Late food Late cabin Leverage less-skilled employees through expert systems
service cleaners
Other Causes Poor announcement of Service process redesign
Weather Late baggage departures
Air traffic
Late fuel Weight and balance sheet
late
Materials,
Materials, Backstage Information
Supplies
Supplies Personnel
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Service Failures
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the situation in which the prospective outcomes of a service
process or the process itself cannot be accomplished by the
service provider and
cannot meet the customers’ former expectations
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7. 04.11.2012
Long Waiting Times May Indicate Need
for Service Process Redesign Types of Service Failures
• Service system failure
• Failures in implicit or explicit customer requests
1st Classification • Unprompted and unsolicited employee actions
• Outcome failure
• Process failure
2nd • Outcome and Process Failure
Classification
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Types of Service Failures (1 st Classification) Types of Service Failures (1 st Classification)
Service system failure Failures in implicit or explicit customer requests:
unavailable service This occurs chiefly when employees are unable to comply
• delayed flight or the hotel’s making excess reservation with the customer’s individual needs
• food not cooked to order
slow service without reason
• seating problems
• delay of meal in a restaurant
• seating smokers in non-smoking section
other core service failures
• not to find specific menu for a vegetarian
• cold food or loss of package during freight transportation
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Types of Service Failures (1 st Classification) Types of Service Failures (2 nd Classification)
Outcome failure
Unprompted and unsolicited employee actions:
some aspect of the core service is not delivered
This includes behavior of employees that is unacceptable
to customers room is unclean, flight is delayed
• level of attention (ignoring the customer) Process failure
• unusual actions (abusive and improper touching) the core service is delivered in a deficient manner
• cultural norms front-desk personnel of hotel is impolite
• Gestalt (customer evaluating the whole of the holiday as
dissatisfaction without identifying a certain reason)
• adverse conditions (employee behavior under stressful event)
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www.ratemyprofessors.com
Understanding Customer
He makes me hate life and management. Maybe he should
change his clothes once in awhile? Run away from this guy. Responses to Service Failure
You can’t cheat in her class, because no one knows the answers.
BORING! But I learned there are 137 tiles on the ceiling.
Why do customers complain?
He will destroy you like an academic ninja.
A. Had unhappy childhoods?customers complain?
What proportion of unhappy
His class was like milk. It was good for just two weeks.
B. Do they have a genetical problem?
All the professors in the world should attend at least one of his Why don’t unhappy customers complain?
C. Have trouble in their primary relationships?
lectures, so they know what is a real teaching
Where do customers complain?
Houston we have a problem.
What do customers expect once they have made a complaint?
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9. 04.11.2012
Customer Response Categories to Service
Why don’t Customers Complain? Failures
Don’t know how to complain to Complain to the
service firm
Don’t think it will do any good
May doubt their own subjective evaluation Take some form of Complain to a third
public action party
May want to avoid confrontation
May lack expertise Take some form of Take legal action to
Dissatisfactory service
private action seek redress
Defect
Customers often view complaining as difficult Take no action
(switch provider)
and unpleasant
Negative
word-of-mouth
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Complaining Outcomes Service Recoveries
Voice Exit Retaliation all the actions taken by the service provider in order to
diminish the effects of the failure or fix the problem or even
HIGH: HIGH:
HIGH: eliminate it totally,
Never purchases Tells lots of people and
Store manager
again attempts to physically under the conditions that the organization meets the failure
damage
MEDIUM:
via complaints or some other sources etc.
MEDIUM:
MEDIUM:
Sales clerk Only purchases if to correct the failure at first hand
other alternatives tell a few people and
are not available created minor to eliminate all of the prospective negative effects
inconveniences
LOW: LOW:
No one associated Continue to shop as LOW:
with the store usual
does not retaliate at all
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10. 04.11.2012
Service Recovery Strategies Importance of Service Recovery
Discount The effects on trust, customer satisfaction and loyalty
Replacement Positive vs. negative word-of-mouth
Refund Recovery paradox was developed by Etzel and Silverman (1981)
No charge “it may be those who experience the gracious and efficient
Gift giving handling of a complaint who become a company’s best
Apology customer.”
Failure escalation “a good recovery can turn angry, frustrated customers into
loyal ones.”
Nothing
Note: Not all research support this paradox
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Your Tokyo flight delayed
Justice Theory one day and you have to
delay your all
appointments in Tokyo.
Perceived Justice
Distributive Justice Procedural Justice Interactional Justice
Relates with Relates with the
Relates with the
outcome of service treatment of
methods of processing SERVICE RECOVERY OPTIONS
recovery employees during
complaints and service
complaint handling He waits 6 hours in airport than airline company arrange a hotel or
recovery
in one hour he goes to hotel.
• Refund • Accessibility Employees’ Airline company provides free hotel for him or they arrange
• Discounts • Timing • Empathy another flight from another airline company in two hours.
• Gifts • Speed • Courtesy Employees of airline company do not inform passengers about
• Flexibility • Sensitivity delay and its reasons or they are so professional and sensitive to
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11. 04.11.2012
How to Enable Effective Service Recovery
CRISIS IN SERVICES
Be proactive—on the spot, before customers complain The cumulative impact of service failures may result in crisis
Plan recovery procedures Characteristics of a crisis
Teach recovery skills to relevant personnel Crises involve a wide range of stakeholders
Empower personnel to use judgment and skills to develop There are time pressures requiring an urgent response
recovery solutions
A crisis usually results from a surprise to the organization
There is a high degree of ambiguity, in which cause and effects are unclear
A crisis creates a significant threat to an organization’s strategic goals
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Crisis Response Strategies Air France Crash
Defensive strategies
Accommodative strategies
full apology
attack the
corrective
accuser
action
denial
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12. 04.11.2012
Response of Air France
Earlier, Air France chief executive Pierre-Henri Gourgeon told reporters:
"We are without a doubt faced with an air disaster." He added: "The
entire company is thinking of the families and shares their pain."
Bernardo Souza, who said his brother and sister-in-law were From press release of Air France
on the flight, complained he had received no details from Air Air France is doing its utmost to provide support for relatives and
friends.
France.
Medical and psychological assistance involving 15 specialist physicians
has been set up at Paris-Charles de Gaulle 2 and Rio de Janeiro
"I had to come to the airport but when I arrived I just found
airports.
an empty counter," he was quoted as saying by Reuters Some one hundred voluntary members of Air France staff are backing
up the teams in Paris-Charles de Gaulle and Rio de Janeiro.
news agency.
Air France has also established a special toll-free number for the
relatives and friends of passengers.
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It is all about emotions...
Emotions are also another
important outcome of the
service recovery
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13. 04.11.2012
Key References
Akao, Y. (ed.) (1990), Quality Function Deployment: Integrating Customer Requirements into
Product Design, Productivity Press, Cambridge, MA.
Berger, C., Blauth R., Boger D., et al. (1993), “A Special Issue on Kano’s Methods for
Understanding Customer-defined Quality”, Center for Quality of Management Journal, 2 (4).
Coombs, W. T. (1998), “An analytic framework for crisis situations: Better responses from a
better understanding of the situation”, Journal of Public Relations Research, Vol.10, pp. 177-
191.
Johnston, R. (2004) “Towards a Better Understanding of Service Excellence”, Managing Service
Quality, 14(2/3), 129-133.
Kano, N., N. Seraku, F. Takahashi ve S. Tsjui, (1984), "Attractive Quality and Must-be Quality",
Hinshitsu, 14(2), 147-56.
Mattila A. (2001). The effectiveness of service recovery in a multi industry setting. Journal of
Services Marketing, 15(7), 583-596.
Maxham III, J.G., (2001). Service recovery’s influence on consumer satisfaction, positive word-
of-mouth, and purchase intentions. Journal of Business Research, 54(1), 11-24.
Oliver, R. L., Rust, R. T., and Varki S. (1997) “Customer Delight: Foundations, Findings and
Managerial Insight”, Journal of Retailing, 73, Fall, 311-336.
Parasuraman A., Zeithaml, V. A., and Berry L. L. (1985) “A Conceptual Model of Service Quality
and Its Implications for Future Research”, Journal of Marketing, 49, Fall, 41-50.
Thanks for listening...
Plutchik, R. (1980), Emotion: A Psychoevolutionary Synthesis, New York: Harper & Row. ozge.ozgen@deu.edu.tr
Smith, A.K., Bolton, R.N. & Wagner, J. (1999). A model of customer satisfaction with service
encounters involving failure and recovery. Journal of Marketing Research, 36, August, 356-372.
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