MKT 5207 Service Marketing

1. MKT 5207Service Marketing Afjal Hossain Assistant Professor Department of Marketing

2. Chapter 05Customer Perceptions of Service

3. The customer is . . . Anyone who receives the company’s services, including: • external customers (outside the organization, business customers, suppliers, partners, end consumers) • internal customers (inside the organization, e.g., other departments, fellow employees)

4. Customer Perceptions of Quality and Customer Satisfaction Figure 5.1

5. What determines Customer Satisfaction (Factors Influencing) • Product quality • Service quality • Price • Specific product or service features • Consumer emotions • Attributions for service success or failure • Perceptions of equity or fairness • Other consumers, family members, and coworkers • Personal factors • Situational factors

6. ASQI and Market Value Added Source: ACSI website, www.theacsi.org, About ACSI, “Economic Indicator,” accessed August 18, 2007.

7. Geek Squad’s Focus on Responsiveness

8. Increased customer retention Positive word-of-mouth communications Increased revenues Outcomes of Customer Satisfaction

9. ASCI and Annual Percentage Growthin S&P 500 Earnings Figure 5.3 Source: C. Fornell “Customer Satisfaction and Corporate Earnings,“ commentary appearing on ACSI website, May 1, 2006, http://www.bus.umich.edu/research/nqre/Q1-01c.html.

10. Top Box Scores – A Higher Standard Definitely Would Recommend XYZ Definitely Will Repurchase fromXYZ Overall Satisfaction with XYZ (% of customers) TOP BOXVery Satisfied (64%) = 91% = 96% 55-point drop 44-point drop SECOND BOX Somewhat Satisfied (29%) All Customers = 36% = 52% BOTTOM 3 BOXES Neutral to Very Dissatisfied (7%) = 4% = 7% Source: Technical Assistance Research Bureau (TARP), 2007.

11. Relationship between Customer Satisfaction and Loyalty in Competitive Industries Figure 5.4 Source: James L. Heskett, W. Earl Sasser, Jr., and Leonard A. Schlesinger, The Service Profit Chain, (New York, NY: The Free Press, 1997), p. 83.

12. What is Service Quality? The Customer Gap • Service quality is the customer’s judgment of overall excellence of the service provided in relation to the quality that was expected. Customer Gap

13. The customer’s judgment of overall excellence of the service provided in relation to the quality that was expected. Service quality assessments are formed on judgments of: outcome quality interaction quality physical environment quality Service Quality

14. Reliability Ability to perform the promised service dependably and accurately. Assurance Knowledge and courtesy of employees and their ability to inspire trust and confidence. Tangibles Physical facilities, equipment, and appearance of personnel. Empathy Caring, individualized attention the firm provides its customers. Responsiveness Willingness to help customers and provide prompt service. The Five Dimensions of Service Quality

15. Exercise to Identify Service Attributes In groups of five, choose a services industry and spend 10 minutes brainstorming specific requirements of customers in each of the five service quality dimensions. Be certain the requirements reflect the customer’s point of view. Reliability: Assurance: Tangibles: Empathy: Responsiveness:

16. SERVQUAL Attributes • EMPATHY • Giving customers individual attention • Employees who deal with customers in a caring fashion • Having the customer’s best interest at heart • Employees who understand the needs of their customers • Convenient business hours • TANGIBLES • Modern equipment • Visually appealing facilities • Employees who have a neat, professional appearance • Visually appealing materials associated with the service • RELIABILITY • Providing service as promised • Dependability in handling customers’ service problems • Performing services right the first time • Providing services at the promised time • Maintaining error-free records • RESPONSIVENESS • Keeping customers informed as to when services will be performed • Prompt service to customers • Willingness to help customers • Readiness to respond to customers’ requests • ASSURANCE • Employees who instill confidence in customers • Making customers feel safe in their transactions • Employees who are consistently courteous • Employees who have the knowledge to answer customer questions

17. How Customers Judge the Five Dimensions of Service Quality (Table 5.2) Table 5.2

18. The Service Encounter • is the “moment of truth” • occurs any time the customer interacts with the firm • can potentially be critical in determining customer satisfaction and loyalty • types of encounters: • remote encounters, phone encounters, face-to-face encounters • is an opportunity to: • build trust • reinforce quality • build brand identity • increase loyalty

19. A Service Encounter Cascade for a Hotel Visit Check-In Bellboy Takes to Room Restaurant Meal Request Wake-Up Call Checkout Figure 5.5

20. A Service Encounter Cascade for an Industrial Purchase Sales Call Delivery and Installation Servicing Ordering Supplies Billing

21. Service Encounters: An Opportunity to Build Satisfaction and Quality

22. Common Themes in CriticalService Encounters Research Adaptability: employee response to customer needs and requests Recovery: employee response to service delivery system failure Spontaneity: unprompted and unsolicited employee actions and attitudes Coping: employee response to problem customers

23. Recovery DO • Acknowledge problem • Explain causes • Apologize • Compensate/upgrade • Lay out options • Take responsibility DON’T • Ignore customer • Blame customer • Leave customer to fend for him/herself • Downgrade • Act as if nothing is wrong • “Pass the buck”

24. Adaptability DO • Recognize the seriousness of the need • Acknowledge • Anticipate • Attempt to accommodate • Adjust the system • Explain rules/policies • Take responsibility DON’T • Ignore • Promise, but fail to follow through • Show unwillingness to try • Embarrass the customer • Laugh at the customer • Avoid responsibility • “Pass the buck”

25. Spontaneity DO • Take time • Be attentive • Anticipate needs • Listen • Provide information • Show empathy DON’T • Exhibit impatience • Ignore • Yell/laugh/swear • Steal from customers • Discriminate

26. Coping DO • Listen • Try to accommodate • Explain • Let go of the customer DON’T • Take customer’s dissatisfaction personally • Let customer’s dissatisfaction affect others

27. Evidence of Service from theCustomer’s Point of View People • Contact employees • Customer him/herself • Other customers • Operational flow of activities • Steps in process • Flexibility vs. standard • Technology vs. human Process Physical Evidence • Tangible communication • Servicescape • Guarantees • Technology • Website Figure 5.7 Source: From “Managing the Evidence of Service” by M. J. Bitner from The Service Quality Handbook, eds. E. E. Scheuing and W. F. Christopher (1993), pp. 358-70.