MD254: e-Service Operations Management

1. 1 MD254: e-Service Operations Management e-Service Performance: Value, Quality and Satisfaction

2. 2 Overview Background Value Quality and Satisfaction e-Service Process Qualities Managing Value Some Empirical Evidence

3. Background

4. 4 Background Roland Rust (speech at DSI 2001) Important marketing issues that need to be figured out … Web site loyalty Web site satisfaction Linking e-Service attributes to customer perceptions

5. 5 Background Zeithaml’s Means-End Model (1988) & other marketing models

6. 6 Background Customer Expectations Impressionistic Expectations (Subjective) general comparison of sites that offer totally different services generic performance comparisons Direct Site-to-Site Comparisons (Subjective & Objective) direct comparison of service attribute (e.g., price, features) direct comparison of general performance Comparing Online to Offline (Subjective & Objective) comparison of service Gestalt of organizations

7. 7 Background Zeithaml’s Means-End Model (1988)

8. 8 Background

9. 9 Value

10. 10 Value Value is positioned at an important place in consumers’ “means-ends chains” Value affects behavioral intentions purchase intention actual purchase activities revenue that results from such actual purchase activities

11. 11 Value Value is “high-level” and “abstract” Value is more individualistic and personal than quality Value involves a tradeoff of “give” and “get” components; quality does not

12. 12 Value “What constitutes value … appears to be highly personal and idiosyncratic” (Zeithaml, p. 13) Value is low price price minimizer Value is whatever I want in a product a “most important” dimension Value is the quality I get for the price I pay v = q / p Value is what I get for what I give v = f(get1, get2, …, getM) / f(give1, give2, …, giveN)

13. 13 Quality and Satisfaction

14. 14 Quality Diverse Characteristics of “Quality” Objective quality vs. Perceived quality Consumers may judge quality along both Attribute vs. Higher level abstraction Consumers may rate “objective” product attributes Consumers may rate many levels of abstractions of those “objective” product attributes Global assessment, similar to “attitude” an overall summary/evaluation Judgment made within a consumer’s “evoked set” quality evaluations depend on what the consumer knows about other products, or depends on the set the consumer chooses to compare a product against

15. 15 Quality Attribute Level e-Service Product Attributes Goods Services Digital Content Abstract Level Perceptions of e-Service Quality will be a function of each of the above

16. 16 Goods Quality Goods Quality Concepts Objective Perceived

17. 17 Goods Quality Goods Quality David Garvin’s Model of 8 Quality Dimensions (1984) Performance: a good’s primary operating characteristics Features: the “bells and whistles” of a product Reliability: the probability of a good surviving over a specified period of time under stated conditions of use Conformance: the degree to which physical and performance characteristics of a good match preestablished standards

18. 18 Goods Quality Goods Quality David Garvin’s Model (1984) of 8 Quality Dimensions Durability the amount of use one gets from a product before it physically deteriorates or until replacement is preferable Serviceability the ability to repair agood quickly and easily Aesthetics how a good looks, feels, sounds, tastes, or smells Perceived Quality subjective assessment resulting from image, advertising, or brand name

19. 19 Service Quality Traditional Services (Person-to-Person) Concepts Objective actual attributes (of facilitating goods) “quality is having certain attributes” some people say services cannot be measured objectively (i.e, counted, weighed, have no objective length) Perceived ratings of performance ratings of performance relative to some prior expected rating “Gap Model” … Quality = Performance - Expected

20. 20 Service Quality Service Quality Measurement SERVQUAL - 10 dimensions of quality originally Tangibles Reliability Responsiveness Communication Credibility Security Competence Courtesy Understanding/Knowing Customers Access

21. Service Quality Service Quality Measurement SERVQUAL - 5 dimensions Tangibles Deals with the physical environment. Relates to customer assessment of physical facilities, equipment, and appearance of personnel. Reliability Perceptions of ability to perform the promised service dependably and accurately. Responsiveness Willingness of the service provider to help customers and provide prompt service, and not shrug off requests for assistance. Assurance Perceptions that service provider’s behavior instills trust and confidence, due to provider’s knowledge and courtesy of employees, Empathy Service provider giving caring, individualized attention, and has customer’s best interests at heart.

22. 22 Service Quality Service Quality Measurement Examples of SERVQUAL survey questions/statements “Their physical facilities should be visually appealing.” “Their employees should be well dressed and appear neat.” “Their employees don’t always have to be willing to help customers.” “Their employees should be polite.” 15 others Rate these questions along a 1-7 scale

23. 23 e-Service Quality Are we measuring Service Quality or Customer Satisfaction of e-Services? Quality Attitude, overall evaluation, overall excellence Long-run Traditional Services: typically measured with a survey long after consumption Satisfaction Relate to a specific transaction Related to a situation Short-run e-Services: can be measured immediately after transaction

24. 24 Customer Satisfaction in e-Services “Ends” Dimensions (Keeney 1999, Shim and Mahoney 1992) Convenience Shopping Enjoyment Shopping Ease Safety Privacy Time Spent Purchasing/Shopping Time to Receive Product Description of Merchandise Advertisement Frequency of Sales

25. 25 Customer Satisfaction in e-Services “Ends” Dimensions (Keeney 1999, Shim and Mahoney 1992) Ease of Returns Variety of Stores Variety of Selection Delivery Credit Ease of Access Store Reputation Environmental Impact

26. e-Service QualityAcademic Dimensions

27. e-Service QualityRating Site Dimensions

28. e-Service Process Qualities

29. e-Service Process Qualities Systemic Qualities (Sun Professional Services) User-Level Qualities Usability Accessibility Service-Level Qualities Performance Reliability Availability Strategic-Level Qualities Scalability Flexibility System-Level Qualities Security Manageability Maintainability

30. e-Service Process Qualities SunTone Quality of Service (QoS) Dimensions Reliability Performance Security Consistency Functionality Predictability Public Shared Reusable Coarse-Grained Controllable Manageable

31. Managing Value

32. 32 Managing Value Theory (Zeithaml, 1988) Perceived Value … is a function of … Perceived Quality … is a function of … Extrinsic Attributes - e.g, brand, reputation Intrinsic Attributes - i.e., actual attributes Perceived Sacrifice … is a function of ... Perceived Monetary Price Perceived Non-Monetary Price - search costs, waiting costs, privacy costs from use of personal information Higher Level Abstractions the values of individual customers

33. Managing Value Theory (Keeney, 1999) - Internet Commerce Value conceptualized as a Means-Ends Process Value is driven by “Fundamental Objectives” Fundamental objectives are a result of “Means Objectives” Elicited customer values can be weighted together to obtain value estimates for new Internet services

34. 34 Managing Value Theory (Keeney, 1999) - Internet Commerce Value is maximizing customer satisfaction … along ... Product quality Cost Time to receive product Convenience Time Spent Privacy Shopping Enjoyment Safety Environmental Impact

35. Some Evidence

36. 36 Some Evidence In traditional services, managing loyalty (and satisfaction) is quite difficult Difficult to collect data about a service experience Difficult to analyze it fast enough and relate it to what the customer is doing right then, in order to modify their behaviors An interesting (and useful) characteristic of e-Services is that it is much easier to collect data on perceived loyalty, and behaviors of your customer

37. 37 Some Evidence

38. Some EvidenceSelf Service Technology -- Banking

39. 39 Some Evidence

40. Some EvidenceOnline Book Retailing – Amazon.com

41. 41 Some Evidence

42. 42 Some Evidence Reichheld & Schefter, “E-Loyalty” Bain & Company Study found five primary determinants of loyalty Compelling product presentations Trustworthy privacy policies Quality customer support Convenient and reasonably priced shipping and handling On-time delivery

43. 43 Some Evidence Dell Computer’s Customer Experience Council Three key drivers of loyalty Product performance Order fulfillment Post-sales service and support

44. 44 Some Evidence Heim and Sinha, (“Operational Drivers of Customer Loyalty in Electronic Retailing,” Manuf. & Service Op. Mgmt., 2001) Relationship of Customer Satisfaction to Customer Loyalty

45. 45 Some Evidence Heim and Sinha, (“Operational Drivers of Customer Loyalty in Electronic Retailing,” Manuf. & Service Op. Mgmt., 2001) Relationship to Customer Loyalty Ordered by importance (variance explained) Ease of Return Timeliness of Delivery Website Navigation Product Availability Price Product Information

46. 46 Some Evidence Heim and Sinha (2001) (described above) Similar to many old service marketing studies Basic regression analysis Model:

47. 47 Summary Academics have done lots of work defining Service Quality, e-Service Quality and Customer Satisfaction Practitioners have developed methods for analyzing Customer Satisfaction and Service Quality for e-Services Value is defined in a variety of manners and is difficult to manage e-Services can analyze online customer behavior data and use it to manage e-Service loyalty -- reacting to behaviors and improving service design