MD850: e-Service Operations

1. 1 MD850: e-Service Operations Service Quality Management in Electronic Services

2. 2 Agenda Background Measuring & Controlling Quality Goods Quality Service Quality e-Service Quality e-Service Customer Satisfaction e-Service Quality Measurement e-Service Quality Management

3. 3 Background Motivation for Managing E-Service Quality Customers need to be able to assess the quality of E-Services to make informed consumption decisions Managers also need to be able to assess quality Quality is critical for New Economy companies to develop ongoing relationships with customers (Hayes 2002) High quality likely to translate into price premiums and expanded sales (Hanson 2002)

4. 4 Background Quality problems are rampant among e-Services Common examples Abandoned shopping carts Customer service problems Fulfillment problems Many possible reasons digital content problems website process problems lack of website capacity stockouts/fulfillment/delivery system problems

5. 5 Background Quality problems can lead to unwanted events For a well-known Dot.Com, can lead to a �CNN Moment� For lesser-known e-Service, may lead to dissatisfaction and customers switching to another service

6. 6 Background e-Service Quality Management Issues of Interest What is e-Service quality? How is it defined? How can I measure the quality of my services? How can I control quality of my services? Any methodologies available for managing e-Service quality? How much does quality cost in e-Services? Is �zero-defects� a reasonable objective? What are the costs of delivering low quality?

7. 7 Background e-Service Quality Management Issues of Interest Should I measure my own quality? Appropriate strategy for using quality measurement data? Should I use a online customer rating vendor to measure quality? Which one? Are online rating vendors measuring quality correctly? Any risks involved with using rating vendor information to make decisions? Any risks involved with integrating rating vendors into my system?

8. 8 Developing A Quality Management Strategy

9. 9 Developing A Quality Management Strategy Questions to Guide Quality Management Efforts What are your objectives? Customer satisfaction perception management? Real-time - �sense and respond� Do-It-Yourself Time-delayed POS site experience - �analyze and adapt� Online customer ratings services (e.g. Bizrate) Time-delayed page experience - �analyze and adapt� OpinionLab

10. 10 Developing A Quality Management Strategy Questions to Guide Quality Management Efforts What are your objectives? Control of public perceptions? Online customer ratings (e.g. Bizrate) Voluntary participation programs Involuntary participation Do-It-Yourself Detection and control of errors/defects? OpinionLab - feedback gathered from customers via pop-up surveys linked to each page Watchfire (D.I.Y.) - Web spider crawls your own site, identifies Do-It-Yourself

11. 11 Measuring & Controlling Quality

12. 12 Measuring & Controlling Quality �Quality� Exhibits Many Characteristics 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

13. 13 Measuring & Controlling Quality Attribute Level e-Service Product Attributes Goods Services Digital Content Abstract Levels Perceptions of e-Service Quality will be a function of each of the above

14. 14 Measuring & Controlling Quality Goods Quality Goods Quality Measurement Objective actual measures (length, weight, etc.) counts (# of errors across a space) Perceived perceptions of objective dimensions relative to � other goods/average good/prior expectations relative to aims for using good/prior expectations rankings

15. 15 Measuring & Controlling Quality Goods Quality Goods Quality Management Objective Statistical Process Control control charts (X-bar, R, C, U, P, etc.) Root-cause analysis techniques House of Quality Perceived House of Quality Conjoint Analysis/Experimental Design

16. 16 Some open questions � How do goods affect e-Service quality? How is quality of a good affected by e-Services? Measuring & Controlling Quality Goods Quality

17. 17 Measuring & Controlling Quality 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

18. 18 Measuring & Controlling Quality Service Quality Service Quality Measurement General Idea psychology based consumers (society) have evolved to some joint understanding of N dimensions that fully define quality researchers attempt to discover what those N dimensions are once researchers discover dimensions, managers can use them to manage their services

19. 19 Measuring & Controlling Quality Service Quality Service Quality Measurement SERVQUAL - 10 dimensions of quality originally Tangibles Reliability Responsiveness Communication Credibility Security Competence Courtesy Understanding/Knowing Customers Access

20. 20 Measuring & Controlling Quality Service Quality Service Quality Measurement SERVQUAL - 5 dimensions Tangibles physical facilities, equipment, appearance of personnel Reliability ability to perform the promised service dependably and accurately Responsiveness willingness to help customers and provide prompt service Assurance knowledge and courtesy of employees and their ability to inspire trust and confidence Empathy caring, individualized attention

21. 21 Measuring & Controlling Quality 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

22. 22 Open Questions � When/How does (person-to-person) Service Quality affect e-Service Quality? Is e-Service Quality different from SERVQUAL? Do we know all of the dimensions of e-Service Quality? What is the proper method for representing & measuring e-Service Quality? Measuring & Controlling Quality e-Service Quality

23. 23 Measuring & Controlling Quality e-Service Quality Old Professors �It�s all the same. We don�t need new quality dimensions. We don�t need new measurement tools.� Young Professors �e-Service quality is very different.� It involves person-to-technology interactions, and usually not the way they are dressed, whether they smile, physical buildings, etc. We need to publish our own papers.

24. 24 Measuring & Controlling Quality e-Service Quality e-Service Quality Dimensions Ease of Ordering Product Selection Product Information Customer Support Order Tracking On Time Delivery etc.

25. 25 Measuring & Controlling Quality e-Service System Qualities Systemic Qualities (SUN) User-Level Qualities Usability Accessibility Service-Level Qualities Performance Reliability Availability Strategic-Level Qualities Scalability Flexibility System-Level Qualities Security Manageability Maintainability

26. 26 Measuring & Controlling Quality e-Service System Qualities SunTone Quality of Service (QoS) Dimensions mentioned Reliability Performance Security Consistency Functionality Predictability Public Shared Reusable Coarse-Grained Controllable Manageable

27. 27 Strategies for Managing Quality

28. 28 Strategies for Managing Quality Outsource to Online Customer Rating Vendors Use Secret Shoppers Measure Quality Yourself

29. 29 Strategy #1:Online Customer Rating Vendors

30. 30 Online Customer Rating Vendors Questions to Guide Quality Management Efforts How to manage public perceptions? Request to be removed from ratings system? Provide data when requested? ex: B-schools � provide yearly updates to Business Week Proactively work with quality rating service? Advise of site updates Advise of new service attributes Actively monitor �customer feedback� sites for �trolls� who just try to get excitement out of making controversial statements

31. 31 Online Customer Rating Vendors BBB Online Bizrate Epinions.com Gomez Advisors Forrester Research Consumer Reports Web Watchdogs ePublicEye DooYoo (dooyoo.co.uk) Keynote Systems TRUSTe Rating Wonders (closed 2002)

32. 32 Online Customer Rating Vendors What do they do? Ratings Reporting Collect data on service attributes Reduce data into scores that rate a small set of quality dimensions Customer Comment Reporting Customers can openly communicate their experiences with your service

33. 33 Online Customer Rating Vendors Object/Event Being Measured Transactions - consumer measurement at point of purchase BizRate �Gold� (attributes, perceptions) WebWatchdog (attributes, perceptions) Transactions - expert ratings BizRate �Silver� (attributes, ratings) Rating Wonders (attributes, ratings) Gomez Associates (attributes, ratings) Page Oriented - consumer measurement on page Opinion Lab Content Oriented Web Guide magazine (expert ratings) Watchfire (Web-spider content analysis)

34. 34 Online Customer Rating Vendors BizRate Perception Overall Service Quality Ease of Ordering Product Selection Product Information Product Prices Website Navigation and Looks On-Time Delivery Product Representation Privacy Policies Product Shipping and Handling Level and Quality of Customer Support

35. 35 Online Customer Rating Vendors RatingWonders Ratings Overall Rating Products Service Site Quality Features Ordering Payment Shipping Returns

36. 36 Online Customer Rating Vendors Object/Event Being Measured Content Oriented Web Guide magazine (expert ratings) Watchfire (Web-spider content analysis) Apple�s iReview (Mac-friendly expert ratings) Consumer Comments Gomez Epinions TRUSTe Web Watchdog

37. 37 Online Customer Rating Vendors Some Characteristics of Online Rating Vendors Positioned as Omniscient Quality/Satisfaction Gurus Aggregators of information about websites� services B2B Marketing Researcher/Expert Service business model B2B Subscription business model Affiliate-oriented � want a piece of each transaction Affiliate business model Infomediary/Recommender business model Advertising oriented Advertising business model Border on e-Retailing Merchant business model

38. 38 Online Customer Rating Vendors Questions to Guide Quality Management Efforts What is the real long-term business model of your service-quality measurement vendor? Service Quality measurement, analysis, reporting? Transaction fees from referrals? Vendor might outsource their measurement Vendor might discontinue their measurement program, and use someone else�s Data vending? Privacy issues? How much data do you want your SQ measurement company to have about your customers? Retailing? Vendor might discontinue their measurement program

39. 39 Strategy #2:Secret Shoppers

40. 40 Secret Shoppers �Secret Shopper� or �Mystery Shopper� Common strategy in traditional services E.g., someone paid by restaurant to eat and report on service experiences Common strategy of the press �We visited 10 sites and ordered products at each. Here are our findings.� Suggested in e-Service Try out your own service If you don�t like the results, your customer probably won�t either

41. 41 Secret Shoppers e-Service �Secret Shopper� Tasks Determine your (and competitors�) easy-to-do-business-with quotient Test your customer service rep empowerment level Try out the experience on your site Learn something new from an e-Service, and envision how it would be useful on yours Check how easy it is to make contact with a human representative Monitor a purchase end-to-end from order to delivery Examine your service recovery activities etc.

42. 42 Strategy #3:e-Service Quality Measurement

43. 43 e-Service Quality Measurement Why measure e-Service Quality yourself (and develop your own set of quality measures)? Many service quality models were inductively derived from customer comments about those services Problem with this? A number of IS researchers suggest that humans tend not to be able to fully understand the complexity of modern IT-based service systems Systems can only be correctly understood through modeling the systems themselves (Scott 2001) Growing opinion of researchers in E-Service Quality Future service quality research for services involving information technologies should be based on the actual attributes of such services (Carr 2002)

44. 44 e-Service Quality Measurement Questions to Guide Quality Management Efforts Do you want to measure quality of a �sub-system� of your e-Service process? Do you have a model (service-blueprint) of the e-Service system (of the �service-product� or �service-process�)? D.I.Y. Define your own satisfaction dimensions and measure(s) for that sub-system Directly measure consumer as they are using that sub-system Do you want to measure quality of individual pages? OpinionLab

45. 45 e-Service Quality Measurement Levels of measurement Objective Measure Service attributes �Has shopping cart� �Allows customers to pay by VISA credit card� Errors/Defects in system �Page not available when visited�, �Dead Link� Abstract/Subjective Measure Customer satisfaction perceptions Expert ratings of customer satisfaction Customer comments - written

46. 46 e-Service Quality Measurement Objective Measures Possible to use statistical process control (SPC) tools Repetitive activities within your site (or delivery processes beyond it) can be studied and controlled Frequency across some space Errors across a page Failures within a week Delivery problems during a month

47. 47 e-Service Quality Measurement Abstract/Subjective Measures Single item questions �How would you rate the On Time Delivery quality of your experience? (1=horrible, 10=fantastic)� Multiple item scales Ex: Reliability (Source: Gefen 2002) [Rating from 1 to 7] �When Amazon.com promises to do something by a certain time, it does so.� �When users have a problem, Amazon.com shows a sincere interest in solving it.� �Amazon.com is dependable.� �Amazon.com provides its services at the time it promises to do so.�

48. 48 e-Service Quality Measurement Which e-Service Quality dimensions to use? Assuming that you�ve identified all possible quality dimensions � Card sorting method for choosing a relevant subset of dimensions (Upchurch, et al. 2001) Extended Web Assessment Method rating method for choosing most relevant subset of dimensions (Schubert 2003)

49. 49 e-Service Quality Measurement How to measure customer experiences using surveys? Approaches �Pop-up� surveys used to gather customer feedback Post-checkout survey pages Survey process Build it into your website/e-Service Outsource it to a measurement service

50. 50 Processes for e-Service Quality Management

51. 51 Quality Management Processes Vision/Benchmarking/Secret Shopper e-Service book Continuous Improvement Build quality into your architecture SunTone 3DF Derive your quality measures from your e-service system blueprints Field, Heim & Sinha (2002)

52. 52 Quality Management Processese-Service Book e-Service Book Ask the �Academy Award question� Get the customer to specify their vision of their real needs and what the possible future e-Services would be like to fulfill those needs Captures future quality expectations Experience your e-Service and then experience competitor e-Services Test the extent of performance in the e-Service Actively rate each Compare your performance to other e-Services to find out what you are doing well and not so well

53. 53 Quality Management ProcessesContinuous Improvement Continuous Improvement �Plan-Do-Check-Act� cycle

54. 54 Quality Management ProcessesContinuous Improvement Continuous Improvement Quality Tools SPC Charts � for repetitive processes Check sheets Pareto charts Cause and effect diagrams

55. 55 Quality Management ProcessesStatistical Approaches Use some variant of regression analysis to study the relationship between service attributes service quality service outcomes � customer loyalty, repurchase, customer switching Regression techniques often used Probit Tobit Logit

56. 56 Quality Management ProcessesSunTone Methodology Symptoms of Bad e-Service Quality Found Throughout Development Life-Cycle Management Requirements Development Deployment Use Operations Maintenance

57. 57 Quality Management ProcessesSunTone Methodology Drivers of Good e-Service Quality (p. 69-70) Based on well-defined, public interfaces Can be shared and reused by other services, end users, and network service developers Easily controllable and manageable Can be brokered, billed, administered, monitored, advertised, or syndicated System and location independent Can be assembled and reassembled to create new services Composed of object-oriented, easily distributable pieces of code Deliver predictable quality of service (QoS) levels

58. 58 Quality Management ProcessesSunTone Methodology SunTone Methodology Builds quality dimensions into the system during architecting of the system Layers + Tiers + Systemic Qualities Systemic qualities drive the choices for architecting the Layers and Tiers

59. 59 Quality Management ProcessesSunTone Methodology

60. 60 Quality Management ProcessesSunTone Methodology

61. 61 Quality Management ProcessesSunTone Methodology Formalizes the 3D Approach Based on the industry standard Rational Unified Process (RUP) Driven by Use Cases Iterative and Incremental Architecture-Centric Extends RUP Patterns Based Systemic Quality Driven (i.e., Emphasizes QoS)

62. 62 Quality Management ProcessesSunTone Methodology

63. 63 Quality Management ProcessesField, Heim & Sinha (2002) Methodology Field, Heim and Sinha (2002) Generate Use Case diagrams and other UML diagrams of e-Service design Extend diagrams to incorporate service flows within the e-Service Link quality dimensions to the entities and flows within the diagrams Create a strategy for measuring quality dimensions that relate to important entities/flows within the e-Service

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65. 65 Quality Management ProcessesField, Heim & Sinha (2002) Methodology The Approach Utilize existing models of E-Service process (in UML) Translate UML model into a process model of E-Service that identifies entities and service transactions Link quality to process model Map dimensions from extant quality models onto the structure of an E-Service system Use process model to identify relevant new quality dimensions Use process model and quality set to manage E-Service system

66. 66 Quality Management ProcessesField, Heim & Sinha (2002) Methodology

67. 67 Quality Management ProcessesField, Heim & Sinha (2002) Methodology

68. 68 Quality Management ProcessesField, Heim & Sinha (2002) Methodology Applying the Process Model Focusing on defining quality dimensions for an E-Service system component Identify system component of interest to manage Use table to identify quality dimensions driven by that component Insights Suggests which levers (i.e., system component/quality dimension pair) are available for managing and improving quality Provides a diagnostic tool for identifying quality problems

69. 69 Quality Management ProcessesField, Heim & Sinha (2002) Methodology Applying the Process Model Focusing on a Quality Dimension Interest is in managing/improving a specific quality dimension Map from quality dimension, into appropriate set of system components identifiable as driving that dimension Ex: �Ease of Ordering� is affected by 6 service system entities + 4 service transactions Insights Extant quality approaches (e.g. SERVQUAL) use a single summary judgment � perceptions, but no operational lever Our approach Can inform about overall satisfaction Provides operational lever(s) for improving the service

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