Managing Service Quality and Productivity

What is Service Quality?

A comparison of expectations with performance”
 Quality and productivity are twin paths to creating value
for both customers and companies
 Quality - focuses on the benefits created for customers
 Productivity - addresses financial costs incurred by firm

Dimensions of Service Quality (SERVQUAL)

To measure customer satisfaction with various aspects of
service quality- Zeithmal developed a survey research
instrument based on premise that customers evaluate
firm’s service quality by comparing
 Their perceptions of service actually received
 Their prior expectations of companies in a
particular industry.

5 parameters:
• Reliability: Dependable and accurate performance.
 Sells car in accurate time. Fast selling, performance.
• Responsiveness: Promptness; helpfulness.
 Quick services & Payments. Payments in 1Hour
• Assurance: Competence, courtesy, credibility, security.
 Certified car, Instant payment. Information is secure with
the company.
• Empathy: Easy access, good communication,
understanding of customer.
 Understanding customer issues, providing vouchers.
• Tangibles: Appearance of physical elements.
 Physical presence of car. Customer, Dealer can actually
touch the car and see its conditions.
Soft and Hard Measures of Service Quality
• Soft measures—not easily observed, must be collected by
talking to customers, employees, or others.
 Service delivery.
 Customer satisfaction.
• Hard measures—can be counted, timed, or measured
through audits.
 Delivery or payment time.
 Performance of the company.
 Profits.
Managing Productivity
• Productivity measures amount of output produced relative
to the amount of inputs
• Improvement in productivity means an improvement in the
ratio of outputs to inputs.

• Efficiency: comparison to a standard--usually time-based

(e.g., how long employee takes to perform specific task)
• Problem: focus on inputs rather than outcomes
• May ignore variations in quality or value of service
 Time required for delivery, follow ups.
• Effectiveness: degree to which firm is meeting its goals
• Cannot divorce productivity from quality/customer
satisfaction
 Instant payments, Security, No fake promises.
• Productivity: financial valuation of outputs to inputs
• Consistent delivery of outcomes desired by customers
should command higher prices.
 Performance.