Learning objectives

 Customer expectations of service

 Customer perception of services

 Strategies for influencing customer perceptions

 Understanding customer expectation through

marketing research
Customer Expectations of Service

 Meaning and Types of Service

Expectations
 Factors that Influence Customer
Expectations of Service
 Issues Involving Customer Service
Expectations
The Customer Gap

Expected Service

Customer Gap

Perceived Service
Possible Levels of Customer Expectations

Banglore
Dual Customer Expectation Levels

Desired Service

Adequate Service
The Zone of Tolerance

Desired Service

Zone of
Tolerance

Adequate Service
 Zone of Tolerance
• Different customers possess different zones of
tolerance

• Zones of tolerance vary for service dimensions

 Zones of Tolerance for Different Service
Dimensions
Desired Service

Level Zone
of of
Expectation Tolerance Desired Service

Adequate Service
Zone
of
Tolerance

Adequate Service

Reliability Tangibles
Factors That Influence Desired Service

Personal Needs

Desired Service

Personal service
philosophy Zone
of
Tolerance

Derived service
expectations Adequate Service
 Factors That Influence Adequate
Service

Desired Service

Zone
of
Perceived Service Tolerance
Alternatives

Adequate Service Predicted

Service

Situational
Factors
Factors That Influence Desired and Predicted
Service
Explicit Service
Promises

Implicit Service
Promises

Desired Service Word-of-Mouth

Zone
Past Experience
of
Tolerance

Predicted
Adequate Service Service
Issues Involving Customers’ Service
Expectations
 What does a service marketer do if customer
expectations are “unrealistic”?

 Should a company try to delight the customer?

 How does a company exceed customers’ service

expectations?

 Do customers’ service expectations continually

escalate?

 How does a service company stay ahead of competition

in meeting customer expectations ?
Customer Perceptions of Service

 Customer Perceptions
 Customer Satisfaction
 Service Quality
 Service Encounters: The Building
Blocks for Customer Perceptions
 Objectives :
Customer Perceptions of Service
• Provide a solid basis for understanding what influences
customer perceptions of service and the relationships among
customer satisfaction, service quality, and individual service
encounters.
• Demonstrate the importance of customer satisfaction—what it
is, the factors that influence it, and the significant outcomes
resulting from it.
• Develop critical knowledge of service quality and its five key
dimensions: reliability, responsiveness, empathy, assurance, and
tangibles.
• Show that service encounters or the “moments of truth” are the
essential building blocks from which customers form their
perceptions.
 Customer Perception
• How customer perceives services?
• How they assess whether they have
experienced quality service and whether they
are satisfied?
Satisfaction Versus Service Quality
• Service quality  focuses specifically on dimensions
of service
• Perceived service quality is a component of
customer satisfaction
Example : Attributes ‘ Service quality of health club’
• Whether equipment is available?
• How responsive the staff are to customer needs?
• How skilled the trainers are?
• Whether the facility is well maintained?
Customer Perceptions of Quality and Customer
Satisfaction
 Transaction Versus Cumulative
Perceptions
• Customer loyalty most often results from
customer assessment of all her experiences,
not just one encounter.
 Customer Satisfaction
Olive defines ‘ satisfaction is the customer’s
fulfillment response. It is a judgment that a
product or service feature or the product or
service itself, provides a pleasurable level of
consumption or related fulfillment’
Satisfaction  customer evaluation of goods/
services has met the customer’s needs and
expectations.
Dissatisfaction  failures to meet the needs and
expectations.
 Satisfaction related with different
types of feeling

Contentment
Fulfillment (passive Pleasure
response)

Delight Relief Ambivalence

 Factors Influencing Customer Satisfaction

• Product/service quality
• Specific product or service features
• Consumer emotions
• Attributions for service success or failure – the
perceived causes of events
• Perceptions of equity or fairness
• Other consumers, family members, and coworkers
• Price
• Personal factors
– the customer’s mood or emotional state
– situational factors
 Outcomes of Customer Satisfaction

• Increased customer retention

• Positive word-of-mouth communications
• Increased revenues
Relationship between Customer Satisfaction and
Loyalty in Competitive Industries
 Service Quality
• 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
 The Five Dimensions of Service Quality

Delivering on promise : Ability to perform the

Reliability promised service dependably and accurately.

Inspiring trust & confidence : Knowledge and courtesy

Assurance of employees and their ability to inspire trust and
confidence.

Tangibles Representing the service physically : Physical facilities,

equipment, and appearance of personnel.

Empathy Treating customers as individuals : Caring,

individualized attention the firm provides its
customers.

Responsiveness Being willing to help : Willingness to help customers

and provide prompt service.
 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:
 SERVQUAL Attributes
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
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
 E-Service Quality
Dimensions

Efficiency Ease and speed of accessing and using the site

Fulfillment Extent to which the site’s promises about order delivery

and item availability are fulfilled
System availability Correct technical functioning of the site

Privacy The degree to which the site is safe and protects customer
information
Responsiveness The effective handling of problems and returns through
the site
Compensation The degree to which the site compensates customers for
problems
Contact Availability of assistance through telephone or online
representatives
Service Encounters: The Building
Blocks for Customer Perceptions
 The Service Encounter
or
Moments 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
 A Service Encounter Cascade for a Hotel Visit

Check-In

Bellboy Takes to Room

Restaurant Meal

Request Wake-Up Call

Checkout
 A Service Encounter Cascade for an Industrial
Purchase

Sales Call

Delivery and Installation

Servicing

Ordering Supplies

Billing
 Critical Service Encounters Research

• GOAL:
– understanding actual events and behaviors that cause
customer dis/satisfaction in service encounters
• METHOD:
– Critical Incident Technique
• DATA:
– stories from customers and employees
• OUTPUT:
– identification of themes underlying satisfaction and
dissatisfaction with service encounters
 Sample Questions for Critical Incidents
Technique Study

• Think of a time when, as a customer, you had a

particularly satisfying (dissatisfying) interaction
with an employee of ______________.
• When did the incident happen?
• What specific circumstances led up to this
situation?
• Exactly what was said and done?
• What resulted that made you feel the interaction
was satisfying (dissatisfying)?
Common Themes in Critical Service Encounters
Research

Recovery: Adaptability:
employee response employee response
to service delivery to customer needs
system failure and requests

Coping: Spontaneity:
employee response unprompted and
to problem customers unsolicited employee
actions and attitudes
 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”
 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”
 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
 Coping

DO DON’T
• Listen • Take customer’s dissatisfaction
• Try to accommodate personally
• Explain • Let customer’s dissatisfaction
• Let go of the customer affect others
 Technology Based Service Encounters
• For satisfying SSTs • For dissatisfying SSTs
– Solved an intensified – Technology failure
need – Process failure
– Better than the – Poor design
alternative – Customer-driven failure
– Did its job
 Evidence of Service from the Customer’s Point of View

 Contact employees
 Customer him/herself
 Operational flow of  Other customers
activities People
 Steps in process
 Flexibility vs.
standard
 Technology vs.
human Process Physical  Tangible
communication
Evidence
 Servicescape
 Guarantees
 Technology

Source: From “Managing the Evidence of Service” by M. J. Bitner from The Service Quality Handbook, eds. E. E.
 Website
Scheuing and W. F. Christopher (1993), pp. 358-70.
UNDERSTANDING
CUSTOMER
REQUIREMENTS
 Provider Gap 1
CUSTOMER
Expected Service

Listening Gap
COMPANY

Company
Perceptions of
Consumer
Expectations
Listening to Customers through Research

 Using Marketing Research to Understand

Customer Expectations
 Elements in an Effective Services Marketing
Research Program
 Analyzing and Interpreting Marketing Research
Findings
 Model Services Marketing Research Programs
 Using Marketing Research Information
 Upward Communication
 Objectives :
Listening to Customers through Research
• Present the types of and guidelines for marketing
research in services.
• Show how marketing research information can and
should be used for services.
• Describe the strategies by which companies can
facilitate interaction and communication between
management and customers.
• Present ways that companies can and do facilitate
interaction between contact people and management.
 Common Research Objectives
for Services
• To discover customer requirements or expectations for service.
• To monitor and track service performance.
• To assess overall company performance compared with that of
competition.
• To assess gaps between customer expectations and perceptions.
• To identify dissatisfied customers, so that service recovery can
be attempted.
• To gauge effectiveness of changes in service delivery.
• To appraise the service performance of individuals and teams for
evaluation, recognition, and rewards.
• To determine customer expectations for a new service.
• To monitor changing customer expectations in an industry.
• To forecast future expectations of customers.
 Criteria for an Effective Service Research
Program
• Includes both qualitative and quantitative research
• Includes both expectations and perceptions of
customers
• Balances the cost of the research and the value of the
information
• Includes statistical validity when necessary
• Measures priorities or importance of attributes
• Occurs with appropriate frequency
• Includes measures of loyalty, behavioral intentions, or
actual behavior
 Stages in the Research Process
• Stage 1 : Define Problem
• Stage 2 : Develop Measurement Strategy
• Stage 3 : Implement Research Program
• Stage 4 : Collect and Tabulate Data
• Stage 5 : Interpret and Analyze Findings
• Stage 6 : Report Findings
 Portfolio of Services Research
Research Objective Type of Research

Identify dissatisfied customers to attempt recovery; identify Customer Complaint Solicitation

most common categories of service failure for remedial action

Assess company’s service performance compared to

“Relationship” Surveys
competitors; identify service-improvement priorities; track
service improvement over time
Post-Transaction Surveys
Obtain customer feedback while service experience is fresh; act on
feedback quickly if negative patterns develop
Customer Focus Groups
Use as input for quantitative surveys; provide a forum for
customers to suggest service-improvement ideas
“Mystery Shopping” of Service
Measure individual employee service behaviors for use in
coaching, training, performance evaluation, recognition and
Providers
rewards; identify systemic strengths and weaknesses in service
Employee Surveys
Measure internal service quality; identify employee-perceived
obstacles to improve service; track employee morale and
attitudes

Determine the reasons why customers defect Lost Customer Research

Forecast future expectations of customers; develop and test
new service ideas Future Expectations Research
 Elements in an Effective Service
Marketing Research Program
Trailer Calls or Post-transaction Surveys

Service Expectation Meetings and

Reviews

Process Checkpoint Evaluations

Market-Oriented Ethnography
 Elements in an Effective Service
Marketing Research Program
Complaint Solicitation

Critical Incident Studies

Requirements Research

Relationship and SERVQUAL

Surveys
 Elements in an Effective Service
Marketing Research Program
Mystery Shopping

Customer Panels

Lost Customer Research

Future Expectations Research

 Analyzing & Interpreting Customer
Research Findings
• Zone of tolerance charts
• Importance / Performance Matrices
 Tracking of Customer Expectations and
Perceptions of Service Reliability

Source: E. Sivadas, “Europeans Have a Different Take on CS [Customer Satisfaction] Programs,” Marketing News, October 26, 1998, p. 39.
Service Quality Perceptions Relative to Zones
of Tolerance

9
8
7 O
O O
6 O O
5
4
3
2
1
0
Reliability Responsiveness Assurance Empathy Tangibles

Retail Chain = Zone of Tolerance O = Service Quality Perception

Service Quality Perceptions Relative to Zones
of Tolerance

10

8
O O O O
O
6

Reliability Responsiveness Assurance Empathy Tangibles

Computer Manufacturer = Zone of Tolerance O = S.Q. Perception

Importance/Performance Matrix
HIGH
High  
Leverage
Attributes to Improve Attributes to Maintain

Importance

  


Low
 Low
 Leverage
Leverage


Attributes to Maintain Attributes to De-emphasize

LOW Performance HIGH

Using Marketing Research Information
Upward Communication
Elements in an Effective Program of Upward Communication
Type of Interaction Research Research Objective
Executive visits to customers To gain first hand knowledge about
customers
Executive listening To gain first hand knowledge about
customers

Research on intermediate customers To gain in-depth information to end-

customers
Employee internal satisfaction surveys To improve internal service quality
Employee visits or listening's To gain first hand knowledge about
employees
Employee suggestions To obtain ideas for service
improvements