THE GAPS MODEL OF SERVICE QUALITY

THE CUSTOMER GAP°:

The difference between customer perceptions and expectations

Customer perceptions are subjective assessments of actual service experiences. Customer

expectations are the standards or reference points for performance against which service
experiences are compared, and are often formulated in terms of what a customer believes should
or will happen. For example, when you visit a fast-food restaurant you expect a certain level of
services, one that is considerably different from the level you would expect in an expensive
restaurant.

EXPECTED SERVICE

gap

PERCEIVED SERVICE

The sources of customer expectations consist of marketer-controlled factors (such as pricing,

advertising, sales promises) as well as factors that the marketer has limited ability to affect
(innate personal needs, word-of-mouth communications, competitive offerings). Broadly, it is the
goal of services marketing to bridge this distance.
Considerable evidence exists that consumer evaluation processes differ for goods an services and
that these differences affect the way service providers market their organizations.

Knowing what customers want and how they assess what they receive is the best way to design
effective services.

In a broad sense, the process of closing the customer gap can be subdivided into four “company
gaps”, discrepancies within the organization that inhibit delivery of quality service.
These are°:
Provider gap 1°: Not knowing what customers expect
Provider gap 2°: Not selecting the right service designs and standards
Provider gap 3°: Not delivering to service standards
Provider gap 4°: Not matching performance to promises

Customer expectations and perceptions are central in the delivery of excellent service.
Provider gap 1

NOT KNOWING WHAT CUSTOMER EXPECT

Not knowing what customers expect is one of the root causes of not delivering to customer
expectations. Provider gap 1 is the difference between customer expectations of services and
company understanding of those expectations.

Why does this first provider gap occur°? Many reasons exist°: no direct interactions with
customers, unwillingness to ask about expectations, unpreparedness in addressing them.

When people with the authority and responsibility for setting priorities do not fully understand
customer’s service expectations, they may trigger a chain of bad decisions and suboptimal
resource allocations that result in perceptions of poor service quality.
One example of misplaced priorities stemming from an inaccurate understanding of customer’s
expectations is spending far too much money on buildings and the appearance of a company’s
physical facilities when customers may be much more concerned with how convenient,
comfortable, and functional the facilities are.

An inaccurate understanding of what customers expect and what really matters them leads to
service performance that falls short of customer expectations. The necessary first step in
improving quality of service is for management or empowered employees to acquire accurate
information about customers’ expectations. Formal and informal methods to capture information
about customer expectations can be developed through market research. Techniques involving a
variety of traditional research approaches must be used to stay close to the customer, among
them customer visits, survey research, complaint systems, and customer panels. More innovative
techniques, such as quality function deployment, structured brainstorming and service quality
gap analysis, are often needed.

Market segmentation is the grouping of customers sharing similar requirements, expectations,

and demographic or psychographic profiles. While segmentation has been used by marketers for
decades it may be more critical today than at any other time. Customers are no longer satisfied
by homogeneous products and services for the mass market; now, more than ever before, they
are seeking and buying services that fit their unique configuration of needs.
Thereby, service companies must manage the customer mix. Managing the customer mix, in a
broad sense, means determining and choosing a mix of customers to target who are compatible
or at least separated from each if incompatible.

Another trend related to provider gap 1 involves current company strategies to retain customers
and strengthen relationships with them. When organizations have strong relationships with their
customers, gap 1 is less likely to occur.
Relationship marketing is distinct from transactional marketing, the term used to describe the
more conventional emphasis on acquiring new customers rather than on retaining them. When
companies focus too much on attracting new customers, they may fail to understand the
changing needs and expectations of their current customers.
Provider gap 2

NOT SELECTING THE RIGHT SERVICE DESIGNS STANDARDS

Accurate perceptions of customers’ expectations are necessary, but not sufficient, for delivering
superior quality service. Another prerequisite is the presence of service designs and performance
standards that reflect those accurate perceptions.
Provider gap 2 is the difference between company understanding of customer expectations
and development of customer-driven service designs and standards. Customer-driven
standards are different from the conventional performance standards that most services
companies establish in that they are based on pivotal customer requirements that are visible to
and measured by customers.

Provider gap 2 exists in service organizations for a variety of reasons°: managers believe that
customer expectations are unreasonable or unrealistic, responsible may contend that the demand
for service is too hard to predict or that the way the company and its personnel operate cannot be
changed, the absence of wholehearted management or company commitment to service quality.

The quality of service delivered by customer-contact personnel is critically influenced by the

standards against which they are evaluated and compensated. Standards signal to contact
personnel what management priorities are and which types of performance really count. When
service standards are absent or when the standards in place do not reflect customer’s
expectations, quality of service as perceived by customers is likely to suffer. In contrast, when
standards do reflect what customers expect, the quality of service they receive is likely to be
enhanced. Therefore, closing provider gap 2 has a powerful positive impact on closing the
customer gap.

Leadership plays a pivotal role in providing service excellence. In particular, management must
perceive that customer expectations can and should be met and must be visibly committed to
delivering high service quality.

Strategic measurement systems are also necessary to close this gap. Because if customer
satisfaction is to become a focus of management strategists, companies must incorporate into
their measurement systems important barometers of customer satisfaction and perceived service
quality.
Provider gap 3

NOT DELIVERING TO SERVICE STANDARDS

Provider gap 3 is the discrepancy between development of customer-driven service

standards and actual service performance by company employees.
Even when standards accurately reflect customers’ expectations, if the company fails to provide
support for them, standards do no good. When the level of service delivery performance falls
short of the standards, it falls short of what customers expect as well.
Narrowing gap 3, by ensuring that all resources needed to achieve the standards are in place,
reduces the gap.

Reasons°: employees who do not clearly understand the role they have to play in the company,
employees who feel in conflict between customers and company management, inadequate
technology, inappropriate compensation and recognition, lack of empowerment.

Most companies have, in addition to external customers, a variety of internal customers,

employees or departments that directly interact with customers and sell, advise, maintain, or
troubleshoot for other departments or functions in the company. Unless the company
acknowledges the importance of internal customers, these internal intermediaries may have
different goals, incentives, and motives than the department developing the service.

One of the difficulties associated with gap 3 involves the challenge in delivering service through
such intermediaries as retailers, franchisees, agents, and brokers. Because quality in service
occurs in the human interaction between customers and service providers, control over the
service encounter by the company is crucial, yet it rarely fully possible. The service delivery
process is complicated by outside parties that are likely to embrace goals and values that not
directly align with those of the service organization. For this reason a firm must develop ways to
either control or motivate these intermediaries to meet company goals.

In provider gap 3, an important part of the variability comes from the customer. The
uncontrollable variable of the customer can introduce heterogeneity in service delivery. If
customers do not perform their roles appropriately (if, for example, they fail to provide all the
information necessary to the provider or neglect to read and follow instructions) service quality
is jeopardized. Effective service organizations acknowledge the role of customer variability and
develop strategies to teach customers to perform their roles appropriately.

Another issue in gap 3 is the need in service firms to synchronize demand and capacity. Because
services are perishable and cannot be inventoried, service companies frequently face situations of
overdemand or underdemand. Most companies rely on operations strategies such as cross
training or varying the size of the employee pool to synchronize supply and demand. The use of
marketing strategies in many companies is limited. Marketing strategies for managing demand,
such as price changes, advertising, promotion, and alternative service offerings, can supplement
approaches for managing supply.
Provider gap 4

NOT MATCHING PERFORMANCE TO PROMISES

Provider gap 4 is the difference between service delivery and the service provider’s
external communications.
Promises made by a service company through its media advertising, sales force, and other
communications may potentially raise customer expectations that serve as the standard against
which customers assess service quality.
The discrepancy between actual and promised service therefore broadens the customer gap.
Broken promises can occur for many reasons°: overpromising in advertising or personal selling,
inadequate coordination between operations and marketing, and differences in policies and
procedures across service outlets.

Customers’ service perceptions may be enhanced if the company educates them to be better users
of the service.
External communications can affect not only customer’s expectations but also customer’s
perceptions of the delivered service. Discrepancies between service delivery and external
communications about provider gap 4 adversely affect customer’s assessments of service quality.
Gap 4 reflects a breakdown in coordination between employees responsible for delivering the
service and employees in charge of promoting the service to customers. Effectively coordinating
actual service delivery with external communications, therefore, narrows provider gap 4 and
favourably affects the customer gap as well.
In service companies, accurate and appropriate communications that do not overpromise or
misrepresent are essential to delivering services that customers perceive as high in quality.
One of the major difficulties associated with these types of communications is that they involve
issues that cross disciplinary boundaries. Because service advertising promises what people do,
and because what people do cannot be controlled in the way that machines that produce physical
goods can be controlled, this type of communication involves functions other than the marketing
department°: operations, human resources, …

Another issue related to gap 4 is associated with the pricing of services. With services, customers
often have no internal reference point for prices before purchase and consumption.

Because services are largely intangible, customers look to the physical or tangible
representations of them for information about the service. Tangible factors such as building,
offices, service personnel, invoices, credit cards, and interior design all play a strong role in
service provision.
PUTTING IT ALL TOGETHER°: CLOSING THE GAP
The full conceptual model conveys a clear message to managers wishing to improve the quality of their
company’s service°: The key to closing the customer gap is to close gaps 1 through 4 and keep them
closed. The gaps model serves as a framework for service organizations attempting to improve service and
services marketing.
KEY FACTORS LEADING TO THE PROVIDER GAP
GAP 1°: Not knowing what customers GAP 2°: Not selecting the right service
expect designs standards
Inadequate marketing research orientation Absence of customer-driven standards
- Insufficient marketing research - Lack of customer-driven service standards
- Research not focused - Absence of process management to focus on
- Inadequate use of market research customer requirements
- Absence of formal process for setting quality
Lack of upward communication goals
- Lack of interaction between management and
customers Inadequate service leadership
- Insufficient communication between contact - perception of infeasibility
employees and managers - inadequate management commitment
- Too many layers between contact personnel and
top management Poor service design
- Unsystematic new service development process
Insufficient relationship focus - Vague, undefined service designs
- Lack of market segmentation - Failure to connect service design to service
- Focus on transactions rather than relationship positioning
- Focus on new customers rather than relationship
customers

GAP 3°: Not delivering to service GAP 4°: Not matching performance to
standards promises
Deficiencies in human resource policies
- Ineffective recruitment
- Role ambiguity and role conflict
- Poor employee-technology job fit
- Inappropriate evaluation and compensation
systems
- Lack of empowerment, perceived control, and
teamwork
Failure to match supply and demand
- Failure to smooth peaks and valleys of demand
- Inappropriate customer mix
- Overreliance on price to smooth demand
Customers not fulfilling roles
- Customers lacking knowledge of their roles
- Customers negatively impacting each other
Ineffective management of customer
expectations
- Failure to manage customer expectations through
all forms of communication
- Failure to educate customers adequately
Overpromising
- Overpromising in advertising
- Overpromising in personal selling
- Overpromising through physical evidence cues
Inadequate horizontal communications
- Insufficient communications between sales and
operations
- Insufficient communication between advertising
and operations
- Differences in policies and procedures across
branch or units