Lecture 4

Customer satisfaction
and service quality

Based on Text Book Chapter 11

Five reflections from last week
 Focus is a key foundation in marketing
 Select target segments according to the firm’s
ability to match or exceed competing offerings
 Importance attributes get the firm into the
contest but often determinant attributes ‘close
the deal’
 Positioning (the placement of a product or service in the minds
of target consumers) is a powerful way to focus and
anchor the brand
 Service brands can gain advantage over
competitors by establishing and communicating a
point of difference (POD)
How might a service firm
communicate a POD?
 Objectives
 Define customer satisfaction and quality in
service industries
 Explain the significance of customer satisfaction
in achieving a competitive advantage
 Describe various models of satisfaction and
service quality
 Explain the causal linkages with customer
perceived value, service quality, satisfaction and
loyalty
 List the major drivers or determinants of
satisfaction and quality in services
 Describe how to measure and monitor
satisfaction
Defining customer satisfaction

Satisfaction is a consumer’s post-purchase

evaluation of the overall service experience
(processes and outcome). It is an affective
(emotion) state or feeling reaction in which
the consumer’s needs, desires and
expectations during the course of the service
experience have been met or exceeded.

Two levels of satisfaction:

• Transaction specific
satisfaction
• Cumulative satisfaction
(Satisfaction across multiple
experiences)
Benefits of customer satisfaction and
service quality

Toyota (Asia-Pacific) has identified a correlation

between Customer Satisfaction and:
• Market Share
• Positive WoM
• Customer propensity to ‘forgive’ an error
Which emotions associate with
satisfaction?

 Contentment
 Fulfilment
 Surprise
 Arousal
 Pleasure A delighted customer is
six times more likely to
 Relief
repurchase a product or
 Delight service compared to a
(just) satisfied customer
 Customer satisfaction
and financial performance

Take note that Service Quality and Customer Service are not
the only drivers of Cumulative Satisfaction
Non-linear effects of satisfaction on
customer loyalty
Disconfirmation of Expectations
Paradigm
 Satisfaction = Performance – Expectations
 Performance is the Performance of the service
 Expectations refers to pre-purchase beliefs about
service provision that acts as a standard for judging
performance. Expectations are shaped by previous
experiences, WoM, Marketing Communications and
performance of competing brands
 If P ≠ E, this is called “Disconfirmation”
 P > E is called ‘positive disconfirmation’
 P < E is called ‘negative disconfirmation’ In B2B services, client
expectations are also
 If P = E, this is called ‘Confirmation’ influenced by the
newness, importance
and complexity of the
service
The Disconfirmation of Expectations Model
 Zone of indifference
 Service performance, even for the same supplier, is
likely to vary from one occasion to the next
 Customers have a ‘zone of indifference’ which is the
range between their desired and minimum
expectations
 In other words, the ‘zone of indifference’ is the
degree of service variation that customers are
willing to accept
 When poor performance falls below the minimum
level of expectation, it may be magnified and result
in considerable dissatisfaction
 The ‘zone of indifference’ can expand or contract
depending on circumstances. E.g. the higher the
importance of a service attribute, the narrower the
zone
 The zone of indifference for the core service is
narrow
 Zones of indifference for first-time
and service recovery situations

Outcome = The core

service delivery
Process =
Supplementary services
 Measuring Customer Satisfaction
 Phase I – Qualitative Research (E.g. Focus groups)
 Establish customer expectations
 Determine what service attributes are most important
in determining customer satisfaction
 Phase 2 – Quantitative Research (E.g. survey)
 Build a survey (questionnaire) using the information
obtained in the previous phase
 Start the survey with a global (overall) satisfaction
question
Overall, how satisfied are you with your visit to our restaurant
today? Note that this
question measures
transaction specific
Much worse Somewhat As expected Somewhat better Much better
satisfaction
than expected worse than than expected than expected
expected Also note the use of
the use of the
-2 -1 0 1 2 disconfirmation of
expectations
Measuring Customer Satisfaction
 Phase 2 – Quantitative Research (continued)
 Now pose questions about specific service attributes
that emerged from the qualitative research (Phase 1)
Rate each of the following in relation to your service experience
today:
Much Somewhat As Somewhat Much better
worse than worse expected better than than expected
expected than expected
expected

Quality of the food -2 -1 0 1 2

Friendliness of the service -2 -1 0 1 2
Speed of the service -2 -1 0 1 2
Cleanliness of the toilets -2 -1 0 1 2
Etc….
 Measuring Customer Satisfaction
 Phase 2 – Quantitative Research (continued)
 You can also determine how important customers
perceive each attribute to be
How important are each of the following aspects to you
personally?
Not at all Somewhat Neither Somewhat Very
important important important important important
nor
unimportant

Quality of the food -2 -1 0 1 2

Friendliness of the service -2 -1 0 1 2
Speed of the service -2 -1 0 1 2
Cleanliness of the toilets
-2 -1 0 1 2
Etc….

Once survey results have been analysed, we can determine:

• The average overall satisfaction with today’s visit (relative to expectations)
• Which attributes contribute most to global (overall) satisfaction (using Linear Regression)
• How important customers perceive each attribute to be
 Service Quality
 Service quality is the consumer’s judgement about an entity’s
overall excellence or superiority
 Whereas ‘satisfaction’ requires that you experience the service, you
can have a perception of service quality without experiencing the
service

 The five dimensions of Service Quality are as follows:

Dimension Description
Tangibles Appearance of physical elements
Reliability Dependable, accurate performance

Responsiveness Promptness and helpfulness

Assurance Competence, courtesy, credibility and security

Empathy Easy access, good communications and customer

understanding
Service Quality and Productivity

 Improvement strategies for service quality and

productivity must be considered jointly rather
than in isolation
 Marketing, Operations and HR managers should
collaborate to ensure that quality customer
experiences are delivered more efficiently
 Service Quality and productivity are twin-paths
to creating value for both customers and the
service firm
Service Quality and
Service Guarantees
 Service guarantees are explicit promises made to
customers about the level of service they can
expect to receive
 For example, McDonalds promised a maximum of
60 seconds waiting time or “you get a free big
Mac!”
 Guarantees are powerful tools that advance service
quality and customer satisfaction because:
 Guarantees reduce the customer’s perceived risk Guarantees should be:
 Firms focus on what customers want • Unconditional
• Easy to understand
 Guarantees set clear standards • Easy to communicate
 Guarantees can generate customer loyalty • Easy to invoke
• Easy to collect
 Guarantees provide meaningful customer feedback
 Service Quality Gaps
 Service firms should seek to identify and close
any gaps in the service delivery process:

 Gap 1: Not knowing what customers expect

 Gap 2: Service specification standards do not
reflect what management thinks customers expect
 Gap 3: Service delivery does not match service
quality specifications
 Gap 4: Not living up to the levels of service
performance that are promoted and promised by
marketing communications
 Gap 5: The service that customers perceive they
get falls below their expectations
 Identifying Service Quality gaps
(Potential Fail Points)

Service delivery
does not match The service that
Service Quality customers
specifications perceive they
get falls below
their
expectations

Management
does not know
what customers
expect

Service
specification
standards do not The quality of service
reflect what performance that is
management promoted and promised
thinks customers is not delivered
expect
Lecture 4

The End