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MGH 9th IM 06 Quality new

Operational Efficiency and Effectiveness (Sullivan University)

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Chapter 6
Service Quality

CHAPTER 6
SERVICE QUALITY

TEACHING NOTE
The intangible nature of the service package requires a comprehensive approach to quality
control that begins with service design and includes the attitudes, training, and motivation of
service personnel. Our discussion begins with defining and measuring service quality using the
SERVQUAL instrument. Students should be challenged to think imaginatively about devising
measures of service performance. The idea of designing quality into the service process includes
tools such as Poka-yoke or failsafing, and quality function deployment. A Walk-through Audit
quality assessment tool is developed with an example. Achieving service quality begins with
understanding the cost of quality and the use of statistical process control techniques. The
chapter concludes with the topic of service recovery planning.

SUPPLEMENTARY MATERIALS
Case: The Ritz-Carlton Hotel Company: The Quest for Service Excellence (HBS: CU09-
PDF-ENG)
The case examines Ritz's processes, leadership, technology, systems, and people as they align
to achieve long term goals. Students learn about Ritz-Carlton's history and corporate philosophy,
and analyze the challenges of being a quality service provider. Issues addressed include how the
company should remedy defects in its customer service, achieve its customer retention goals, and
maintain a culture of service while experiencing rapid growth. (quality control, six-sigma)
Cases: We Can Hear You Now (A): A Customer Survey Design for a Six Sigma Project at
Crutchfield Corp. (HBS: UV3960-PDF-ENG)
The director of CS at a customer-focused catalog electronics company has asked a Six Sigma
Black Belt for assistance in evaluating several ideas to effectively obtain and analyze feedback
from users of its CS department. A Design For Six Sigma project was run six years previously
and discovering why the company used the Six Sigma project, as opposed to one of the many
new customer-satisfaction-survey tools available from third-party vendors is a goal. (Customer &
client analysis, Customer feedback, Six sigma)
Case: State Bank of India: ''SMS Unhappy'' (HBS:
State Bank of India: SMS Unhappy, is a deceptively simple but comprehensive case of a
public sector company using a customer complaint management tool as a catalyst to improve
overall service performance and overtaking even its private sector competitors in terms of both
customer satisfaction and organizational performance. The case describes a novel, mobile phone-
based complaint redressal system designed and implemented by Shiva Kumar, chief general
manager. The SMS Unhappy initiative brought greater levels of transparency to all levels of
branch performance, resulting in superior service operations with low variance, and ultimately,
better customer response. (commercial bank, customer service, controls)
Case: Club Med (A) and (B) (HBS case 9-687-046) (HBS case 9-687-047)
Used together, these cases can stimulate a discussion of service quality measurement; cost of
service quality; and they provide a basis for an analysis of ways to achieve quality.

Case: Federal Express: The Money Back Guarantee (A) (HBS case 9-690-004)

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This case involves a professor who is unable to conduct an executive seminar at an island resort
because the overnight package containing her presentation materials did not arrive. Distributing
supplements (B), (C), and (D) sequentially during class provides an opportunity for student role-
playing.

Case: A Measure of Delight: The Pursuit of Quality at AT&T Universal Card Services (A)
(HBS Case 9-694-047)

As part of its overall strategy for “delighting” customers, Universal Card Services, a wholly
owned financial services subsidiary of AT&T, has created a comprehensive quality measurement
and compensation system. Through multiple measures of both internal process performance and
external customer satisfaction, and by linking employee compensation to overall organizational
performance, Universal Card Services attempts to achieve rapid identification of process
problems, ongoing assessment of customer satisfaction, and motivation of employees to sustain
high levels of customer service. Despite the company’s success, its management continues to
struggle to balance the basic tensions that arise from linking compensation to performance
measurement.

Case: Westlake Cinemas: Designing a Service Guarantee (HBS Case 9-689-004)

The CEO of a small chain of movie theaters grapples with the design of a service guarantee. She
is faced with the following issues: assessing customer needs, defining the service offering,
determining current organizational capabilities, and determining the role that a guarantee would
play in competitive strategy.

Deming’s Bead Experiment (see instructions at end of instructor’s manual)

The Bead Experiment is a role-playing exercise that W. Edwards Deming devised to illustrate the
extent of variability in a process that is beyond the control of the participants. The game also can
be used to demonstrate the construction of a control chart for proportions. Instructions for this
game are included in a separate section in this manual.

LECTURE OUTLINE
1. Defining Service Quality

Dimensions of Service Quality (Figure 6.1)

Gaps in Service Quality (Figure 6.2)

2. Measuring Service Quality

SERVQUAL (Figure 6.3)

Walk-Through-Audit (Table 6.1 and Figures 6.4-6.6)

3. Quality Service by Design

Incorporation of Quality in the Service Package (Table 6.2)

Taguchi Methods (Figure 6.7)

Poka-yoke (failsafing) (Table 6.3)

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Quality Function Deployment (Figure 6.8)

4. Achieving Service Quality

Cost of Quality (Table 6.4)

Statistical Process Control (Tables 6.5, 6.6, 6.7 and Figs. 6.9, 6.10)

Unconditional Service Guarantee (Figure 6.11)

Stages in Quality Development (Figure 6.12)

5. Service Recovery (Table 6.8 and Figure 6.13)

Approaches to Service Recovery

Complaint Handling Policy

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TOPICS FOR DISCUSSION

1. How do the five dimensions of service quality differ from those of product quality?

[Student Lisa Wildes submitted this response.]

The five dimensions of service quality are tangibles, empathy, assurance, reliability, and
responsiveness. Tangibles are the appearance of physical facilities, equipment, personnel, and
evidence of care and attention to detail. Empathy refers to caring and individualized attention,
while responsiveness refers to the willingness to help and the prompt delivery of service.
Assurance deals with knowledge and courtesy of employees and their ability to convey trust and
confidence. Reliability refers to service that is provided properly the first time and every time
thereafter.

The dimensions of quality that are associated primarily with products are performance, features,
reliability, conformance, durability, serviceability, aesthetics, and perceived quality. The latter
consideration, perceived quality, can be considered as encompassing all of the dimensions of
quality related to service.

Service quality is measured by comparing a customer's expected service, which comes from
word-of-mouth, personal needs, and past experience, with his or her perceptions of the service.
The measurement of satisfaction is based on whether the expectations were met, not met, or
exceeded, so service qualities are difficult to measure individually or by collecting data. Product
quality is different because many of the dimensions are tangible and, thus, can be measured
directly or by collecting data.

The assessment of service quality is made during the delivery of the service. The assessment of
product quality, however, usually is made after the purchase.

Customers of a service are the sole judges of its quality, but because many of the dimensions of
product quality are tangible, the manufacturer can measure some of those dimensions for features
and conformance even before the customer sees them.

In general, the main differences between service and product quality arise from the variance in
ability to measure the dimensions based on their tangibility, on who can judge the quality, and
when the quality is judged. There is some overlap, however, as shown below:

Medical, auto repair, root canal

Services
Hair cuts, tourist services, restaura

Products
Cars, jewelry, clothing, furniture
The middle section represents the overlap where quality can be assessed during and after the
process and where the measurement is more tangible than in the top section.

2. Why is measuring service quality so difficult?

Service quality is difficult to measure because the outputs of many services are intangible or
subject to individual judgments. Ultimately, the measure of service quality is a measure of
customer satisfaction. But, customer satisfaction is a measure of the discrepancy between the
customer's expectations before the service is delivered and his or her perceptions of the service
that is delivered, which are both subjective evaluations.

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A measurement tool called SERVQUAL attempts to deal with this difficulty by tracking service
quality trends by measuring the gaps between customer expectations and perceptions. Surrogate
measures such as customer waiting times and the number of customer complaints can also be
used to assess customer satisfaction and service quality.

In addition to the difficulties in measuring the quality of outputs, service organizations face
another important problem related to quality. Because services usually are provided and
consumed simultaneously, there seldom is enough time to remedy an incidence of poor service
before the customer is involved in the process.

3. Illustrate the four components in the cost of quality for a service of your choice.

[Student Ron Chovanec provided this answer.]

Service firms face four costs of quality: internal failure, detection, prevention, and external
failure. The United Way-Capital Area is an Austin, Texas, human service organization that must
deal with combinations of these costs.

The costs of internal failure cause the organization to lose valuable time, which otherwise could
be used for more productive activities. At the United Way, these costs include the time to rework
tasks that had previously been done improperly by staff members and volunteers.

Detection costs might be termed quality control costs and are necessary and prevalent in all
industries. At the United Way, peers, superiors, or volunteers review all work before it is sent out
of the office. These reviews are designed to ensure that only quality work makes it into the
public realm in order to avoid external failures.

Prevention costs arise from the effort to avoid making mistakes more than once. Two costs of
prevention involve the implementation of a quality system and the examination of materials
brought in by outside sources. United Way incurs additional prevention costs by conducting
evaluations of continuing programs as a way of preventing repetition of problems.

External failure costs occur when mistakes are made outside of the company walls. Such
mistakes can be very expensive and sometimes devastating to an organization. External failures
cost United Way in three ways: a reduction in contributions, dissatisfaction among the member
agencies, and a reduction in numbers and satisfaction of the volunteers.

4. Why do service firms hesitate to offer a service guarantee?

[Student Iain Burchell contributed this response.]

There has been a great deal of hesitation in offering guarantees within the service sector. The
concerns of management are based largely on naive assumptions that, in practice, generally are
not true.

First, the main concern of management seems to be that if a guarantee were offered, the
organization would be cheated out of its livelihood. Such sentiment assumes that all customers
are inherently dishonest and would take unfair advantage of the guarantee. In practice, however,
that fear has not been supported. In fact, although some customers have abused a guarantee
policy, the increased customer confidence and goodwill that have been generated have
outweighed the cost of the abuses.

A second major concern is that a guarantee will lead to a large increase in costs. Organizations
are likely to incur modest additional costs when a guarantee is first offered, but generally these

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costs are offset quickly by the increased business that results from repeat customers and customer
referrals.

Third, some managers who overlook the costs of service quality failures think that guarantees are
unnecessary. But, a service guarantee forces management to improve the quality of the service,
which will reduce the incidence of failures and their costs.

A fourth area of concern arises when management believes that most failures are beyond its
control, and therefore, a guarantee would serve no purpose. The classic example of this situation
can be seen in the airline industry where weather and traffic controllers cause most delays.
However, for many travelers it is not the delay itself that causes distress, but how the airline
personnel treat them during the delay. Passengers who are kept informed of the reasons for the
delay and are treated well by airline representatives will be less likely to invoke a guarantee than
will passengers who are ignored or abandoned by their carriers.

Some firms that have established a reputation for delivering "perfect" service believe a service
guarantee would be counterproductive. They think a guarantee would imply that they "might"
make a mistake.

A final concern arises particularly in organizations that have a large number of employees. In
these cases, management may believe that because the employees are fallible, it would be
suicidal to offer a guarantee. However, Deming's view is that it is the company's processes that
fail, not the employees. Properly trained employees will enhance the value of a service
guarantee.

A well-run and quality-oriented service firm should regard a service guarantee as a tool to
improve its quality and its profits.

5. How can the recovery from a service failure be a blessing in disguise?

[Student Roger Bhalla provided this response.]

Recovery from a service failure can have several rewards. First, as part of the recovery process,
management can reassure the customer that "if anything ever goes wrong in the future, we will
take care of you." After such reassurance, the customer might be even more loyal to the
organization and this could mean additional business in the form of referrals by the satisfied
customer.

Second, the recovery process lets management identify and correct weaknesses in its delivery
system. Most dissatisfied customers do not report problems, so management should regard
feedback from unhappy customers as a source of valuable information. The feedback allows
management to satisfy the customer, prevent similar failures in the future, and to train employees
in facilitating future recoveries.

If a failure results from a discrepancy between the customer's expectations and his or her
perceptions of the service, a recovery from the failure can be approached in different ways. One
way is to educate the customer and another way might be to change the method of delivering
service. For example, a hotel might place self-service luggage racks in its lobby, but unless
customers are made aware that the racks are available, the customers might be upset by the lack
of assistance from bellhops. The hotel management can create a recovery simply by posting
signs that the carts are available for the customer's convenience.

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Management that handles the recovery process properly can lower the cost of delivering a quality
service by reducing failure costs. Prevention costs might also decline, because well-trained
employees require less supervision.

INTERACTIVE CLASS EXERCISE

The class breaks into small groups. Each group identifies the worst service experience and the
best service experience that any member has had. Return to class and discuss what has been
learned about service quality.

First have the student groups report on their worst and best experiences. Then focus the
discussion on the general observations they can make about service quality. The five dimensions
of service quality should surface. Display Figure 6.3 the service quality gap model and discuss
its relevance to the quality experiences. Finally, the importance of service recovery should be
identified.

EXERCISE SOLUTIONS
6.1

Expectation Importance Training Attitude Capacity Information Equipment

Reliability 5 8 5 5
Responsiveness 5 3 9 3 2
Assurance 5 5 9 6
Empathy 5 7
Tangibles 5 2 3
Score 90 80 45 70 50

Training remains the most important service element.

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6.2 For a sample size of 8, the following X -chart control limits are determined:

UCL  X  A2 R 5.0  (.373)(31

. ) 616
.

LCL  X - A2 R 5.0 - (.373)(31

. ) 384
.

x x
x
6.0 UCL = 6.16
x x x
x
5.0 X = 5.0

4.0
LCL = 3.84

1 2 3 4 5 6 7 Day
A run of seven observations falling above the average of 5.0, three of which are above the UCL,
suggests that the process is out of control. Evaluate the situation and take corrective action.

6.3 (a)

Service time, sec.

Maid Sample 1 Sample 2 Sample 3
Ann 120 90 150
Linda 130 110 140
Marie 200 180 175
Michael 165 155 140
X 153.75 133.75 151.25
R 200-120=80 180-90=90 175-140=35

X (153.75  133.75  15125

. ) / 3 146.25

R (80  90  35) / 3 68.33

Control limits for mean:

UCL  X  A2 R 146.25  (.729)(68.33) 196.06

LCL  X - A2 R 146.25 - (.729)(68.33) 96.44

Control limits for range:

UCL  D4 R (2.282)(68.33) 155.93

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LCL  D3 R (0)(68.33) 0
(b)

Sample mean: X = (185 + 150 + 192 + 178)/4 = 176.25

Sample range: R = 192 - 150 = 42

Process is in control, no action is needed.

6.4 (a)

Service time, sec.

Service Sample Sample Sample Sample
person 1 2 3 4
1 200 150 175 90
2 120 85 105 75
3 83 93 130 150
4 68 150 145 175
5 110 90 75 105
6 115 65 115 125
X 116 105.5 124.17 120
R 200-68=132 150-65=85 145-75=70 175-75=100

X (116  1055
.  124.17  120) / 4 116.42

R (132  85  70  100) / 4 96.75

Control limits for mean:

UCL  X  A2 R 116.42  (.483)(96.75) 16315

.

LCL  X - A2 R 116.42 - (.483)(96.75) 69.69

Control limits for range:

UCL  D4 R ( 2.004)(96.75) 19188

.

LCL  D3 R (0)(96.75)  0
(b)

Sample mean: X = (180 + 125 + 110 + 98 + 156 + 190)/6 = 143.17

Sample range: R = 190 - 98 = 92

Process is in control, no action is needed.

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6.5

p .02

.02(.98)
UCL 0.02  3 0.02  3(0.014) 0.062
100

.02(.98)
UCL 0.02 - 3 0.02 - 3(0.014) - 0.022( set 0)
100
6.6

Congestion Rate per

Month Incidence Month
J 14 .014
F 18 .018
M 14 .014
A 12 .012
M 16 .016
J 8 .008
J 19 .019
A 12 .012
S 14 .014
O 7 .007
N 10 .010
D 18 .018
Total 162 .162
(a)

.162
P .0135
12

P (1 - P ) .0135(1 - .0135)
P   .00364
n 1000

UCL .0135  (3)(.00364) .0244

LCL .0135 - (3)(.00364) .0025
(b) The system is in control because congestion rates of .015, .009, and .011 are within the
quality control limits.

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6.7 (a)

76
P .038
2000

.038(1- .038)
P  .0191
100

UCL .036  (3)(.0191)  .095

LCL .036 - (3)(.0191)  0
(b) The expected number of wrong test results nP 100(. 038) 3. 8.

(c) p = .10 is above the UCL, therefore the system is out of control.

6.8 (a)

10
P .1
100

.1(1 - .1)
P  . 067
20
(b)

UCL .1  ( 3)(. 067)  . 3

LCL .1 - ( 3)(. 067) 0
p = 4/20 = .2, therefore, the service quality is within the required limits.

CASE 6.1: CLEAN SWEEP, INC.

1. Prepare an X -chart and R-chart for complaints, and plot the average complaints per
building for each crew during the 9-month period. Do the same for the performance ratings.
What does this analysis reveal about the service quality of CSI’s crews?

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X -chart and R-chart for complaints

Table 1 Analysis of Complaints

Averages by Crews
Range for All Average for All
Month Buildings Buildings 1 2 3 4
1 5 3.5 2.33 4 5.5 3.00
2 7 3.1 1.67 4 5.5 2.33
3 8 2.4 1.00 3 4.0 1.00
4 5 2.1 1.00 3 4.0 1.33
5 3 1.6 1.33 2 2.5 1.00
6 5 1.4 .67 3 2.5 .33
7 4 0.8 .33 2 1.0 .33
8 4 1.5 1.33 1.5 3.0 .67
9 4 1.4 1.00 2.5 2.5 .33
Average R = 5.0 X =1.98 1.18 2.78 3.39 1.15
Key x + o # *

For a sample size of 10 buildings, the following X -chart control limits for complaints are
determined:

UCL  X  A2 R 1.98  (.308)(5.0) 3.52

LCL  X - A2 R 198
. - (.308)(5.0) 0.44
The following R- chart control limits for complaints are:

UCL  D4 R (1.777)(5.0) 8.9

UCL  D3 R (0.223)(5.0) 1.1

Figure1 X Control Chart for Complaints

5 # #

4 o o # #
x UCL= 3.52
3 * x o o # o #
#o
2 + * x x o
#
o
+ x x xo X = 1.98
* + x
1 +* + * + x# + +
* +* * * LCL = .44
0
1 2 3 4 5 6 7 8 9
Months
We can see from Table 1 and the complaint control chart shown in Figure 1 that the overall
quality of Clean Sweep's service is poor, particularly in the first four months and for crews 2 and

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3. The average monthly complaint rate, however, is declining, beginning with a 3.5 average for
the first month and ending with a 1.4 average for the nine-month period.

X -chart and R-chart for performance ratings

Table 2 Analysis of Performance Ratings

Averages by Crews
Range for All Average for All
Month Buildings Buildings 1 2 3 4
1 4 5.3 6.33 5 4 5.66
2 4 5.2 6.33 5 4 5
3 4 6.1 6.66 5.5 5 6.66
4 3 6.3 7.33 5.5 5 6.66
5 3 6.3 6.66 6 5.5 6.66
6 3 6.4 6.66 5.5 5.5 7.33
7 2 7.0 7.33 7 6.5 7
8 3 6.4 6.66 6 5 7.33
9 3 6.4 6.33 6 5 7.66
Average R = 3.2 X =6.15 6.70 5.72 5.05 6.66
Key x + o # *

For a sample size of 10 buildings, the following X -chart control limits for performance ratings
are determined:

UCL  X  A2 R 615
.  (.308)(3.2) 7.14

LCL  X - A2 R 615
. - (.308)( 3.2) 516
.
The following R- chart control limits for performance ratings are:

UCL  D4 R (1.777)(3.2) 5.7

UCL  D3 R (0.223)(3.2) 0.7

Figure 2 X Control Chart for Performance Rating

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8 *
x
+ * o*+ * UCL = 7.14
7 + +x
+ + *+ x* x +
*+ x # x
6 x X = 6.15
* o o o o
x x o o # #
LCL = 5.16
5 o *
o # # # #

4 # #

1 2 3 4 5 6 7 8 9
Months
We can see from Table 2 and the control chart for performance rating in Figure 2 that the overall
performance of Clean Sweep's service is poor, particularly in the first four months and for crews
2 and 3. The average monthly performance rating, however, is improving beginning with a 5.3
average for the first month and ending with a 6.4 average for the nine-month period.

2. Discuss possible ways to improve service quality.

The quality of Clean Sweep's service is not consistent for all of the crews. As indicated in Tables
3 and 4, crews 1 and 4 have average rating and complaint rates that are far superior to those of
crews 2 and 3. This inconsistency compromises Clean Sweep's contract with the building
management because the poor performance of some of the crews might draw complaints from the
building tenants.

Table 3
Average Monthly Performance Ratings
Building Complaint Rating Building Complaint Rating
A 1 7 E .88 6.55
Be 4.22 5.77 F 1.11 6.55
Bw 4.66 4.55 G 2.77 5.22
C 1.44 6.55 H 1.33 5.55
D .66 7.11 I 1.88 6.33

Sq. Ft. per Average No. of Average

Crew Worker Buildings Complaints Rating
1 18,333 A, C, F 1.18 6.7
2 18,750 Be, H 2.78 5.66
3 20,000 Bw, G 3.39 4.89
4 19,625 D, E, I 1.15 6.66

Clean Sweep's quality problems can be divided into three categories:

 Lack of consistency among the crews

 Unbalanced division of work among the crews

 Little positive incentive for quality work

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The nature of Clean Sweep's work is routine and simple. Although some activities might require
practice, operating a floor polisher for example, it is reasonable to expect that lack of skill is not
an important component of the quality problem. Clean Sweep can be regarded as a functionally
specialized organization, so it can use control methods that center on decision rules, policy,
standard operating procedures (SOPs), and work scheduling. Techniques such as developing
specific cleaning procedures and standards, devising cleaning schedules, establishing policies on
the amount of employee involvement in break and lunch decisions, assigning crew members to
specific jobs may improve the consistency and quality of the service.

Table 5 suggests a reallocation of the floor space and a reassignment of crews to particular work
locations.

Table 5
Recommended Building Assignments
Sq. Ft. per
Crew Building Total Sq. Ft. Crew Size Worker
1 Be, C 140,000 7 20,000
2 E, H, A 160,000 8 20,000
3 G, F 120,000 6 20,000
4 Bw, I, D 177,000 9 19,666

The new assignments offer several advantages. First, the floor space-to-worker ratio is much
more equitable. The total workload for crews 2 and 3, which have had the lowest performance
ratings and highest number of complaints, has been reduced from 55 percent of the total floor
space to 44 percent. This factor alone might increase the quality of service that those two crews
deliver. The new arrangement also reduces the number of workers needed by one person, but this
does not mean an inevitable reduction in quality. We see that the present assignment for crew 4
is almost the same as its original assignment when it had the highest quality rating of all the
crews. Assuming that crewmembers are paid a minimum wage of $4.25 per hour, the annual
savings of reducing the staff by one member would be $8500 (excluding the savings from the
company contributions for taxes and benefits). This money that is saved could be used as an
incentive to the crews for improving the quality of their work. For example, a monthly bonus
could be awarded to the members of the crew that had the highest rating-to-complaints ratio with
the caveat that such a plan also has some disadvantages. Consider the impact if a particular crew
regularly out-performs the other crews.

3. Describe some potential strategies for reducing CSI's staffing problems.

Several elements of the recommended design should improve Clean Sweep's staffing problems:

 Consistent procedures for cleaning

 Fair division of work load

 Potential for earning bonuses

 Reduction of work load for the two crews that received the lowest ratings and highest
number of complaints

A regular bonus system and the redesigned job descriptions shown below could improve relations
between the crewmembers and leaders:

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 Setting policies regarding crew supervision, remedies for noncompliance with quantifiable
work standards, employee evaluations, lunch and break times, division of labor, and
disciplinary procedures

 Conducting on-site inspections by the crew supervisor to view the work in progress for
compliance with established policies

 Allowing each crew leader to name an "assistant crew leader" and to reward the top two crew
members with appropriate raises in order to convey a sense of career movement and
monetary advancement

A plan in which seniority is factored into the decisions about promotions and raises will
encourage staff members to stay with the firm, thereby reducing the high turnover rate. The
hiring and training of new workers is very expensive, so a reduction in the rate of employee
turnover is very attractive. Any savings realized under this plan could be returned to the quality
improvement program.

CASE 6.2: THE COMPLAINT LETTER

1. Briefly summarize the complaints and compliments in Dr. Loflin's letter.

Complaints:
 Had to ask repeatedly for such things as salads, entrees, water, rolls, and butter.

 Had to wait much too long for cocktail waitresses, drinks, salads, entrees, water, rolls, and
butter.

 Had to endure rude treatment from the cocktail waitress and waiter and inept service from an
untrained waiter's assistant.

 Received a level of service that was not commensurate with the cost of the meal.

Compliments:
 The food was excellent.

 The atmosphere was very pleasing.

2. Critique the letter of Gail Pearson in reply to Dr. Loflin. What are the strengths and
weaknesses of the letter?

Strengths:
 She put much time and effort into her response, acknowledged Dr. Loflin's concerns, and
thanked him for his feedback.

 She communicates on a professional-to-professional basis and conveys a sense of sympathy

rather than antagonism.

 She does not deny or dispute Dr. Loflin's claims.

Weaknesses:

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 Many of her comments in which she complains about how hard it is to get good help seem
self-serving.

 She offers no plans for correcting the situation; consequently Dr. Loflin cannot feel confident
that he will receive better service if he should return.

 She doesn't offer Dr. Loflin any enticements, such as free desserts, with his next meal.

3. Prepare an "improved" response letter from Gail Pearson.

[Material related to this case is reprinted from Martin R. Moser, "Answering the Customer's
Complaint: A Case Study," The Cornell H.R.A. Quarterly, May 1987, p. 15, The Better
Letter is written by Darryl Forrester, manager of the seasonal resort Weekapaung Inn. Ó
Cornell HRA Quarterly. Used by permission. All rights reserved.]
Dear Dr. Loflin,
Your letter of October 13, 1986, was most troubling, because it accurately pinpointed our
greatest deficiency: lack of consistency. The comments made to your party by our wait-staff
that night are totally inexcusable under any circumstances. It is our job to provide a
wonderful dining experience - beautiful surroundings, excellent food, and excellent service -
and in this instance we have fallen far short of the mark. I ask you to please accept my
sincere apology. More than that, I also want to thank you for taking the time to write the
letter.
Your letter was, in a way, the straw that broke the camel’s back. It shocked me out of my
complacency and propelled me into a reevaluation of the recruitment and training of our
service staff. Unfortunately, we have so far concentrated primarily on finding and training an
excellent chef and assistants, while paying only lip service to training our service staff. Your
letter actually confirmed a situation I had suspected (but ignored) some time ago.
We have begun a total restructuring of our staffing program. Though we do not expect
overnight miracles, I can personally guarantee that no guest of ours ever will have a repeat of
your awful experience here. I have saved your letter and read it in weekly staff meetings as a
training tool to demonstrate unacceptable wait-staff behavior.
Realizing that that evening cannot be brought back, I fully understand your predisposition
not to return. While we cannot change the past, I do hope that you will give us another
chance. Our food is better than ever, and the difference in attitude and service of our wait-
staff really makes dinner at the Retreat House the delightful experience it should be. Your
contribution to the Retreat House has been great, and we would like to have the opportunity
of demonstrating our appreciation for your help.

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4. What further action should Gail Pearson take in view of this incident?

 Motivate the employees to deliver good service by giving them a sense of ownership (if not
the real thing, then in some form of profit sharing).

 Train employees better.

 Use Dr. Loflin's letter as part of the training process.

 Institute a service guarantee.

 Provide the employees with monetary incentives for excellent service.

CASE 6.3: THE HELSINKI MUSEUM OF ART AND DESIGN

[Students Tahseen Ahsan, Deanna Draper, and Bruce Fulton provided this case analysis.]
1. Critique the WtA gap analysis. Could there be other explanations for the gaps?
A walk-through-audit "can be a useful management tool for the systematic evaluation of a
customer’s view of the service being provided." Such an audit was conducted by a group of
MBA students from the Helsinki School of Economics and Business Administration for the
Helsinki Museum of Art and Design. This audit identified several areas of diverging service
perceptions by museum staff and customers. One of the most important gaps identified by the
audit dealt with customers' likelihood of visiting the museum again and customers’ expectations
of recommending the museum to friends. Both measures represent overall visitor satisfaction
with museum services. The average rating of their own expectations for a repeat visit as 2.8 out
of 5 and of the likelihood that they would recommend the museum to others as 2.2. Management
and staff who responded to the same statements as if they were customers, however, rated the
likelihood of a repeat visit 3.4 and 3.8 ratings, respectively, and they gave the notion of
recommending the museum to other ratings of 3.2 and 2.8. The walk-through-audit analyzed
various services offered by the museum individually, identifying possible causes for the overall
service perception gaps.
The Helsinki Museum specializes in design and industrial art focused primarily on
Finnish design. It hosts three to four major exhibitions per year with a number of smaller
exhibits and a private collection. Museum facilities include a private cafe and gift shop, as well
as exhibition areas. The museum does not maintain its own Web site at this time.
The walk-through-audit surveyed museum customers, employees, and managers. Six
elements of museum services were analyzed for service gaps. These included awareness of
exhibits, information, exhibit experience, visitor habits, facilities, and language (i.e., of posted
information). Museum staff and visitors had similar perceptions concerning the appropriate level
of interactivity of the exhibition experience, as well as the language in which museum
information should be provided, primarily in Finnish and Swedish. However, customers
indicated that lighting, background noise, and music were more important elements of the service
than the staff perceived, thereby indicating that staff should be more aware of these items.
The audit uncovered a positive gap concerning the museum's facilities. Visitors had
much higher perceptions of the facilities than did the museum staff. In a series of eight questions
concerning restrooms, the gift shop, and the restaurant, customers gave an average rating of 2.7,
while managers and staff gave these same questions ratings of 0.8 and 1.6, respectively. The
audit concludes that this gap may be the result of the museum staff anticipating higher visitor
expectations of services than visitors themselves have. However, we certainly believe that the
museum staff should still focus on improving customer satisfaction with these services.

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Customers still gave these services relatively low scores, less than a “not sure.” Additionally,
this is an area of services that can be managed most easily by the staff. The questions focused on
the cleanliness of restrooms, the quality of food, the price of both food and gift items, and the
signs locating these facilities. Therefore, even though customer expectations perhaps exceed
those of the staff, improving these services could be an easy and relatively inexpensive means for
improving customers’ overall experiences. Perhaps management should spend some time
comparing its own facilities to those of comparably sized museums, ascertaining menu item
ideas, gift pricing, and identifying facilities with signs to ascertain customer expectations better.
Finally, it would certainly be important to investigate further the gap between management and
employee perceptions of these services. Managers gave significantly lower ratings than
employees and if management is that dissatisfied with the level of these services, it certainly
should be attempting to bring employee services in line with their own expectations.
2. Make recommendations for closing the gaps found in the WtA.
The audit uncovered two important marketing perception gaps. First, the museum staff believed
that word of mouth played the largest role in visitor awareness, however, visitors ranked this
method last. This is reflected by customers' low scoring of the statement that they would
recommend the Museum to friends, only a 2.2, compared to management and employee scores in
this category of 3.2 and 2.8 respectively. Additionally, the museum staff also thought radio was
much more influential in customer awareness than it actually was. In fact, the staff felt as if
newspapers played the least role in customer awareness, when it actually caused the greatest
amount of customer awareness according to customers. Therefore, the museum should focus
more of its resources on newspaper coverage of its events. Additionally, improving customers’
overall perceptions of their experiences as discussed below will likely increase the amount of
customer awareness generated by word of mouth. [Since this study was done, online resources
have surely replaced newspapers as a source of information about museum events.]
The second marketing gap identified by the audit concerned visitor behavior. Museum
staff indicated that they believed most visitors came alone and viewed all of the exhibits while
they were there. However, according to customer responses, large numbers of visitors came in
groups of twos and threes and only 38 percent of visitors saw all of the exhibits. The audit
concluded that different exhibits drew different audiences. This might represent an opportunity
to capture visitors who return each time the exhibits change. With four new exhibits a year, the
museum has the potential of creating a substantial group of highly profitable customers, if the
overall service experience improves. Finally, only 13 percent of customers visited the museum's
permanent collection. This might be caused by the problems discussed below concerning the low
ratings given to the ease of navigating the exhibits. If visitors cannot locate the permanent
collection, the museum layout might unintentionally cause customer self-selection of this exhibit.
Improving service facilities in these areas might make it easier for visitors to find the permanent
collection and increase the number of visitors. Conversely, it might only be a signal that many of
these visitors are repeat visitors and have already viewed the permanent collection, an important
distinction that should be investigated further.
The most important individual service gap identified by the audit concerns the amount of
information available to visitors. The museum staff had much higher perceptions than customers
of how available staff people actually were to customers. Conversely, the staff had much lower
perceptions of the clarity and adequacy of information and explanations about exhibited
information than did customers. Additionally, all three groups rated the services in this category
very poorly. Overall, in this category, customers gave these questions an average rating of 1.4,
employees gave them a 1.8 rating, and management gave them a 0.9 rating. The audit concluded
that museum personnel were much harder to locate than they themselves believed and that
customers preferred human information sources to print or audio information. These rational
conclusions indicate a need for more identifiable uniforms for museum personnel and possibly

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for instituting more guided tours by museum personnel or perhaps even by volunteers and design
professionals.
All three groups of respondents gave low ratings to the ease of navigating the facilities.
Generally, there were not enough signs concerning the location of exhibits and insufficiently
clear passages for visitors to follow through the exhibits. These problems with the servicescape
might also be the cause of the perception gaps in the availability of museum staff. Staff might be
on-hand and ready to answer questions, but visitors might have trouble locating them.
Additionally, customer frustration with getting lost in an exhibit might exacerbate perceptions of
inadequate staffing. Because the museum has recently undergone significant renovations, actual
physical alterations such as the addition of an entry atrium, are unlikely to be feasible. Smaller
changes, like color coding rooms or enlarging signs with room numbers on them accompanied by
easy-to-read printed maps would help to alleviate problems in this area. Again, however,
customers indicated a greater preference for human contact, so efforts to address this problem
should include increasing staff visibility and, to the extent possible, increasing the number of
staff throughout the exhibits themselves. Such an effort might only require repositioning
existing staff or might include the introduction of a museum “docent” volunteer program, which
would allow students and other volunteers to act as information sources throughout the exhibits.
Finally, the museum might want to investigate the economic viability of lowering ticket
prices. All three groups of respondents strongly disagreed that the ticket price is a good value for
the money. Because “delivery of a service should conform to the customers' expectations from
the beginning to the end of the experience,” a high-ticket price might be raising customer
expectations beyond what reasonably can be filled by the museum. If a lower ticket price is not
feasible for the Museum, other means of increasing customers’ perceived value in museum
services must be addressed. Addressing the service gaps identified by the walk-through-audit
should aid the Museum in increasing overall customer satisfaction.

CHAPTER QUIZ QUESTIONS

True/False
1. The concept of quality service deployment is based on the belief that services should be
designed to reflect customer requirements. (T)
2. Being meaningful and easy to invoke are important elements of a good unconditional
service guarantee. (T)
3. A process is said to be in control when all the variation that is noticed can be assigned to
specific causes. (F)
4. The first stage or rung of the service quality ladder is cost of quality. (F)
5. The average business hears only from 10 percent of its dissatisfied customers. (F)
6. The systematic-response approach to service recovery uses a protocol to handle customer
complaints. (T)
7. The term "producer's risk" refers to the probability that a sample will indicate an
acceptable quality incorrectly. (F)
8. A service guarantee becomes a service winner when it covers all aspects of the service.
(T)
9. When customer expectations are confirmed by perceptions, service quality is considered
satisfactory. (T)

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10. According to the SERVQUAL quality assessment instrument, responsiveness is the most
important dimension of service quality. (F)
11. Serving complimentary drinks on a delayed flight is an example of empathy being shown
by the service personnel to the irate customer. (F)
12. In the service quality gap model, GAP1 arises because of the management’s lack of
understanding about how customers formulate their expectations. (T)
13. Setting goals and standardizing service delivery tasks will help close GAP3, the service
performance gap. (F)
14. The most important function of SERVQUAL is to keep a record of service quality trends
through periodic customer surveys. (T)
15. Managing evidence of information is the key to closing the gap between customer
perception and service delivery. (T)
16. Severity of failure, speed of recovery, service guarantee and perceived service quality are
all factors governing service recovery expectations. (F)
17. A customer’s failure to remember the process steps is an error that falls in the preparation
category. (F)
18. Juran identified internal failure costs, external failure costs, detection costs, and
prevention costs. (T)
19. Fixing service-process problems before they affect the customer could be classified as
another component to the systematic-response approach. (T)
20. The Walk-through Audit focuses on the effectiveness of each stage in the service delivery
process (T)
21. The Club Med example illustrated the creative initiative by staff to implement a pre-
recovery. (F)
Multiple Choice
1. Which of the following dimensions of service quality is most important to customers?
a. Empathy
b. Assurance
c. Reliability*
d. Tangibles
2. Which of the following is not an advantage of offering a service guarantee?
a. It acts as a mechanism to differentiate the firm from its competitors.
b. It advertises the firm's commitment to quality.
c. It allows employees to interpret broadly the firm's service standards.*
d. It acts as a means of receiving feedback from customers.
3. Which of the following is a poka-yoke method?

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a. Adopting a checklist to help an employee avoid making a mistake*

b. Designing a service to reflect the customers' needs and requirements
c. Designing a service in a robust manner that can withstand abuse by customers
d. Comparing a firm's quality performance to the performance of others that are
considered "best in class"
4. Which one of the following is not an approach to service recovery.
a. case-by-case
b. systematic-response
c. unconditional guarantee*
d. early intervention
5. The costs of quality for services include all of the following except:
a. failure costs.
b. prevention costs.
c. control costs.*
d. detection costs
6. A gap in service quality is not the difference between:
a. customer expectations and management's perceptions of customer expectations.
b. the service delivery and the results that are communicated externally to the customer.
c. customer expectations and management's perception of the delivered service.*
d. the perceptions of the delivered service that are translated into service quality
specifications and the actual service delivery.

7. Which one of the following is not an example of detection costs?

a. Rework*
b. Collecting quality data
c. Process control
d. Periodic inspection
8. Which of the following is not considered effective in achieving and maintaining service
quality?
a. Encouraging service providers to be highly visible in dealing with customers.

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b. Establishing peer groups among service providers to foster teamwork and a sense of
pride.
c. Installing a system of incentives that emphasizes quality.
d. Increasing supervision of service providers.*
10. Which of the following is not part of a good service guarantee?
a. It is unconditional.
b. It is easy for the customer to understand.
c. It is meaningful to the customer.
d. It is difficult for the customer to invoke.*
11. All of the following are examples of “detection costs” of quality except
a. Quality planning.*
b. Periodic inspection.
c. Process control.
d. Collecting quality data.
12. Which quadrant in the matrix below represents attributes of a good service guarantee?
No Conditions Many Conditions
Complex (a) (b)
Detailed
Clear (c)* (d)
Precise

13. Which of the following is a strategy for closing the gap between customer expectations and
management perceptions of customer’s expectations (GAP 1)?
a. Standardization of service delivery.
b. Improved market research.*
c. Employee empowerment.
d. Investment in training.
14. Which of the following statements is not true concerning a service guarantee?
a. A well designed and implemented service guarantee can help a firm gain control over
its operation
b. Fear of customer cheating inhibits some mangers from adopting a service guarantee.

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c. Managers are likely to worry about the costs of a service guarantee, but for the wrong
reasons.
d. Managers who seek control over the financial consequences of a service guarantee
should require customers to meet various conditions.*
15. There are five dimensions that customers use to judge service quality. The willingness to
help customers and to provide prompt service is
a. assurance.
b. empathy.
c. reliability.
d. responsiveness.*
16. Shigeo Shingo is credited with which of the following quality ideas?
a. robustness
b. quality is free
c. poka-yoke*
d. quality function deployment
17. When a process appears to be functioning properly when, if fact, it is out of control, the type
of error and injured party is identified as:
a. Type I error, producer’s risk
b. Type II error, consumer’s risk*
c. Type I error, consumer’s risk
d. Type II error, producer’s risk
18. The difference between a customer’s ________ of a service and the _______ of the service
delivered is called GAP 5.
a. perceptions; perceptions
b. perceptions; expectations
c. expectations; perceptions*
d. expectations; expectations
19. Which of the following is not a reason that a service guarantee works?
a. Encourages individual employees to set their own standards.*
b. Generates reliable data on poor performance.
c. Builds customer loyalty.
d. Forces a firm to identify failure points.
20. Which of the following is not true of a Customer Satisfaction Survey?

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a. Survey can be completed at customer convenience.

b. Survey usually is conducted by operations personnel.*
c. Primary focus of survey is on overall impression of service.
d. Survey is designed around common service dimensions.
21. Which of the following is not possible using SERVQUAL?
a. Record customer expectations.
b. Track service quality trends.
c. Measure the quality of competitors.
d. Identify dimensions of service quality.*
22. Which of the following is not true of a Walk-through Audit?
a. Focuses on five dimensions of service package.
b. Emphasis is on evaluation of each stage of service delivery.
c. Survey is completed at customer convenience.*
d. Survey usually conducted by operations personnel.

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