Delivering Quality Service

At MIT we had a course called Management of Supply Networks that had a couple of lectures on Service Quality. At the time, I can remember thinking that the material was rather esoteric. I was expecting the course to talk about logistics, measurement and analytics and instead we got into concepts and mental models. There were a couple of optional text books which I bought but given the class, I never really read. I'm a book junkie so the books have lived in my library ever since.

Recently, I had a customer hire my firm to help improve their customer satisfaction rating. They were ranked last in a JDPower's poll and felt they had to improve their customer satisfaction rating even though they were technically a regional monopoly and customers could not change providers. I got out my notes from class and I skimmed some of the books I had on the shelf to prepare for the engagement. That's when I started to get what the professor was teaching in class. One of the lectures was a summary of the book, Delivering Quality Service: Balancing Customer Perceptions and Expectations by Valarie A. Zeithaml, A. Parasuraman and Leonard L. Berry. As I skimmed the book, I realized that it had a useful framework. The framework helped outline that service quality is not just about delivering quality service; it's about exceeding customer expectations. Since that engagement, I've relied on this book many times. If you are interested in improving your service quality, I'd highly recommend reading it.

Customer satisfaction is the difference between a customer's expectations of a service and their perceptions of what was delivered. Having high customer satisfaction ratings simply means you've exceed your customer's expectations, it does not mean that you've delivered great service.

Let me give you an example. If you look at the American Customer Satisfaction Index for Southwest Airlines and United Airlines, you'll see that they score an 81 and a 56 out of 100 respectively. Southwest got the highest score of any US Airline in 2009 and United had the lowest. Yet if you look at Skytrax, which measures the quality of airline service, you'll see that Southwest and United are both given 3 stars ratings (equivalent of Fair). They have the same quality ranking and yet have vastly different customer satisfaction scores because their customers have different expectations.

A customer enters an engagement with an expectation of service quality. They form their expectations by personal experiences with other vendors, things they hear about word-of-mouth (like your reputation), performing online research, and their own personal take on service quality. When Southwest started to offer service 38 years ago, they decided to compete strictly on price. United has a much longer history, being founded back in the early days of aviation. They were there when flying on a plane was a life changing experience. Customers grew to expect higher quality service. So though both airlines have the same quality ranking, they differ in customer satisfaction because one exceeds its customer's expectations and one does not. The starting point to improving customer satisfaction then is to look at customer expectations.

Understanding customer expectation allows you to focus on cost affective delivery that exceeds expectation. There are four categories where a provider can make mistakes that increase the gap between customer expectations and perceptions:

1. Management's perception of customer expectation is wrong
2. The translation of management's perceptions into service quality specifications is flawed
3. The way in which the organization is executing to the specifications is off
4. Or external communications with the customer are wrong

I'll look more at these next.