Improving Service Quality and Productivity

Improving Service Quality

1. Customer satisfaction and customer focus

Many of the historic sources of company superiority-technology, innovation, economies of scale-allowed companies to focus their efforts internally and prosper. Today, internal focus in many companies is shifting to an external focus on the customer. Companies are acknowledging that unless customer needs are taken into account in designing and delivering both services and goods, all the technical superiority in the world will not bring success.

When customers become scarce in an industry and competition heats up, however, the customer gains power. In the 1990s, when competition for master of business administration students intensified and Business today conducted “customer surveys” of students to rank the best business schools in India, the business school “customer” assumed a more central position in these organizations.

What students wanted in courses and experiences began to drive curricula, content, and peripherals associated with business degrees. Business Schools overhauled their MBA programs to make them more relevant to the students and the business environment.

Many B-schools revamped the course content of their programmes, recognized their key constituents (students, faculty, administrators, alumni, and corporate recruiters), and acknowledged that they needed research to understand their customer’s expectations.

2. Value

Another key competitive factor defining the way services are bought and sold is value. In the words of the business observer, the marketing of value has “gone from a ground swell to a tidal wave.” Value reflects the growing customer concern of getting more for money, time, and effort invested.

Experts can point to many reasons why value is critical to today’s consumers: economic problems, loss of jobs due to company restructuring, and a return to the real and practical. While the 1980s could easily have been termed the decade of extravagance, the customer priority of the 1990s is turning out to be value. To thrive, companies must understand the demographic and psychographic change that reflects this new perspective.

3. Total Quality Management and Service Quality

Many experts considered the 1980s the decade of manufacturing quality because efforts to improve quality-to make products that conformed to requirements-were initiated in some form in many companies during that time.

Total quality management (TQM) is the term widely used to capture the movement, although this concept is used in a myriad of ways. In a general sense, TQM has most often been defined as a management philosophy or way of doing business based on continuous quality improvement.

TQM has subsumed a diverse group of quality techniques and strategies, among them statistical process control, process management, employee participation, management commitment and leadership, empowerment, and team building.

4. Emphasis on Service as a Key Differentiator in Manufacturing Firms

Competitive parity has been reached in many manufactured goods (such as personal computers, video cassette recorders, and other electronic products, to name just a few) meaning that product quality alone no longer differentiates one producer from another.

Low price as a differentiating strategy is also disappearing, especially as companies face the reality that they and their competitors accomplish little more in price wars than to eliminate their own margins. One of the few remaining strategies that can set one goods company apart from others is customer service, broadly defined as developing strong relationships with customers. Goods firm in industries such as automobiles; computers and most industrial firms are heavily focusing on service.

5. New Measurement Systems that Link Customer Satisfaction with Financial Goals and Operational Measurements

Before the early 1990s, few companies had measurement systems that viewed the customers as a focus. While most companies were drowning in measurement, emphasis was typically on short- term financial performance, productivity, and efficiency-not on long-term customer satisfaction and value. Focusing on customers’ priorities led the company to many changes, one of the most important being a company-wide measurement effort emphasizing customer satisfaction.

When committing resources to improve service quality, company executives, want to be sure that these investments will pay off. To document the payoff, many organizations have put in place measures that capture both the costs and gains of service quality.

6. Internationalization of Services

At one time-and indeed, not so long ago-the potential for services to be provided on a global basis was limited by the belief that services cannot be transported. That time is now past, for the internationalization of services has become a reality. Probably the most dramatic examples of global service markets are in the airline and financial services industries.

Improving Productivity

Improved productivity must, therefore, take into account effectiveness as well as efficiency.

Productivity improvements in the service sector are possible and a number of ways of improving service productivity are suggested.

1. Improving Staff

One way is through improving the knowledge, skills, attitudes and behaviour of existing and new staff involved in service delivery and performance through better systems of recruitment, training, development and motivation.

Thus staff in contact with customers handling the visible elements of the service can be trained in handling queries and complaints, in product knowledge, in the operations of internal systems. Productivity bargaining schemes with considered measures of output and formu­lae for sharing gains can be operated to provide incentives for improved productivity. In other words staff can be encouraged to work harder and more skillfully.

2. Introducing Systems and Technology

Service organizations can reap productivity improvements if they become more systems and technology oriented. The systems approach looks at the task as a whole. It attempts to identify key operations to be undertaken, examines alternative ways of performing them, devises alternative meth­ods, removes wasteful practices and improves co-ordination within the system as a whole.

Alterna­tive layouts, better job design and consideration of overall costs of the system are important features of the systems approach. For example productivity improvements in grocery retailing have been made possible by a systems approach to physical handling of goods, layout, job design and merchan­dising.

The systems approach to service can be applied in three ways: through hard technology, soft technology and hybrid technology.

(a) Hard technology means substituting machinery and tools for people (e.g. automatic car washes, airport x-ray surveillance equipment, automatic car parking, automatic vending equipment, audio visual equipment, and computers.)

(b) Soft technology means substituting pre-planned systems for individual service operations. The systems may involve some technology, but their basic characteristic is the system itself which is designed for optimal results (e.g. fast food outlets, pre-packaged tours).

(c) Hybrid technology is where equipment is combined with planned systems to give greater order, speed and efficiency to the service process (e.g. limited service, fast repair facilities for car exhausts, tyres and brakes).

The approach to service activities can have important effects upon productivity. The systems approach, like the marketing approach, is as much about attitude and outlook as it is about tools, techniques and hardware or engineering. But the combination of division of labour with industrial­ization of service can produce new solutions to old problems.

The effects of this kind of thinking when applied to services are reflected in features like:

(a) Greater standardization of performance and the mass production and greater impersonalization of services (e.g. telecommunications, group travel schemes);

(b) The appraisal of jobs. Attention is focused on how improvements can be made in the ways of doing the present job, what new methods can be employed to do jobs differently, and how the jobs and tasks themselves can be changed.

(c) Reconsideration of the scale of operations. Economies of operation through chain operation or franchising may be sought;

(d) Specialization of effort of markets to make labour more productive.

3. Reducing Service Levels

Productivity can also be improved by reducing the quantity of service and/or the quality of service (e.g. doctors could give less time to each patient). There are dangers in these approaches particularly where a service organization has promised to deliver a higher level of service in the past. Also competitors can differentiate their services by broadening and upgrading their service quantity and quality.

4. Substituting Products for Services

Productivity can be improved by providing a product substitute for the service (e.g. new data transfer technology has removed the need for the telegram service).

5. Introducing New Services

It is possible to design a more effective service that eliminates or reduces the need for the less effective service. For example, transatlantic travel by air has largely replaced transatlantic travel by sea; the credit card has replaced the former system for obtaining overdrafts.

6. Customer interaction

It is possible to change the way in which customers interact with service providers. This is particularly possible with ‘high contact’ services. Using the consumer more in the production pro­cess demands greater understanding of consumer behaviour and its underlying causes. Ways have to be found to hardness consumers or to change the behaviour through education and persuasion for the benefit of service delivery.

Consumers are involved in service delivery anyway, whether actively or passively. To improve the useful, active role of the customer in service delivery may mean new managerial approaches, changed organizations or organizational structures, the employment of para professionals and perhaps a changed role for the professional service manager.

He may become more of a catalyst, stimulator, orchestrator or manager directing energies toward the maximum in­volvement of the consumer, student, client, parent or whatever. In other words more consumer- intensive designs have to be developed to maximize the contribution of the customer to service performance and delivery.

7. Reduce the Mismatch between Supply and Demand

A significant feature of many service organizations is the mismatch that often exists between supply of the service and demand for it. A major goal in marketing services is to get greater control over supply and demand and to obtain a better balance between the two. If more people want to use an airplane than there are seats available then business may be lost to competitors; unsold seats for a theatrical performance mean revenue lost forever.

Service marketer may therefore face problems of:

• Increasing demand (e.g. using up spare capacity)
• Decreasing demand (e.g. where demand is excessive)

Obtaining a better balanced service supply (e.g. to meet fluctuating demand patterns). Kotler has used the term ‘demarketing’ to describe the strategy which an organization may actively adopt to discourage additional customers on a temporary or a permanent basis. He uses the terms ‘syncromarketing’ to describe the strategy which an organization may actively adopt to bring supply and demand into better balance.