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EuroMed Journal of Business
Applying importance-performance analysis to assess service delivery performance:

Evidence from Greek insurance
Evangelos Tsoukatos
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Evangelos Tsoukatos, (2008),"Applying importance-performance analysis to assess service delivery
performance", EuroMed Journal of Business, Vol. 3 Iss 2 pp. 144 - 162
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EMJB
3,2 Applying importance-performance
analysis to assess service delivery
performance
144
Evidence from Greek insurance
Evangelos Tsoukatos
Department of Finance and Insurance,
TEI (Technological Educational Institute) of Crete,
Agios Nikolaos, Crete, Greece
Abstract
Purpose – The purpose of this study is to demonstrate the potential of importance-performance (IP)
analysis as a decision-making tool for service management, employing IP analysis to assess the
performance of Greek insurance in delivering quality services.
Design/methodology/approach – Data were collected in a two-stage survey. In both stages,
respondents were asked to provide importance and performance scores, in identical seven-point Likert
scales, for the 25 service attributes identified for Greek insurance. In order to qualify for the sample,
individuals had to be over the age of 25 and have at least one insurance policy and one service
encounter with their insurers within the previous three months. The two methodological streams of IP
analysis, “gap analysis” and IP maps, were employed to analyse the data.
Findings – The value of importance-performance analysis as a tool for managerial decision making
in services was reaffirmed. Contrary to previous findings on insurers’ reluctance to respond to their
customers’ quality requests, Greek insurance was found to have adequate reflexes in this respect. In
stage one, the dimensions Responsiveness and Assurance were positioned in the “keep up the good
work”, Reliability in the “concentrate”, Empathy in the “low priority” and Tangibles in the “possible
overkill” quadrants of the importance-performance map. In stage two, the industry was found to have
taken actions towards keeping-up with its customers’ requirements.
Research limitations/implications – The main limitations of this study are that it was based on a
single service industry and that convenience sampling was used. However, its methodology and
results are valid for various industries in the service sector and provide a solid basis for future
research.
Originality/value – Service managers can exploit the approach taken by this study to improve
service management. Greek insurers have to keep considering the needs and wants of their customers
regarding service delivery.
Keywords Customer services quality, Insurance, Greece
Paper type Research paper
Introduction
Although much more effort and resources are traditionally directed towards
aggressive marketing for attracting new customers and increasing market shares,
EuroMed Journal of Business research has shown that defensive strategies, concerned with retaining customers, can
Vol. 3 No. 2, 2008
pp. 144-162 be more profitable (Fornell, 1992). High retention rates lead to long-lasting
q Emerald Group Publishing Limited
1450-2194
customer – provider relationships that, in turn, affect positively the financial
DOI 10.1108/14502190810891209 performance of firms (Reichheld and Sasser, 1990; Reichheld, 1996; Grönroos, 2000).
Customer retention is driven by the loyalty (or disloyalty) of customers to a service Applying IP
provider (e.g. Jacoby and Kyner, 1973; Bansal and Taylor, 1999) that comes as a result analysis
of how much customers believe that what they get from this specific service provider is
worth more than what they can get from others. The main antecedents of loyalty,
discussed in the literature, are customer satisfaction and service quality (e.g. Zeithaml
et al., 1996; Bloemer et al., 2002; Durvasula et al., 2004). Delivering excellent/superior
services is the corner stone of customer loyalty, as the causality of relationships 145
between loyalty and its main antecedents is described in the literature by the sequence
“service quality ! customer satisfaction ! customer loyalty” (e.g. Zeithaml, 1988;
Iacobucci et al., 1995; Rust et al., 1995; Zeithaml et al., 1996; Bloemer et al., 2002;
Chumpitaz and Paparoidamis, 2004).
Service organizations face four quality challenges: to deliver superior services to
satisfy their customers, to achieve higher customer satisfaction than their competitors,
to retain customers in the long run, and to gain market share; with the latter three
being dependent on the first (Marwa, 2005). Hence, their continuous quest for
delivering services of superior quality has compelled service providers to frequently
assess their performance in relation with changing customer requests as their firms
need to keep pace with shifts in the market place. Service providers must be proactive
in collecting, collating and assessing their customers’ service preferences against
perceptions, to establish the extent to which customers requirements are being met by
the services they provide and subsequently take corrective measures to sustain service
quality (Marwa, 2005). Once customers have experienced the possible, it is difficult to
settle for less (service quality) and they always look forward and expect more from all
providers without exception (Zemke, 2002).
The issue is of great managerial importance. Service providers that fail to match
their customers’ needs and tastes and keep in track with changes in customers’
preferences put their firm’s existence in danger. For example, the replacement of the
“me” by the “now” generation in the United States in the 1990s that increased the
importance of certain service dimensions (Responsiveness) at the expense of others
(Empathy) (Heskett et al., 1990) put at risk the survival of thousands of businesses that
failed to accordingly and in time realign their service delivery. Service managers
should be aware that the dynamic nature of service quality demands frequent
monitoring. Delivering superior services often goes beyond the scope of individual
firms, into the best interests of industry bodies, in highly deregulated financial markets
with intense competitive pressures from foreign institutions (Ibrahim et al., 2006).
The purpose of this study is twofold. First, to exhibit the potential of
importance-performance (IP) analysis as a management decision-making tool for:
.
assessing service quality strategies;
.
deploying service quality efforts and resources;
.
evaluating shifts in customers’ quality preferences; and
.
adapting the quality of delivered services to match customers’ needs.
IP analysis has been used in a variety of service settings for similar reasons (e.g.
O’Neill et al., 2001; Magal and Levenburg, 2005; Joseph et al., 2005). The second
objective of the study is, by employing IP analysis, to assess the performance of Greek
insurance, from which evidence was drawn, in matching the service requirements of its
EMJB customers and keeping up with shifts in their needs and tastes. Since no preconceived
3,2 assumptions were made regarding the response of Greek insurers, no testable
hypotheses were developed in this respect.
The remainder of this paper is organised in eight sections. Section two reviews the
literature on service quality and its assessment, section three explains the
implementation of IP analysis while section four gives a short presentation of Greek
146 insurance, from which evidence was drawn for this study. Sections five and six
describe the study’s methodology and results respectively. Finally, research findings
and implications, limitations and directions for further research and conclusions are
discussed in sections seven through nine.
Literature review
Service quality
Although service quality is extensively researched its discussion is not
straightforward. The concept is synthetic and any attempt to discuss it involves the
discussion of its components, i.e. service and quality.
Services are processes of activities aiming to provide solutions to customers’
problems, with most other characteristics of services being consequences of their
process nature (Grönroos, 2000; 2001). The majority of services are first sold and then
simultaneously produced and consumed, very often requiring the physical presence of
customers (Berry, 1999). The “inseparability” of production and consumption, prevents
services from being subject to a predetermined quality control process or marketed in
traditional ways (Grönroos, 2000). Being very often produced during service
employee-customer encounters (Drew-Rosen et al., 2003), services are “heterogeneous”
as the performance of humans is not stable. Services are heterogeneous even when
delivered through automated channels due to varying customer attitudes towards
interacting with “machines”.
Although certain tangible elements may be included, the essence of services is
“intangibility” (Zeithaml et al., 1990) that leads customers to perceive services in
subjective and often highly abstract ways (Grönroos, 2000). Services are perceived as
bundles containing the “core service” and the “service experience”, i.e. “what” the
service provides and “how” it is delivered, depending on front-line employees’
interactions with customers, the organization and its facilities. A number of
“peripheral” services facilitate the offering of the core service (Grönroos, 2000).
Fitzsimmons and Fitzsimmons (2001) define a service bundle as a package of goods
and services consisting of supporting facilities, facilitating goods, and explicit services.
The American Society for Quality (www.asq.org/), in line with Feigenbaum (1983),
views quality as “a subjective term for which each person has his or her own
definition” while the international standard ISO 8402 (1994) defines quality as “the
totality of characteristics of an entity (product, service, process, activity, system,
organization, person) that bear on its ability to satisfy stated and/or implied needs”.
The mission of defining quality is more complex for service providers. Intangibility
implies that the criteria for a flawless service are not only less specific than the criteria
for a defect-free tangible good (Berry and Parasuraman, 1991) but also exceptionally
composite and not easily identifiable. Marketers view service quality as the level
needed to make the service acceptable in the market place and try to define service
quality in advance. On the other hand, customers make “during” and “after use”
evaluations (Marwa, 2005) comparing the service delivered to them with their previous Applying IP
experiences (Grönroos, 1982, 1984; Lehtinen and Lehtinen, 1982; Lewis and Booms, analysis
1983). The result of this comparison is perceived service quality (Grönroos, 1982; 1984;
Takeuchi and Quelch, 1983; Parasuraman et al., 1985; 1988). Hence, services must
conform to the wishes of customers rather than to any predetermined set of
specifications (Berry et al., 1988). As Lewis (1993) put it, “there is no other fact or reality
about service quality but what customers perceive about a service”. 147
Service quality assessment
Following the definition of perceived service quality as the result of comparing actual
service delivery with prior experience (Grönroos, 1982; 1984; Lehtinen and Lehtinen,
1982; Lewis and Booms, 1983; Parasuraman et al., 1985), researchers have generally
followed two main theoretical perspectives. The Nordic (European) (Grönroos, 1982,
1984) perspective views service quality as having two dimensions: “technical” and
“functional” quality, reflecting the service outcome and the service process
respectively. Customers’ perceptions of these two dimensions are filtered through
the service firm’s image. The American model defines service quality as the
discrepancy between expected and perceived service through five core components:
Reliability – performing the promised service dependably and accurately;
Responsiveness – helping customers and providing prompt service; Assurance –
inspiring trust and confidence; Empathy – providing caring, individualized attention
to customers; and Tangibles – the tangible elements of service (Parasuraman et al.,
1988). Although the American model dominates the literature there is no unanimity
between researchers on which of the two, or some other, better reflects perceived
service quality (Brady and Cronin, 2001). The present study abides by the
five-dimension typology of the American model.
Although not disputing the battery of items and the dimensionality of service
quality proposed by Parasuraman et al. (1985; 1988), Cronin and Taylor (1992)
recommended the adequacy-importance model as more appropriate, arguing that
performance rather than “performance minus expectation” better determines service
quality. Several measurement instruments have been developed following the debate
on disconfirmation (Grönroos, 1982; 1984; Parasuraman et al., 1985) vs
performance-only measurement of service quality (Cronin and Taylor, 1992) with a
number of researchers defending the main stream disconfirmation measurement
(SERVQUAL) and others disputing it (mostly in favour of SERRVPERF) on theoretical
and operational grounds (Buttle, 1996). However, the research community is
unanimous in that service quality is a multidimensional phenomenon that requires
multi-item measures.
Importance – performance analysis

An alternative approach for service quality assessment is IP analysis (Martilla and
James, 1977) that treats service quality as a function of customers’ importance and
performance perceptions related to salient service attributes. The method identifies
service elements that should be emphasized or de-emphasized and guides the
redeployment of resources (Graf et al., 1992; Slack, 1994; Skok et al., 2001). Several
applications of IP analysis are reported; in evaluating customer services and marketing
strategies (Martilla and James, 1977; Crompton and Duray, 1985; Sampson and
EMJB Showalter, 1999), operations strategy (Slack, 1994), IS/IT operations (O’Neill et al., 2001;
3,2 Skok et al., 2001), human resource management (Graf et al., 1992), allocating
organizational resources (Graf et al., 1992; Slack, 1994; O’Neill et al., 2001). It has been
applied in numerous service settings, e.g. the automotive industry (Martilla and James,
1977) health clubs (Skok et al., 2001), hospitality/tourism (Weber, 2000), banking (Yeo,
2003), education (Roszkowski, 2003), food services (Sampson and Showalter, 1999),
148 online library services (O’Neill et al., 2001), e-banking (Ibrahim et al., 2006) etc.
For each attribute, customers provide importance and performance scores, usually
in identical Likert scales. The analysis then follows two main methodological streams:
“gap analysis” and “IP maps”. The former, focuses on identifying mismatches,
measured by performance-minus-importance scores (Martilla and James, 1977; O’Neill
et al., 2001; Skok et al., 2001), the size and sign of which reveal the existence of
performance gaps, with positive and negative signs indicating over and under
performance respectively. Gap analysis is based on the adequacy-importance model
recommended by Cronin and Taylor (1992) and is often used as an alternative to
SERVQUAL’s performance-expectation model (Parasuraman et al., 1988).
The theoretical and empirical merits of gap analysis are debated. Bacon (2003)
rejects its value on a number of accounts. He claims that importance-performance gaps
do not appear in classical gap analysis studies (Parasuraman et al., 1985; 1988), that
importance and performance are different constructs and the meaning of
performance-minus-importance scores is not well-defined. He concludes that, as a
consequence, the method is worth only as a “rule of thumb”. However, Bacon (2003)
fails to provide adequate evidence to support his claims. The mere fact that
importance-performance gaps were not discussed by Parasuraman et al. (1985; 1988)
cannot be enough to condemn the method. On the other hand, following Ryan’s (1999)
proposal that importance and performance are desired and tolerated outcomes
respectively, Shaw et al. (2002) consider importance-performance gaps as better
indicators, than expectation-performance gaps, of the contrast between what a service
ought to be and what is. They propose that customers’ service expectations have built
in some actual prior experiences regarding the service industry and/or the specific
provider. Negative prior experiences lead to lower expectations that may, in turn, lead
to falsely small gaps. Shaw et al. (2002) consider importance as a better indicator of the
ideal service and performance-minus-importance gaps as precise measures of service
performance. They argue that if a specific service attribute is very important and
performance is very weak then a large gap is an accurate portrait; if negative prior
experience has reduced current expectation, the gap shrinks thus providing false
information. In empirical research, importance and expectation are often used
interchangeably in measuring service quality (e.g. Chon et al., 1991; Evans and Chon,
1989; Hollenhorst et al., 1992; Ennew et al., 1993). Oh (2001) attributes this confusion to
the resemblance of gap analysis to other popular research models, such as the
expectancy-value theory (Fishbein and Ajzen, 1975) and SERVQUAL (Parasuraman
et al., 1988) that involve similar concepts. In short, the conclusion that
importance-performance gaps analysis is rigorously grounded and can be
appropriately used (Shaw et al., 2002) seems to have prevailed in the literature and
the method is widely used (e.g. Shaw et al., 2002; Magal and Levenburg, 2005; Ibrahim
et al., 2006).
The IP maps approach plots mean importance and performance ratings of salient Applying IP
service attributes on a two-dimensional grid. A four-quadrant matrix, identifying areas analysis
needing improvement and areas of effective performance, is produced by dividing the
horizontal and vertical dimensions into “high” and “low” sections using either the
grand means of observed importance and performance ratings (e.g. Martilla and James,
1977; Hemmasi et al., 1994; Aigbedo and Parameswaran, 2004) or the mean values of
the scales employed for measuring importance and performance (e.g. Evans and Chon, 149
1989). This study adopts the grand means of observed values approach. The High
Importance/Low Performance quadrant is labelled “Concentrate here” and contains
elements representing key quality challenges that should be given top priority (Graf
et al., 1992). The High Importance/High Performance quadrant, labelled “Keep up the
good work”, contains elements that represent quality strengths calling for a
maintenance posture (Graf et al., 1992). Elements positioned in the Low

Importance/Low Performance quadrant, labelled “Low priority”, do not require
immediate attention and may be candidates for discontinuation of resources (Crompton
and Duray, 1985). Finally, the Low Importance/High Performance quadrant, labelled
“Possible overkill” contains elements that, although insignificant, are over-resourced
suggesting that quality resources could be diverted elsewhere. An extension of the IP
map approach is the iso-rating or iso-priority line, an upward 458 line from the grid’s
origin, on which importance equals performance. The area above the line is that of
quality challenges where the larger the distance from the line the greater the priority
(Skok et al., 2001). IP maps are valuable decision-making tools for: providing quality
services in areas perceived to be the most critical to customers; and monitoring service
providers’ performance in keeping up with their customers’ changing needs and
preferences.
Service setting
In insurance, economic performance is tied with customer retention (Moore and
Santomero, 1999; Diacon and O’Brien, 2002) as the cost of selling a policy is not
recovered unless the policy is renewed for at least three or four years (Zeithaml et al.,
1996). Hence, any genuine insurer’s growth relies upon delivering services of superior
quality, which is linked to business success (Phillips et al., 1983) and survival
(Parasuraman et al., 1988). The industry has recognised that the quality of services and
the achievement of customer satisfaction and loyalty are fundamental principles of
successful marketing (Marwa, 2005).
However, insurers are often accused that they are not always prepared to take all
the necessary actions for adapting the quality of their services to their customers’
preferences, especially when customer needs are shifted through time. They, often, find
it difficult to envision and understand what service attributes, and at what levels, are
required to indicate high quality (Sureshchandar et al., 2002). Some, mistakenly, even
define service quality as their promptness in compensating sincere customers
(Anderson and Skogh, 2003) while others confuse service quality with generosity, i.e.
their readiness to compensate more than a policy states or a court of justice orders
(Roos, 1981).
Greek insurance is worth only a fraction of a medium sized European insurer. The
industry is worth e4.3bn in annual premiums (2006), of which e2.3bn in life and e2.0bn
in non-life business. In the same year the medium sized European insurer Eureko wrote
EMJB e14.3bn in premiums. The life sector is highly concentrated with the five leading
3,2 insurers controlling 65.2 per cent of written premiums whereas the corresponding
figure in the non-life sector is 32.5 per cent. Ninety insurers compete in the market
(2006), of which 17 are life, 60 non-life and 13 composite (www.eaee.gr/). Although it is
almost impossible to track the nationality of investments in an open European
economy such as the Greek, one can reasonably speculate that most insurance
150 companies, even those established under the Greek law, belong to non-Greek interests.
However, the state is a major market player as in 2006 the two state-owned insurers
(National Insurance and Agroinsurance) controlled 19.6 per cent of annual written
premiums (www.eaee.gr/).
The deregulation of premiums in 1997 that came as a result of the harmonisation of
the Greek legislation with that of the European Union resulted in:
.
significant increases of motor liability premiums;
.
reduced fire insurance premiums; and
.
mass introduction of unit-linked life insurance products.
An important consequence of deregulation is a wave of buy-outs and mergers, which is

expected to go on for a number of years to come. Deregulation also caused an increased
mobility of foreign insurers in and out of the industry. Major international groups
entered the market through by-outs while others left, mainly because of negative
margins in motor insurance and high costs of acquiring new life business. At the same
time certain European insurers previously operating through branches, transformed
their branches into subsidiaries established and operating under Greek law
(Tsoukatos, 2007).
In the life sector, deregulation brought a number of new unit-linked and
index-associated products. On the other hand, health insurance continues to make
losses mainly because of the industry’s failure to foresee medical inflation trends.
Insurers are trying to confront the problem by taking measures to control service
provision costs and by increasing premiums. In non-life insurance, deregulation gave a
big push to the previously exceptionally problematic motor liability. However, the
sector is still challenging and is expected to be so in the immediate future. The
mandatory recreation-vessels liability insurance is a good prospect but a real boost is
expected from the prospective legislation for compulsory earthquake insurance.
However, the industry accepts pressures for increased reinsurance premiums, mainly
after the 9/11 terrorist attack (Tsoukatos, 2007).
Greek insurance is taking various initiatives towards improving service quality but
a number of challenges are still unresolved:
. Reliability of insurers. Solvency related questions create mistrust to consumers
of, mainly, the life sector (ICAP, 2003).
.
Insurance products and services. High premiums permit access to life insurance
only to individuals in the higher income brackets. In mandatory non-life
insurance companies are primarily concerned with reducing costs, often at the
expense of quality.
.
After-sales service and support. Insurers often find various pretexts in order to
avoid fulfilling their promises (ICAP, 2003). Customers frequently discover that
the terms of their contracts do not correspond to the promises given to them.
.
Sales networks. Consumers consider that insurance agents usually fail to, fully, Applying IP
explain the terms of contracts they propose, and finally sell (ICAP, 2003).
analysis
.
Unhealthy competition. A number of insurers are engaged in price cuts practices,
especially in compulsory motor liability that records underwriting losses for a
number of years. Unless these practices are soon brought to an end, a number of
insurers will be driven out of business. In fact three insurance companies in 2005
and six in 2006 lost their licences because of inadequate solvency margins (www. 151
eaee.gr/).
.
Globalisation. Greece is an open European economy fully participating in the
EMU and its insurance industry is wide open to international competition that
takes the form of alternative sales channels, new mergers and alliances, new
products, transitions in the regulatory and legal framework etc. Globalisation
raises operation costs while it depresses profit margins.

.
Web-based technology (IT). The insurance market is increasingly considering
transacting insurance business through the web. Drury (2003) suggests that the
web influences the insurance landscape by allowing companies to: reduce
processing expenses, design more competitive products, expand markets more
quickly at relatively lower cost and, thereby, increase revenue and improve
returns by expanding investment strategies.
Methodology
Research instrument and data collection
Data were collected in a two-stage survey, in 2004 and 2006, where respondents were
asked to provide importance and performance scores, in identical seven-point Likert
scales for the 25 service attributes, previously identified for Greek insurance
(Tsoukatos and Rand, 2006):
(1) Tangibles:
.
EQUIPTE – Modern looking equipment and technology;
.
PHYSFA – Visually appealing physical facilities;
.
NEMPL – Neat appearing employees and agents; and
. SERVMA – Visually appealing service materials.
(2) Reliability:
.
DOSOM – Keeping promises;
.
PRODTS – Offer quality products and services;
.
NOAMB – Issuing contracts with clear terms;
.
INDEMN – Settling claims with no unnecessary delays;
.
INTESOL – Being interested in solving customers’ problems;
.
FIRSTM – Perform the service right the first time;
.
TIMELY – Provide services at the promised time; and
.
ERRORFR – Issuing error free documents.
(3) Responsiveness:
.
TELCUS – Informing customers exactly when services will be performed;
. PROMPT – Offering prompt service to customers;
EMJB .
WILLNG – Always willing to help customers; and
3,2 .
TOBUSY – Never being too busy to respond to customer requests.
(4) Assurance:
.
SAFE – Customers feeling safe in their transactions;
.
BEHAV – Employees and agents instilling confidence in customers;
152 .
COUTES – Employees and agents being consistently courteous with
customers; and
.
KNWLG – Employees and agents having the knowledge to respond to
customers’ requests.
(5) Empathy:
.
INDVAT – Giving customers individual attention;
.
CONVHRS – Having convenient operating hours;
.
PERSNL – Employees and agents giving customers personal attention;
.
CUSINT – Having customers’ best interests at heart; and
.
UNSPEC – Employees and agents understanding the specific needs of
customers.
The research population consisted of Greek residents, over the age of 25, who had at
least one insurance policy and a service encounter with their insurer within the
previous three months (Tsoukatos, 2007). The sampling area was the major cities of
Crete. The method of personal interview was chosen in both stages as being superior to
self-administered questionnaires in perceptual or attitudinal surveys (Groves, 1989). In
addition, face-to-face administration of survey instruments maximizes response rates
and makes researchers available to answer to respondents’ questions (Ibrahim et al.,
2006).
Convenience sampling was employed in both stages of the survey. This type of
sampling may incorporate an increased risk of sampling bias the assessment of which
is not straightforward (Easterby-Smith et al., 2002). However, service-quality –
customer-satisfaction research very often employs convenience sampling (see for
instance Brady et al., 2002; Chang et al., 2002; Wang et al., 2004; Semeijn et al., 2005)
mainly because of the requirements of random sampling regarding the homogeneity of
populations and the cost of locating and measuring chosen population items
(Easterby-Smith et al., 2002). This study employed convenience sampling due to time
and cost constraints that did not allow for a random sample, especially in view of the
specific research population.
The n ¼ 520 sample of stage 1 was taken from customer lists of three major Greek
insurers that participated in the study and by “mall-intercepting” (Rice and Hancock,
2005). Individuals in insurers’ lists were contacted by phone and personal interview
appointments, within the next couple of days, were made with eligible for the sample
respondents. In addition, an independent team of interviewers was mall-intercepting
(Rice and Hancock, 2005) individuals to set-up personal interview appointments with
eligible customers within the next few days. On the spot or by phone interviewing was
not an option in view of the length and complexity of the survey instrument. The
response rates were 55.9 per cent for customers in insurers’ lists and 42 per cent in
mall-intercepting. Given time and cost constraints, it was decided that a relatively Applying IP
simpler sampling procedure would suffice for stage 2. “Mall-intercepting” (Rice and analysis
Hancock, 2005) in the same sampling area produced an n ¼ 252 sample of respondents,
all meeting the same eligibility criteria and interviewed in exactly the same way as in
stage 1. The response rate was 40.5 per cent.
In both stages, interviewers were adequately trained and worked independently.
The sampling process resulted in two samples that, although taken two years apart 153
from each other, were comparable regarding respondents’ demographics, types of
insurance policies held and perceptions of insurers’ service failures and recovery
efforts. With the exception of gender (p , 0:05), the samples’ structures were
consistent in terms of all other demographic indicators, i.e. respondents’ age (p . 0:1),
family status (p . 0:1) and family income (p . 0:05). They were also consistent in
terms of respondents’ insurance covers (p . 0:1) and policy types (p . 0:1) and finally
in terms of having experienced service failures (p . 0:1), types of service failure
experienced (p . 0:1) and service recovery perceptions (p . 0:1). In view of the above
it can be considered that the sampling structure is adequate for this study.
Results discussion
Average importance and performance scores both overall and across the service
dimensions, Reliability, Responsiveness, Assurance, Empathy and Tangibles
(Parasuraman et al., 1988) of both stages of the study are summarized in Table I.
Considering that both stages of the study employed convenience sampling, one might
be tempted to attribute importance – performance scores and observed differences to
sampling bias and measurement instability. However, the precautions taken to reduce
bias, the matching samples’ structures and the identical measurement of importance
and performance scores between stages may well lead to the conclusion that the scores
and changes depicted in Table I reflect actual market conditions.
High performance scores reflect respondents’ perceptions that high quality services,
rated above five in a seven-point Likert scale, are delivered in all service areas. The
industry’s overall performance in stage 2 is rated with 5.43, a significantly higher score
(p , 0:05) than the 5.23 of stage 1, as a result of significant increases in Reliability
(p , 0:01), Responsiveness (p , 0:01) and Assurance (p , 0:05) while Empathy and
Tangibles scores remain unchanged. Increased performance scores indicate improved
service delivery performance in stage 2 as compared to stage 1.
Stage 2 respondents’ overall importance ratings are significantly lower than stage 1
by 0.10 (p , 0:05), mainly as a result of lower (p , 0:01) Empathy and Tangibles
ratings by 0.22 and 0.57 respectively. On the other hand, Reliability importance ratings
are increased by 0.11 (p , 0:05) while Responsiveness and Assurance ratings remain
unchanged. These variations may be attributed to either or both of the following: First,
stage 2 respondents have adapted their importance ratings to their perceptions of what
the industry can deliver. Second, customers have adjusted their importance ratings on
the basis of real changes in their needs and tastes. The theoretical framework behind IP
analysis treats importance and performance as non-dependent variables (Martilla and
James, 1977). However, previous research has shown (Furrer et al., 2000; Tsoukatos and
Rand, 2007) that the level of services an industry is tuned to deliver affects customers’
importance perceptions. Overall, importance rating changes between stages can be
3,2
scores
154
average
Table I.
EMJB
Stage 1 vs Stage 2
importance-performance
Average importance Average performance Performance minus importance
Stage 1 Stage 2 Difference St.2-St.1 Stage 1 Stage 2 Difference St.2-St.1 Stage 1 Stage 2 Difference St.2-St.1
Overall 6.50 6.40 20.10 * * 5.23 5.43 0.20 * * 2 1.27 20.96 0.31 * * *
Reliability 6.58 6.69 0.11 * * 5.18 5.53 0.35 * * * 2 1.41 21.17 0.24 * * *
Responsiveness 6.58 6.60 0.02 5.32 5.61 0.29 * * * 2 1.25 20.99 0.26 * * *
Assurance 6.58 6.57 20.01 5.35 5.58 0.23 * * 2 1.23 20.99 0.24 * *
Empathy 6.45 6.23 20.22 * * * 5.02 5.08 0.06 2 1.44 21.15 0.29 * * *
Tangibles 6.22 5.65 20.57 * * * 5.38 5.37 2 0.01 2 0.84 20.28 0.56 * * *
Notes: * *p , 0:05; * * *p , 0:01
interpreted as reflecting both actual changes in customers’ needs and tastes and Applying IP
changes in their perceptions of what the industry can deliver. analysis
Performance-minus-importance scores across dimensions and overall are in both
stages negative, indicating respondents’ perceptions that the industry fails to match
their needs and wants. However, stage 2 scores are significantly lower than in stage 1.
In particular, lower stage 2 performance-minus-importance scores are attributed to:
decreased importance scores and unaltered performance perceptions for Empathy 155
(p , 0:01) and Tangibles (p , 0:01), unaltered importance scores and improved
performance perceptions for Responsiveness (p , 0:01) and Assurance (p , 0:05), and
industry’s outperformance regarding customers’ increased importance scores for
Reliability (p , 0:01). As compared to stage 1, stage 2 respondents’ perceptions about
the industry’s performance in satisfying their needs and tastes are improved.
The picture becomes clearer when results are plotted on the IP maps (Figure 1 for
stage 1 and Figure 2 for stage 2). Stage 1 respondents place Responsiveness and
Assurance in the “keep up the good work” quadrant, an indication of their perceptions
that the industry delivers high quality services in these high importance service areas.
Empathy is of low importance to customers, hence of low priority regarding
performance improvement. However, stage 1 customers perceive that the industry
overperforms in Tangibles, a low importance service area. Certain quality resources
employed in Tangibles may better be directed towards improving performance in other
dimensions. The industry’s immediate challenge in stage 1 is Reliability, a high
importance service area in which the industry underperforms. The first priority should
be to fix the performance-minus-importance gap, of 2 1.40 in Reliability, by deploying
resources and efforts to this specific service area.
Stage 2 IP map (Figure 2) reveals that Reliability is moved from the “Concentrate
here” to the “Keep up the good work” quadrant, an indication of respondents’
perceptions that the industry’s performance in this area is improved compared with
Figure 1.
Stage 1
map
EMJB
3,2
156
Figure 2.
Stage 2
map
stage 1. The “Keep up the good work” quadrant also contains Responsiveness and
Assurance as was the case in stage 1. Empathy is still a low priority dimension and is
placed accordingly while Tangibles is moved from the “Possible overkill” to the “Low
priority” quadrant, as a result of a lower importance rating of the dimension (5.65
against 6.22 of stage 1), statistically unchanged (p . 0:1) performance rating and
increased (p , 0:05) performance grand mean that moved the dividing line between
“low” and “high” of the horizontal axis to the right. Between the dimensions in the
“keep up the good work quadrant” the top quality challenge remains Reliability, as
having the widest gap (p , 0:01), to which the industry must prioritise the deployment
of resources. The dimensions Assurance and Responsiveness, with equal gaps, are the
immediately subsequent priorities while Empathy and Tangibles are low-importance
dimensions not currently requiring improvement.
Research findings and implications

The initial aim of this study was twofold; to demonstrate the potential of IP analysis as
a tool for service management decision-making and assess the responses of Greek
insurance to its customers’ quality preferences. The study succeeded in both its
objectives.
Service managers, irrespective of industry, should use IP analysis as an aid to their
decision making for allocating quality efforts and resources. The method can be
employed in assessing the efficacy of allocating service quality resources in accordance
with customer requirements. Further, IP analysis can produce valuable
recommendations for optimally deploying resources to improve service performance
in service areas of high importance to customers. Hence, management’s decision
making can benefit in this respect. Additionally, IP analysis can be employed in
tracking shifts in customers’ preferences and accordingly adapt the allocation of
available resources to keep importance-performance gaps as low as possible. Although
evidence was drawn from a single industry, it is evident that the value of IP analysis as Applying IP
a decision-making tool in service management goes beyond insurance to every service analysis
sector. Managers will find IP analysis valuable for benchmarking in both international
and national markets.
Regarding its second objective, the study showed that although insurance
companies are often accused as not understanding their customers’ service demands
(Sureshchandar et al., 2002), Greek insurers provide services of high quality and are in 157
a position to respond to their customers’ shifting quality preferences. Between 2004
and 2006 service performance in Reliability, the top priority service determinant, was
improved and Reliability was moved from the “concentrate here” to the “keep up the
good work” quadrant. At the same time, Tangibles was moved from the “possible
overkill” to the “low priority” quadrant, where it should be in the first place.
Responsiveness and Assurance were, in both stages, in the “keep up the good work”
quadrant, indicating the industry’s response to its customers’ high importance
perceptions regarding these areas. Finally, Empathy was kept in the “low priority”
quadrant an indication that the industry recognised the true importance of the specific
dimension to customers despite accusations that insurers often hide their true quality
deficiencies behind offering excessively empathetic services. Overall, between 2004
and 2006 the industry reduced performance gaps in all service areas indicating that
services better tailored to the customers’ needs and requirements were delivered. This
indicates that the industry is doing a good is keeping-up to its customers’ shifting
needs, especially in view of increased competition from deregulation, globalisation and
technological developments. Insurers should often assess their customers’ preferences
against performance perceptions to ascertain that they deliver services that match their
customers’ requirements, bearing in mind that service quality is a dynamic concept
that changes as societies advance forward.
It is evident that the methodological framework of assessing the performance of
Greek insurance, regarding its service delivery, can be easily extended to apply to
every service industry. Hence, this study is valuable to service management in general.
Limitations and directions for further research

Although due care was taken regarding methodological considerations in both stages,
the study suffers from a number of limitations. First, evidence was drawn from a single
industry. Second, the study abided by the typology of Parasuraman et al. (1985; 1988)
regarding the dimensions of service quality. This assumption is testable and subject of
on-going research. However, the methodology of this study will be valid even if new or
alternative service quality dimensions exist. Further, convenience sampling, although
common in management studies, was employed in both stages of the study, so issues
such as location and sample representativeness may have affected the findings.
Nevertheless, given time and cost constraints the sampling procedure is considered
adequate.
However, the study’s limitations can also serve as opportunities for further research.
Future studies, regarding the value of IP analysis for service quality management,
should encompass samples from a number of service industries to provide more
generic conclusions. Cross-national repetitions of the study would give the opportunity
to managers to enhance their understanding on service quality management in
international markets. Cross-industry replications will provide valuable comparisons
EMJB of various industries’ performance to be used for benchmarking. The responses of
3,2 services industries to their customers’ shifting needs must be constantly monitored.
This calls for longitudinal research.
Conclusions
158 This study builds on previous research regarding the value of importance-performance
analysis for managerial decision making in service management. Additionally, it is the
first study that does so in the context of Greek insurance, an under-researched industry
as far as service management is concerned. The study provides valuable insights for
managers on the value of IP analysis in service delivery and on the ability of Greek
insurance to assess the preferences of its customer base and match their needs.
Although the service setting of Greek insurance is different from other industries,
the methodological framework of the study is applicable to every
culture/industry/service setting arrangement. Hence, a variety of industries may
benefit by replicating this study. Finally, the issue of delivering services of superior
quality is vital to all service industries in today’s global marketplace. Managers must
be monitoring shifts in service demands and be constantly prepared to accordingly
redeploy resources to keep-up with changes.
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Corresponding author
Evangelos Tsoukatos can be contacted at: tsoukat@sdo.teicrete.gr
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