Customer satisfaction versus customer loyalty (SERVQUAL)

Clearly, a key element of ensuring quality is to measure customers responses to the product or service they have received. Understanding this provides strategic feedback as to the likely future success of the firm. At first, it might seem simple to establish if customers are pleased or dissatisfied with their purchase - just ask them. With regards to products that have tangible characteristics, it is possible to ask customers about these and their degree of satisfaction with them. In services, it has been less straightforward. However, Parasuraman et al . (1985) have developed the SERVQUAL model based on measuring the difference between customers expectation of a service and their perceptions of the actual experience. This has led them to identify five key character- istics which they claim apply across all services: tangibles, reliability, responsiveness, assurance and empathy. Despite its general applicabil ity, this approach is modified to reflect the specific characteristics of different service industries and can only be used with other forms of quality measurement techniques. The SERVQUAL model is shown in Figure 8.5. Parasuraman et al. (1985) identified five gaps that can lead to service quality failures: 1 Not understanding the needs of the customers. 2 Being unable to translate the needs of the customer into a service design that can address them.

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Strategic operations management

Word of mouth communications

Personal needs

Past experience

Expected service Gap 5 Perceived service Gap 1 Management Gap 3

Service delivery Service quality specifications

Gap 4

External communications to customers

Figure 8.5 The SERVQUAL model (source: Parasuraman et al., 1985).

perceptions of customer expectations Gap 2

3 Being unable to translate the design into service expectations or standards that can be implemented. 4 Being unable to deliver the services in line with specifications. 5 Creating expectations that cannot be met (gap between customers expectations and actual delivery). The task that the organization has, therefore, is in ensuring that these gaps are closed in order for the promise of the offer to be on a par with the actual delivery. The various gaps are common, and an amusing example is given in the following anecdotal perception of management consultants.

SERVQUAL - an example
A reader sends the following story. A shepherd is tending his flock when a Jeep screeches to a halt beside him. The driver hops out and says: If I tell you how many sheep youve got, will you give me one? The shepherd looks him up and down.OK, he shrugs. The stranger takes out his laptop, plugs it into his mobile phone and, after a little work involving NASA websites and satellite readings, says: The answer is 931. The shepherd nods. Choose your sheep, he says. The stranger bundles the animal into his Jeep. Now, says the shepherd. If I tell you what job you do, can I have it back? Sure, the stranger replies. Youre a management consultant, the shepherd says. How did you know? the astonished stranger asks. Easy, the shepherd says. First, you charged me a fortune. Second, you told me something I already knew. And third, you know nothing about my business. Now please give me back my dog.
Source: Financial Times, A flair for stating the obvious, 29 January 2003.

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Although the SERVQUAL model has been one of the most used research instruments in the operations field throughout the world, it is not without some controversy. The single biggest issue is asking cus tomers about their expectations and the difficulty of operationalizing this (Parasuraman, 1995). Unfortunately, customer satisfaction measurement is more complex than simply asking questions. Completely satisfied customers may never repurchase because customer loyalty derives not solely from satisfaction, but two other factors - the relative importance of the purchase to the customer and the ease of switching. From a strategic perspective it is customer loyalty that should be sought, not just satisfaction. Satisfied customers may purchase a competitors product or service because the purchase is not significant to them and hence they do not mind which brand they use. Likewise, satisfied customers purchase a competitors product or service when they cannot perceive any difference between them - in effect, the product is a so-called commodity. Firms therefore need to ensure that their product or service either is, or appears to be, a significant purchase and that their brand has features that no other brand has. From an operations perspective, making the product special, and the brand differentiated, derives from innovation (discussed in Chapter 4). The role of marketing is to ensure that this reality is also perceived by the customer.

Case: The roadside restaurant chain

Understanding customers is the key to making good products and delivering fine service. In the 1980s there were two major chains of roadside restaurants and the CEO of one of them decided to conduct market research into why motorists stopped at one of his restaurants rather than his competitors.The CEO was very experienced in this industry. Indeed, 20 years earlier he had travelled to the United States to investigate the roadside dining concept and on his return had set up the very first operations of this kind. Despite his experience, he had never conducted market research. Demand was such that units had been opened and traded successfully without such data. But given the increasing competition, he decided the time was now right for more detailed information about his customers and their preferences. Naturally enough, the first question the researchers asked was: Why have you stopped at this roadside restaurant? The CEO was rather surprised to find that the principal reason given by 55 per cent of respondents was to use the washroom facilities. As he himself said: I had been in the industry for twenty years. I thought I was in the restaurant business, but it turned out I was in the toilet business. As a result of this, the operations strategy of the chain was changed. Up to that point washrooms had deliberately been placed at the back of the operation so that customers had to walk through the restaurant to get to them. The theory was that they would feel guilty just doing this, so would stay to buy something. After the market research, the chain decided that in all its new build units from that moment on, they would put the facilities near the front entrance - making it easier for people to use. Their theory was that this would make more people stop - and once stopped, they would purchase something anyway. Moreover, the washrooms were built bigger and equipped with higher quality fittings. And along with this, a procedure was introduced to check cleanliness more frequently than before.