Performance Metrics: Service Quality

Transcription

1 Performance Metrics: Service Quality In the recent years, the service industry has been blooming due the heavy reliance of different industrial societies on infrastructure and distribution services in most of their economic activities. i Thus, the growth of importance for excellent services is essential for the survival of a business function. However, as consumers demands heighten, the necessity for more customer contact and customization created a shift toward high-contact services ii that exponential the balance between supply, demand and ensuring quality in environment where consumption and production are inseparable. Quality in general refers to the differentiation of perceived performance to expected outcome and can be defined in 2 aspects namely functional and technical qualities iii. Functional quality specifies the delivery of service which diverts to customers perceptions of interaction during service experience. Technical quality on the other hand is the output of the service actuation and evaluates the service encountered by the customer. With the achievement of both functional and technical quality excellence, companies would be able to retain its customers and foster loyalty which is important to the sustainability of its customer base. The objective here is to provide a framework to understand the customer and achieve their satisfaction of expectation and perception balance in service. This would therefore affect the customers perceived value and their behavior intentions. Hence, emphasizing the importance of service quality measurement, offers the ability to seek insights in areas of service quality s strengths and weaknesses that may antecedent to customers satisfaction. Due to the everchanging behavior of the dynamic environment, it is vital to measure, understand, maintain, monitor and improve service quality to efficiently adapt on conditions. Knowing the importance of service quality is the key survival of business in this dynamic marketplace, it is therefore necessary to focus our study in understanding the 4 methods of measuring service quality in electronic business and service industry in general, in order to gain adequate awareness of service expectations and perceptions to dynamic service experience. For elaboration purposes, each method would be described in the following format. Firstly, a description to each service quality measurement would introduce us to the needs for using each diagnostic tool. After which, a detailed specification of its usage and how it would

2 benefit the business under study. Then finally, flaws and restrictions would be identified to keep focus on the need to have different service quality measurements will be given. ServQual ServQual is one of the earliest service quality framework used for measuring service quality. It is a technique that can be used for performing gap analysis on an organization s service performance against customer service needs. It is an approach often used by organizations to measure the difference in perception and expectation of service quality. iv It primary involves identifying and understanding the gaps in service. Initially base on 10 dimensions, the model had been refined to 5 key generic service dimensions, also known as the RATER model. The RATER acronyms stand for reliability, assurance, tangibles, empathy and responsiveness. First, reliability refers to the ability of the organization to perform the promised service dependably and accurately. Second, assurance refers to the knowledge and courtesy of employees and their ability to convey trust and confidence. Third, tangibles refer to the physical appearance of the facilities, equipment, personnel and communication materials. Fourth, empathy refers to providing care and individualized attention to its customers. Fifth, responsiveness measures the willingness and promptness in providing service to the customer. VI With these 5 dimensions, a comparison can be made between expected and perceived service to determine the degree of service quality to satisfaction which will be either negative or positive. These dimensions can be applied to both external and internal of an organization. v Externally, the dimensions can be used to understand customer s perceptions of their service needs. Internally, it can be used to understand employees perceptions on service quality. Based on using survey to collect data, the survey questions are structured in a way that conforms and targets the importance of each dimension s attributes. Gathered survey results provide measurements of performances and the expectations for the organization. The measured perceptions of service quality are then compared against the best organization in the industry. This allows for an assessment on the gap between desired and actual performance based upon the contributing factor of service dimension. In which, the result may then be used as a driver for service quality improvement. VI Benchmarking service quality requires a comprehensive and thorough examination of the service needs. The concept of measuring the difference between expectations and perceptions

3 in the form of ServQual gap score proved very useful for assessing levels of service quality. VI The gap score allows organizations to gauge its level of service quality with other in comparisons. Survey gathered also provides detailed information about customer perceptions of service, the performance levels as perceived by customers, customer comments and suggestions, and impression from employees with respect to customers expectations and satisfaction. Organization is able to understand the problems in each dimension and rectify it quickly and accurately by focusing its resources to maximize service quality whilst costs are controlled. However, ServQual method raises doubt to the validity of the five dimensions on its uniform applicability of the method for all service sectors. vi ServQual is also seems mainly to be used only for closing Gap 5 of the GAP model, the perception and expectation gap. Other gaps in the model are not thoroughly addressed. vii Different standards and usage of scores derived from ServQual contributes to problems with reliability, discriminant validity, convergent validity, and predictive validity of the measurement. This questions the validity of the score measurements when comparing with other scores. VI Another problem to point out is the dimensions relating to service quality is culture specific, certain dimensions considered for a Western society may not be appropriate for Asian countries. VI As such, ServQual model is constantly being review upon and several key service dimensions have been added to adapt to the changing service industry. Some of recently added key dimensions includes competence, courtesy, credibility, feel secure, access, communication and understanding the customer. VI ServQual has been widely used within service industries since its introduction in the 1980s. VII It gives a comprehensive and thorough examination of service needs and service quality, by understanding the perceptions of target customers regarding their needs and also providing a measurement of service quality of the organization. Using ServQual as the underlying framework, many researchers are able conceptualize, construct, refine and test new service quality models. These new models are catered specifically to measure different service natures. WebQual: Web Quality With the growth of the Internet physical complexity and rapid development of associated technologies, businesses and trades found their way to a more diverse and cost-effective platform known as the electronic commerce (E-commerce) viii. It consists of the buying and

4 selling of products or services over electronic systems such as the Internet and is currently expanding extraordinarily over many industries, creating an environment for habitual behaviours to shop online or otherwise. With accordance to an e-tailing group3, studies found that only 3% of customers visit a site to complete a purchase and more than 47% of them abandon their orders even before checking out ix. Theoretically, one may perceive that by having an online presence with low prices would seem sufficient to the success of a business, however, neither of those would guarantee service quality. The fact service exists for every e-business either as its main business function or its complementary support element. Satisfying its consumers is necessary for the survival of commerce website. However, attributes like anonymity ix obstructs consumer company relations and this factor is worsen by the diversity of consumer groups on the Internet. It is critical for businesses in the e-commerce industry to understand their customers wants and to meet their needs; however, there is a lack of an existing comprehensive measure to assess x the quality of a website. In this section, we would explore and analyze the use of WebQual instrument which evolved from the concepts of ServQual, tailored to provide a framework for studies of the quality on websites. The main objective of WebQual application is to provide a valid measure of web quality that would predict website reusability. WebQual processes involves 5 measurable constructs which consist of 12 dimensions that would address the validity and reliability concerns of website quality xi provided., revolving around the voice of the consumer and their perception of the service The first construct refers to the usability of the web site and it complies to the dimensions that would affect the way consumer s perceives and interacts with the site xii. The focus here lies in the design of the website with quality specifications of appearance, ease of navigation, consistency of image projected and the degree at which those components can be easily utilized on the site. X The second construct, usefulness, involves the quality of information or content that the web site provides the consumer and the level of usefulness of the website with its content. It also refers to the quality of information published and how they are formatted or processed for consumers knowledge digestion. The usefulness can also be measured from the quality service interaction

5 that consumers acquire from the website, be it customized or personalized with preferences. With interaction, security of transactions and communication should also be observed in dimensions for information privacy, as well as the response time taken upon request or interaction with the site. The third construct states the degree of entertainment value on the website, determined by perception of visual appeal to a consumer and the unique standout points of site design from other websites. The flow of the website is one dimension that arbitrates the psychological and emotional effect of using the website and the intensity of involvement in usage. The fourth construct consists of the elements of complementary relationships that include the acuteness of transactions fully integrated on the Internet and discuss about the alternative channels that would emulate similar or better the interaction of the actual website services. The last construct projects customer service in a need for timely response to customer inquiries, comments and feedbacks so as to evaluate or to recover faulty services for improvement and thus, forms the determinant of service quality as a whole. From this 5 constructs, WebQual would be able to determine the differences in the perception of quality between internal business functions by looking at each independently as well as in a group comparison. Actualization can be done through the collection of data using WebQual survey to achieve research objectives that varies among different industries xi. With WebQual, we can then understand the needs of specific customers by capturing perceptions of web quality to determine areas for improvement that will meet or exceed consumer s expectations of a quality website thus fostering customer relations. Nonetheless, even though the WebQual approach provides insights on actual consumers perceptions, it is not able to evaluate all aspects of the complex online-service lifecycle xi as questions in WebQual does not require the consumer to perform the whole online service to complete the survey. Thus, it is conclusive that WebQual cannot be used to measure all perceptions of electronic service quality as some portions of the service are left untouched. xiii Another limitation lies in development of WebQual which was conducted with undergraduate business students, thus, cannot represent all web users. xiv Students that were involved in WebQual study were not ongoing customers of the website and do not justify the need for more rationalization of result from a variety of survey samples on different websites.

6 In summary, we have seen why service quality is an important factor in any e-commerce website and the urgency to measure performance in this area. Measuring of web service quality can be achieved through the use of WebQual and its 5 constructs namely usefulness, ease of use, entertainment, complimentary relationship and customer service. With those 5 components, we can evaluate the perception of service quality and to ensure the continuity of validity and reliability, as well as objectivity of web services. Furthermore, there are also other forms of web quality measurements else as E. S. Qual, NetQual, SiteQual and etailq that revolves around WebQual 5 constructs of evaluation. xiv E-S-QUAL In year 2000, Internet users in the world totals at 360 Million. By the end of year 2008, it has increased to over 1.5 Billion. xiv Globalization and technology advancements increases the number of internet users tremendously. Emerging technoprenuers saw that e-business, which uses internet technologies to provide superior customer service, streamline business process, increase sales and reduce costs xv, has great potential as a business model. Hence, more e- businesses are established and businesses utilize e-commerce for online transactions with customers. E-commerce became a necessity among e-businesses due to competition in retaining and earning recurring sale from the same customer to be the best merchant on the Internet. However, companies soon found out that customers want more than just e-commerce the transactions. In fact, they need a service: e-service to be exact so as to get adequate quality xvi service before, during and after delivery of electronic service. Companies saw the need to shift their focus from e-commerce to e-service. Therefore, e-service Quality (esq) emerged to be the important factor in e-businesses, replacing price and promotion as it provides valuable feedbacks to the companies whether their customer are satisfied with the e-service process. High quality e-service attracts online customers to pay more and influence customer to make online purchase decisions effectively. Research has shown that high quality e-service has a significant effect on customer satisfaction, loyalty, retention and purchase decisions, which affects company s financial performances. xvii Hence, there s a need for measurement of esq in the online community. Two scales for capturing esq in websites with a focus on online shopping with relevant results from past researches will be introduced next.

7 E-S-Qual, a multiple-item scale for measuring service quality delivery by web sites on which customer shop online, consists of 22-item in the scale of 4 dimensions: efficiency, fulfillment, system availability and privacy. It was a scale used by A. Parasuraman, Valarie A. Zeithaml and Arvind Malhotra in the Journal of Service Research written during The second scale E- RecS-Qual, which handles service problems and inquiries, is used mainly for customers who had non routine encounters with the websites, contains 11 items in three dimensions: responsiveness, compensation and contact, xviii These 2 scales are used to measure the esq for 2 online stores amazon.com & walmart.com in the journal article. Observations from the survey results and what service quality factors are essential will be discussed in further details. 4 Dimensions used for E-S-Qual: Efficiency: How fast and easy is it to use the website Fulfillment: Website s promises about order delivery and item availability to be kept System availability: Ensure systems up-and-running 24/7 Privacy: Website safe from hackers and customer information protected 3 Dimensions used for E-RecS-Qual are defined as follows: Responsiveness: Effective handling of problems and returns through the site Compensation: Extent which website compensates customers for problems caused Contact: Assistance available through telephone or online representatives. xix A marketing research firm was hired to distribute the questionnaire to a random sample of Internet users though online survey. These users have been screened to determine sufficient level of experience they had in the websites. The respondents had either visited or made purchase at the site at least 3 times during the past 3 months. Once qualified, respondents were redirected to another website to complete the online questionnaire. To provide more motivation for those surveyed, lucky draws were included upon filling out of surveys. Sample size for the respondents for each site was set at minimum of 200. The questionnaire varied in terms of both perceived quality and product variety. High proportion of missing data on certain items in the questionnaire were observed and it was evident these items relates to service recovery; product returns, problems, compensation for problems, ways to reach the company for information or to deal with problems. As Recovery is an important aspect of service, an e-recovery service scale which is the E-RecS-Qual was developed to provide measurement in e-service recovery

8 areas. xx Amazon.com & walmart.com were selected for the research due to the several considerations: Walmart has physical counterparts and Amazon doesn t have any to create two different types of online retailing, testing of scales can be provided with little similarities within both sites, both were among the most popular sites visited by internet users, high incidence rates from internet users visiting both sites are necessary to generate large samples of customer s e-satisfaction, xxi which are their feedbacks in the survey. Through the research analysis and survey result, two aspects of the 4 dimensions were important in determining the e-service quality of a website. They are the efficiency and fulfillment dimensions in the E-S- Qual scale. Respondents rate these 2 dimensions higher compared to privacy and system availability. These 4 dimensions in the E-S- Qual also have strong & positive correlation with perceived value and loyalty intentions according to assessment by the authors in the study. xxii Therefore, efficiency and fulfillment can be the key determinants in measurement or used for improvement in e-service quality if e-businesses wants to improve on their scores in esq to retain and attract more customers to their site. In summary, e-service quality and e-satisfaction are critical components in the globalization e- commerce. Emergence of e-service is the key to success for e-businesses in this competitive global e-commerce environment. Great efforts must be made to improve e-service to achieve competitive advantage over other competitors. Through the use of E-S-Qual & E-RecS-Qual as a scale measurement for esq, clearer view of how customer evaluates e-service quality as foundation for delivery can be seen. Benefits taken from website and its service quality performance can be further research to find out their correlation links. Further studies can be done to measure esq of pure service wbsites online as E-S- Qual & E-RecS- Qual only pertains to online shopping sites in this case. The two scales aims to obtain assessment of the website s service quality so as to track overall esq perceptions and therefore able to identify trends in attribute or dimensional level. Strengths and weaknesses of websites can be revealed upon survey and companies can do even more to improve on their bad quality of service electronically to achieve the ultimate aim of every e-business: customer satisfaction. xxiii

9 Walkthrough Audit In ServQual, WebQual and E-S-Qual, we had seen 3 similar service quality measurement tools focusing on service quality dimensions and the service quality Gap model. These measurement tools allow us to have a detailed overall view on the delivery of the service. However, managers sought for a systematic way in the evaluation of the service seeking to understand the service delivery at each stage from the beginning to the end of the customer s experience. A Walk-through audit(wta) is a systematic customer focused survey aimed at uncovering areas for improvements for the delivery of the service. It consists of numerous questions with each of them spanning to several categories of variables covering the particular part of the service experience. For example, one application using walk through audit to measure a full dining experience would list numerous variables like Ticketing, Information, The experience, Facilities and Satisfaction. Next, the multiple questions catered for each section of the service delivery in the questionnaire allow us to go into details uncovering areas for improvements in the customers perspective. For instance, a simple question categorized under ticketing on the ease on finding information about ticket prices allow us to survey on the customer s perception during pre-sale stage as they enquire on the prices. A successful implementation of a WtA is divided into 2 phases being designing the walk-through audit and using it as a diagnostic instrument. The first phase involved 3 steps. Firstly, a preparation of a flowchart of customer s interaction with the service system should be done. This step should look into service delivery above the sales period like pre-sales where customers enquire about the product. Secondly, a questionnaire would then be designed based on the flowchart dividing it into several categories mapping to various variables. Some consideration should also be made in the contents of the questionnaire being: 1. Phrasing as declarative sentences rather questions 2. Using a Likert scale to gauge the customer perception 3. Leaving a Comments section to gather information not found in the questions 4. Limiting the questionnaire to a maximum of 2 page to avoid overwhelming from the customer Lastly, the method to allow the customer to do the Walk-through audit needs to be chosen with incentive being given upon the completion of the questionnaire.

10 In the second phase, WtA would be used as a diagnostic instrument, to evaluate the gaps in perception between customers and managers on the service delivery system. As WtA surveys both managers, employees and customers, the gaps found out from the results will allow us to not only identify the areas for improvements but also affirm that the improvements made are suitable as we compare the results between the different users. For example, a sample question indicating There was enough information about the objects would fetch different results. Because the employees are very familiar with the exhibits while customers are not, managers may overlook this room of improvement and assume that the service quality is excellent. In summary, walk-through audit enable us to uncover areas for improvements not seen by the management but in the customers point of view. With this measurement, design could be made consistent and service delivery could be match with the expectation desired by the customer, as a result, achieving the ultimate goal of having repeated visits and attaining customer loyalty. Conclusion In conclusion, due to the intangibility of services, it is hard to measure service quality. Throughout the paper, 4 main service quality diagnostic tools have been identified to aid in service measurement. Firstly, ServQual allows the measurement of service quality to identify the strength and weakness of the service dimensions of an organization. Secondly, focusing on web quality evaluation, WebQual provides the insights to customer perception to ensure the continuity in validating the reliability of web services through the utilization of 5 dimensions. Thirdly, E-S-Qual provides measurement tools for e-service quality with focus on e-commerce websites like amazon.com. Lastly, Walk-Through Audit enables us to uncover specific areas for improvement by looking at the entire service delivery through the perspective of the customer. With the industry shifting towards a more service centric approach, it s still insufficient to use current measurement tools to fully evaluate service quality. As such, the future of service quality measurement lies in the accuracy of data gathered from a broader base of study subjects.

11 i Service Management, Fitzsimmons, James, A., Fitzsimmons, Mona, J. pg102 : Service Quality ii Cutting Corners and Working Overtime: Quality Erosion in the Service Industry, Harvard Business School, Morgan Hall T87, Author: Rogelio Oliva, John D. Sterman iii WebQual: The Perception of Website Quality As It Relates To Intermodel Business Segments, Author Gwendyl Patrice Spann iv Mohammad Mehdi Bozorgi (2006). Measuring service quality in the airline using SERVQUAL model. Lulea University of Technology. v Paul Fedoroff (2009). Comparing service quality performance with customer service quality needs. Explanation of SERVQUAL Methodology of Zeithaml, Parasuraman, and Berry. ( 88) [accessed 5th February 2009] vi Wikipedia (2009). SERVQUAL [accessed 3rd February 2009] vii Dr. Arash Shahin. SERVQUAL and model of service quality gaps: a framework for determining and prioritizing critical factors in delivering quality services. [accessed 8th February 2009] viii E-commerce, page modified 7 Feb 2009 ix WebQual: A Measure of Website Quality, American Marking Association. 2002, Author Eleanor T.Loiacono, Richard T.Watson, Dale L. Goodhue x WebQual: The Perception of Website Quality As It Relates To Intermodel Business Segments, Author Gwendyl Patrice Spann xi WebQual: A Measure of Website Quality, American Marking Association. 2002, Author Eleanor T.Loiacono, Richard T.Watson, Dale L. Goodhue xii WebQual: An E-Commerce Audit, Author: Stewart Adam, Dr Kenneth R Deans xiii The Measurement of Electronic Service Quality: Improvements and Application, International Journal of E-Business Research, Author: Gregory Bressolles, Jacques Nantel xiv Internet World Stats : Usage and population statistics, xv What is e-business, xvi etransqual: A transaction process-based approach for capturing service quality in online shopping, E-services section: xvii Assessment of E-service Quality via E-satisfaction in E-Commerce Globalization, Introduction

12 xviii E-S-QUAL : A Multiple-Item Scale for Assessing Electronic Service Quality, Data Analysis and Scale reduction (p220) xix E-S-QUAL : A Multiple-Item Scale for Assessing Electronic Service Quality, Data Analysis and Scale reduction (p220, 2nd & 3rd paragraph) xx E-S-QUAL : A Multiple-Item Scale for Assessing Electronic Service Quality, Sample Design and Data Collection xxi Critical review of E-Satisfaction Literature: () xxii E-S-QUAL : A Multiple-Item Scale for Assessing Electronic Service Quality, Reassessment of Reliability & Validity : (p224) xxiii Assessment of E-service Quality Via E-satisfaction in E-commerce Globalization, Conclusion: