PERCEIVED QUALITY IN THE DELIVERY OF BUSINESS SUPPORT SERVICES: A CONCEPTUAL FRAMEWORK (WITH PRACTICAL IMPLICATIONS)

PERCEIVED QUALITY IN THE DELIVERY OF BUSINESS SUPPORT SERVICES: A CONCEPTUAL FRAMEWORK (WITH PRACTICAL IMPLICATIONS) Nicola Bellini LINK Research Center Scuola Superiore Sant'Anna Pisa - Italy nbellini@sssup.it -- draft -- paper presented at the European Seminar on Support Services for Micro, Small and Sole Proprietor s Businesses, Wien, 11-12 April 2002

Bellini, Perceived quality in the delivery of business support services - page 2 The aim of this paper is to present - in a very schematic way - three conceptual tools derived from the literature on service management that seem particularly appropriate to a discussion of quality management and quality evaluation in the case of business support services. Firstly, we propose a model of the components of quality in business support services. Secondly, we present a gap analysis model. Thirdly, we discuss a model concerning the dynamics of expectations concerning service quality. The four components of quality Quality in business support services is the result of four components (that are summarized in figure 1): - the structural quality of the supplier; - the technical quality of the outcome; - the functional quality of the process; - the (corporate and/or local) image of the provider (Grönroos, 2000; Homburg and Garbe, 1999). Figure 1 A model of service quality 1 Total quality Image (corporate/local) Structural quality of the provider: who Technical quality of the outcome: what Functional quality of the process: how Although management (and evaluation) of service quality may tend to concentrate on only one aspect or just a few of them, it is important to remember that the total perceived quality is in fact the result of the interaction of all these dimensions. 1 This model is an extension of the Grönroos model of service quality.

Bellini, Perceived quality in the delivery of business support services - page 3 The structural quality of the supplier refers to the relatively stable characteristics of the providers of services, of the tools and resources they have at their disposal, and of the physical and organizational settings in which they work (Homburg and Garbe, 1999, 46). It may be measured objectively by identifying key features of the providing organization, which may be also used as standards to select quality providers. The technical quality of the outcome is what the customer is left with, when the service production process and its buyer-seller interactions are over (Grönroos, 2000, 63). This dimension may also (although not always) be measured objectively. It may be defined ex ante and, most importantly, it may be monitored in itinere. The third dimension of the quality (the functional quality of the process) derives from the way the service is delivered. It is typically evaluated ex post, although it can (and should) be monitored also in itinere. Functional quality is critical especially in those business support services with a strong emphasis on technology. In those cases, possibly because of the overwhelmingly technological concern and the poor customer orientation of the provider s staff, technical quality may be good, but not recognized and even neutralized by badly-managed interactions between customer and provider. In the case of business support services, a good functional quality depends on a number of factors: - depending on the attitude and behavior of the provider s personnel, customer may feel that the staff is sincerely concerned with solving their problems and does it in a friendly and considerate way; - physical accessibility may matter, in terms of both geographical location of the provider s facilities (close to the customer) and appropriate logistics and serviscape that make contacts easy (by overcoming psychological barriers: the rude small manufacturing entrepreneur vs. the sophisticated, educated consultant; by regulating access to the facilities, thereby allowing a certain degree of confidentiality in the provision of the service; by appropriate opening times of the facilities); - satisfaction may depend on the quality and intensity of the user s involvement in the production of the service, as the customer will probably feel to have a better opportunity to influence service delivery and to adapt to his needs. Moreover, depending on the kind of co-production, satisfaction may differ among individuals within the user firm (e.g. may be greater for technicians than for managers); - specific quality attributes of the service may have a different impact on the total perceived quality (cf. Mohr, 2001, 131). Only for some of them ( onedimensional quality ) there will be a linear relationship between functionality and customer satisfaction. Attractive attributes may have an important, exponential impact on customer satisfaction, although poor performance below a certain limit is accepted and does not dissatisfies the customers: e.g. friendliness in face-to-face interactions increases the

Bellini, Perceived quality in the delivery of business support services - page 4 overall quality perception, but the lack of it may not surprise negatively customers. Other must-be attributes, e.g. reliability, cause negative reactions below a certain limit, but their increase beyond an ordinary level does not influence the customer s judgment; - perceived quality may depend on the flexibility and ability to solve emerging problems even unforeseen, outside the scope of the provider s original mission or requiring skills that are not immediately available to the provider; - reliability, trust and readiness to recovery 2 make that customers can count on service delivery. The (corporate and/or local) image of the provider can affect the final perception of the quality in various and important ways, filtering the evaluation of the actual (technical and functional) results: if the provider is good in the minds of the customers; that is, if it has a favorable image, minor mistakes will probably be forgiven. If mistakes often occur, the image will be damaged. If the image is negative, the impact of any mistake will often be considerably grater than it otherwise would be (Grönroos, 2000, 64). Several factors contribute to the creation of image of the providers of business support services. Some factors pertain to the general context. The culture of users is a function of the industry or market segment to which they belong and is influenced by socio-economic features of the region, starting with the level and quality of social capital. On the provider s individual level, although marketing is heavily engaged in constructing images, the most powerful of these factors are those corresponding to the actual, perceived features of the service provider. They are, firstly, the product itself and, secondly, the key persons in the management and staff (especially in the front line). Notwithstanding all the intricacies in the formation of expectations, it would be wrong to assume that customers are unable to sense quality even if they cannot appreciate fully the contents of the service. Small entrepreneurs may be rough in dealing with technical or managerial sophistication, but are ready to distinguish a competent approach from bureaucratic or amateurish attitudes. This is a (sometimes overlooked, but compelling) requirement for service providers in the selection of personnel, especially for front line roles. Furthermore, the image of the business support service provider is heavily influenced by the image of its shareholders. This is especially relevant when the provider depends on non- corporate subjects, like associations, universities, local and regional governments, development agencies. The importance of image cannot be underestimated: 2 Service recovery is often the real test of the quality and customer orientation of the service provider. Service recovery is a service-oriented approach to managing the same situations that, in an administrative way, are managed by complaints handling routines (Grönroos, 2000, 113).

Bellini, Perceived quality in the delivery of business support services - page 5 - it creates in the customers the sense of community, i.e. the perception that they are members of a club centered around the service provider: this decreases drastically the costs and efforts required by other aspects of marketing, strengthens the relationship, eases the innovation and upgrading of service contents; - image has snowball effects, i.e. has the tendency to reinforce itself and, once it has become established, to become self-fulfilling; - the provider s image is important not only for users. Image has an influence also on the (present and prospective) staff, by contributing to increase (or frustrate) motivation, and on stake-holders. The provider s image is extremely important for customers: - to present customers: image filters, at least temporarily, experiences and impacts on the perception of the provider s performance; - to the market (present customers + potential customers + lost customers): image reflects experience and communicates expectations. Quality gaps A very useful conceptual tool to analyze the quality management problem in business support services is provided by the gap analysis model (Zeithaml et al., 1988; Zeithaml et al., 1990; Grönroos, 2000, 100 ff.), that we have modified as shown in figure 2. This model is based on a definition of service quality as the relationship between the expectations about the service and the quality perceived by the customer. Figure 2 - The gap analysis model for business support services Customer Expected Service Perceived Service (Gap 1) Provider (Gap 2) (Gap 4) Service Communication Delivery with Customers (Gap 6) (Gap 7) Service Quality Specifications (Gap 5) Management Perceptions (Gap 3) Policy maker Policy Guidelines

Bellini, Perceived quality in the delivery of business support services - page 6 This model allows to emphasize that a whole series of other gaps are behind (and impact on) the basic gap between perceived service and expected service (gap 1). Gaps 2, 3 and 4 pertain to political and strategic choices: - gap 2 occurs between policy guidelines and the expected service and is due to the policy s scarce understanding of the companies expectations, including both explicit expectations and hidden needs. This gap is caused by failures and deficiencies in the policy-making process, by cultural biases, by biases induced through the influence of lobbies, by the inability to build and manage consensus etc; - gap 3 occurs between policy guidelines and management perceptions and concerns the translation of the former into the provider s strategies, especially when the latter concern politically sensitive aspects (e.g. market segmentation and targeting); - gap 4 emerges when the provider s management has inadequate perceptions of the user s expectations concerning the service. Normally this depends on wrong or distorted or badly interpreted information, deriving from market research and other communication channels (formal or informal; direct or mediated by brokers, entrepreneurial associations). Gaps 5, 6 and 7 pertain to the management and marketing of the service: - gap 5 emerges when service quality specifications do not correspond to the management s perceptions of users expectations concerning the service. In other words, the interpretation may be correct, but this is not translated into an appropriate design of the service package; - gap 6 concerns the actual delivery of the service, whose technical and/or functional quality may be inconsistent with the original service design. Many factors may cause this gap: scarce quality of human or technical resources involved in the service provision; ineffective internal marketing, creating a divergence between management and staff, between corporate culture and service specifications; excessively rigid specifications, that are not adjusted according to the feedback from the front-line; - gap 7 occurs between service delivery and the promises that are communicated to customers and that can be unrealistic because biased for political reasons or because of based on wrong planning. The dynamics of expectations The hypothesis that consumers evaluate a service according to their own expectations, based on past experiences, both direct and indirect, gives a realistic picture of the wide majority of business support situations (cf. Priest, 1998). However, expectations are often confused: the more innovative is the service, the less likely is that past experiences can contribute to realistic expectations. As business support services are difficult to evaluate also after

Bellini, Perceived quality in the delivery of business support services - page 7 consumption, satisfaction is likely to depend to a large extent on the ability to attune the customer s expectations to the provider s perception of what the customer s reasonable expectations should be: in other words, satisfaction depends heavily on the quality of the dialogue between user and provider, especially in the moments of truth. Expectations may be biased by several factors. In some cases unrealistically high expectations can be nurtured by generic policy statements or by the fact that the company perceives the business support service as a last resort in order to solve extra-ordinary problems. This may be reinforced by marketing strategies that emphasize social relationships more than the substantial qualities of the core service. As a consequence, it is likely that uncertainties emerging even at early stages trigger a negative spiral of disappointment and distrust. Customers expectations evolve. Figure 3 describes a useful model of the dynamics of expectations, by distinguishing three types: - fuzzy expectations exist when customers expect a service provider to solve a problem but do not have a clear understanding of what should be done; - explicit expectations are clear in the customers minds in advance of the service processes. They can be divided into realistic and unrealistic expectations; - implicit expectations refer to elements of a service which are so obvious to customers that they do not consciously think about them but take them for granted (Grönroos, 2000, 89 f.). Figure 3 - A dynamic model of expectations Fuzzy expectations Explicit expectations unrealistic realistic Source: Grönroos, 2000, 90 Intentional dynamics Implicit expectations Unintentional dynamics

Bellini, Perceived quality in the delivery of business support services - page 8 In the case of business support services: - fuzzy expectations may easily prevail and run a high risk of being disappointed. Customers with fuzzy expectations must be helped by the provider to make their expectations explicit. This may happen also without the provider s intervention, as a result of the user s learning process, but this may lead the user to quit the relationship or to substitute unrealistic for fuzzy expectations; - explicit expectations are likely to be unrealistic, due to their innovative or experimental character or to the vague promises made by manager and politicians: these expectations must be rapidly brought to realism. Again this may happen autonomously, as the company learns about the service, but what the user understands now as realistic may be felt as insufficient and disappointing; - implicit expectations may become relevant when they are not fulfilled: e.g. the user may incorrectly expect that the support service is free of charge. Implicit expectations should therefore made explicit and it must be clarified whether they are realistic or not; - over time expectations, that were once explicit, may become implicit and out of control: e.g. a certain level of quality and empathy is given for granted, but may decline as a consequence of the routinization of the service (cf. Grönroos, 2000, 89 ff.). Bibliographical references Grönroos, C. (2000), Service Management and Marketing. A Customer Relationship Management Approach, 2 nd edition, Chichester: Wiley Homburg, C., Garbe, B. (1999), Towards an Improved Understanding of Industrial Services: Quality Dimensions and Their Impact on Buyer-Seller Relationships, Journal of Business-to-Business Marketing, 6 (2), 39-71 Mohr, J. (2001), Marketing of High-Technology Products and Innovations, Upper Saddle River, NJ: Prentice-Hall Priest, S. J. (1998), Business Link: a method for examining customer satisfaction, dissatisfaction and comlalining behaviour, Journal of Consumer Satisfaction, Dissatisfaction and Complaining Behaviour, 11, 186-197 Zeithaml, V., Berry, L., Parasuraman, A. (1988), Communication and Control Processes in the Delivery of Service Quality, Journal of Marketing, 52 (April), 35-48 Zeithaml, V., Parasuraman, A., Berry, L. (1990), Delivering Quality Service. Balancing Customer Perception and Expectations, New York: The Free Press