Service Quality: The Key Success factor & challenge of
Indian service industry


Dr. Manoj K Trivedi
Assistant Professor
Department of Business Management
Maharana Pratap Engg. College
Shirish Mishra
Research Scholar
UPTU, Lucknow


Service quality is not one-dimensional; it encompasses numerous factors that are important to customer satisfaction. Satisfaction basically is related to expectations and perceived delivery on these dimensions and as shown by the equation given below.

The quality of service delivery results in customer satisfaction & their retention as it reinforces the perception that the value of the service received is grater than the price paid for it.

Quality is defined as the ability of the service provider to satisfy customer needs. Customer perception , service quality & profitability are interdependent variable.

Even in the case of products, quality is difficult to define because it is highly dependent upon customer perception. The task is made more complicated in the case of service because of the intengible nature of service & the variation in services offered to different customers.

There are several reasons why customers must be given quality service. Most important of them are

1. Industry has become so competitive that customers now have variety of alternatives. If the customers are lost, it can be extremely difficult to win back the individual.

2. Most customers do not complain when they experience problems, these customers simply opt out & take their business elsewhere.

What is Satisfaction?

Satisfaction = function of {Expectation and Perceived delivery}

A person is said to be dissatisfied when the perceived delivery is lower than expectation; he/she is satisfied when they match; delighted when the delivery exceeds expectation and astonished when the delivery far exceeds expectation. The following equations explain these relationships.

Perceived Delivery < Expectation    --> Dissatisfaction
Perceived Delivery = Expectation    --> Satisfaction
Perceived Delivery > Expectation    --> Delight
Perceived Delivery >> Expectation  --> Astonishment

Dimensions of Service Quality:

Barasuramm, Barry and Zaithaml listed various aspects that a customer expects from different services.

1. Reliability: This refers to the ability of the company to perform the promised service dependably and accurately. Reliability is probably the single most important dimension of quality. Customers expect that companies will do what they say and they will do when they say they will do it.

2. Tangibles: This refers to the appearance of the physical facilities, equipment, personnel, and communication materials. As services are intangible, the tangibles give an impression to the customers about the quality of service they can expect from a firm. A bank in a shabby building will make the customer wonder whether their money will be safe in such a bank.

3. Responsiveness: This refers to the willingness of the employees to help customers and provide prompt service. When you go to a bank the minimum that you expect is that the employees would attend to you rather than chit-chat amongst themselves.

4. Assurance: This factor is linked to several minor factors such as competence, courtesy, credibility and security. Competence depends on the service provider's possession of the required skills and knowledge to perform the service. The politeness, respect, consideration, and friendliness of the service providers can be bundled into the term courtesy. Credibility refers to the perceived trustworthiness, believability, and honesty of the service provider. Security refers to the fact that the service should be free from danger, risk, and doubt. In sum, the assurance factor refers to the knowledge and courtesy of employees and their ability to inspire trust and confidence.

5. Empathy: Empathy refers to the caring, individualized attention the firm provides to its customers. It includes access, communication and understanding. Access refers to the approachability and ease with which the customer can contact the firm. Communication refers to keeping the customer informed in the language they can understand and listening to them. Understanding has to do with the efforts made by the service provider to know customers and their needs.

The Service Quality Gaps:

Gaps between perceived & expected levels of service quality delivery result in the failure of the service provider. The servqual instrument designed by Parasuraman, Berry and Zeithaml can be adapted to most of the services and can be used to measure service quality. This basically will give the gap between customer's expectations and the perceived delivery of service. The same authors have also suggested a gap model, which describes four more gaps. The First gap does not know what customers expect. The second gap is between what the customer expects and what the management understands as the customers' expectation from the company. The third gap is with reference to the management's understanding of the customer expectations and the service quality standards set by the management. The fourth gap is between the quality specifications and actual service delivery. The fifth gap is between what is communicated to customers and what is actually delivered. It is possible to measure the gaps and take corrective actions to fill them to the extent possible. The most difficult gap to fill is the one between customer expectations and the perceived service delivery. The expectation of the customers keeps rising with every good experience. When a customer visits the service organization, he/she expects a better service than what was experienced in the last encounter.

Organization's strategies for closing the gap:

  • Internal and external research
  • What do customers really want from service & create value
  • Listening to what customers and employees feel about performance
  • Improve the technical service quality as well as functional service quality
  • Evaluation of performance
  • Action
  • Monitoring
  • Improving
  • Motivation

Methods for enhancing service quality

  • Internal performance analysis
  • Customer satisfaction analysis
  • Specialist market research

Customer Retention:

Customer retention and relationship marketing (Berry 1983 & Gronroos 1990) concepts have also come to be accepted in product marketing. It basically stresses the fact that it is more economical to retain a customer than to get a new customer. This was primarily practiced in banking to get existing customers to use more services of the same bank relationship marketing recognizes the value of current customers and the need to provide continuing services to existing customers so that they remain loyal. Basically, trust and relationship commitments lead to satisfaction and customer loyalty. While product and service quality are becoming the minimum requirements, the quality of relationship with the customers is emerging as a proper measure of success. The new marketer will gauge success of marketing programmers by the increase or decrease in a customer's future value to the company.

While it is common to both the manufactured goods and services that customer retention brings more revenues than running after new customers, the approach to customer retention are very different. In the case of manufactured goods, it is the zero-defect quality that matters while in services it is the service quality that matters most. In the case of manufactured good, it is possible to build quality into the product so that there is very little necessity for after sales service and human interaction, whereas in the case of services like credit cards, banks and beauty parlous, it is the quality of interaction that the service provider has with the customer that matters.

Role of Internal Marketing in Customer Retention:

Internal Marketing means that the service firm must efficiently train & motivate its customer contact employees & supporting service people to work as a team to provide customer satisfaction. Internal marketing was originally proposed as an approach to service management, which entailed the application of traditional marketing concepts within the organization in order to improve corporate effectiveness. A related concept called internal customer suggests that the employees be treated as customers in order to improve the quality of service offered to external customers. The approach basically inverts the organizational pyramid and puts customers on top and divides the employees into two categories, viz., (i) those who serve customers and (ii) those who serve those serving the external customers. Hence, the front-line employees became internal customers to the back-office support service staff, supervisors and management.

Internal marketing is supposed to build a market-oriented and customer-focused culture in an organization that facilitates the following:

1. Enable the organization to build customer focus into the corporate mission and make every employee (Whether in operations, marketing, finance or personnel) understand the importance of customer satisfaction and play a direct/indirect role in providing the same.
2. Treat the front-line employees as internal customers and keep their morale and motivation high.
3. Create an environment where customer contact personnel feel empowered to deliver high quality service to customers and do not feel threatened to give feed back to the management on the negative moments-of-truth experienced by customers.
4. Streamline service delivery systems (including the back-office support systems and procedures) in order to suit customer needs regardless of internal conveniences.

Major Issues in Service Quality

Issues such as individual customer satisfaction versus meeting the corporate objectives have been debated at length in marketing literature. Additionally, employees are bound by the rules and regulations of the organization, whereas the relationships with customers are not tightly governed by rules. Of course when a customer voluntarily enters the premises of an organization to avail its services, he/she will be governed by its rules. For example, a customer entering a McDonald's outlet cannot ask for waiter service.

However, the organizational relationships are much more complex. Though to some extent we may find parallels in customer relationships, the relationship between one employee and another is much more complex as it is governed by past behaviour and other situational factors. Many times, people have hidden agendas and they use organizational issues to settle scores with each other. As the hierarchy is involved, people can use positional power to play polities to achieve their end objectives. These are not going to be very pronounced in the case of customers.

Service can be broadly classified into high-tech, low-touch and low-tech, high touch services. A customer using an ATM to withdraw cash has no human much at all. It is basically a high-tech, low-touch service. On the other hand, if you enter a beauty par-lour for hairdressing the service- provider understands the individual customer's needs and customizes the service accordingly. This is an example of a low-tech, high-touch service. The service delivery systems are designed to suit the specific services. Companies are trying to move in the direction of high-tech, low-touch, as it is easier to manager. Federal Express has developed a package tracking- system, which can be accessed through the Internet by its customers. This has greatly reduced customer calls wanting to know whether their packages have been delivered or nor.

The most important thing in blueprinting of a customer service is to look at the processes from the customer's perspective. Companies should move out of their internal divisions and conveniences to devise delivery systems ideally suited to the consumers. Bank timings are fixed by taking into consideration the convenience of the employees. Some banks have now started the practice of keeping the banks open on Sundays and during late hours. Similarly, a loan applicant will be make to run from section to section to know the status of his application. This is where it makes sense to create a single window clearance system.

Future Service Strategy:

The traditional marketing strategy revolved around the identification of the target market and deciding on the 4Ps, namely, Product, Price, Place and Promotion to satisfy the needs of the customers. In the case of services, factors that really matter are very different. What is needed is a clear understanding of the customer' needs that the company would like to meet and then work out a broad strategy for the same. That broad strategy will determine what kind of people we need to have and the kind of delivery systems that will effectively blend with the strategy. The strategy planning process for service industries is like this.

                                                 Understanding the customer's needs
                                                    Formulation of a broad strategy
                         Choice of people and trainging <---------> Internal delivery system

Service strategy basically positions the company and gives a direction to the organization of the activities within the company. A good fast-food restaurant will require a different kind of interior design and procedures as compared to a pub or a bar. The kind of people to be employed and the skills needed will differ based on the broad positioning. The technology to be used will depend on the nature of service, size of the operation and customer expectatons.

List of References for article:

Rampal M K , Service Marketing : Galgotia publishing co. , New Delhi
Ramaswamy V S , Marketing Management : Macmillan India Ltd.
Apte Govind , Service Marketing : Oxford University Press
Xavier M J , Marketing in the 21st century : Vikas Publishing House
Shajahan S. : Service Marketing , Himalaya Publishing House
Business Today, Pitch

Dr. Manoj K Trivedi
Assistant Professor
Department of Business Management
Maharana Pratap Engg. College
Shirish Mishra
Research Scholar
UPTU, Lucknow

Source: E-mail February 25, 2006


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