Services Marketing

Everything on the class test, and where it is answered

Zeithaml chapter 4, in three parts. Open a part to see what sits under it; every line is a link to the section that covers it.

Zeithaml, Chapter 4 · part 1 of 3

What customer perception is

Customer perception of services is the customer's subjective assessment of, and feelings about, a company, a brand or its offerings. It covers their thoughts, emotions and opinions about the brand and its products or services. It can be positive or negative, and it forms whenever the customer interacts with the brand, its products or its services. It matters because it shapes customer loyaltyThe customer's tendency to keep coming back to the same firm.Driven by satisfaction, but only strongly at the very top of the scale., brand image and, in the end, business success.

The book adds two points that sit underneath every answer in this chapter. First, perceptions are always judged relative to expectations, and because expectations shift, the same service can be rated differently over time, from person to person and from culture to culture. Second, everything here is about the customer's perception of the service, not some objective standard of what the service ought to be.

Perceptions of quality and satisfaction

The chapter turns on one figure. Satisfaction is the broad judgement, and service quality is only one of the things that feeds it.

Satisfaction versus service quality book only

People use the two words as if they meant the same thing. Researchers agree they do not: they have different causes and different outcomes. Satisfaction is the broader concept, and perceived service quality is one component of it. A health club shows the difference. Its service quality is judged on whether the equipment works, how responsive the staff are and how skilled the trainers are. Satisfaction with the club also takes in the quality of the products sold in its shop, the membership price, the customer's own mood, and even the weather on the drive there.

Transaction versus cumulative perceptions book only

The two views are complementary, not competing. Single encounters are the building blocks; the cumulative view is the wall.

Customer satisfaction

Two definitions were given in class. Customer satisfaction measures how well a company's products, services or overall experience meet or exceed customer expectations and needs. Put more simply, it measures how happy customers are with a company's products, services and capabilities.

The book's formal definition comes from Richard Oliver: satisfaction is the consumer's fulfillment response. It is a judgment that a product or service feature, or the product or service itself, provides a pleasurable level of consumption-related fulfillment. In plain terms, it is the customer's evaluation of whether the product or service met their needs and expectations. Failing to meet them produces dissatisfaction.

Satisfaction is also a dynamic target. It is usually measured at one point in time as if it were fixed, but it moves through the service cycle, and for a new service the expectations it is judged against are themselves still forming.

What determines customer satisfaction

Beyond quality and price, five determinants are named, and they are on the slide exactly as the book lists them.

National customer satisfaction indexes book only

Many countries track satisfaction nationally, as a measure of the quality of economic output to sit beside the usual measures of quantity. Sweden was first, with the Swedish Customer Satisfaction Barometer in 1989, followed by Germany, the United States and Switzerland. The American Customer Satisfaction Index (ACSIThe American Customer Satisfaction Index, a national measure of satisfaction across about 200 firms.Run by the University of Michigan, updated quarterly.), developed at the University of Michigan, tracks about 200 firms quarterly, with roughly 250 customer interviews per company. Each firm's score is built from its customers' perceptions of quality, value, satisfaction, expectations, complaints and future loyalty. The pattern worth remembering: goods cluster at the top of the ACSI table and services fill the bottom, with subscription television and Internet service providers lowest of all.

Outcomes of customer satisfaction book only

Satisfaction is linked to loyalty and profit. Firms that beat competitors on the ACSI have earned superior returns at lower risk, and the ACSI stock portfolio has consistently outperformed the S&P 500. But the relationship with loyalty is not a straight line. It is only strong at the very top of the scale.

Xerox found that customers rating it 5, very satisfied, were six times more likely to repurchase than those rating it 4. Enterprise Rent-A-Car found the top rating made a customer three times more likely to rent again than the second-highest. The lesson is that merely satisfying customers is not enough to keep them; the firm has to more than satisfy, or delight, them. At the other end, dissatisfaction is strongly linked to defection, and loyalty can collapse once dissatisfaction passes a threshold or touches a critical attribute.

Consequences of customer dissatisfaction

The slide lists five consequences. This list comes from the slide rather than the book, but every item follows from the book's satisfaction-loyalty link.

Zeithaml, Chapter 4 · part 2 of 3

What service quality is

Service quality is how well a service meets or exceeds customer expectations: the customer compares the performance they perceived with what they expected. Efficiency, courtesy and responsiveness matter most, which separates it from product quality, where the focus is on tangible features. For pure services such as health care, banking or education, service quality is the main thing customers judge.

Outcome, interaction and physical environment book only

The five dimensions

Customers do not judge quality as one thing. They judge it on five dimensions, found by Parasuraman, Zeithaml and Berry and later measured with the SERVQUALThe survey scale built to measure the five service quality dimensions.Covered properly in chapter 5; here you only need the name. scale. An easy way to hold them is the initials RATER.

How customers judge the five dimensions

The slide shows three industries from the book's table; the book adds three more.

E-service quality

Online, the dimensions change. E-service quality (E-S-QUALThe scale for e-service quality: how well a website supports shopping, buying and delivery.Seven dimensions, four core and three for recovery.) is the extent to which a website makes shopping, buying and delivery efficient and effective. Seven dimensions were found: four for ordinary use, and three that only come into play when something goes wrong.

Customer effort book only

A separate driver of loyalty. Research on customer-service contacts found loyalty depended less on delighting customers than on how little effort they had to spend to get a problem solved. High effort drives customers away; delight does not reliably keep them. So firms should prevent repeat calls, handle the emotional side of the contact, avoid forcing a channel switch, and genuinely solve the problem. The limit: for a wedding, a degree or a special holiday, customers expect to invest effort, and other things decide their loyalty.

Zeithaml, Chapter 4 · part 3 of 3

Service encounter, or moment of truth

A service encounter is any moment when the customer deals with the service firm: in person, by phone, or through some other medium. It is a social interaction, and it is where something changes hands between provider and customer, whether goods, information or both. The book calls encounters the building blocks of customer perceptions, because each one is where a promise is kept or broken, and the customer's overall view of the firm is assembled from them.

The encounter cascade book only

Encounters link into a chain, and the chain becomes the customer's whole experience. Some services have a handful of encounters; Disney counts about 74 in a park visit, and one bad one can sour the whole day. Early encounters weigh most: Marriott found four of its top five loyalty drivers happen in the guest's first ten minutes.

Why every encounter matters book only

Types of service encounters

Three types. A customer may meet the firm through any one of them, or all three.

Sources of satisfaction and dissatisfaction

Thousands of encounter stories, gathered with the critical incident techniqueA research method that collects customers' own stories of very good and very bad encounters.The four themes came out of thousands of these stories., sort into four themes. Each theme starts from a different trigger.

Dos and don'ts for each theme

Technology-based encounters

The same logic carries over to websites, kiosks, apps and automated phone lines, with some differences book only. Customers still expect the core promise kept: the technology must work and meet their need quickly. Their biggest complaint is weak recovery, when a failure forces them to phone the firm, the very thing they were avoiding. They also expect personalisation, which is why Amazon and Netflix recommend from each customer's history. And they adopt the technology only when it beats the alternative, mainly on convenience.

Not everyone adopts, though. Customers fall into five groups by how they take to technology.

The lists you must be able to write out from memory

Cover the answer, say the list out loud, then open it to check. Everything expands when printed.