Service Quality and Quality Management

Lessons for Service Quality and Quality Management

 The models and frameworks of customer perceived service quality and of how to manage service quality presented in this and the previous topic demonstrate a number of important lessons of the contemporary service quality research.  Some of these issues have been focused upon in studies of goods quality management as well.  However, it is nevertheless justified to say that service quality research has most explicitly pointed out the importance of these issues.  The lessons are:

1.         Quality is what customers perceive.  Quality cannot be determined by management alone, it has to be based on customer needs and wishes.  Moreover, quality is not what is planned in objective measures, rather it is how customers more or less subjectively perceive what has been planned.

2.         Quality cannot be separated from the production and delivery process.  The outcome of the service production process is only part of the customer perceived service quality.  The production and delivery process itself is perceived by customers who also actively participate in this process.  Therefore, the perception of the process and of the buyer-seller interactions of this process becomes another part of total quality.  From a competitive point of view, this so-called functional quality dimension frequently is equally important as or even more important than the so-called technical quality of the outcome.

3.         Quality is produced locally in the moments of truth of the buyer-seller interactions.  Because of the existence of the important functional quality dimension of total service quality, the buyer-seller interactions, including a number of moments of truth, or moments of opportunity, become a pivotal factor in quality perception.  Since buyer-seller interactions take place locally, where the customer meets the service provider, and not in centrally located quality design and planning departments, quality is also produced locally.  Therefore, the planning and design of quality has to move out to the local level.  Technical quality aspects and overall design of how to create quality can, of course, be planned centrally, but the interface between the organisation and its customers has to be involved in quality management and design as well.  Otherwise, well-designed quality may remain a desk product which does not materialise in a good customer perceived quality.

4.         Everyone contributes to customer perceived quality.  As quality is created and produced in the moments of truth of the buyer-seller interactions, a large number of employees get involved in the production of quality.  Moreover, since these front line employees who actually handle customer contacts in order to serve their customers well are dependent on the support of people beyond them in the service process, these "support" people also become responsible for the ultimate customer perceived quality.  Hence, a large number of employees, not far from everyone, contribute to quality.  If someone in customer contacts or beyond the direct customer interface fail, quality suffers.

5.         Quality has to be monitored throughout the organisation by the organisation.  As quality is produced by a large number of people and functions throughout the organisation, quality performance has to be monitored and assured at the point where a quality contribution is produced.  A centrally located quality control and management staff cannot normally do this.  The task is overwhelming, and, moreover, a separate staff function or department for this has a negative effect psychologically on the people in the organisation.  The mere fact that such a function exists can easily draw the attention of those producing quality away from quality assurance.  It is easy to stop worrying about the tricky issue of constantly producing, maintaining, and monitoring high-class quality when there is a group of specialists to turn to, and to blame when problems occur.  Such a staff function may contribute to quality assurance and monitoring and quality design if it is perceived by everyone as an internal consultancy function in quality issues.  However, the organisation itself has to do the job of assuring quality.

6.         External marketing has to be integrated in quality management.  Customer perceived quality is a function of expectations as well as of real experiences of the quality dimensions.  Therefore, improvement of the experiences of quality may be counteracted by, say, a market communication campaign that promises improvements or gives customers reason to believe that improvements will be greater than they in reality are.  Customer expectations that are not met by reality are created.  The perceived quality is bad, although improvements, objectively measured, may have occurred.  Such negative effects of external marketing may have far-reaching consequences, for example, because bad word-of-mouth is created and the corporate image may be damaged.  If market communication campaigns are planned in collaboration with those responsible for the quality improvement process, these mistakes can be avoided.  Hence, external marketing, predominantly market communication, has to be integrated with quality management.

Service Quality

Quality Does Not Cost - A Lack of Quality Does

The notion that high quality implies higher costs is not based on facts.  Normally, it is the other way around.  Frequently the more important issue is that it is a lack of quality that costs.  If you concentrate on making quality certain, you can probably increase your profit by an amount equal of 5 to 10 percent of your sales.  That is a lot of money for free. This statement is based on the notion that many firms spend more than 20 percent of their sales dollars doing things wrong and then having to correct these mistakes.  Lee Iacocca of Chrysler confirms this by stating that “if there's any doubt that lack of quality costs American industry a ton of money, get this statistics: As many as one out of four factory workers produces nothing at all.  They spend their entire workday fixing the mistakes of other workers" (Iacocca 1988, p. 251).
These are facts from manufacturing.  However, service organisations are probably no better off.  On the contrary, Gummesson (1987) notes that as much as 35 percent of their operating costs may be caused by a lack of quality.  This, of course, follows from the fact that service quality is a much more complicated phenomenon and that, consequently, it is much more difficult to monitor and assure quality in service than in manufacturing.  Furthermore, manufacturing has a long history of quality control research and a whole collection of quality monitoring techniques at its service, whereas for more than a decade service quality issues have not been addressed explicitly.
Hence, improving quality by creating customer-oriented and foolproof systems and by training employees to know how to perform is a way, not to increase costs, but to get rid of unnecessary costs of a low quality level or a lack of quality.  If we assume that 35 percent of the operating costs are unnecessary, because they are due to bad quality, quality improvement by removing these quality problems would save 35 percent of these costs.  All of this would be visible on the bottom line.  However, such an improvement would not go unnoticed by the market, and some new business and additional revenues could be expected to be achieved.  This would add even more to the bottom line, that is, profits would be boosted by more than 35 percent of original operating costs.  Furthermore, if the firm would spend this 35 percent on improving quality even more, the operating costs would remain on the same level as they were originally.  This quality improvement process could be expected to bring in more business, and perhaps, even probably, enable the firm to get a better price for its services.  The effects on the bottom line are obvious.
Another common reason why managers feel that developing and offering services with 100 percent quality is impossible is their feeling that 'we are so special; our industry is so difficult; it is impossible to guarantee customers top quality all the time; it cannot be done."
Consequently, the organisation accepts that mistakes happen, and failures are allowed.  Psychologically, the battle for excellent performance is over before it even started.
Saying and maybe believing that a particular firm is so special and its services are so complex and difficult to produce that top quality cannot be achieved is only an excuse for not trying hard enough.  True enough, hard and long-term efforts may frequently be required, but it is never impossible.