Service Quality and Sustaining Customer Relationships


Essay, 2016

10 Pages, Grade: 1,7


Excerpt

Contents:

Introduction

Service Quality Models

Sustaining Customer Relationships

Evaluating the Connection Between Service Quality Models and Customer Relationship

Examples on Service Quality Sustaining Customer Relationships

References

Service Quality and Sustaining Customer Relationships

Heiko Filthuth

Abstract: Service quality and sustaining customer relationships are interrelated, as both the academic theory and some featured business examples show. Comparing the SERVQUAL model (Berry, Parasuraman, & Zeithaml, 1985) with the 4Ps and 4Cs (Kotler, Keller, Brady, Goodman, & Hansen, 2012) based on three core statements underline this relationship. Examples from three different industries show practical benefits for both suppliers and customers of products and services.

Introduction

Several of today’s world-famous companies supply services to their customers along with or even without physical products. Service quality therefore can be assumed essential to these businesses and to contain every aspect of the marketing mix (Brassington & Pettitt, 2005). But service quality is difficult to measure, particularly when it comes to being an important means for the relationship between the supplier and the customer (Christopher, Payne, & Ballantyne, 1994) (Zeithaml, 1990) (Devlin & Dong, 1994) (Lovelock, Vandermerwe, & Lewis, 1999), as it obviously needs to compare the expectation of the receiver (perception of service) with the performance of the supplier (reception of service) (Brassington & Pettitt, 2005). This essay critically discusses the academic literature on service quality models before turning to sustaining customer relationships. In its third paragraph, the connections between service quality and customer relationships are discussed and business situations in which service quality models may sustain customer relationships are considered.

Service Quality Models

Amongst the first service quality models can be counted that of Donabedian to whom service quality consisted of structure (supplier resources), process (activities), and outcome (Donabedian, 1980). Grönroos took a different view and compared in his model the perceived quality of the customer with the quality he received (Grönroos, 1982), taking into account the customers view and therefore making him the centre of the quality process and the driving of the process a central management role. (Brogowicz, Delene, & Lyth, 1990) and also distinguishing the objectively (what) and the subjectively (how) measurable dimension. He also underlined the importance of interrelations between his dimensions (Grönroos, 1984) and stressed the importance of the direct contact between the supplier and the receiver of the service which he called The Moment of Truth which has been taken-up, reflected (Carlzon, 1987; Czepiel, Solomon, & Surprenant, 1985) and developed into a Process of Truth (Lehmann, 1998).

The combination of customers’ views and processual views was also part of the initial development of what became the SERVQUAL or GAP-model (Berry, Parasuraman, & Zeithaml, 1985; Berry, Parasuraman, & Zeithaml, 1988).

This GAP approach targets on the least possible gap between the perceived and the received service quality from the receivers’ point of view and appears to be the most renowned model to-date although some authors see the risk of a mismatch between the perception and the expectation of the receiver (Caruana, Money, & Berthon, 2000). But what is the GAP’s strengths can also be considered its shortcoming: the customer perception. It is difficult to assess and thus any measurement is likely to be influenced by the measurer. A wrong outcome therefore bears a high risk of a complete misunderstanding of the customers’ needs and wants. Another challenge can be the individuality of the service, which asks for attention when thinks out of the ordinary happen (Berry, 1986) and leaves room for added services (Brandt, 1988), both also not covered by SERVQUAL. Its processual strength is not made for these situations and can be harmed particularly in businesses who deal with frequent individual needs.

To reflect on continuity, the Total Quality Management initiative (TQM) was launched, targeting an ongoing customer quality focus by everyone’s involvement and at low costs (Kanji, 1990; Porter & Parker, 1993; Yusof & Aspinwall, 1999) and establishing eight critical factors to influence service quality with management being the most important. One of the originators of the GAP model, Valerie Zeithaml, supported this by pointing out that both perception and reception of quality can change throughout the service process (Boulding, Kalra, Staelin, & Zeithaml, 1993) and that the customers’ perceptions can be influenced by the suppliers (Liljander & Strandvik, 1993) and vice-versa (Meyer & Mattmüller, 1987) and thus addressing the topic of individuality, too. Deviations and variations of these and other service quality models can be found for different industries, one of the more complex examples being CLOUDQUAL (Xianrong Zheng, Martin, Brohman, & Li Da Xu, 2014) which extended the SERVQUAL idea to cloud computing and the transformation to manufacturing industries (O’Hara & Frodey, 1993).

Along with service quality models came aspects of loyalty assessing the importance of interaction (Kukanja, Omerzel, & Kodrič, 2016) and the need for variation in different industries (Leisen Pollack, 2009). Bolton and Drew (1991) underline the link between quality and value and Lee (2012) adds the ethical side on the example honesty and its influence on the service quality reception in the real-estate market.

SERVQUAL is a complex model offering to take the customers’ views into the centre and defining and building service quality around it. One of its key challenges lies, however, in its standardised approach which apparently triggered many authors to reflect on additional models to find solutions individual to their relevant industries.

Sustaining Customer Relationships

The literature reviewed shows the requirement to utilise the marketing mix and to extend it to a customer perspective as suggested by Kotler (Kotler, Keller, Brady, Goodman, & Hansen, 2012). From the traditional 4Ps (product, place, promotion, price) he sees an extension to customer relationship with the 4Cs (cost to customer, convenience, customer’s needs and wants, communication) (Kotler, Keller, Brady, Goodman, & Hansen, 2012). This, however, leaves to address the trend of faster and more short-termed transactions which may require a shift from a wide-spread marketing approach to a much more individual addressing of the customer (Grönroos, 1997) which is known as relationship marketing (Storbacka, Strandvik, & Grönroos, 1994).

In order to provide a suitable overview on the literature on sustaining customer relationships, the four groups loyalty, relationship, value, and process were created, covering those topics selected as representatives for the total subject, recognising that even within these groups the discussion will remain incomplete.

Loyalty: No one owns the customer . This statement by Farquhar (2005) reflects the tenacity of the relationship between customer satisfaction and loyalty and explains the reasons for models such as the Wheel of Loyalty (Lovelock & Wirtz, 2014) which describes how to build and optimise customer bonds. One of its key messages: Once loyalty is installed, the relationship between profitability and costs for loyalty need to be monitored closely. Even building loyalty cannot be done at any price as loyalty and profitability should develop simultaneously (Kumar & Shah, 2005). Loyalty can come with service quality (Wong & Sohal, 2003) with tangibles playing the most important role in this relationship but can also be built strategically and its reliability being tested (Zineldin, 2006) and brought to an ultimately effective level. To achieve a lasting customer loyalty, businesses can utilise interactions, involvements and the value chain (Mascarenhas, Kesavan, & Bernacchi, 2006) but at all times the limits of building loyalty lie within the effectiveness and the overall profitability with the individual customer.

Relationship: The relationship between a customer and a supplier can be more important to the customer than sole cost considerations if the supplier can add services, support and his personal interaction (Ulaga & Eggert, 2006) to the product or the core service. This can be particularly important in mature industrial markets where personal trust can shift a typical asymmetrical business (small supplier, large customer) to a commitment or interdependency between the two organisations (Narayandas & Rangan) developing from a classical supplier-customer-relationship to a business partnership in providing understanding and resulting services and potentially even entire processes (Lacoste & Johnsen, 2015). But relationship building is not a one-way-street (De Wulf, Odekerken-Schröder, & Iacobucci, 2001) as customers, too, must be prepared to engage themselves for an improved relationship. This is of particular importance for online businesses who without interaction lack the response of their customers (Yoon, Choi, Sohn, Taylor, & Lee, 2008) and need to rely on a mixture of traditional and online marketing.

Value of the customer: The Customer Pyramid (Zeithaml, Rust, & Lemon, 2001) reflects on an improved customer profitability, laying the groundwork for using Customer Relationship Management (CRM) targets to identify the potentially most lucrative customers by steering and increasing targeted loyalty and thus sales and revenues (Hughes, 2001). An evolving relationship, too, can help increasing the value of the customer (Peppers & Rogers, 2011). To actually asses the value, however, be it only to put it against the costs or – even more important – to become aware of it, can be incredibly challenging, bearing in mind that this is not the turnover or revenue a supplier makes with its customer but what the two can potentially do with each other. One of the tools to assess this is a strategic gap model used by the writer and assessing the total potential size of a customer for its supplier and deducting those parts the supplier will not be able to provide as well as those the customer for reasons of other relationships will never pass to the supplier.

Process and costs: The management of customer relationships should cover all aspects of strategy, organisation, marketing and IT between the supplier and the customer (Peelen, 2005). It is not so much a piece of CRM-software but an overall idea of how to effectively manage a supplier-customer relationship which needs to be carefully monitored and evaluated on a customer basis (Zinnbauer & Eberl, 2005). One of the means of CRM can be to lower the indirect costs to the customer with e.g. different forms of accommodation, a communication frequency suitable to him, a geographical closeness, or simply the product quality (Cannon & Homburg, 2001), all of which can potentially compensate a higher product price. Another means to create sustaining customer relationships is a prioritisation which according to (Mathur & Kumar, 2013) is closely related to customer retention. Despite all cost consideration what should be avoided is an outsourcing of customer contacts (Stace & Bhalla, 2008) since this bears the grave danger of losing the learning from and thus understanding of the customer.

Evaluating the Connection Between Service Quality Models and Customer Relationship

In order to evaluate how service quality models can be useful for sustaining customer relationships, the characteristics of customer relationship management as outlined above are condensed into three core statements. These are address in relation the contents of the aforementioned service quality models.

Statement One: A sustaining customer relationship requires a focus on the individual customer. Service quality models aim for a direct contact to the customer and a customer view on service quality.

The design of most of the service quality models discussed further up in this assignment circle around the needs of and the interaction with the individual customer, putting the closing of the gap between his perceived and his received quality in the centre. This approach can be very useful for the customer management process (or approach) as understanding the customer and his demands is vital to address his needs successfully. Particularly the aspect of process and costs which underlines a strategical and structural approach to the individual customer and his specific needs will benefit from the use of a sophisticated service quality model. To apply the most renowned GAP-model as an example among those of its aspects which directly refer to the individual customer are those of courtesy, communication, knowing and understanding the customer, and responsiveness.

Statement Two: A sustaining customer relationship strives for customer loyalty. Service quality models contain added values, customer understanding, and the creation of individualised processes and solutions.

The loyalty of a customer is strongly dependent on service quality and interaction as has been outlined above. This matches directly with the processual approach shown in several of the later service quality models, last but not least the SERVQUAL model which specifically addresses the interactions between the supplier and the receiver of the service in question with its quality of input to the process and quality of outcome from the process distinction. The understanding of the customer, too, and the appropriate actions from this is another key feature of the service quality model linking the customer relationship not only to the service quality models but also to the aspect above. The dealing with individually and changing perceptions during the service process and with out-of-the-ordinary situations are two other aspects that the models can add to a sustainable customer relationship.

Statement Three: A sustaining customer relationship is about profitability. Service quality models target to deliver the quality really needed leading to maximum retention, maximum loyalty, and thus a maximum profitability.

The overall target of profitability out of a customer relationship is also reflected in most of the service quality models, albeit more indirectly: None of the service quality models is self-sustaining. All have been designed to identify, meet and improve the quality of service towards the customer. This in turn is a key means towards customer loyalty and a long-lasting customer relationship. The relationship between loyalty and profitability has already been outlined above and bases on two factors: A good relationship can let the supplier get through with terms more in favour to himself and at the same time still giving benefits to the customer. And it spares the supplier the high acquisition efforts of generating a new customer. Another aspect of profitability is the interdependency of the supplier and the customer which is also discussed above. According to the models featuring this topic a smaller supplier can be able to serve and secure a much bigger customer profitably if he distinguishes himself with added services up to taking over an entire outsourced process.

On an overall evaluation, use of service quality models is deemed very beneficial to the customer relationship. What must not be underestimated are a) the manifold other factors that are important to the relationship which predominately lie in the acquisition process of the customer, b) the market environment which may include regulated markets and industries or submission requirements that have been designed to deliberately rule out relationships, c) the fact that if the quality as such is not sufficient even the best models cannot help, and d) that the supplier’s competitors may also use service quality models in their relationship management.

Examples on Service Quality Sustaining Customer Relationships

Three examples from the author’s own experience show how service quality models sustain customer relationships. All companies have specifically designed and developed the described models basing on academic service quality models such as SERVQUAL and have been successful with their approaches.

Example One: A manufacturer of quality housewares, selling products through mass merchants, department stores, and specialist shops.

Many of the company’s customers are much larger than itself. Products were under price pressure by cheap far-east imports and the interest level with the customer’s buyers were low. The company decided to create and introduce Customer Competence Teams (CCT) consisting of all people in touch with the specific customer ranging from the key account manager and a member of the executive board to the sales manages on-site, the responsible sales service staff and the customer service team member. The teams analysed the customer carefully from different perspectives and – among others – found shortcomings in the sales to the product user which could be addressed. Following the analysis, the company and its customer installed a meeting scheme to not only make proposals to the subjects in question but also to come to a regular exchange on trends and market developments between the company and the customer. Due to the company’s long-lasting work with focus groups and the customer’s widespread assortment these alone added benefit to both parties and contributed also to the positive development of other product ranges. To help the customer addressing the shortcomings within his organisation, the company provided – among other activities – propagandists in the key stores who actively sold the company’s products during high-frequency periods and at the same time educated the customer’s personnel on the product range and the benefits to the user. With these and many other means the company helped the customer solving a problem, installed a mutually beneficial relationship and a much closer loyalty, enhanced the customer’s turnover and at the same tome increased its own profitability.

[...]

Excerpt out of 10 pages

Details

Title
Service Quality and Sustaining Customer Relationships
College
University of Salford
Grade
1,7
Author
Year
2016
Pages
10
Catalog Number
V541354
ISBN (eBook)
9783346153074
Language
English
Tags
Servqual, service quality models, sustaining customer relationship
Quote paper
Heiko Filthuth (Author), 2016, Service Quality and Sustaining Customer Relationships, Munich, GRIN Verlag, https://www.grin.com/document/541354

Comments

  • No comments yet.
Read the ebook
Title: Service Quality and Sustaining Customer Relationships



Upload papers

Your term paper / thesis:

- Publication as eBook and book
- High royalties for the sales
- Completely free - with ISBN
- It only takes five minutes
- Every paper finds readers

Publish now - it's free