Professor A. ―Parsu‖ ParasuramanUniversity of Miami

Service Science Factory PresentationMaastricht University

Maastricht, Netherlands21 January 2011

Service Productivity, Quality and Innovation: Implications for Service-

Design Practice and Research

© Professor A. Parasuraman; not to be reproduced or disseminated without permission 2

October 23, 2000

Some Preliminary Observations

Service continues to be mediocre in many sectors

Gains in service productivity of firms may lead to lower service quality as experienced by customers

Service innovations may not necessarily lead to gains in service productivity and quality

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Service Productivity, Quality and Innovation are Intertwined

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Service Productivity

Service Innovation

Service Quality

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What is Service Productivity?

Output Input

Simple Definition of Productivity

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7

Traditional View of Service Productivity

Company’s

Inputs

Company’s

Outputs

Service Productivity

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Proposed View of Service

Productivity

Service productivity can and should be evaluated from the perspectives of both companiesand customers

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Components of Service Productivity

Inputs from company’s perspective: Labor, capital investments, ongoing expenses, etc.

Inputs from customer’s perspective: Monetary cost, time, effort, mental stress, etc.

Outputs from company’s perspective: Revenue, profits, customer loyalty, etc.

Outputs from customer’s perspective: Value, satisfaction, service experience, etc.

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10

A Company-Customer Conceptualization of Service Productivity

Inputs

[Labor, Equipment,

Technology, etc.]

Outputs

[Sales, Profits, Market

Share, etc.]

Company’s Perspective

Productivity

Inputs

[Time, Effort, Emotional

Energy, etc.]

Outputs

[Service Performance,

Satisfaction, etc.]

Customer’s Perspective

ProductivityMissing

Link!Service

Quality!

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What is Service Quality?

From Customers’ Perspective…

Service quality results from a comparison customers’ service expectations with their actual service experience

Their service experience frequently falls short of their expectations

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Determinants of Customers’ Evaluation of a Service

The outcome and the process of the service delivery

Whether the service is routine or nonroutine

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A Common Disconnect between Companies and Customers

Nature of Service

Process

ServiceDelivery

Outcome

Routine Nonroutine

Most customer svc. standards fall

here……

……and perhaps some fall here

Customers affected disproportionately

by this……

……and perhaps by this

From a Company’s Perspective…

Delivering superior service quality on a sustained basis is a major challenge

This challenge arises because of four key internal deficiencies or ―gaps‖ within the organization

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Conceptual Model of Service Quality – GAPS Model

CUSTOMER SERVICE ORGANIZATION

Customers’ Service

Expectations

Customers’ Service

Perceptions

ServiceQuality

GapGAP 5

GAP 2

GAP 3

GAP 1

GAP 4

Organization’s Understanding of

Expectations

Organization’s Service Standards

Organization’s Service

Performance

Organization’s Communications

to Customers

MarketInformation

Gap

ServiceStandards

Gap

Service PerformanceGap

Internal Communication

Gap

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GAP 1: Market Information Gap

Do you have an accurateunderstanding of customers’

expectations?

No or not sure

GAP 2: Service Standards Gap

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Do you have service standards and are they aligned with customers’ expectations?

No or not sure

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GAP 3: Service Performance Gap

―McDonald’s Finds AngryCustomers on Its Menu‖

-The Wall Street Journal

Does your service delivery meet your own internal standards?

No or not sure

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GAP 4: Internal Communication Gap

Are all your interfaces and interactions with your customers

synchronized?

No or not sure

Prerequisite for Superior Customer Experience

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Close Gaps 1-4 & hence Gap 5!

The internal organizational gaps not only lead to poor service quality but also adversely affect service productivity!

An Important Implication of the Four Organizational Gaps

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Svc. Gaps—Svc. Productivity Link

Opportunities for Improving Service Productivity

Reallocation of resources Better customer service

Resource Misallocation and Customer Frustration

Focus on ―wrong‖ attributes Service delivery deficiencies

Organizational Gaps

Managerial: Gaps 1&2 Employee/Systems: Gaps 3&4

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24

A Dual Conceptualization of Service Productivity: A Second Look

Inputs

[Labor, Equipment,

Technology, etc.]

Outputs

[Sales, Profits, Market

Share, etc.]

Company’s Perspective

Productivity

Inputs

[Time, Effort, Emotional

Energy, etc.]

Outputs

[Service Performance,

Satisfaction, etc.]

Customer’s Perspective

ProductivityService

Quality

+

++

+

─

─

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Role of Technology in Service Delivery

The ―Technology Readiness‖ Construct and Its Implications

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Pyramid Model of Services Marketing

Technology

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An Important Implication of the

Pyramid Model

An organization’s ability to use technology effectively in marketing to and serving customers critically depends on the technology readiness of its customers and employees

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What is Technology Readiness?

Technology Readiness [TR] refers to ―people’s propensity to embrace and use new technologies for accomplishing goals in home life and at work‖

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Drivers of Technology Readiness

Technology Readiness

Discomfort InsecurityInhibitors

Contributors InnovativenessOptimism

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OPT

.TRIINS

.

DIS

.

INN

.

MeanTR

Scores

TR Scores by Dimension and Overall TRI*

0

0,5

1

1,5

2

2,5

3

3,5

4

4,5

1999 2000 2001 20042002 2006 2007 2009

*Data are for U.S.A.

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Five TR-Based Customer Segments

Optimism Innovative-ness

Discomfort Insecurity

Explorers High High Low Low

Pioneers High High High High

Skeptics Low Low Low Low

Paranoids High Low High High

Laggards Low Low High High

32

High-Tech versus High-Touch Customer Service

High

Low

Appeal of

Hig

h-T

ech

Serv

ice C

hannels

Appeal of High-Touch Service Channels

Explorers

Pioneers

Skeptics

Paranoids

Laggards

Low High

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An Important Implication of

Technology Readiness

To be effective, the implementation of any technology-based service innovation has to take into account the technology readiness of its intended users

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Typology of Service Innovations

Unfavorable

Favorable

Impact on Svc. Productivity: Customer Perspective

Impact on Svc. Productivity: Co. Perspective

Favorable Unfavorable

Win-Win Unaffordable

Short-sighted Dumb

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Take into account customers’ service expectations (as well as their resources/capabilities)

Increase service productivity from both company and customer perspectives

Focus not only on developing completely new services but also on the process of service delivery

Service Innovation Should Ideally Lead to Service Enhancements

That:

Evolution Required for Effective Service Enhancements

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Service Productivity

Service Innovation

Service Quality

Service Productivity

Service Innovation

Service Quality

37

Critical Issues Worthy of Scholarly Research

Mathematical/analytical modeling of tradeoffs between the two conceptualizations of service productivity

Metrics for operationalizing input and output constructs embedded in the dual conceptualization of service productivity

Approaches for assessing and classifying service enhancements into the productivity-based typology

Refining the two-dimensional typology – e.g., by adding dimensions such as ―ease of resource transfer‖

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38

Critical Issues Worthy of Scholarly Research (continued)

Exploring ways for fostering greater inter-functional collaboration—particularly among marketing, operations, human resources, and accounting/finance—when developing service innovations

Developing process innovations that focus specifically on improving the efficiency and effectiveness of service recovery

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www.technoreadymarketing.com

Sources of Additional Information

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Sources of Additional Information

Parasuraman, A. ―Service Productivity, Quality and Innovation: Implications for Service-Design Practice and Research,‖ International Journal of Quality and Service Sciences, Vol. 2, Issue 3, 2010, pp. 277-286.

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Thank You!