Parasuraman: Service Excellence

Posted: December 16, 2013 by jennroig in English, Interviews
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Prof. A. Parasuraman, UM

Prof. A. Parasuraman, UM

A. Parasuraman teaches at the University of Miami Business School. Among his research goals, it is key to understand the elements that shape the market’s perception over some product, service and ultimately companies, which could also make the difference for business against competitors.

This is the original, unedited, English version of the interview to prof. A. Parasuraman that has been published in Spanish by AméricaEconomía, on December 16, 2013.

Globalization brings along diversity to the demographics of cities and countries. For companies that operate within these increasingly diverse environments, what are the biggest challenges in terms of service excellence?

The world is becoming smaller. Consumers around the world are becoming increasingly aware about what’s available on other parts of the world. I think there’s a general increase of the knowledge of consumers across different countries and different cultures.

To some extent, one can also argue that globalization is also reducing diversity. Nevertheless, markets are getting diverse. For example, in China are a lot of people that are moving to the cities and I’m sure the same is happening in Latin America. Urban population is increasing which brings a growth in the diversity of markets.

In relation to the issue of Service Excellence, among the biggest challenges is trying to understand the aspects of service that will appeal to different segments of customers.

What customer service really means is a very simple proposition. It is something that customers believe really superior companies should provide but often don’t provide. From a customer’s perspective, service excellence can be defined as the gap that exists between what we believe excellent companies should be able to deliver and what a given company within a particular sector is in fact providing. There’s typically a discrepancy between those two.

Studies show that customers’ expectations vary across places, segments and cultures. So that’s why that’s among the biggest challenges.

My own research also suggests that regardless of the type of service, and the part of the world, there soma basics all customers expect.

I think these basics can be summarized in five dimensions. So came up with a method to try to find the discrepancy. The basics underlying are:

One is tangibles, which refers to the appearance of the facility, of the people, appearance of the communication materials that customers receive and so on. Everything that is visual.

Se second is reliability. It has to do with the ability to deliver the promise of the service accurately.

A third component is responsiveness, which has to do with speed of the service and also a general willingness to be helpful to customers.  It addresses the way service employees behave with customers, implying that they really care and they actually want to help.  A lot of times customers feel like having to interrupt employees to get our questions answer or get services delivered, because they seem to be so busy or seem to be doing something else. That suggests a lack of responsiveness.

The fourth component is what I call assurance. This has to do with the courtesy level the employee shows to the customer. The employee is suppose to inspire in the customer the feeling of confidence, so they feel reassured that they are dealing with a responsible and capable organization.

The last component is empathy, which has to do with the extent to which a company and employees do understand what the customer wants and need. They can put themselves in the customers shoes.

They are basic and intuitive dimensions. That’s why I argue that these categories are universal. What might differ from a region to another are the specifics related to those broad categories. For example, if you take responsiveness in the USA, people generally tend to be more impatient. The actual speed of the service delivery might be more critical than let’s say in Latin America where there’s probably more tolerance toward time delay. Instead the willingness to be helpful to the customer probably will not be that different.

There might be some nuances in relation to the categories from country to country and among cultures. For example, if you take McDonalds that is a universal brand, in the USA 70% of the sales occur through the drive thru window, without entering the store. I understand in the vast majority of Latin American countries the sale occurs in the store. The customer goes to the location to sit down and eat. So when contrasting these different operations, it could be said that the appearance aspect of the store is more important in Latin America. Instead in the USA this may be less important than getting the orders correctly, because the customer is waiting the product and doesn’t want to find out later that the product is wrong. These differences need to be managed. Really good companies take this into account when designing the service strategy.

Having that level of understanding is a big challenge for companies that operate globally.

How does UM Business School help business students to understand what the elements of excellence in service are?

At UM we have a unique advantage. One is that the region of South Florida is dominated by service companies. So we have logistic companies, cruise lines, insurances, healthcare services are really big. The context for the students is dominated by the service industry. Thus they are able to explore very different types of companies within the service sector.

In terms of what the UM B-School specifically does to inculcate concepts related to service excellence, there are programs at our graduate level, the MBA program and also the Executive MBA program, and also among the executive education programs which include courses of service excellence and service marketing.

The subject is also among the research guidelines. We speak about a number of concepts and frameworks and measurement approaches to systematically studying how to improve the quality of service.

The idea is to find out what service quality gaps customers are experiencing. It measures the customers understanding of quality of service. We also have done a lot of research inside companies to find out the reasons of this gap.

It is suggested that there are a series of major basic organizational gaps within companies that affect or contribute to the quality of service gap.

The first internal gap is Market Information Gap. This is a lack of understanding in managers about what customers expectations really are. That leads to misallocations of resources to areas that are not really relevant to customers.

The second is the standards gap. In a lot of companies, even senior managers have at least some understanding of what customers want but they don’t translate that knowledge into specifications. There’s a lack of standards for service delivery. In other words, there’s some knowledge somewhere in the organization about what the customers want but that knowledge doesn’t get translated into systems that could actually help improving the quality of service.

The third is the service performance gap which occurs due to a disconnection between what are the internal standards that could be in place and the actual delivery of the service. Returning to the reference of McDonalds, it has a lot of internal standards of service, but it has problems with the delivery of the service. You need the proper infrastructure, technology in place, trained employees, so the connection exists between the standards and the delivery.

The last gap is a serious problem today, and it is a lack of internal communication, a lack of coordination across different functional areas to which customers could potentially interact.

In a lot of companies there’s a lack of communication between the advertisement people that make promises that can’t be delivered by the employees in the operational area of the company.

My main thesis on this gap model is that to truly improve the quality of service and the customer experience externally, to close the expectation-perception gap, companies need to systematically study and improve the internal gaps.

Coming back to the question, in the courses we teach there are details about these issues affecting the quality of service. Courses and programs are going to talk in detail about these frameworks and what companies can do to improve the service to customers. These courses are not common in business schools.

Due to the increasing importance of providing an excellent experience to the customer, is it a trend for companies to create new job positions to focus on this area?

It is definitely possible. In many companies are interested in improving service excellence. The problem that I see it’s there’s not enough understanding yet about what service quality really means from the customer’s perspective. And what needs to occur inside the company to produce those external market efficiencies.

There’s the interest, and the investment in resources, but customers actually don’t see a lot of change. For instance, sometimes you go to a hotel and there are nine pillows on the bed, but the employee calls you later than the hour you asked to be woken up in the morning.

There’s a lot of competitive imitation. In the moment a company offers a new service every other company tries to do the same.

Still few companies appoint someone to take care of the service to the customer.

In terms of the use of technology and all social media, a study conducted by Duke University’s faculty found that among CMOs there’s no certainty about the real impact of social media investments on the performance of the business. What are your thoughts about it?

These are very interesting findings. It agrees to some of my own thinking. Many companies now are enamored with social media. Everybody talks about Twitter and there’s a lot of coverage about these new networks. Companies feel pressure to invest in this sense, creating a facebook page, a profile in other social networks. Companies in my view blindly imitate each other.

But no one has really understood the real impact of all that. My own feeling is that there’s too much hype around the influence of social media. At this stage, most companies are just imitating each other.

I recently came across the book: Contagious, by Wharton school professor Jonha Bergr where it says that much of the communication p2p occurs through word of mouth rather than through social media.

How could a startup or SME design a much better experience for the customer?

My view is that SMEs especially the ones that are starting have a great opportunity to make a big impression on customers. That is because they don’t have all the infrastructural problems, or corporate cultural problems that these big organizations have.

I think the gaps are likely to be smaller in the SMEs because the organization itself is smaller.

There’s opportunity for better communication and the coordination among functional areas.

With the economic growth perceived in several Latin American countries, there has been an increasing relationship and investment from US companies there, and Latin companies in the USA. From your perspective, what are the most important difference you notice between the way Latinos provide services and the way North Americans do so? What should these companies, from each side, consider in order to satisfy customers from a diverse cultural background?

I get asked that question ofte, about country-to-country differences in terms of service excellence.

I start answering this question by saying that the basics are the same. In my view, regardless of the country, the basics don’t change. It is important to realize the specifics associated with the basic categories, such as understanding the market place through research and observation. What might work in a country does not necessarily work as effectively in another country. A good understanding of different expectations of customers is important.

Another option for companies moving into foreign countries is to feel they can make some local partners. Local companies will be more aware about expectations and cultural expectations. Create local partnerships can be a way to quickly get the understanding of the needs and expectations of the new market.

In conclusion, companies across the board are focusing on service because it’s what can distinguish them from the competition. It is difficult to achieve competitive advantage based only on product. There are so many brands available that it’s difficult to achieve advantage based only on the service or the product. Likewise, you can’t compete on price, because it’s something that can be easily match. Whereas excellence service is something that can bring the opportunity, it’s a way to achieve sustainable competitive advantage. It may require initial investments, but it will be worthwhile.

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