1. MD850: e-Service Operations Service Quality Management in Electronic Services

2. Agenda • Background • Measuring & Controlling Quality • Goods Quality • Service Quality • e-Service Quality • e-Service Customer Satisfaction • e-Service Quality Measurement • e-Service Quality Management

3. Background • Motivation for Managing E-Service Quality • Customers need to be able to assess the quality of E-Services to make informed consumption decisions • Managers also need to be able to assess quality • Quality is critical for New Economy companies to develop ongoing relationships with customers (Hayes 2002) • High quality likely to translate into price premiums and expanded sales (Hanson 2002)

4. Background • Quality problems are rampant among e-Services • Common examples • Abandoned shopping carts • Customer service problems • Fulfillment problems • Many possible reasons • digital content problems • website process problems • lack of website capacity • stockouts/fulfillment/delivery system problems

5. Background • Quality problems can lead to unwanted events • For a well-known Dot.Com, can lead to a “CNN Moment” • For lesser-known e-Service, may lead to dissatisfaction and customers switching to another service

6. Background • e-Service Quality Management Issues of Interest • What is e-Service quality? How is it defined? • How can I measure the quality of my services? • How can I control quality of my services? • Any methodologies available for managing e-Service quality? • How much does quality cost in e-Services? • Is “zero-defects” a reasonable objective? • What are the costs of delivering low quality?

7. Background • e-Service Quality Management Issues of Interest • Should I measure my own quality? • Appropriate strategy for using quality measurement data? • Should I use a online customer rating vendor to measure quality? Which one? • Are online rating vendors measuring quality correctly? • Any risks involved with using rating vendor information to make decisions? • Any risks involved with integrating rating vendors into my system?

8. Developing A Quality Management Strategy

9. Developing A Quality Management Strategy • Questions to Guide Quality Management Efforts • What are your objectives? • Customer satisfaction perception management? • Real-time - “sense and respond” • Do-It-Yourself • Time-delayed POS site experience - “analyze and adapt” • Online customer ratings services (e.g. Bizrate) • Time-delayed page experience - “analyze and adapt” • OpinionLab

10. Developing A Quality Management Strategy • Questions to Guide Quality Management Efforts • What are your objectives? • Control of public perceptions? • Online customer ratings (e.g. Bizrate) • Voluntary participation programs • Involuntary participation • Do-It-Yourself • Detection and control of errors/defects? • OpinionLab - feedback gathered from customers via pop-up surveys linked to each page • Watchfire (D.I.Y.) - Web spider crawls your own site, identifies • Do-It-Yourself

11. Measuring & Controlling Quality

12. Measuring & Controlling Quality • “Quality” Exhibits Many Characteristics • Objective quality vs. Perceived quality • Consumers may judge quality along both • Attribute vs. Higher level abstraction • Consumers may rate “objective” product attributes • Consumers may rate many levels of abstractions of those “objective” product attributes • Global assessment, similar to “attitude” • an overall summary/evaluation • Judgment made within a consumer’s “evoked set” • quality evaluations depend on what the consumer knows about other products, or depends on the set the consumer chooses to compare a product against

13. Measuring & Controlling Quality • Attribute Level • e-Service Product Attributes • Goods • Services • Digital Content • Abstract Levels • Perceptions of e-Service Quality will be a function of each of the above

14. Measuring & Controlling Quality Goods Quality • Goods Quality • Measurement • Objective • actual measures (length, weight, etc.) • counts (# of errors across a space) • Perceived • perceptions of • objective dimensions • relative to … other goods/average good/prior expectations • relative to aims for using good/prior expectations • rankings

15. Measuring & Controlling Quality Goods Quality • Goods Quality • Management • Objective • Statistical Process Control • control charts (X-bar, R, C, U, P, etc.) • Root-cause analysis techniques • House of Quality • Perceived • House of Quality • Conjoint Analysis/Experimental Design

16. Measuring & Controlling Quality Goods Quality • Some open questions … • How do goods affect e-Service quality? • How is quality of a good affected by e-Services?

17. Measuring & Controlling Quality Service Quality • Traditional Services (Person-to-Person) • Concepts • Objective • actual attributes (of facilitating goods) • “quality is having certain attributes” • some people say services cannot be measured objectively (i.e, counted, weighed, have no objective length) • Perceived • ratings of performance • ratings of performance relative to some prior expected rating • “Gap Model” … Quality = Performance - Expected

18. Measuring & Controlling Quality Service Quality • Service Quality • Measurement • General Idea • psychology based • consumers (society) have evolved to some joint understanding of N dimensions that fully define quality • researchers attempt to discover what those N dimensions are • once researchers discover dimensions, managers can use them to manage their services

19. Measuring & Controlling Quality Service Quality • Service Quality • Measurement • SERVQUAL - 10 dimensions of quality originally • Tangibles • Reliability • Responsiveness • Communication • Credibility • Security • Competence • Courtesy • Understanding/Knowing Customers • Access

20. Measuring & Controlling Quality Service Quality • Service Quality • Measurement • SERVQUAL - 5 dimensions • Tangibles • physical facilities, equipment, appearance of personnel • Reliability • ability to perform the promised service dependably and accurately • Responsiveness • willingness to help customers and provide prompt service • Assurance • knowledge and courtesy of employees and their ability to inspire trust and confidence • Empathy • caring, individualized attention

21. Measuring & Controlling Quality Service Quality • Service Quality • Measurement • Examples of SERVQUAL survey questions/statements • “Their physical facilities should be visually appealing.” • “Their employees should be well dressed and appear neat.” • “Their employees don’t always have to be willing to help customers.” • “Their employees should be polite.” • 15 others • Rate these questions along a 1-7 scale

22. Measuring & Controlling Quality e-Service Quality • Open Questions … • When/How does (person-to-person) Service Quality affect e-Service Quality? • Is e-Service Quality different from SERVQUAL? • Do we know all of the dimensions of e-Service Quality? • What is the proper method for representing & measuring e-Service Quality?

23. Measuring & Controlling Quality e-Service Quality • Old Professors • “It’s all the same. We don’t need new quality dimensions. We don’t need new measurement tools.” • Young Professors • “e-Service quality is very different.” • It involves person-to-technology interactions, and usually not the way they are dressed, whether they smile, physical buildings, etc. • We need to publish our own papers.

24. Measuring & Controlling Quality e-Service Quality • e-Service Quality Dimensions • Ease of Ordering • Product Selection • Product Information • Customer Support • Order Tracking • On Time Delivery • etc.

25. Measuring & Controlling Quality e-Service System Qualities • Systemic Qualities (SUN) • User-Level Qualities • Usability • Accessibility • Service-Level Qualities • Performance • Reliability • Availability • Strategic-Level Qualities • Scalability • Flexibility • System-Level Qualities • Security • Manageability • Maintainability “The list of systemic qualities is potentially inexhaustible.”

26. Measuring & Controlling Quality e-Service System Qualities • SunTone Quality of Service (QoS) Dimensions mentioned • Reliability • Performance • Security • Consistency • Functionality • Predictability • Public • Shared • Reusable • Coarse-Grained • Controllable • Manageable • System-Independent • Location-Independent • Updatability • Flexibility • Assemble-able

27. Strategies for Managing Quality

28. Strategies for Managing Quality • Outsource to Online Customer Rating Vendors • Use Secret Shoppers • Measure Quality Yourself

29. Strategy #1:Online Customer Rating Vendors

30. Online Customer Rating Vendors • Questions to Guide Quality Management Efforts • How to manage public perceptions? • Request to be removed from ratings system? • Provide data when requested? • ex: B-schools … provide yearly updates to Business Week • Proactively work with quality rating service? • Advise of site updates • Advise of new service attributes • Actively monitor “customer feedback” sites for “trolls” who just try to get excitement out of making controversial statements

31. Online Customer Rating Vendors • BBB Online • Bizrate • Epinions.com • Gomez Advisors • Forrester Research • Consumer Reports • Web Watchdogs • ePublicEye • DooYoo (dooyoo.co.uk) • Keynote Systems • TRUSTe • Rating Wonders (closed 2002)

32. Online Customer Rating Vendors • What do they do? • Ratings Reporting • Collect data on service attributes • Reduce data into scores that rate a small set of quality dimensions • Customer Comment Reporting • Customers can openly communicate their experiences with your service

33. Online Customer Rating Vendors • Object/Event Being Measured • Transactions - consumer measurement at point of purchase • BizRate “Gold” (attributes, perceptions) • WebWatchdog (attributes, perceptions) • Transactions - expert ratings • BizRate “Silver” (attributes, ratings) • Rating Wonders (attributes, ratings) • Gomez Associates (attributes, ratings) • Page Oriented - consumer measurement on page • Opinion Lab • Content Oriented • Web Guide magazine (expert ratings) • Watchfire (Web-spider content analysis)

34. Online Customer Rating Vendors BizRate • Perception • Overall Service Quality • Ease of Ordering • Product Selection • Product Information • Product Prices • Website Navigation and Looks • On-Time Delivery • Product Representation • Privacy Policies • Product Shipping and Handling • Level and Quality of Customer Support • Attributes • Ordering Methods Supported • Special Features • Delivery Methods Available • Payment Methods Accepted

35. Online Customer Rating Vendors RatingWonders • Ratings • Overall Rating • Products • Service • Site Quality • Features • Ordering • Payment • Shipping • Returns • Attributes • Product attributes • Service attributes • Site Quality attributes • Feature attributes • Ordering attributes • Payment attributes • Shipping attributes • Return attributes

36. Online Customer Rating Vendors • Object/Event Being Measured • Content Oriented • Web Guide magazine (expert ratings) • Watchfire (Web-spider content analysis) • Apple’s iReview (Mac-friendly expert ratings) • Consumer Comments • Gomez • Epinions • TRUSTe • Web Watchdog

37. Online Customer Rating Vendors • Some Characteristics of Online Rating Vendors • Positioned as Omniscient Quality/Satisfaction Gurus • Aggregators of information about websites’ services • B2B Marketing Researcher/Expert Service business model • B2B Subscription business model • Affiliate-oriented … want a piece of each transaction • Affiliate business model • Infomediary/Recommender business model • Advertising oriented • Advertising business model • Border on e-Retailing • Merchant business model

38. Online Customer Rating Vendors • Questions to Guide Quality Management Efforts • What is the real long-term business model of your service-quality measurement vendor? • Service Quality measurement, analysis, reporting? • Transaction fees from referrals? • Vendor might outsource their measurement • Vendor might discontinue their measurement program, and use someone else’s • Data vending? • Privacy issues? How much data do you want your SQ measurement company to have about your customers? • Retailing? • Vendor might discontinue their measurement program

39. Strategy #2:Secret Shoppers

40. Secret Shoppers • “Secret Shopper” or “Mystery Shopper” • Common strategy in traditional services • E.g., someone paid by restaurant to eat and report on service experiences • Common strategy of the press • “We visited 10 sites and ordered products at each. Here are our findings.” • Suggested in e-Service • Try out your own service • If you don’t like the results, your customer probably won’t either

41. Secret Shoppers • e-Service “Secret Shopper” Tasks • Determine your (and competitors’) easy-to-do-business-with quotient • Test your customer service rep empowerment level • Try out the experience on your site • Learn something new from an e-Service, and envision how it would be useful on yours • Check how easy it is to make contact with a human representative • Monitor a purchase end-to-end from order to delivery • Examine your service recovery activities • etc.

42. Strategy #3:e-Service Quality Measurement

43. e-Service Quality Measurement • Why measure e-Service Quality yourself (and develop your own set of quality measures)? • Many service quality models were inductively derived from customer comments about those services • Problem with this? • A number of IS researchers suggest that humans tend not to be able to fully understand the complexity of modern IT-based service systems • Systems can only be correctly understood through modeling the systems themselves (Scott 2001) • Growing opinion of researchers in E-Service Quality • Future service quality research for services involving information technologies should be based on the actual attributes of such services (Carr 2002)

44. e-Service Quality Measurement • Questions to Guide Quality Management Efforts • Do you want to measure quality of a “sub-system” of your e-Service process? • Do you have a model (service-blueprint) of the e-Service system (of the “service-product” or “service-process”)? • D.I.Y. • Define your own satisfaction dimensions and measure(s) for that sub-system • Directly measure consumer as they are using that sub-system • Do you want to measure quality of individual pages? • OpinionLab

45. e-Service Quality Measurement • Levels of measurement • Objective Measure • Service attributes • “Has shopping cart” • “Allows customers to pay by VISA credit card” • Errors/Defects in system • “Page not available when visited”, “Dead Link” • Abstract/Subjective Measure • Customer satisfaction perceptions • Expert ratings of customer satisfaction • Customer comments - written

46. e-Service Quality Measurement • Objective Measures • Possible to use statistical process control (SPC) tools • Repetitive activities within your site (or delivery processes beyond it) can be studied and controlled • Frequency across some space • Errors across a page • Failures within a week • Delivery problems during a month

47. e-Service Quality Measurement • Abstract/Subjective Measures • Single item questions • “How would you rate the On Time Delivery quality of your experience? (1=horrible, 10=fantastic)” • Multiple item scales • Ex: Reliability (Source: Gefen 2002) [Rating from 1 to 7] • “When Amazon.com promises to do something by a certain time, it does so.” • “When users have a problem, Amazon.com shows a sincere interest in solving it.” • “Amazon.com is dependable.” • “Amazon.com provides its services at the time it promises to do so.”

48. e-Service Quality Measurement • Which e-Service Quality dimensions to use? • Assuming that you’ve identified all possible quality dimensions … • Card sorting method for choosing a relevant subset of dimensions (Upchurch, et al. 2001) • Extended Web Assessment Method rating method for choosing most relevant subset of dimensions (Schubert 2003)

49. e-Service Quality Measurement • How to measure customer experiences using surveys? • Approaches • “Pop-up” surveys used to gather customer feedback • Post-checkout survey pages • Survey process • Build it into your website/e-Service • Outsource it to a measurement service

50. Processes for e-Service Quality Management