Performance Where it Counts

NZ Business, June 1998

By Theo Muller

 

Back in the early nineties LL Berry, VA Zeithaml and A Parasuraman - all academics at US universities - invented a concept now popularly known as ServQual. The concept was extensively written up in Sloan Management Review of Summer 1990.

In essence, ServQual aims to identify the principal dimensions used by customers to judge a company's service.

Through extensive research Berry et al. identified five customer service dimensions.

They are:

Tangibles

  • The availability of physical resources, facilities and equipment, personnel and communication materials.

Reliability

  • The ability to perform the promised service dependably, accurately and timely.

Responsiveness

  • The willingness to help customers and the ability to provide prompt service.

Assurance

  • The knowledge and courtesy of employees and their ability to convey trust and confidence.

Empathy

  • The provision of caring - individualised attention to customers.

 

In other words, these are the things customers expect from product and service providers.

This raises an important question: how do service providers know whether they or their firm is delivering against these generalised principles?

I raise this question because I have learned that many companies, especially service providers, have an urge to get in on the 'customer act' but fail to find out first what the customer actually thinks of their firm and its services. Applying this to your practice there are certain things your firm will be good at and others not so good. The same applies to your competitors. They also have their strengths and weaknesses, and the customer will have a pretty good idea what these are. Customers always compare the performance of their providers. I am convinced that customers have a better idea about strengths and weaknesses of their service providers than the providers have themselves.

We have done some serious research in this area over the last few years and I wish to share some of the information with you. Let me first describe how the research was done. The type of research I refer to is generally known as a Client Satisfaction Survey. I prefer to call it a Client Relationship Audit.

Basically by means of a series of face-to-face interviews we asked customers to talk freely about the performance of their service providers. We interviewed 119 CEO's and senior executives of a wide range of companies and industries throughout New Zealand and Australia. Despite the fact that these individuals represent different companies and industries, they all had one thing in common: They frequently purchase professional services from law firms, accounting firms, management and personnel consultants. In other words, they deal with professional service providers and we asked them how these service providers perform in the delivery of these services. What does the executive expect from the service providers, what does he/she like or not like about the service, what improvements can be made. How do the people perform, what are the technical skills and competencies and how do service providers compare with each other in the delivery of the service?

We found that service providers enjoy very little exclusivity from their customers despite a recent trend of rationalising the use of professional service providers. A corporate client may deal with two accounting firms, one for auditing purposes and another one for tax advice. A client may use the services of two or more legal firms. They spread the business around and they have their reasons for doing so. One reason is technical competency - they buy the best skills from wherever these are available. Another reason is that clients have a need to "keep the service providers honest". Law firms these days have become only too aware of the legal tenders they now have to provide even to existing clients.

In these interviews we include an attribute study. We ask the interviewee to score a range of attributes for their importance on a scale of 0 - 10 where 0 is not at all important and 10 is very important. Each of these attributes falls in one of the five categories mentioned above.

For instance, the attribute Is trustworthy or can be relied on to keep their word falls in the category of Reliability.

The attribute of senior partners being accessible falls in the category of Responsiveness.

Relates well to you on a friendly personal level falls under Empathy and so on. Obviously there may be some overlap here and there.

There may be 28 or 30 attributes and preferably reasonably evenly spread over the five service dimensions. Once executives have scored the attributes for their importance we get them to score the same attributes again, but this time not for their importance but for the Performance of the service provider in each of these areas. Finally we may repeat this process to obtain a performance rating of several competitive service providers.

In the table below we have aggregated the importance and performance scores by 119 senior executives who were asked to evaluate service attributes of service providers they deal with be it a law firm, accountants, management consultants etc.

 

Importance Performance

Reliability

8.84 Importance  7.71 Performance

Responsiveness

7.65 Importance 7.39 Performance

Assurance

7.48 Importance 7.72 Performance

Tangibles

7.15 Importance 7.04 Performance

Empathy

6.88 Importance 7.28 Performance

 

From this information it is clear that purchasers of professional services attach the highest importance to the category of Reliability. If the firm's performance is low in this area - say below 7.0 - there is a problem. There may be a need to find out whether the professionals and support staff in the firm are regarded as trustworthy, keep promises, provide sound advice, produce clear recommendations, are consistent in the timely delivery of the service, or work effectively to achieve agreed goals.

Problems in this area require urgent fixing because clients expect to rely on professional service providers. If they can't they will eventually go to the competitor.

How does your firm perform through the eyes of the client in terms of being Responsive. Do the professionals in your firm respond quickly and efficiently to problems or client requests? Do they return telephone calls quickly? Is there a sense of urgency in what they do?

It is interesting to note how executives attach a relative low importance rating to Tangibles and Empathy. (They are not saying that these areas are not important, but they don't rank as high as Reliability and Responsiveness). Yet, the relationship marketing guru's of the nineties, in my view, overrate attributes such as visiting clients on their premises, relating well on a personal level, a friendly and courteous disposition etc.

The lesson that may be taken from this research is this: Before contemplating to spend money on client functions, newsletters, or an advertising campaign, before giving the go-ahead on an office refurbishment programme or computer upgrade, indeed before spreading the message in the office that from today onwards your firm is the most client focused law firm or management consultant, stop for a minute and contemplate how your firm delivers the service that the client has hired you for.

An independent review conducted by an outside professional may just be a very wise investment. No newsletter, advertising campaign, cocktails in a prestigious hotel or a Thursday afternoon on the golf course with a handful of clients is going to make up for deficiencies in meeting basic customer expectations.

As service providers we need to embrace such concepts as honesty, integrity, care, support, teamwork and sharing. Make these concepts an integral part of the culture of your organisation and you will find that you easily out-perform your competitors despite their big advertising and entertainment budgets.


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