Customer Service and Quality
Strategies
Chapter 9
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
HMS - Customer Service and
Quality Strategies




Overall Customer Satisfaction
TQM (Total Quality Management)
CQI (Continuous Quality Improvement)
Malcolm Baldrige Award
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
HMS - Customer Satisfaction



Age of the Consumer
How Satisfied is the Hospitality and
Travel Industry Consumer?
Satisfying the Consumer in the Future
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
The Age of the Consumer
The Consumer Dictates
Satisfaction and Quality
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
In many industries, the expectations and
behavior of today’s consumer is much
different than that of 20 years ago.
Increasingly Time-Poor
More Savvy
More Demanding
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Increasingly Time-Poor

Consumers have less time to shop but will not trade off service quality...




Shop at home (L.L. Bean, Land’s End)
Express check-in
Express auto service
Banking on the Internet
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Speed is the New Currency




Speed is shortening product lifecycles from
years to months and sometimes weeks.
Speed is the worldwide financial network that
transfers money at the rate of $41 billion a
minute.
Speed is real-time responsiveness, 24 hours a
day, 7 days a week.
Speed measures competitive advantage.
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Connectivity Widens the Market


From mobile phones, pagers, satellite
communication, e-mail, and the
Internet, virtually everything and
everyone is in reach.
Connectivity means that business is not
bound by location. “The Death of
Distance”
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Speed + Connectivity = Real Time


Every aspect of business operates and
changes in real time.
Virtually everything is becoming
electronically connected, from
consumers and products to companies
and countries.
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Speed and Connectivity Are
Blurring Traditional Boundaries
of Products and Services
Source: Blur, Stan Davis & Christopher Meyer
Anytime Customer
Access and Response
Speed
Real time operation
No Product without Service Online
No Service without Product Interactive
Anyplace Customer
Connectivity
Access and Response
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Implications for the Consumer


Consumers have control of the
information
 Anytime access
 Anyplace access
Real time continually raises the
expectations of the consumer resulting
in “the never satisfied customer”
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Consumer is More Savvy

Internet usage



Sixty-five million U.S. adults access the
Internet.
Forty percent of these Internet consumers
are spending more time online than a year
ago.
Sixty percent go online to shop.
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Consumer is More Savvy


As a result, the difference between the
“expert” seller and naïve buyer is
getting smaller.
Consumers are better informed and
more assertive buyers.
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Consumer is More Demanding


Across industries this New
Consumer has higher expectations
of service.
Consumer demands continue to
intensify.
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
What is Consumer Satisfaction?
Customer Expectations
+/Perceived Value Received
Equals
Customer Satisfaction
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Customer Satisfaction Areas of Measurement


Consumables vs Durables
Products vs Services
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
The Auto Industry has Responded
to Emerging Customer Demands
1990
1992
1994
1996
109
120
129
135
1998
138
2000
146
2002
153
2004
162
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Conclusion

Today’s customer expects satisfaction
with the product and with the service
across a wide range of purchase
experiences . . . .
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Customer Expectations has Resulted
in Customers Demanding:
What they want
Where they want it
When they want it
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
U.S. Traveler Satisfaction is Beginning
to Decline
Rental Car
Up-Scale Hotel
Airline
Hospitality Management Strategies
By R.A. Nykiel
1999
2000
2001
2002
2003
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Behind the Consumer Electronics,
Automobile/Truck, and Telecommunications
Business on an Absolute Basis
80
79
75
Consumer
Electronics
Hospitality Management Strategies
By R.A. Nykiel
71
Auto/Truck
TeleHotels
Communications
Source: National Quality Research Center
67
Airlines
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Loyalty Intention Increases With
Satisfaction and. . .
85%
80%
A
75%
C
Renaissance
B
D
70%
F
65%
H
G
60%
J
55%
50%
600
E
I
620
640
R2 = 0.70
660
680
*Satisfaction Index Score
Source: J.D. Power & Associates. Based on Frequent Business Travelers
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Financial Performance
Increases with Loyalty
7
A
6
B
5
C
4
3
2
D
1 75
80
Top Two
85
R2 = 0.93
90
% Intention-to-Return
Source: Syndicated Upscale Guest Satisfaction Studies
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Conclusions


The Customer is NOT in the driver’s
seat in the travel industry yet.
Travel organizations that are delivering
customer satisfaction are reaping the
financial benefits of loyal customers.
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
What is Important
to the Traveler?
Approximate
Contribution
To Overall
Satisfaction*
Reservation/Check-In
40%
Car/Hotel Room/Flight
40%
Return/Check-Out
20%
Key Areas For
Improvement
Speed & Ease
Performance
vs Price = Value
Speed & Ease
*Average across Upscale Hotel, Rental Car, and Airline
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Checking-In Using Express
Service Increases Satisfaction
for The Entire Experience, But. . .
%
Truly
Outstanding/
Excellent
Satisfaction
56
54
40 Upscale Hotel
38 Rental Car
Yes
No
Source: J.D. Power and Associates 1998 Domestic Rental Car Customer Satisfaction
Study Frequent Flyer Magazine/J.D. Power and Associates - Domestic Hotel Guest
Satisfaction Study.
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
…Waiting 5 Minutes or
More to Check-in Greatly Decreases
Satisfaction With the Experience
59
48
45
32
30
19
-5 min.
Hospitality Management Strategies
By R.A. Nykiel
-10
-15
17 Rental Car
11 Upscale Hotel
-20 min.
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Membership in a Frequency Program Increases
Satisfaction With the Experience by
Delivering Added Value, But...
%
Truly
Outstanding/
Excellent
Satisfaction
45
44
40
42 Rental Car
37 Upscale Hotel
26 Airline
Yes
No
Membership In Frequency Program
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Having a Problem With
the Experience Greatly Reduces
Satisfaction
53
%
46
Truly
Outstanding/
Excellent
Satisfaction
18 Rental Car
16 Upscale Hotel
No Problem
Hospitality Management Strategies
By R.A. Nykiel
Problem
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Summary

Improving satisfaction will result from making Reservation/Check-In
Rental Car/Hotel Room/Flight
Return/Check-out

Faster & Easier
More “Valuable”
for the price paid
Faster & Easier
While delivering a “problem-free” experience.
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Conclusions
First:
Now is the time for the hospitality
industry to listen to what the consumer
is saying and improve satisfaction.
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Conclusions
(continued)
Second:
 Hospitality organizations that “set
themselves apart” from their
competition by demonstrably improving
the travel experience will be those that
successfully ride out the next economic
wave.
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Conclusions
(continued)
Third:
 Hospitality organizations that “set the
bar at it’s highest point” in terms of
customer satisfaction will force the rest
of the industry to play catch-up.
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
HMS
 TQM
 CQI
 Malcolm Baldrige Award
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
HMS - Quality Strategy

Goal:
 To consistently meet or exceed
customer expectations by providing
services at prices that create value for
the customer and profit for the
company.
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Quality


Quality is a moving target.
Value fluctuates with changing
customer expectations.
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Total Quality Management

Deming’s 14 Points





Create constancy of purpose
Adopt the new philosophy
Cease dependence on inspection to achieve
quality
End the practice of awarding business on the
basis of price tag
Improve constantly and forever the
system of production and service
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Total Quality Management
(continued)

Deming’s 14 Points






Institute job training
Institute leadership
Break down barriers between departments
Drive out fear
Eliminate slogans
Eliminate work standards (quotas)
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Total Quality Management
(continued)

Deming’s 14 Points



Remove barriers that rob employees
of pride and workmanship
Institute a vigorous program of
education and self-improvement
Put everybody in the company to
work to accomplish the
transformation
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Juran
“The quality of a product or service is
determined by its fitness for use by
external and internal customers.”
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Juran




Common language
“Process”
External customers
Internal customers
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Juran

The “process” must produce value for
the customer.
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Juran
Quality = Product/ Service Features
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Juran
Quality = Freedom from defects
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Defect Ratio
Frequency of Defects
Opportunity of Defects
(the lower the defect ratio, the higher
the quality rating)
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Juran


CQI leads to “breakthrough
performances.”
Quality efforts are an integral part of a
company’s business plan.
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Continuous Improvement
Incremental- enhance or streamline
current work process.
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Continuous Improvement
Breakthrough - redesign work process
and the result is unprecedented levels
of quality, speed, and savings.
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Continuous Improvement
Process
(1)
(2)
(3)
(4)
Target opportunities
Analyze
Develop implementation plan
Evaluate
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Tools for Continuous
Improvement





Brainstorming
Multi-voting
Priority determination charts
Selection matrixes
Weighted selection matrixes
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Tools for Continuous
Improvement





Flow charts
Cause-and-effect diagrams
Fact-finding planning sheets
Check sheets
Bar charts, pie charts, and line graphs
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Tools for Continuous
Improvement




Customer input
Competitive analysis
Empowerment
Service recovery process
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Empowerment
…the redistribution of power enabling
employees to perform their jobs more
efficiently and effectively.
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Empowerment’s Goal


Enhances service to the guest
Fix it now!
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Service Recovery

Anticipating & handling service
problems or failures
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
CQI - Improvement Resources





Organizational
Physical facilities
Technological systems
Workplace design
Training systems
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
The Inverted Pyramid
Customers
Service Employees
Support Units
Managers
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
The Point of Customer Contact
Managers
Support Units
Service Employee
Customer
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Costs of Dissatisfaction



Termination costs
Recruitment and selection cost
Word of mouth
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Quality Service

Quality service is measured by the
customer’s perception.
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Quality Service

Quality service is service that meets or
exceeds customer expectations.
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Characteristics of High
Performance Companies



Skills and information
Participation, organization, and
partnership
Compensation, security, work
environment
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Malcolm Baldrige Award


1987 - National Quality Improvement
Act
Standards of excellence for U.S.
businesses
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Malcolm Baldrige Award




Six each year
Two manufacturing firms
Two service firms
Two small businesses
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Malcolm Baldrige Award’s
Purpose
Three important roles in strengthening US
competitiveness:



Help improve performance and capabilities
Facilitate communication / sharing of best
practice information among and within
organizations
Serve as a working tool for managing
performance, planning, training, and
assessment
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Malcolm Baldrige Award’s
Criteria
Are designed to help companies
enhance their competitiveness by
focusing on:


The delivery of ever-improving value to
customers, resulting in marketplace
success
The improvement of overall company
performance and capabilities
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Malcolm Baldrige Award’s
Application Categories







Leadership
Information and analysis
Strategic planning
HR development & management
Process management
Business results
Customer focus and satisfaction
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Core Values and Concepts of
Baldrige Award Criteria






Customer-driven quality
Leadership
Continuous improvement and learning
Employee participation & development
Fast response
Design quality and prevention
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Core Values and Concepts of
Baldrige Award Criteria





Long-range view of the future
Management by fact
Partnership development
Corporate responsibility and citizenship
Results orientation
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
Sample Baldrige Award
Criteria
Categories
Leadership
Information and Analysis
Strategic Planning
HR Development & Mgmt.
Process Management
Business Results
Customer Focus / Satisfaction
Total Points
Hospitality Management Strategies
By R.A. Nykiel
Points Value
90
75
55
140
140
250
250
1000
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
The Ritz Carlton Interactive
Team Pyramid
Guest
Customer
Interaction
Employee
Training Certification,
Problem Solving and
Strategic Planning Teams
Hotel Executive Committee
Corporate Steering Committee / Developers
The Ritz Carlton Interactive
Team Pyramid
Guest
Customer
Interaction
Employee
Training Certification,
Problem Solving and
Strategic Planning Teams
Hotel Executive Committee
Corporate Steering Committee / Developers
Hospitality Management Strategies
By R.A. Nykiel
©2005 Pearson Education, Inc.
Upper Saddle River, N.J. 07458
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HMS Customer Service and Quality Strategies