Service Quality, Customer Satisfaction and Customer Retentio

Service Quality, Customer Satisfaction and Customer

Retention in the hospitality industry: Keys to achieve

tourism growth.

S. Melisidou

1

, N. Theocharis

2

Dpt. Of Tourism Administration, T.E.I. of Athens, Athens, Greece,

Tel: +30 6974366280, Fax: +30 2103212276, E-mail: smelisidou@

2

1

Dpt. Of Tourism Administration, T.E.I. of Athens, Athens, Greece,

Tel: +30 6977746042 , E-mail: ntheocharis@

ABSTRACT

The

increased

significance

of

the

services

sector

to

the

global

economy

has

led

to

a

heightened

concern

by

practitioners

as

well

as

consumers

regarding the quality of services being offered.

The

past

few

decades,

―mass‖

tourism

e

merged

as

a

forceful

agent

of

change

and

created

impacts

which

clearly

affect

the

qualitative

issues

of

tourist product.

The concept of quality and its relationship with the service industries has

become

a

major

preoccupation

for

many

within

this

sector,

not

least

the

hospitality

industry.

Hospitality

operations

have

to

serve

an

increasingly

discerning public, who are nowadays more eager than ever to complain and

transfer their allegiances to perceived providers of quality services.

Applicable

models

and

methods

of

service

quality

can

protect

and

upgrade

the

operation

of

enterprises

as

well

as

the

level

of

tourist

demand

satisfaction.

This

paper

seeks

to

investigate

the

evaluation

and

conceptualization

of

service quality and its interactive impacts.

The

aims

of

this

study

are

as

follows:

(1)

to

sustain

that

service

quality,

customer satisfaction and customer retention can be considered as the major

tools

to

achieve

development

and

enhance

the

hospitality

industry,

(2).

to

assess that perceived service quality is a crucial matter for the global tourism

development and can bear socio-economic development.

KEYWORDS:

service

quality,

service

value,

customer

satisfaction,

retention,

SERVQUAL, tourism development.

1

1. Introduction

Service

industries

play

an

important

role

in

most

economies.

As

competition

increases

in

the

market,

tourism

businesses

and

organizations

need

to

develop

effective

methods

for

being

more

responsive

to

peoples‘

needs and retaining more loyal participants since attracting new participants

will cost more which involves more advertising and promoting.

Like

other

fields,

tourism

involves

both

goods

and

services,

but

the

service

component is relatively high.

It

has

been

suggested

that

each

of

these

determining

constructs

(perceived quality, perceived value, and satisfaction) should be measured to

monitor

hospitality

operations

performance

and

to

understand

more

thoroughly

the

interrelationships

between

them

(Baker

and

Crompton

2000;

Getty

and

Thompson

1994;

Petrick

and

Backman

2002a;

Tam

2000).

Enhanced

understanding

of

the

relationships

among

these

constructs

and

their

relative

influence

in

determining

behavioral

intention

to

revisit,

would

better

equip

hospitality

industry

providers

to

adjust

their

services

and

marketing

efforts

to

enhance

positive

behavioral

intention.

Quality

attributes

can

be

more

useful

than

either

satisfaction

or

perceived

value

items

since

hospitality industry managers can control and manipulate the items.

Perceived quality and satisfaction have been shown to be good predictors of

visitors‘ future behavioral intentions (Baker and Crompton 2000; Tian

-Cole et

al. 2002).

While

perceived

quality

and

perceived

value

are

cognitive

responses

to

a

service

offering,

overall

satisfaction

is

an

emotional

response

based

on

a

holistic view of phenomenon (Cronin et al. 2000). With a clear understanding

of

the

relationship

among

these

three

constructs,

hospitality

businesses

would know which of these evaluation measures have the stronger total effect

on visitors‘ behavioral intentions.

There

is

widespread

agreement

in

the

general

service

management

literature

that

the

provision

of

service

quality

is

concerned

with

generating

customer

satisfaction.

Gr?

nroos

(1984),

Parasuraman,

Zeithaml

and

Berry

(1985)

and

Johnston

(1988)

define

service

quality

in

terms

of

customer

satisfaction,

that

is,

the

degree

of

fit

between

custom

ers‘

expectations

and

perceptions of service.

2.

Defining Service Quality

–

Notional approaches

Service

quality

is

now

of

major

concern

to

industries

such

as

the

tourism/hospitality industry, which are basically ?peopleoriented‘.

In the service industry, definitions of service quality tend to focus on meeting

customers‘ needs and requirements and how well the service delivered meets

their expectations (Lewis and Booms, 1983). In order to deliver and maintain

service

quality,

an

organization

must

first

identify

what

it

is

that

constitutes

quality to those whom it serves (Gronross, 1984). Gronross (1984) classified

service

quality

into

two

categories:

technical

quality,

primarily

focused

on

what

consumers

actually

received

from

the

service;

and

functional

quality,

focused on the process of service delivery.

2

Service quality characterised by the following aspects:

-

is multidimensional,

-

has underlying quality dimensions, some of which change over time;

-

is intangible, although it is often assessed through tangible clues;

-

is the result of both service processes and service outcomes;

-

depends

on

the

difference

(gap) between

customer

expectations

and

perceptions

The central link in most service strategies is quality, which has been a major

issue for many years

, dating back at least to Deming‘s work in Japan in the

?50s.

Solomon et al. (1985) concluded that a customer assesses quality by his or

her

perception

of

the

way

in

which

the

service

is

performed.

As

a

result,

service

quality

has

been

defined

as

the

outcome

of

a

comparison

between

expectations of a service and what is perceived to be received (Czepiel et al.,

1985;

Parasuraman

et

al.,

1985).

The

gap

between

expectations

and

perceptions

of

performance

determines

the

level

of

service

quality

from

a

consumer

‘s perspective.

Johnston

and

Morris

(1985)

argue

that

service

organisations

tend

to

measure only what is easy to measure and quantify, and shy away from the

use

of

soft,

qualitative

measures.

Kaplan

(1983)

argues

satisfaction.

Whilst

the

measurement

of

customer

service

perceptions

are

now

widespread

in

tourism/hospitality,

an

understanding

of

managements‘

perception

of

guest

expectations,

as

well

as

staff

responses

to such management expectations,

are yet to be explored. Hochschild (1983) has described the work performed

by service providers as ?emotional labor‘ that requires them to subsume their

own

feelings

to

the

goals

of

their

employer

and

the

immediate

needs

of

a

paying customer.

Indeed,

she

described

service

encounters

as

the

commercialisation

of

human

feeling,

and

warns

of

the

individual

and

social

effects

that

may

engender.

Klaus

(1985)

has

described

service

encounters

as

interlocking

behaviour composed of task and ?ceremonial‘ elements, in which the former

are

the

economic

exchange

elements

and

the

latter

the

psychological

need

satisfaction that provider and customer provide each other.

Parasuraman

et

al.

(1985)

identify

over

200

attributes

of

service

quality.

The pool of attributes was derived from an extensive series of interviews with

customers

in

four

different

commercial

services.

Using

factor

analysis,

five

main

dimensions

of

service

quality

were

identified.

They

were:

tangibles,

reliability,

responsiveness,

assurance

and

empathy.

The

importance

of

the

above dimensions in understanding service quality cannot be underestimated.

However,

comparing

service

expectations

with

service

perceptions

has

offered

a

more

insightful

perspective.

Perceptions

of

quality

by

those

who

provide services and those who consume them have often been reported to

differ (Parasuraman et al., 1985).

3. Experienced Service Quality Models

3

There have been numerous attempts to encapsulate the essential nature

of the service quality construct in the form of theoretical models. One of the

earliest models is that described by Gronroos (1983), which relates the level

of experienced quality to both technical and functional dimensions of service

provision:

?

Technical

quality

refers

to

the

result

of

service

and/

or

the

question,

what has been provided?

?

Functional quality, on the other hand, refers to the way the service has

been delivered and delivered and relates to the question, how has the

service been provided?

Technical quality refers to the relatively quantifiable aspects of the service

that

consumers

experience

during

their

interactions

with

a

service

firm.

Because

it

can

be

easily

measured

by

both

consumer

and

supplier,

it

becomes an important basis for judging service quality (Palmer, 1998).

According

to

Gronroos

(1998,1990),

however,

these

more

technical

aspects

of

a

service

are

easily

lost.

Functional

quality,

in

contrast,

can

be

used to create a competitive edge by focusing on the more personal aspects

of the service encounter.

Diagram 1.1. Service Quality Model

.

Experienced Quality

Experienced

Experienced

service

service

Image

Technical

Attitudes

Solutions

Knowledge Technical Machines

Technical

Functional

Availability Functional Customer

Quality

Quality

Quality

Quality

ADB- Systems

Environment

WHAT?

HOW?

SERVQUAL

Source: Gronroos, 1984

4. Perceived Service Quality- SERVQUAL model

4

Service

quality

has

become

a

major

concern

of

service

industries.

Berry

and

Parasuraman

(1991)

stated

that

service

is

the

essence

of

services

marketing and hat service quality is its foundation. Perceived service quality is

a user‘s judgment about a

service‘s overall excellence or superiority (Berry et

al.

1988).

In

tourism

businesses

and

organizations,

suppliers

provide

the

same

types

of

services,

but

they

do

not

provide

the

same

service.

Wager

(1966,

p.12)

observed,

―Quality

is

a

human

concept

based

on

highly

subjective criteria … and seems to be a highly personal matter.‖ Due to the

central

importance

of

service

quality,

tourism

businesses

and

organizations

have

commissioned

research

studies

designed

to

identify,

assess,

or

evaluate the phenomenon of service quality.

In

the

private

sector

of

tourism,

the

ultimate

goal

of

businesses

and

organizations is to increase profits. Improving technical aspects of goods and

services

is

not

sufficient

to

retain

participants.

Tourism

businesses

and

organizations

are

investing

more

effort

in

improving

perceptions

of

service

quality

so

visitors

(participants)

will

become

repeat

visitors

and

spread

positive word-of-mouth to their social group (Crompton and Lamb 1986). For

public sector organizations, making a profit may not be an ultimate goal.

Rather

it

may

be

to

satisfy

participants‘

needs

and

wants

(Crompton

and

Lamb 1986). In public tourism businesses and organizations, participants are

most

likely

to

find

satisfaction

through

high

quality

service

(MacKay

and

Crompton 1988).

There

is

a

plethora

of

measurement

tools

and

techniques

for

assessing

service quality and consumer satisfaction levels. The leading protagonists in

the

area

of

service

measurement

studies

have

been

Parasuraman

et

al.

(1985), with development and subsequent refinement in 1988 and 1991 of the

SERVQUAL instrument (Parasuraman et al., 1991).

4.1. The SERVQUAL Model

The

SERVQUAL

instrument

developed

by

Parasuraman

et

al.

(1991)

has

proved

popular,

being

used

in

many

studies

of

service

quality.

This

is

because it has a generic service application and is a practical approach to the

area.

A

number

of

researchers

have

applied

the

SERVQUAL

model

to

measure service quality in the hospitality industry, with modified constructs to

suit specific hospitality situations (Saleh and Ryan, 1992; Bojanic and Rosen,

1993;

Getty

and

Thompson,

1994;

Lam

and

Zhang,

1998;

Tsang

and

Qu,

2000).

The

SERVQUAL

instrument

consists

of

22

statements

for

assessing

consumer

perceptions

and

expectations

regarding

the

quality

of

a

service.

Respondent are asked to rate their level of agreement or disagreement with

the

given

statements

on

a

7-

point

Likert

scale.

Consumers‘

perceptions

are

based on the ac

tual service they receive, while consumers‘ expectations are

based

on

past

experiences

and

information

received.

The

statements

represent

the

determinants

or

dimensions

of

service

quality.

Refinement

of

his work reduced the original service dimensions used by consumers to judge

the quality of a service from ten to five.

The five key dimensions (Parasuraman et al. 1991) that were identified are as

follows:

5