Customer Service by Andrew Clegg

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Submission date: 06/05/2011 Supervisor: Dr Andy Clegg

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Abstract Service providers that adopt a customer service strategy, which identifies those aspects of service which customers value the most, are by virtue more likely to achieve higher levels of customer retention than those who do not. This research project has investigated customer attitudes towards services delivered by Static Systems in order to understand customer requirements. A web survey was constructed and 238 customers possessing a service level agreement invited to participate. Analysis of the results has identified several important strengths and shortfalls in service quality which ultimately could affect the re-‐purchase decision. Keywords: retention; attrition; service quality; satisfaction; perceived value; after-‐sales

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Acknowledgements I wish to thank my partner, Corinne who without her good grace, studying would have been untenable and our daughter Rowan and my son Henry with whom I intend to spend more leisure time. With regard to my studies, I wish to express my respect and gratitude to Dr Andy Clegg, an exceptional supervisor. Finally, my appreciation extends to my employer, Static Systems, who sponsored my studies and to specific colleagues in alphabetical order, John Barton, Don Kane and Stuart Squire. Page | 3

Customer Retention: a small scale analysis of customer requirements and attitudes towards the Service Level Agreement (SLA) -‐ a case study of Static Systems Contents

Chapter 1 -‐ Introduction ........................................................................................................................ 6 1.0 Introduction ........................................................................................................................ 7 1.1 Customer Retention & Loyalty ............................................................................................ 7 1.2 Static Systems Group .......................................................................................................... 8 1.3 Legislation and Best Practice............................................................................................... 9 1.4 Service Level Agreements ................................................................................................... 9 1.5 Preventative Maintenance & Breakdowns ....................................................................... 10 1.6 External & Internal Environmental Scan ........................................................................... 11 1.7 Research Project ............................................................................................................... 12 Chapter 2 -‐ Literature Review .............................................................................................................. 13 2.0 Introduction ...................................................................................................................... 14 2.1 Customer Retention .......................................................................................................... 14 2.2 Customer Expectations of Service..................................................................................... 15 2.3 Service Profit Chain ........................................................................................................... 16 2.4 Customer Perceptions of Service Quality.......................................................................... 17 2.5 Value of Customer Satisfaction ......................................................................................... 18 2.6 Customer Perceptions of Service Value ............................................................................ 19 2.7 Service Quality Measurement........................................................................................... 20 2.7.1 SERVQUAL Instrument ................................................................................................... 20 2.7.2 SERVPERF Instrument .................................................................................................... 22 2.8 Summary ........................................................................................................................... 23 Chapter 3 -‐ Methodology ..................................................................................................................... 24 3.0 Introduction ...................................................................................................................... 25 3.1 Establishing a Sampling Frame.......................................................................................... 25 3.2 Method of Data Collection ................................................................................................ 26 3.3 Questionnaire Design........................................................................................................ 26 3.3.1 The Structure of the Questionnaire ............................................................................... 28 3.3.2 Pilot Study ...................................................................................................................... 30 3.3.3 Request for Participation ............................................................................................... 31 3.4 Data Process and Analysis ................................................................................................. 32 3.5 Research Limitations ......................................................................................................... 34 3.6 Ethical Considerations....................................................................................................... 35 Page | 4

Chapter 4 -‐ Findings and Analysis ........................................................................................................ 36 4.0 Introduction ...................................................................................................................... 37 4.1. Service Priority Area 1 -‐ Services Outlined within the SLA ............................................... 38 4.1.1 Performance of Employees within the Maintenance & Service Office .......................... 38 4.1.2 Interactions with, and Performance of Site Personnel .................................................. 43 4.1.3 Costs Associated with the Breakdown ........................................................................... 46 4.1.4 Section Summary ........................................................................................................... 47 4.2 Service Priority Area 2 -‐ Aspects of Services Un-‐Associated with the SLA ........................ 49 4.2.1 Cost of Spares................................................................................................................. 49 4.2.2 Attitudes towards Modifications and/or Additions ....................................................... 50 4.2.3 Section Summary ........................................................................................................... 52 4.3 Service Priority Area 3 -‐ Economic Impact and Overall attitude to Static Systems........... 53 4.3.1 Economic Impact............................................................................................................ 53 4.3.2 Overall attitude to Static Systems .................................................................................. 55 4.3.3 Section Summary ........................................................................................................... 57 4.4 Company profiling ............................................................................................................. 58 4.5 Conclusion ......................................................................................................................... 59 Chapter 5 -‐ Conclusions and Recommendations ................................................................................. 60 5.0 Introduction ...................................................................................................................... 61 5.1 Aims and Objectives: An Overview ................................................................................... 61 5.2 Implications of Findings .................................................................................................... 62 5.2.1 Service Priority Area 1 -‐ Services Outlined within the SLA ............................................. 62 5.2.2 Service Priority Area 2 -‐ Aspects of Services Un-‐Associated with the SLA ..................... 63 5.2.3 Service Priority Area 3 -‐ Economic Impact and Overall attitude to Static Systems........ 64 5.3 Summary ........................................................................................................................... 64 5.4 Recommendations and Future Research .......................................................................... 65 5.5 Conclusion ......................................................................................................................... 66 References ........................................................................................................................................... 67 Appendices........................................................................................................................................... 75 Appendix A – Ethics Approval Form ..................................................................................................... 76 Appendix B -‐ 2005 Survey .................................................................................................................... 81 Appendix C -‐ 2009 Survey .................................................................................................................... 82 Appendix D -‐ Request for Participation................................................................................................ 83 Appendix E -‐ Introductory Letter ......................................................................................................... 84 Appendix F -‐ Instrument Format & Questions ..................................................................................... 85 Page | 5

Appendix G -‐ Qualitative Comments.................................................................................................... 92

Chapter 1 -‐ Introduction Introduction

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1.0 Introduction Within any profit making organisation, customer retention is linked with profit and growth as Hesket et al. (2008, p. 124) confirms, ‘loyal customers account for an unusually high proportion of the sales and profit growth of successful service providers’. Given the current economic climate a strategy for improving retention should be of the utmost strategic importance. The aims and objectives of this research are to gain an understanding of customer requirements and their attitudes towards services delivered during the term of a Service Level Agreement (SLA). According to Cohen, Agrawal & Agrawal (2006, p. 259) ‘many organisations have adjusted their focus from the provision of systems to their customers, and now see after-‐sales service as an important source of revenue and profit, retention, and competitive differentiation’. The aim of this chapter is to establish the context for the research conducted, detailing the economic losses associated with poor retention rates of customers holding Service Level Agreements within a business setting. Chapter two provides a review of the literature on the prominent determinates of retention, whilst chapter three details the research employed during this study. Finally, chapters four and five provide an analysis of the findings leading to a series of recommendations for improving customer retention. 1.1 Customer Retention & Loyalty When considering the economic case for improving retention rates, ‘it costs six to thirty times more to get a new customer than it does to service and maintain the satisfaction and loyalty of an existing customer’ (Brandi, 2011). There are a number of important but different factors which lead to customers returning to an organisation for further consumption, although as Stone & Liyanearachchi (2006, p. 90) observe, ‘the relationship between customer experience and customer attrition is a complex one’. It is considered of paramount importance by academics (Mohanty & Lakhe 2006, p. 96; Gronroos 2007, p. 145) that organisations should focus on cementing relationships with their retained customers as Page | 7

they exhibit the highest probability for additional business. A view discussed by Fill (2002, p. 566) is that consumers are capable of varying degrees of loyalty (see figure 1.1) where the objective is to move customers up the loyalty ladder to become advocates and partners of the organisation. In support of this view (Heskett et al., 2008, p. 118) confirms that ‘the lifetime value of a loyal customer can be astronomical, especially when referrals are added to the economics of customer retention and repeat purchases of related products’. Figure 1.1: The loyalty pyramid

Adapted from Fill (2002, p. 566) 1.2 Static Systems Group Static Systems Group PLC1 (to be referred herein as SSG) is a privately owned manufacturing company established in 1964. It is located on the border of South Staffordshire and the West Midlands. Products and services fall into three main categories, namely: Healthcare, Fire Alarm and Custodial solutions. SSG’s portfolio of clients includes the BBC television studios (London), The Natural History Museum, Great Ormond Street Hospital and HMP Pentonville. Systems are intended to have a lifetime of 35 years and as a result there is a high level of competition to secure the revenue stream generated from SLA’s. 1

Static Systems Group -‐ www.staticsystems.co.uk/ Page | 8

1.3 Legislation and Best Practice SSG provides systems which either legislation or best practice dictate that routine planned preventative maintenance (PPM) of the systems should be undertaken to ensure optimum performance at all times. For example Fire Alarm systems are subject to a code of practice (British Standards Institution, 2008) covering system design, installation, commissioning and maintenance. Within this code it is detailed, ‘Periodic inspection and servicing needs to be carried out by a competent person with specialist knowledge of fire detection and alarm systems ... this will normally be an outside fire alarm servicing organization’ (British Standards Institution, 2008, p. 109). Should a fire alarm system not be maintained, it is expected that the building owner or organisation would be in breach of the Regulatory Reform (Fire Safety) Order (Great Britain. Parliament. House of Commons, 2005). To contextualise the importance of this, where systems are installed into buildings, the management team responsible for the building must ensure that systems are properly maintained and serviced. In relation to the other systems provided by SSG, custodial systems are subject to the ministry of justice code referred to as ‘NOMS2’, whilst the Healthcare systems are controlled by NHS code of practices known as the ‘HTM3’s’. 1.4 Service Level Agreements SSG enters into SLA’s on a Business to Business basis (B2B) where the client is generally another organisation or establishment. Having earlier highlighted the necessity that these systems require PPM’s, a business would generally engage an external body to perform the inspection and servicing requirements. It used to be commonplace for the systems provider to be initially awarded the SLA but this is becoming less frequent as operating budgets are reduced.

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National Offender Management Service Health Technical Memorandum Page | 9

Within SSG, the Sales representative’s role is to engage in dialogue with 1) consultants and main contractors in order to sell systems and 2) the end users to secure the SLA. Figure 1.2 illustrates how the body responsible for the purchase of systems are generally not the same body that enters into the SLA. Figure 1.2: Selection of systems and service providers

1.5 Preventative Maintenance & Breakdowns

Within SSG the tasks as laid out in the SLA are carried out by the maintenance & service departments and their principal functions are the scheduling of visits and reacting to breakdown calls. The office teams manage 44 geographically dispersed employees whose role is to travel to customer’s premises and attend to either preventative maintenance or breakdowns on SSG systems, as Susskind (2003, p. 179) identifies, ‘Service ... employees differ from traditional manufacturing because they primarily deal with perishable, intangible products’. Subsequent renewals of the SLA are negotiated by the Maintenance office (see figure 1.3). Page | 10

Figure 1.3: The Static Systems SLA renewal cycle

1.6 External & Internal Environmental Scan SSG core products are targeted towards the Hospital (Healthcare) and Prison (Ministry of Justice buildings) markets. Widely publicised in the media is the government spending cuts where ‘overall, the coalition has announced £81bn of cuts, with the aim of bringing borrowing down from £149bn in 2010/2011 to £37bn in 2014/2015’, Wilson (2011). These cuts have already had a significant effect on the organisation; in 2010 two redundancy programmes took place with the latter resulting in 26 employees being made redundant in the last quarter of 2010. A loss of just under £500,00.00 was declared at the end of 2010 and a further redundancy program was announced in the first quarter of 2011. Within the sectors that SSG operates, competition is high; SSG has to battle with well known providers such as ADT4, Protec5, Wandsworth6, Chubb7 and Gent8. The turnover of the Maintenance department in 2010 totalled £1,848,208. However during that year 34 customers, with a total contract value of just under £222,000, were lost. This figure 4

ADT -‐ www.adt.co.uk/ Protec -‐ www.protec.co.uk/ 6 Wandsworth -‐ http://www.wandsworthgroup.com/ 7 Chubb -‐ www.chubb.co.uk/ 8 Gent -‐ www.gent.co.uk/ 5

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represents 12% of the total invoicing from within the maintenance department for 2010. SSG has a policy of not maintaining equipment manufactured by others; however competing companies have no qualms in doing this. Consequently in respect of the non-‐retained SLA’s, in virtually all cases, competitors must have acquired those contracts. This may mean that in the long term these competitors would look to install their own system into these premises and as a result the whole site could be lost. Internally, one of the strengths of SSG is the importance it places on providing developmental opportunities for employees. There is an apprenticeship scheme and also encouragement of personal development with employees able to receive sponsorship to further their education; this helps to maintain a low employee churn rate. Within SSG there is an emphasis on product development and continual improvement; its many accreditations from external bodies include ISO-‐90019, LPS -‐ 101410, Safe Contractor11. 1.7 Research Project In light of the high [perceived] SLA attrition and the current poor trading conditions the Quality Manager was given permission to conduct another survey on clients holding a SLA. Subsequently this task was passed on to the researcher as his research project.

Quality Management System -‐ www.bsigroup.com/en/ Loss Prevention Certification Board -‐ www.bafe.org.uk/ 11 Health & Safety Assessment Scheme -‐ www.safecontractor.com/ 10

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Chapter 2 -‐ Literature Review Literature Review

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2.0 Introduction How customers perceive the after-‐sales service experience is of great importance for service providers as research suggests that ‘on average, businesses lose 15-‐20% of their customers each year to their competition’ (Smith, 2011); in the case of Static Systems, 34 contracts were lost in 2010 representing 12% of their maintenance turnover. Therefore it is of the upmost importance for organisations to consider the service experience as customers re-‐ purchase decisions will be largely influenced by their expectations and perceptions of the service delivered. Having contextualised the research aims and objectives within the previous chapter, a review of the literature is presented which concentrates on the prominent determinates of retention, namely: service quality, value for money and satisfaction (Tam, 2004, p. 898). 2.1 Customer Retention Within the service environment, customer retention is key to sustaining growth and competitive advantage, as Heskett, Sasser, Schlesinger (1997, p. 61) highlight, ‘Retention is the continuing, active relationship with a customer that yields a stream of revenue from the sale of the initial product or service’. Statistics published by BusinessFast4ward (2011) state that ‘acquiring a new customer can cost 6 to 7 times more than retaining an existing customer’. When observed from the customers’ perspective, the reasons for customer attrition can sometimes be easy to identify and can range from poor customer service, lack of affordability and technical issues such as system or equipment failure (Stone & Liyanearrachchi, 2006, p. 91). Service providers adopting a customer service strategy are by virtue more likely to achieve higher levels of customer retention than those who do not as Davidlow & Uttal (1989, p. 79), cautions, ‘without one, you don’t know who your customers are, how much they value different aspects of service, how much you must spend to satisfy them, and how big the payoffs are likely to be’. Organisations that take into account the complexities of customer attrition and are able to adapt their offerings in order to meet customer requirements should achieve increased profit and growth, as Yee et al. (2009, p.

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627) point out, ‘customers who are satisfied with the quality of services they have received are likely to have the intention to make repeated purchases’. Though empirical studies do indicate that there is a measurable link between increased satisfaction and retention, Venetis & Ghauri (2004, p. 1583) suggest that satisfactions ‘relative contribution, compared to the other antecedents, might be very small or non-‐ significant’. Empirical research exploring the relationship between service quality and retention (Boulding et al, 1993; Zeithaml, Berry & Parasuraman, 1996; Venetis & Ghauri, 2004; Onyeaso & Adalikwu, 2008) supports the notion that increasing service quality perceptions positively affects customer retention. Service quality and customer satisfaction are widely viewed as an important determinant for customer retention, where it has been argued that service excellence enhances customers’ inclination to repeat purchase (Venetis & Ghauri, 2004, p. 1577). 2.2 Customer Expectations of Service Customer expectations are drivers within the service economy and essential to competitive advantage as Zeithaml, Bitner & Gremler (2009, p. 75) define are, ‘beliefs about service delivery that serve as standards or reference points against which performance is judged’. The main determinates of customer expectations discussed in the literature (Zeithaml, Bitner & Gremler, 2009; Zeithaml, Parasuraman & Berry, 1990; Parasuraman, Zeithaml & Berry, 1985, 1988) are namely: verbal, personal needs of the customer, past experiences and communications with the service provider themselves. For organisations to benefit from repeat business, it is essential that the services offered and subsequently delivered fulfil customer expectations (Raab et al., 2008, p. 7). When services fall below customer expectations, this can contribute to feelings of dissatisfaction, as Pitt & Jeantrout (1994, p. 173) advises, ‘in the long run it is best practice for organisations to deliver exactly what they promise’ and therefore essential that a cohesive marketing strategy is aligned to an organisation’s operations. As Zeithaml, Bitner & Gremler (2009, p. 75) observe, ‘knowing what the customer expects is the first and possibly most critical step in delivering quality service’. Page | 15

2.3 Service Profit Chain In order to gain a holistic understanding of the complex inter-‐relationships that exist between an organisations internal performance and profit and growth, Loveman (1998, p. 18) presented ‘a conceptual framework linking employee satisfaction and loyalty, customer satisfaction and loyalty and financial performance’. As the focus of this research is directed towards specific aspects of this model (see figure 2.1), it is considered appropriate to explain a series of hypothesised relationships. Figure 2.1: The links in the service-‐profit chain

Adapted from Heskett et al. (2008, p. 120) From right to left, hypothesises of the model encapsulated within the external environment are: profit and growth which is stimulated primarily from customer loyalty; loyalty as a result of customer satisfaction; customer satisfaction largely influenced by the value of the service provided (Yee et al. 2009, p. 617). In summary, it is essential that organisations

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identify those aspects of the service that are particularly valued by the customer and adapt the service in order to satisfy the customer; ultimately this will improve attrition rates. 2.4 Customer Perceptions of Service Quality Modern service organisations recognise that service quality is important to running a successful business and is now considered to be a critical success factor (Venetis & Ghauri 2004, p. 1577). For service providers to better understand the links between service quality and customer retention, characteristics of services need to be acknowledged: 1) intangibility -‐ an organisation may find it difficult to understand how consumers perceive their services and evaluate service quality’; 2) heterogeneity -‐ especially for services using a high level of labour as performance of services often varies; 3) inseparability -‐ production and consumption of many services are inseparable (Parasuraman, Zeithaml & Berry, 1985, p. 42). As good perceived quality is obtained when the experienced quality meets the expectations of the customer (Gronroos, 2010, p. 76), it is therefore essential for organisations to improve their understanding of how customers perceive and evaluate service quality, as Schneider, White & Paul (1998, p. 150) highlight, the ‘customer who holds positive perceptions on an organisations service quality is likely to remain a customer of that organisation’. Whilst tangible goods can be examined and used to assist in rating the quality of a product, it is noted that by Gronroos (2010, p73) that ‘service quality is whatever the customer perceives it to be’. For service providers whose offerings generally involve a high degree of human involvement, interactions will greatly influence the perceptions of a customer, as Kattara (2008, p. 310) highlights, ‘employee’s behaviour is important in a service company as they connect the organisation with its customers’. Should actual performance be ‘counteracted or nullified by badly managed or handled buyer-‐seller interactions or service encounters, then the overall service experience may result in a negative perception by the customer’ (Gronroos 2010, p76). As a consequence service providers have a vested interest in measuring service quality, and a significant research base (Gronroos, 1984; Parasuraman, Zeithaml & Berry, 1985, 1988; Zeithaml, Berry & Parasuraman, 1996; Boulding et al., 1993; Cronin and Taylor, 1992, 1994; Taylor & Baker, Page | 17

1994; Landrum, Prybutok & Zhang, 2007) exists which serves to re-‐enforce service quality as an important determinant of retention, as Landrum, Prybutok & Zhang (2007, p. 104) conclude, ‘Service quality matters in every industry: all companies recognise its importance because it affects customer loyalty and satisfaction’. 2.5 Value of Customer Satisfaction

As defined by Lemon, White & Winer (2002, p. 1), ‘Satisfaction is the consumer’s fulfilment response. It is a judgement that a product or service feature, or the product or service itself, provided (or is providing) a pleasurable level of consumption-‐related fulfilment, including levels of under or over fulfilment’. When considering the value of customer satisfaction, consumers compare service experiences to their current expectations and form satisfaction judgements (Lemon, White & Winer (2002, p. 3); the aim for organisations is to ensure these judgements are positively linked towards the actual service delivered.

Understanding ‘feelings’ of satisfaction is complex and as Evans, Jamal & Foxhall (2009, p. 397) insist, ‘must include the core product or service as well as the economic and social aspects of the relationship’. There is a close relationship between satisfaction and service quality (see figure 2.2) and it is important not to get the two discrete constructs confused, as Zeithaml, Bitner & Gremler (2009, p. 103) cautions, ‘practitioners and writers in the popular press tend to use the terms satisfaction and quality interchangeably’. Figure 2.2: Customer perceptions of quality and customer satisfaction .

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Adapted from Zeithaml, Bitner & Gremler (2009, p. 103) As figure 2.2 illustrates, service quality is as a result of customer perceptions of the five dimensions of service quality, whilst customer satisfaction is influenced by a broader range of factors. Respected academics, Zeithaml, Bitner & Gremler (2009, p. 103) describe satisfaction as being ‘influenced by perceptions of service quality, product quality, and price, as well as situational factors and personal factors’, whilst Dimitris et al (2007) cited in Kattara, Wehaba & El-‐Said (2008, p. 310) state, ‘customer satisfaction is a measure of how a product or service performs, compared to customer perceptions’. These definitions follow the hypothesis that a customer who is satisfied with the delivery of a [high quality] service is more likely to be loyal to a service provider. 2.6 Customer Perceptions of Service Value Organisations need to identify which aspects of their offerings, deliver value to the customer, however as Zeithaml, Bitner & Gremler (2009, p. 524) identify, ‘what constitutes value, even in a single service category, appears to be highly personal and idiosyncratic’. Customers define value in four discrete ways (see figure 2.3), and are encapsulated in one definition by Zeithaml, Bitner & Gremler (2009, p. 528): ‘perceived value is the consumers overall assessment of the utility of a service based on perceptions of what is received and what is given’. Figure 2.3: The four customer definitions of value Page | 19

Adapted from Zeithaml, Bitner & Gremler, 2009, p. 525) Roig, Garcia & Tena (2006, p. 776) evaluates the ‘what is received’ element as the economic, social and relational aspects, whilst the ‘what is given’ include the price, time, effort, risk and convenience of the service. Consequently, the hypothesis leading from the discussion is that service value can be considered to involve a trade off between a customer’s evaluation of the benefits of using a service and its cost (Bolton & Drew, 1991, p. 375). Therefore a successful organisation is one which takes into account how its customers value the service offering and is prepared to adapt its operations to reflect customer requirements, as Gronroos (2010, p. 75) highlights, ‘the competitive advantage of a firm is said to depend on the quality, and value, of its goods and services’. 2.7 Service Quality Measurement Given the emphasis on service quality as an antecedent of customer satisfaction (and consequently customer satisfaction as an antecedent to retention) two main instruments constantly emerging when reviewing literature in measuring service quality was the SERVQUAL and SERVPERF instruments. 2.7.1 SERVQUAL Instrument Within service quality literature, the most prolifically cited academics are Parasuraman, Zeithaml & Berry who published in 1988 their 22-‐item instrument for assessing customer Page | 20

perceptions and expectations of service quality in service and retail organisations; as Parasurman, Zeithaml & Berry (1991, p. 445) informs, ‘The purpose of SERVQUAL is to serve as a diagnostic methodology for uncovering broad areas of a company’s service shortfalls and strengths’. See figure 2.4 for their conceptual model presenting the determinants of perceived service quality. Figure 2.4. Determinants of perceived service quality .

Adapted from Parasurman, Zeithaml and Berry (1988, p. 23) SERVQUAL involves the subtraction from the customer’s expectations of service delivered with the perceptions of the service quality, and as Parasurman, Zeithaml & Berry (1988, p. 30) explain, can be used to ‘better understand the service expectations and perceptions of consumers and, as a result, improve service’. Emerging from this pioneering research, were dimensions of service, (see table 2.1) which consumers use in forming expectations and perceptions of services, which highlights a set of five integral quality indicators that can be used to assess the nature of service quality in a given organisation. Table 2.1: The five dimensions of SERVQUAL Tangibles

Physical facilities, equipment, and appearance of personnel. Page | 21

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, individualised attention the firm provides its customers.

Parasurman, Zeithaml and Berry (1988, p. 23) 2.7.2 SERVPERF Instrument The SERVPERF instrument was developed by Cronin & Taylor (1992) however this used the same five dimensions of service and 22-‐item scale as the one used in the SERVQUAL instrument. SERVPERF measures perception scores only (see figure 2.5) and therefore reduced the number of questions by half as Parasurman, Zeithaml & Berry (1991, p. 443) admits ‘From a practical standpoint ... the two parts of SERVQUAL may seem repetitive to some respondents and does increase the questionnaire’s length’. One of the main observations recognised as a result of their research was that ‘service quality should be measured as an attitude’ (Cronin & Taylor, 1992, p. 64). Figure 2.5: SERVPERF -‐ Perception only model

Adapted from Cronin & Taylor (1992) Page | 22

2.8 Summary Emerging from the literature is that service quality and perceived customer value possess the strongest links towards retention than other antecedents. When considering the use of either the SERVQUAL or SERVPERF instruments to measure service quality, service providers are encouraged to identify those issues of service quality that are relevant to their specific environments and adjust the instrument to suit (Brown, Churchill & Peter, 1993, p. 137). Relationships identified in the literature and particularly the influence of SERVQUAL in shaping the survey will now be discussed in the methodology.

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Chapter 3 -‐ Methodology Methodology

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3.0 Introduction Having considered the importance of customer retention within previous chapters the aim of this chapter is to address key methodological issues used in this research project with a specific focus on questionnaire design, and execution of an online survey tool relating directly to the operations of Static Systems. It is the opinion of the senior management at SSG that contracts are primarily lost due to the poor performance of the services delivered by the Maintenance department. Therefore the immediate priority was focused towards the identification of strengths and shortfalls in delivered service quality as Landrum, Prybutok & Zhang (2007, p. 104) highlights, ‘service quality matters in every industry: all companies recognise its importance because it affects customer loyalty and satisfaction’. 3.1 Establishing a Sampling Frame Drawing from an accurate sample frame is essential so that collected data is representative of the customer base (Partington, 2003, p. 105; Hill, Brierley & MacDougall, 1999, p. 4). As the focus of the research was directed towards organisations possessing a SLA with Static Systems, the most important requirement was to establish the size of population and thus select an appropriate sample. In order to gather information relating to SLA customers and begin the process of constructing a database, it was necessary to draw upon secondary12 data from two principal sources, the SSG legacy IT system and the Maintenance office paper files. Due to the age of the IT system a ‘text’ file could only be produced and this was imported into an Excel worksheet; information contained within the worksheet included site name, equipment type and contract value. The paper files needed to be manually reviewed and information such as the number of times the SLA had been renewed were collated and input into the database. 12

Secondary data refers to data that has not been collected as part of that study (Horn 2010, p. 135). Page | 25

As of 4th January 2011, the database identified 239 customers possessing SLA’s with SSG. Given the sample size, it was considered viable to request primary data from the whole sample via an online survey, as Maylor & Blackmon (2005, p. 199) advise, ‘get as large a sample as you can within your time and cost constraints’. 3.2 Method of Data Collection As it is regular practice for SSG to communicate by email, an online web survey was deemed most appropriate as ‘these operate by inviting prospective respondents to visit a web page at which the questionnaire can be found and completed on-‐line’ (Bryman & Bell, 2007, p. 677). Two web hosts were reviewed, namely ‘Bristol Online Surveys (BOS)’ and ‘Google documents’; the latter was selected, principally due to the universal recognition and popularity of the Google brand. 3.3 Questionnaire Design The main aim of the questionnaire was to gain an understanding of customer requirements and their perceptions towards the service quality delivered by the Maintenance department. Questions regarding the notice period provided prior to attending the PPM, performance of how the PPM are performed and the knowledge possessed by the attending engineer were posed. Following a review of the contents of the Static Systems SLA, it was noted that operations regarding the breakdown service was also included and as consequence a number of questions were included with respect to these operations too. Previous surveys conducted by SSG had taken place in 2005 and 2009; the questionnaires are shown in Appendix B and C respectively. The 2005 survey, entitled ‘a customer satisfaction’ survey consisted of 15 questions and used a postal questionnaire as the instrument to gather data; 225 customers were sent the survey and a response rate of 32% was achieved. The 2009 survey instrument was also a questionnaire but was limited to Page | 26

seven ‘key questions’ and was an administered questionnaire. The 2009 survey received little internal support and only 17 customers were asked to participate. It is noted that the prominent focus of previous research concentrated on the activity of the planned preventative maintenance operations, although in the 2005 survey there were two questions that were not directly related with the on-‐site PPM function (see table 3.1). Table 3.1: Questions unrelated to the PPM function (SSG 2005 survey) Question 1

Static Systems Group gives me sufficient notice of Maintenance visits

Question 11

As a Maintenance Customer, I am satisfied with the response time of SSG Engineers, when I need an urgent service call.

Further consideration was given to other areas of the business that might need to engage with organisations possessing a SLA and several prominent areas were identified (see figure 3.1). Figure 3.1. Customer interfacing departments

Adapted from Gronroos (1984, p. 40) An example of this is a fire alarm system contained within a building; at some point during the life of the system (this is estimated to be 30-‐35 years) it would be likely that at least one room within the building would undergo a change of use. This change of use could be the

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conversion of an office into a kitchen and this would necessitate a heat detector being fitted (it is assumed that a smoke detector was fitted previously). As this change of use would require modifications to take place on the fire alarm system, a sales representative would need to be engaged in order to provide a quotation. If this work was ordered then the installation and commissioning department would attend the site and deal with the ordered changes. Consequently, measuring customer’s experiences of these activities is essential; this is because poor performance from these operations might negatively influence the customer’s decision to purchase either the initial or repeat purchase of the SLA. 3.3.1 The Structure of the Questionnaire Preliminary questionnaire design was influenced by the SERVQUAL and SERVPERF instruments, which have been used as a tool for measuring service quality, as Maylor & Blackmon (2005, p. 187) advises ‘you should consider using an existing survey and/or questions before you design your own’. Both instruments contained questions on the dimensions of service quality: tangibility, reliability, responsiveness, assurance and empathy as defined by Parasurman, Zeithaml & Berry (1988), where according to Bryman and Bell (2007, p. 144), ‘previous research have shown that these questions are reliable indicators for the dimensions of service quality’. During early discussions with the Academic Supervisor, the repetitive style of the questions in the SERVQUAL models were discussed, such as, ‘excellent telephone companies will give customers individual attention’ and ‘excellent telephone companies will have employees who give customers personal attention’ (Parasuraman, Zeithaml & Berry, 1991, p. 447). It was considered that this style of questioning would not reflect back to the previously described operations delivered by SSG, and would not satisfy the requirements of the research project, as Landrum, Prybutok & Zhang (2007, p. 110) advise, ‘using the right instrument to determine service quality helps management assess service performance. In order to assess customer perceptions of service performance, the researcher elected to frame his own questions, however these did relate to the dimensions of service quality as defined by Parasurman, Zeithaml & Berry (1988). The final questionnaire was divided into Page | 28

eight sections (see table 3.2) with sections one to four focusing towards planned and reactive maintenance. The purpose of these questions was to identify customer attitudes towards the service quality of the operations outlined within the SLA. Section five and six considered other areas of the business (see figure 3.1) that might influence repeat purchase of the SLA and included questions such as, ‘where quotations are requested, the time taken for the supply of these is’ and ‘when I place an order, the process of supply, install and commission I would describe as’. The purpose of these questions was to establish customer perceptions of performance within these other areas; the results of which could considerably affect the hypothesis of Senior Management and provide an alternative area to research. Table 3.2: Sections contained within the final questionnaire Section 1

Notice & Attendance for your Planned Preventative Maintenance (PPM) visit

Section 2

Planned Preventative Maintenance (PPM)

Section 3

Call-‐outs and Breakdown

Section 4

Site Personnel

Section 5

Spares

Section 6

Modifications or additions to your System

Section 7

Economic Impact

Section 8

Static Systems Overall Service Quality

In particular, section seven and eight focused on the economic climate and overall perceptions of service quality and asked questions such as, ‘have you considered in the last year identifying another service provider’, and ‘how likely is it that you would recommend Static Systems as a systems provider to others’. An understanding of the overall perceptions towards SSG and its business would help to establish a holistic view held by customers possessing a SLA. After each section a text box (see figure 3.2) was provided to give the respondent the opportunity to fully express their views.

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Figure 3.2: Screen shot from spares section extracted from the web survey

In order to maximise the response rate it was considered that questionnaire design should allow for anonymous feedback. In line with the Market Research Society code of conduct (2006) guidance cited in Bryman & Bell (2007, p. 139), should the participant submit contact details, these would be used only for what was outlined in the covering request for information. 3.3.2 Pilot Study A review of the literature on research methodology advises pilot testing the survey before using it to collect data, so as to identify problems with questions, instructions or survey design (Saunders, Lewis & Thornhill, 2009, p. 394; Bryman & Bell, 2007, p. 273; Maylor & Blackmon , 2007, p. 194). The questionnaire was initially proof read by the Quality Manager at SSG and a review of the questions was undertaken by a customer known to the researcher. The feedback received confirmed the suspicion held that the questionnaire was too long and that some of the Page | 30

questions were repetitive in manner; this highlights the simple observation made by Maylor & Blackmon (p. 187) that ‘If you want people to fill out a questionnaire, it needs to be short and clear’. 3.3.3 Request for Participation ‘Response rate creates a big headache for students and their supervisors ... even legally required surveys such as the National Census don’t achieve a 100 percent return rate’, Maylor & Blackmon (2005, p. 198). Therefore in order to gain the highest possible response rate several discrete strategic decisions were made: emails requesting participation were sent from a SSG corporate account, and included a letter (see Appendix E) detailing ethical considerations and an explanation of the survey intent. It was hoped that the customer may consider that participation was self-‐serving. Each request for participation (see Appendix D) was individually personalised with the customer’s name, and the type of system that was maintained under the SLA. In order to incentivise the response rate, an iPod touch or a donation of £150.00 to a charity of choice was offered as inducement to complete the questionnaire. With regard to the ethical consideration of an inducement, it was decided that this placed the responsibility on the participant to ensure that accepting such gifts did not breach the ethical code of their own organisation. The process of personalising 239 emails took approximately 2.5 hours and it was therefore disappointing that 42 email addresses (18%) were returned as undelivered, because the recipient was not recognised. Two problems were identified: out-‐of-‐date records and misspelt email addresses contained within the SSG database which highlights an issue of integrity of secondary data. Consequently a number of telephones calls were made to obtain correct email addresses. A feature of the web survey host was that response rates were tracked automatically and a after two weeks a follow up email was sent to the sample of customers who had not participated (Maylor and Blackmon, 2007, p. 194; Saunders, Lewis & Thornhill, 2009, p. 398). Page | 31

3.4 Data Process and Analysis On the 14th March 2011, having adopted a multi-‐wave strategy, the web survey was closed. From a sampling frame of 238 there were 61 respondents (see figure 3.3) which equates to a response rate of 26%. Figure 3.3: Sampling Frame versus Respondents .

Sampling Frame

Respondents 26%

100%

n=238

In order to verify that the sample was representative, the data was collated within a contingency table (see table 3.3) and a one sample Chi-‐Squared test conducted in order to identify any differences between categories. In doing so, an expected response rate of 25.6% was first calculated, and then rounded to meet the conditions of a chi-‐square test (see table 3.4). Table 3.3: Contingency table showing the observed and expected frequencies of sizes (£) of SLA. Category

Up to £5,000

Between £5,000 &

Above £25,000

£25,000 Sampling Frame

147

Response Rate

25.6%

Expected freq. (E)

Observed freq. (O)

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See Figure 3.4 below illustrating the distribution of size (£) of SLA by sampling frame and sample. Figure 3.4: The distribution of size (£) of SLA by Sampling Frame & Sample .

above £25k between £5k & £25k up to £5k

n=238 / 61

100

120

140

160

up to £5k

between £5k & £25k

above £25k

Sampling Frame

147

Sample

At the 0.05 significance level, the tabulated x2 statistic with two degrees of freedom is 5.99. As the calculated value is 1.63 and therefore less than the tabulated value (see table 3.4) it can be concluded that there is no significant difference in the size (£) of SLA and the sample which indicates that the sample obtained is representative. Table 3.4 : The calculation of the Chi-‐Squared statistic .

Category

(O-‐E)

(O-‐E)2

(O-‐E)2/ E

Up to £5K

0.000

Between £5K and £25K

-‐3

0.474

Above £25K

0.800

x2 =

1.274

df =

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Submissions were exported from the web host and merged with the database (see Appendix F which lists the variables contained within the database). SPSS13 was used to produce descriptive statistics for variables such as response times, economic impact and performance ratings. An initial review of the responses highlighted that answers had not been recorded in all fields by all customers on the completed questionnaire. It is possible that omissions might have occurred, because there are questions related to several aspects of SSG’s operations that some SLA customers had never needed and therefore were unable to comment e.g. sections relating to attendance for breakdowns, and modifications on systems. 3.5 Research Limitations Requests for participation were sent to all organisations that possessed a SLA with Static Systems as of 4th January 2011. Un-‐retained SLA customers from a previous period or customers who had never entered into a SLA were not asked to participate. Having selected a web based survey, it is acknowledged that there was a small risk of multiple anonymous replies by a customer as Bryman and Bell (2007, p. 681) caution, ‘with web surveys, there is a risk that some people may mischievously compete the questionnaire more than once’. In order to mitigate this risk, the site name was made a required field so that these names could be cross referenced with the database. Two independent factors were identified following requests for participation, namely: IT restrictions governing organisations internet use and a concern that participation would not contribute to improving service quality delivered by SSG. With regard to the former, one customer advised that their own IT security network would not allow access to the web host whilst the latter was identified when a customer was telephoned to ask them to participate. Due to the fact that the email mentioned an association with a university course, it had been considered that results coming from the research would not be used to actually improve the service of SSG. Advertising this association was deemed ethically important as Bryman & Bell (2007, p. 137) highlight, ‘prospective research participants should be given as 13

www.spss.com/uk/ Page | 34

much information as might be needed to make an informed decision about whether or not they wish to participate in a study’. It is unknown how many other customers did not respond due to these points. Should a similar project be undertaken again then an accompanying word document would be initially sent together with a link to an alternate web host. 3.6 Ethical Considerations An ethics review form was completed, submitted and approved prior to the collection of primary data (see Appendix A). The main consideration when following the ethical code is that nobody is actually or potentially harmed as a result of the research (Bryman & Bell, 2007,

133;

Maylor

and

Page | 35

Blackmon,

2005,

280).

Chapter 4 -‐ Findings and Analysis Findings and Analysis

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4.0 Introduction Within the previous chapter key methodological and practical issues relating to data collection were discussed. To aid analysis the results sections will be broken down into three key service priority areas, namely: 1) Services outlined and performed within the SLA; 2) Aspects of service un-‐associated with the SLA; 3) Economic impact and overall attitudes to SSG. Figure: 4.1: The three key service priority areas .

These key sections reflect not only the structure of the questionnaire survey, but also reflect key areas of focus for SSG. Service quality and perceived value play an important role within this discussion. A brief summary will follow each section, whilst an overall summary of the findings and analysis will conclude the chapter.

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4.1. Service Priority Area 1 -‐ Services Outlined within the SLA This section will detail the results of the questionnaire survey which were with regard to the service quality of the operations as outlined within the SLA. In order to aid analysis this section has been broken down into three further sub-‐sections which reflect the formation of the questionnaire survey and highlight customer attitudes towards the SLA operations, these are, namely: 1) Maintenance & Service office employee performance; 2) Site personnel performance including their interactions; 3) Breakdowns charges. 4.1.1 Maintenance & Service office employee performance Custom and practice dictate that a reasonable notice is provided prior to attending customers’ premises (see figure 4.2), and engineers should not (be simply despatched and) arrive unannounced. When customers were asked about their perceptions towards the notice period provided prior to the planned preventative maintenance (PPM) visit (see figure 4.2), 23% rated the notice provided as above expectations and excellent, as one respondent commented “they contact me in advance to check when they can come on site and always arrive on time”. Disappointingly, 13% thought that the notice provided was below expectations or poor with one respondent commenting “on occasions we receive a phone call arranging a visit, other times the engineers turn up unannounced”. Figure 4.2: Perceptions towards notice period provided prior to the PPM visit .

Excellent Above Expectasons Acceptable Below Expectasons Poor 0%

10%

n=61 Poor

20%

30%

40%

50%

Below Above Acceptable Expectasons Expectasons

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60%

70%

Excellent

When customers were asked to submit the number of working days (see figure 4.3), 36.2% indicated they would prefer at least 4-‐6 working days notice, whilst 37.9% preferred at least 7-‐10 working days notice, the mean number of working days was nine. It is evident that on occasions the notice of attendance is inadequate and the maintenance office should be aiming to provide at least nine working days notice, as one customer commented “Much notice is preferred so that end users could be informed”. Figure 4.3: Notice period preferred prior to PPM .

15.5%

10.3%

1-‐3 days 4-‐6 days 7-‐10 days 36.2%

More than 10 days

37.9% n=58

An important dimension of service quality is the responsiveness to customer requests. Following the completion of the inspection and service visit, there are occasions when remedial works are identified either requiring additional information or quotations to be sent to the customer: for instance it might be identified that batteries14 contained within the fire alarm panel are recommended for replacement. In total (see figure 4.4), 20% rated the time taken to attend to provide additional information or quotes as above expectations and excellent, however 22% considered the time taken to be below expectations or poor. As one respondent commented “Remedial actions not addressed following PPM”, this clearly highlights (a concern) that issues identified are not followed through by the maintenance office. 14

In relation to Fire Alarm systems, battery back-‐up is a requirement laid out in of the British Standards in case of electrical power failure. Page | 39

Figure 4.4: Perceptions towards the time taken for additional information or quotes to be supplied Excellent Above Expectasons Acceptable Below Expectasons Poor 0%

10%

n=59 Poor

20%

30%

40%

50%

Below Above Acceptable Expectasons Expectasons

60%

70%

Excellent

Due to the critical level of importance associated with Fire Alarm, Cardiac Arrest and Custodial systems, response to breakdowns (see figure 4.5) is a critical feature of the SLA, in total 33% rated the response time to an urgent breakdown as above expectations and excellent however 10% of customers considered the response time to an urgent breakdown to be below expectations or poor. Figure 4.5: Perceptions towards the response time to urgent breakdowns .

Excellent Above Expectasons Acceptable Below Expectasons Poor 0%

10%

n=57 Poor

20%

30%

40%

Below Above Acceptable Expectasons Expectasons

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50%

60%

Excellent

In order to gain an insight into the actual response time preferred, customers were asked to submit a response time (in hours) they would ideally like guaranteed (see figure 4.6), overall 85% of customers indicated that they would like a guaranteed response of 12 hours or less, more significantly though 56% stated that they would prefer a 4 hour response or less. Only 15% of customers indicated that a response time of more than 12 hours would be acceptable. Figure 4.6: Response time (in hours) that customers would like guaranteed .

60%

n=61

50% 40% 30% 20% 10% 0% Percentage

1 hour

2 hour

4 hour

8 hour

12 hour

24 hour

48 hour

49%

26%

10%

Given that SSG currently only offer a guaranteed response (time) of 24 hours there is an immediate gap emerging in relation to a key element of service delivery. More significantly a quick response time appears to be regarded as a core service priority. When asked if they would be willing to pay a higher premium for a quicker response (see figure 4.7), overall 36% stated they would, however 64% stated they would not. Figure 4.7: Customer attitudes towards paying a premium for a quicker response .

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n=55

36%

Yes No 64%

How service providers communicate with customers is of the upmost importance, in total (see figure 4.8), 28% rated the communication from the maintenance office as above expectations or excellent. Disappointingly 14% thought this was either below expectations or poor and as one respondent commented, “work arranged to be carried out during service visit is seldom carried out; it would appear that communication is lacking between sections”. Figure 4.8: Perceptions towards the overall communication from the maintenance office .

Excellent Acceptable Poor 0%

10%

n=61 Poor Percentage

20%

30%

40%

50%

60%

Below Expectasons

Acceptable

Above Expectasons

Excellent

59%

23%

70%

When customers were asked about their perceptions towards the communication from the breakdown office (see figure 4.9), 41% rated this as above expectations and excellent, one customer commented “All communications are dealt with quickly and professionally”. In total only 7% considered the communication to be either below expectations or poor, as one customer commented “I requested to be informed prior to the visit, of the time and date of the visit. This was not done”.

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Figure 4.9: Perceptions towards the communication from the breakdown office .

Excellent Above Expectasons Acceptable Below Expectasons Poor 0%

10%

n=57

Poor

Percentage

20%

30%

40%

50%

Below Above Acceptable Expectasons Expectasons 5%

53%

60%

Excellent

32%

4.1.2 Site Personnel Performance including their Interactions The appearance (tangibles) of site engineers and SSG documentation e.g. work sheets etc, are an important aspect of service quality as they portray to the customer an image of the organisation, as Hu, Kandampully & Juwaheer (2009, p. 121) highlights, ‘a favourable image can positively affect repeat patronage’. When customers were asked for their perceptions on the appearance of site personnel (see figure 4.10), 50% considered personnel presentation to be above expectations and excellent, 48% considered it to be acceptable and only 3% considered the presentation of site staff to be below expectations. Figure 4.10: Perceptions towards the presentation of site personnel .

Excellent Above Expectasons Acceptable Below Expectasons Poor 0%

10%

20%

30%

40%

50%

n=61 Poor

Below Above Acceptable Expectasons Expectasons

Excellent

Turning towards the quality of the maintenance reports and electronic documents (see figure 4.11), in total 25% rated these as above expectations and excellent, as one

Page | 43

respondent commented “I have marked excellent as following my last PPM I was sent the report electronically which was extremely useful. However, it is the first electronic report I have received in seven years”. The latter statement reflects improvements made within the maintenance department during 2010 when electronic reports were introduced in support to paper documentation. Disappointingly, 18% of customer rated the maintenance reports and electronic documents as either below expectations or poor and indicates that further improvements are required, as one customer commented “we tend to receive very poor carbon copies which cannot be read clearly”. Figure 4.11: Perceptions towards the maintenance reports and electronic documents .

Excellent Above Expectasons Acceptable Below Expectasons Poor 0%

10%

n=60

Poor

Percentage

20%

30%

40%

Below Above Acceptable Expectasons Expectasons 15%

57%

50%

60%

Excellent

17%

The knowledge (assurance) of engineers on SSG products and services, or at least appearance of knowledge would provide a customer with confidence in the engineer’s ability to perform the tasks required. In total (see figure 4.12), 57% of customers considered the knowledge of the site engineers to be above expectations or excellent whilst 40% rated this as acceptable and above, as one customer commented “We have good feedback from all of the Static Engineers which is extremely important”. Pleasantly, only 4% of customer considered the knowledge of site personnel to be either below expectations or poor, as one customer highlights “Depends which engineer is sent some are excellent some are poor”; this comment does indicate a training gap as engineers skill levels can and do differ. Figure 4.12: Perceptions towards the knowledge of the site engineers .

Page | 44

Excellent Above Expectasons Acceptable Below Expectasons Poor 0%

10%

n=60

Poor

Percentage

15%

20%

25%

30%

35%

Below Above Acceptable Expectasons Expectasons 2%

40%

45%

Excellent

37%

20%

When considering the standard (reliability) that the PPM is carried out (see figure 4.13), 41% rated this as either above expectations or excellent, whilst 56% rated it as acceptable. As one respondent acknowledges “Initially the maintenance was not carried out to an acceptable standard”. In total only 3% thought that the standard was below expectations.

Figure 4.13: Perceptions towards the standard of PPM .

Excellent Above Expectasons Acceptable Below Expectasons Poor 0

0.1

0.2

0.3

0.4

0.5

0.6

n=61 Poor

Below Above Acceptable Expectasons Expectasons

Excellent

When attending to breakdowns, there are many diagnostic approaches that engineers can draw upon in order to identify equipment failure. On occasions, the diagnosis of faults can prove to be difficult and may result in the engineer being unable to identify a specific problem with a system on his/her first visit to site therefore fault rectification is an important element of service delivery (see figure 4.14). In total, 44% considered this to be above expectations or excellent, as one customer commented “faults rectified most times on first visit”, whilst 11% rated this as either below expectations or poor, as one customer

Page | 45

commented “very hit & miss”. The latter comments escalates the concern that a training gap exists, as engineers abilities differ.

Figure 4.14: ability of engineers to rectify faults first time or in a short space of time .

Excellent Above Expectasons Acceptable Below Expectasons Poor 0%

10%

n=59

20%

30%

40%

Below Above Acceptable Expectasons Expectasons

Poor

50%

Excellent

4.1.3 Charges Associated with the Breakdown Sending an engineer to customer’s premises has a real cost associated with the journey time and number of miles driven, together with the time spent on site. Given that SSG do not have engineers based all over the UK, travel and mileage charges can be looked at by some customers as excessive. When customers were asked if they considered the charges associated with the breakdown to be reasonable (see 4.15), 14% of customers either agreed or strongly agreed, but rather disappointedly 30% of customers either disagreed or strongly disagreed; customer comments include: “Mileage charges are unacceptable” and “travelling time costs to and from site are sometimes equal or greater than repair costs”. How customers value the overall breakdown service is of great importance, especially as earlier results indicate that response to a breakdown is a core service priority and requires improving. The results indicate a further gap emerging with respect to the perceived high charges associated with the breakdown, of significance this gap appears to be directed towards the travel and mileage charges. Figure 4.15: Perceptions towards breakdown charges .

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60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% n=57

Percentage

Strongly Disagree

Disagree

Neither Agree or Disagree

Agree

Stongly Agree

14.0%

15.8%

56.1%

10.5%

3.5%

4.1.4 Section Summary Analysis of the operations as outlined within the SLA has identified several important strengths and shortfalls in service quality; see table 4.1 for the full results of these questions. Through the calculation of a gap score, this has allowed those aspects of service possessing the largest gaps to be identified. Despite many areas possessing a reasonably small gap (such as: knowledge of engineer, standard of PPM, appearance of personnel) it is of concern that aspects identified as being a key service priority, namely: guaranteed breakdown response and associated costs appear to fall short of customer requirements.

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4.2 Service Priority Area 2 -‐ Aspects of Services Un-‐Associated with the SLA With regard to the second service priority area, discrete aspects of the overall services provided by SSG which were not associated with the SLA will be presented; a discussion shall be based around two further service areas that have not previously been researched, namely: charges for spares and attitudes towards modifications & additions. 4.2.1 Charges for Spares It is likely that during the term of a SLA, components associated with the systems will require replacement e.g. smoke detectors will commonly become contaminated, and plug-‐ in ‘hand units’, an integral part of the health care systems will receive damage: both will require replacement. In total 60.3% of customers held no opinion as to whether spares purchased from SSG were reasonably priced (see figure 4.16), significantly 29.3% either disagreed or strongly disagreed. Customers comments include: “Spares appear to be expensive.”, “too expensive and long delivery times” and “I find spares in general from Static Systems to be on the expensive side”. An immediate gap emerging is that customers perceive charges for spares to be set too high. Figure 4.16: Customer attitude towards Spares being reasonably priced .

70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% n=58 Percentage

Strongly Disagree

Disagree

Neither Agree or Disagree

Agree

10.3%

19.0%

60.3%

10.3%

Page | 49

Stongly Agree

4.2.2 Attitudes towards Modifications and/or Additions During the life of a system it is likely that at some point the customer would require some modifications or additions to their systems. In total (see figure 4.17), 15% rated the time taken to make contact as above expectations or excellent, but 27% rated this as either below expectations or poor. Figure 4.17: Customer response towards time taken for an appropriate person to make contact for modifications required on the system .

Excellent Above Expectasons Acceptable Below Expectasons Poor 0%

10%

n=57 Poor

20%

30%

40%

50%

60%

70%

Below Above Acceptable Excellent Expectasons Expectasons

When asked of their perceptions towards the time taken for the supply of quotations (see figure 4.18), only 11% of customers rated this as above expectations or excellent, whilst 26% of customer rated this as either below expectations or poor. As one customer commented “without a quote, I'm never going to get a P.O. to enable me to order the equipment, and if the person who said they would provide the quote, won't respond to my emails or telephone messages, it gets quite frustrating”, the comment will be of great concern to SSG senior management. Page | 50

Figure 4.18: Customer attitude towards the time taken for the supply of quotations .

Excellent Above Expectasons Acceptable Below Expectasons Poor 0%

10%

n=58 Poor

20%

30%

40%

50%

60%

70%

Below Above Acceptable Excellent Expectasons Expectasons

When customers were asked about their perceptions towards process of supply, install and commission (see figure 4.19), 15% of customer rated this as either above expectations or excellent, however 30% of customers considered the process to be either below expectations or poor. Customer’s comments include “Has recently taken along time to get commissioning on site via a main Contractor” and “The cost of providing simple modifictions appears excessive”. Figure 4.19: Customer perceptions towards the process of supply, install and commission .

Excellent Above Expectasons Acceptable Below Expectasons Poor 0%

10%

n=57 Poor

20%

30%

40%

Below Above Acceptable Expectasons Expectasons

Page | 51

50%

Excellent

60%

4.2.3 Section Summary The area of the business that handles modifications and additions is financially lucrative and when customers invite SSG to make contact to discuss modifications, this is an early indication that the customer intend to spend a portion of their budget with SSG. Therefore it is of commercial importance, especially during these poor economic trading times that every enquiry is attended too promptly and the task of actually installing and testing equipment is carried out efficiently. A review of the results (see table 4.2) indicates that customers regard this as a core service priority, and that the large service gaps emerging from these aspects of service performance must indicate a major shortfall in service quality.

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4.3 Service Priority Area 3 -‐ Economic Impact and Overall attitude to Static Systems Static Systems conducts business primarily focused towards government institutions where government spending cuts are widely publicised in the media (Wilson, 2011). Given the poor economic climate pressures on senior management of has resulted in the redundancy programmes, it was considered necessary to ask customers key questions on the economic impact and overall attitudes towards SSG. 4.3.1 Economic Impact Customers were asked if they had considered (in the last year) identifying another service provider (see figure 4.20), in total 62.7% had declared they had not, whilst 37% stated they actually had, as one customer commented, “Static Systems are generally perceived within my field of experience to be expensive particularly for modifications to fire alarm and nurse call systems”. Figure 4.20: Customer attitude towards identifying another service provider .

37.3

Yes No 62.7 n=59

In order to establish why customers had considered identifying another service provider, they were asked to provide reasons for this (see figure 4.21) and multiple selections were allowed. Of the 22 respondents, 14 customers selected ‘costs of services’, 9 selected ‘poor

Page | 53

service delivered’ whilst only 7 selected ‘budgetary restrictions’ were the reasons. As one customer commented “What static gain in high margins they lose more in custom. I have recently had a contractor install an additional smoke detector for the equivalent price Static would have charged to commission alone”. It is unfortunate that though poor service delivery and [high] costs are being cited as reasons for looking for another service provider, additional data required to identify specific areas is not available due to the limitations of the questionnaire.

Figure 4.21: Customer reasons for looking for another service provider .

Poor Service Delivered Budgetry Restricsons Costs

7 n=22

When assessing if value for money has been provided (see figure 4.22), customers will consider the costs of services and the performance of services delivered, as Tam (2004, p. 900) explains, ‘Price is often used as the key measure to represent what customers have to sacrifice to obtain the service’. In total, 16% agreed that Static Systems provides value for money, as one customer commented “Static systems are deemed to be expensive but the quality is excellent”. In contrast 25% of customers disagreed that SSG provided value for money, as one customer commented “Install costs are very high”. Page | 54

Figure 4.22: Customer attitude towards Static Systems providing value for money .

70% 60% 50% 40% 30% 20% 10% 0% n=58

Percentage

Strongly Disagree

Disagree

Neither Agree or Disagree

Agree

16%

60%

16%

Stongly Agree

4.3.2 Overall attitude to Static Systems In order to assess the overall perception of SSG responsiveness, a question was posed which encompassed the complete SSG service quality (see figure 4.23), 43% of customers surprisingly agreed with this statement whilst 18% either disagreed or strongly disagreed. Despite the identification of other gaps relating to the responsiveness, e.g. time taken for making contact and the supply of quotations, customers appeared to not let these areas negatively influence their overall attitude. Figure 4.23: Customer attitude towards Static Systems promises .

50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% n=60

Percentage

Strongly Disagree

Disagree

Neither Agree or Disagree

Agree

15%

38%

43%

Page | 55

Stongly Agree

When customers were asked to comment on the likelihood of recommending Static Systems as a systems provider to others (see figure 4.24), 50% stated that it was either likely or very likely that they would recommend SSG to others, but 20% stated it was either unlikely or very unlikely. Figure 4.24: Customer attitude towards likelihood of recommending Static Systems as a systems provider to others .

45% 40% 35% 30% 25% 20% 15% 10% 5% 0% n=60

Very Unlikely

Unlikely

Neither Liekly or Unlikely

Likely

Very Likely

Percentage

13%

30%

38%

12%

A question referring to the overall service delivered by Static Systems was included in order to assess customer perceptions (see figure 4.25). In total, 16% rated this as either below expectations or poor, however 46% rated this as either above expectations or excellent. Figure 4.25: Customer attitude towards the OVERALL service delivered by Static Systems .

Excellent Above Expectasons Acceptable Below Expectasons Poor 0%

10%

15%

20%

25%

30%

35%

40%

45%

n=61

Poor

Below Above Acceptable Expectasons Expectasons

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Excellent

4.3.3 Section Summary The questions asked within this section were intended to provide an overall view of SSG from the perspective of the customer. The results indicate (see table 4.3) that despite significant gaps in the priority areas of costs and value for money; these aspects of service were not excessive enough to create a large gap with respect to affecting the likelihood of recommending SSG or overall service delivery.

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4.4 Company profiling The on-‐line questionnaire was directed towards the existing base of SLA customers possessing a contract at the beginning of 2011. It was therefore important that a broad spectrum of these customers responded as had all respondents been found to be loyal advocates of SSG then it is likely that the results would have provided an inaccurate view of the SSG service. In terms of number of respondents that had repeatedly renewed the SLA (see figure 4.26), 75.4% had renewed their contract more than 4 times and were in the 5th year of the B2B relationship. Encouragingly 13.1% were new customers, having entered into a SLA for the first time whilst 11.5% had renewed between 1 and 3 times; this therefore alleviates some concerns of bias. Fig 4.26: Percentage distribution of number of yearly renewals . .

8.2%

13.1%

27.9%

11.5%

New contracts Renewed between 1 -‐ 3 smes Renewed between 4 -‐ 6 smes Renewed between 7 -‐ 9 smes Renewed 10 or more smes

n=61

39.3%

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4.5 Conclusion An initial review of the results has highlighted a number of service quality shortfalls; these shall be discussed in the final chapter and include a series of recommendations for improvement. Continually emerging from the discussion is the constant theme of perceived high charges of services however due to the survey limitations some detailed data is lacking. The results of the survey indicate for instance that customers consider the charges for spares and breakdowns to be high however how customers perceive the charges for modifications and additions or the PPM itself is unknown.

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Chapter 5 -‐ Conclusions and Recommendations Conclusions and Recommendations

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5.0 Introduction The intention of this final chapter is to review the original aims and objectives which were focused towards the identification of service quality strengths and shortfalls and the degree to which this has been achieved. This discussion shall concentrate on those key service priority areas which the results identify as possessing the largest service gaps; a series of recommendations shall be made to improve the service quality and provide a direction for future research. 5.1 Aims and Objectives: An Overview The senior management of Static Systems was concerned that poor service quality delivered with respect to the planned preventative maintenance were the reasons for losing 34 contracts in 2010. A review of the literature identified retention having empirically proven links with both satisfaction and service quality; the latter having the strongest link (Venetis & Ghauri, 2004, p. 1583). The immediate priority was to elicit responses from customers focused towards the services outlined within the SLA. However the researcher considered it essential that additional questions, which took into account service quality delivered by other areas of the business were posed and customer perceptions on these were recorded. The reasoning behind this was the likelihood that during the life cycle of systems, customers would interface with other parts of the business e.g. modifications and additions for example were very likely to take place. The hypothesis coming from this discussion is that issues of service quality in these areas could be the cause for SLA attrition. Page | 61

5.2 Implications of Findings A review of the results highlighted that aspects of service delivery were falling short of customer requirements from all three key service priority areas. 5.2.1 Service Priority Area 1 -‐ Services Outlined within the SLA In connection with the services outlined and performed within the SLA, the results highlight six prominent aspects where a shortfall in service quality emerges (see figure 5.1). Figure 5.1: Service quality shortfalls -‐ Service priority area 1 .

2.26

Q17. Costs associated with the breakdown Q10. Time taken for the supply of quotasons or addisonal informason following the PPM

2.03

Q5. Nosce provided prior to a maintenance visit

1.9

Q11. Quality of maintenance reports and electronic documents following the PPM

1.88

Q7. Rasng of communicason with the Maintenance oﬃce

1.87 1.7

Q13. Response sme to an urgent breakdown. Gap Score 0

0.5

1.5

2.5

A review of the most significant gap within this priority area, namely: the charges associated with the breakdown, highlights that this aspect actually possessed the second largest gap overall from all three service priority areas. Examining aspects of breakdown charges identifies the SSG travel charges for SLA customers as of 18th April 2011 was £33.00 per hour, whilst for non-‐SLA customers was £33.25. Given that the difference is miniscule, this could indicate why SLA customers consider charges associated with the breakdown to be high. Page | 62

5.2.2 Service Priority Area 2 -‐ Aspects of Services Un-‐Associated with the SLA When reviewing those aspects of services un-‐associated with the SLA, significant gaps emerge from within this service priority area (see figure 5.2); the largest of is with respect to the charges associated with spares. Figure 5.2: Service quality shortfalls -‐ Service priority 2

2.29

Q23. Costs associated with spares Q26. Time taken for the supply of quotasons for modiﬁcasons and/or addisons

2.21

Q27. The process of supply, install, test & commission

2.14

Q25. Time taken for an appropriate person to avend site to discuss modiﬁcasons Gap Score 2

2.12 2.05

2.1

2.15

2.2

2.25

2.3

All customers that enter into a SLA agreement benefit from a discount of 15% on SSG list prices for all equipment. One of the commonest items ordered with respect to fire alarm systems are smoke detectors. A review of charges of an Apollo15 ‘Xp95 Optical Smoke detector’ from SSG identified the cost to be £24.04 (this takes into account the 15% discount). A quotation from a high street wholesaler (CEF16 -‐ Stock Code: 1035-‐4279) was provided on the 3rd May 2011 was £27.79 for one unit and £25.86 for 10 units. This illustrates that certainly on smoke detectors SSG is competitive, however a full spares review should be undertaken; if SSG is found to have high spares charges then this could influence re-‐purchase behaviour. Results show that customer perceptions concerning their experiences when arranging modifications and additions, from the initial request for an appropriate person to make contact all the way through to the installation and final commission highlights significant gaps in service quality. 15

http://www.apollo-‐fire.co.uk/ http://www.cef.co.uk/

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5.2.3 Service Priority Area 3 -‐ Economic Impact and Overall attitude to Static Systems When considering the economic impact and overall attitude to Static Systems, emerging from this final service priority area was a significant gap (2.17) in relation to customers considering the overall value for money. The economic climate has undoubtedly had an effect on the budgets of organisations that Static Systems conducts business with, as these are principally government funded bodies such as the Ministry of Justice and NHS trusts. A limitation identified with the survey is that it is unclear how price affected the decision making process for customers; especially when renewing contracts on life safety systems, as Naumann, Williams & Khan conclude following their own empirical research on customer satisfaction and loyalty in B2B services that ‘when lost business customers are asked why they defected, the most common reason stated is better price’. Analysis of the findings did identify that 37% of customers had looked for another service provider in the last twelve months. It has been considered that some SLA clients might feel ‘locked’ in to Static Systems and feel that they have no real choice, but to continue the relationship, as Venetis & Ghauri (2004, p. 1583) highlight, ‘the investments made in the relationship can be so high or the quality of the available alternatives so bad that a party is willing to continue the relationship despite deteriorating satisfaction’. 5.3 Summary Analysis of the returned data identified two significant areas for review and improvement, these are namely: general charges for services and operations relating to modification and additions of systems. When considering the gap in connection with Static Systems providing value for money, it is not known the extent that these aspects have contributed to the gap. Analysis of the results identify that certain questions have been phrased badly, including the question relating to quotations or additional information following the PPM. Important questions have also been omitted which in hindsight should have been asked e.g. customer perceptions of SLA charges; it is recommended that any subsequent research includes these. Page | 64

5.4 Recommendations and Future Research It is clear from a thorough analysis of the findings that Static Systems would benefit from a more in-‐depth examination into several key areas: 1) Should senior management wish to expand on the empirical research conducted within this paper, it is suggested that qualitative research is undertaken in order to identify the reasons for the attrition of the SLA’s as Palmer (2009, p. 161) highlights, ‘face-‐to-‐face depth interviews are used, particularly in business to business research’. This would involve a programme of detailed interviews with both retained and un-‐retained customers. 2) It is recommended that an immediate review of the processes in how customer enquiries for modifications and additions are handled as the emerging service gaps appear to indicate a significant shortfall in service quality; empirical research should be conducted. 3) A review of charges benchmarked against other service providers would provide perspective on whether SSG charges were comparable for both spares and breakdowns. With respect to the later charges, a review of the number of breakdowns in 2010 identified 52.3% was on non-‐maintenance customers (see figure 5.3). Consequently, it is recommended that charges for SLA customers are immediately adjusted; it is suggested that hourly travel charges for SLA customers is decreased where revenue lost for these calls would be offset by increasing charges for non-‐SLA customers. Figure 5.3: Number of breakdown calls in 2010 .

47.7%

Maintenance Non-‐Maintenance 52.3% n= 2500

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5.5 Conclusion This survey has allowed customers of Static Systems to have commented on a wider operations base than previous studies. It has been acknowledged that some survey questions were poor in structure and some pertinent questions missing. The results coming from the survey indicate that customers generally perceive the services delivered as outlined in the SLA to be reasonable, however as Hu, Kandampully & Juwaheer (2009, p. 121) concludes, ‘service providers should continuously improve both service quality and perceived value’. In consideration to the returned data, and in hindsight, it is identified that customers do not view operations performed in isolation from one another. Despite the operations as outlined within the SLA generally performing to a reasonable standard, the whole organisations offerings needed to have been taken into consideration when discussing overall service quality and leaves an avenue open for further research.

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Appendices

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Appendix A – Ethics Approval Form

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Appendix B -‐ 2005 Survey

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Appendix C -‐ 2009 Survey

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Appendix D -‐ Request for Participation

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Appendix E -‐ Introductory Letter

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Appendix F -‐ Instrument Format & Questions Static Systems -‐ After Sales Service Quality Questionnaire Feedback provided by our valued maintenance & service partners is a very important measure of how well we are meeting our customer expectations and identifies those areas requiring further improvement. Your time given to complete this form is much appreciated. Should your operating system disable macros on word documents, would you for each question please either underline or type the number next to the question which closely represents your feelings. 1. Your site name (This is the only required field) 2. Your name 3. Your email address 4. Your telephone number

Notice & Attendance for your Planned Preventative Maintenance (PPM) visit 5. The amount of notice I am given prior to a maintenance visit (PPM) is: 1. Poor 2. Below Expectations 3. Acceptable 4. Above Expectations 5. Excellent 6. How many working days notice would you prefer to receive prior to your PPM being conducted? 7. Overall, I rate the communication with the Static Systems Maintenance office as: 1. Poor 2. Below Expectations 3. Acceptable 4. Above Expectations 5. Excellent 8. Additional comments on notice & attendance of your PPM:

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Planned Preventative Maintenance (PPM) 9. I would describe the standard to which Static Systems performs the PPM as: 1. Poor 2. Below Expectations 3. Acceptable 4. Above Expectations 5. Excellent 10. I would describe the time taken for quotations or additional information which I request as a result of the PPM as: 1. Poor 2. Below Expectations 3. Acceptable 4. Above Expectations 5. Excellent 11. I would describe the maintenance reports and electronic documents I receive after the PPM as: 1. Poor 2. Below Expectations 3. Acceptable 4. Above Expectations 5. Excellent 12. Additional comments with regard to the PPM:

Call-‐outs and Breakdowns

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13. The response time to an urgent breakdown is: 1. Poor 2. Below Expectations 3. Acceptable 4. Above Expectations 5. Excellent 14. Please select a response time (in hours) which you would ideally like SSG to guarantee: 15. Would you consider paying a premium for a quicker response time? 1. Yes 2. No 16. Static Systems ability to rectify faults first time or in a short space of time is: 1. Poor 2. Below Expectations 3. Acceptable 4. Above Expectations 5. Excellent 17. Costs associated with the breakdown are reasonable: Strongly Disagree

Strongly Agree

18. I rate the communication with the Breakdown office (at Static Systems) as: 1. Poor 2. Below Expectations 3. Acceptable 4. Above Expectations 5. Excellent 19. Additional comments with regard to breakdowns and call-‐outs:

Site Personnel Page | 87

20. I would describe the presentation of the Maintenance & Service personnel as: 1. Poor 2. Below Expectations 3. Acceptable 4. Above Expectations 5. Excellent 21. I would describe the knowledge held by the Maintenance & Service personnel as: 1. Poor 2. Below Expectations 3. Acceptable 4. Above Expectations 5. Excellent 22. Additional comments with regard to the Maintenance & Service personnel:

Spares 23. Spares purchased from Static Systems are reasonably priced: e.g. Handsets, Smoke detectors etc

Strongly Disagree

24. Additional comments regarding to spares:

Strongly Agree

Modifications or additions to your System 25. When I require modifications to be carried out on my system, the time taken for an appropriate person to

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make contact with me I would describe as: 1. Poor 2. Below Expectations 3. Acceptable 4. Above Expectations 5. Excellent 26. Where quotations are requested, the time taken for the supply of these is: 1. Poor 2. Below Expectations 3. Acceptable 4. Above Expectations 5. Excellent 27. When I place an order, the process of supply, install and commission I would describe as: 1. Poor 2. Below Expectations 3. Acceptable 4. Above Expectations 5. Excellent 28. Additional comments regarding modifications and additions to my system:

Economic Impact 29 Have you considered in the last year identifying another service provider? 1. Yes 2. No 30. If Yes to the above, was this reason due to: Poor service delivered by Static Systems My budgetary restrictions

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Cost of services supplied by Static Systems Other: 31. Static Systems provides value for money:

Strongly Disagree

Strongly Agree

32. Additional comments regarding the economic impact and the cost of services delivered by Static Systems:

Static Systems Overall Service Quality 33. When Static Systems promises to do something it does so in the timescale promised:

Strongly Disagree

Strongly Agree

34. How likely is it that you would recommend Static Systems as a systems provider to others? Very Unlikely

Very Likely

35. I would rate the OVERALL service delivered by Static Systems as: 1. Poor 2. Below Expectations 3. Acceptable 4. Above Expectations 5. Excellent 36. Please provide details on the two most important things you would change about the Service delivered by Static Systems:

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37. Any other comments:

38. I would be willing for a representative of the Customer Services / Quality Assurance department to make contact with me to discuss my feedback: 1. Yes 2. No

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