Business-to-Business Selling Determinants of Quality

Business-to-Business Selling Determinants of Quality

Business-to-Business Selling Determinants of Quality Kevin W. Westbrook Robert M. Peterson With the recent growing interest in service relationships i...

88KB Sizes 1 Downloads 9 Views

Business-to-Business Selling Determinants of Quality Kevin W. Westbrook Robert M. Peterson With the recent growing interest in service relationships in the industrial sector, a need exists to investigate the underlying determinants for service quality for business-to-business service encounters. An overview of the relevent literature dealing with service quality is given that provides theoretical grounding for an exploratory study. This project evaluates the efficacy of SERVQUAL’s underlying determinants in an industrial setting, explores other salient variables germane to industrial settings not originally found in the SERVQUAL model, and analyzes cross-industrial differences along these salient variables. Finally, practical suggestions are offered to assist managers providing services to businesses. © 1998 Elsevier Science Inc.

Address correspondence to Kevin W. Westbrook, Department of Marketing, Fogelman College of Business and Economics, University of Memphis, Memphis, TN 38154.

Industrial Marketing Management 27, 51–62 (1998) © 1998 Elsevier Science Inc. All rights reserved. 655 Avenue of the Americas, New York, NY 10010

INTRODUCTION Quality must be judged as the customer perceives it [1].

Fierce competition in the services sector is compelling many service companies to initiate quality programs. Achieving high quality standards along with high profitability and greater market share is now an important part of strategic planning. The marketing literature is also reflecting an awareness for quality. Fisk, Brown, and Bitner [2] report that service quality is the most highly researched area in the services literature to date. Some of the more recent studies have provided the theoretical underpinnings of customer expectations for service quality while others have extended quantitative models to measure quality outcomes. This vast, but still new field, affords tremendous opportunities for further research on how consumers assess service quality. One commonality amid much of the extant literature is that most studies are grounded and tested on theory

0019-8501/98/$19.00 PII S0019-8501(97)00037-0

The ideal seller is the one who is committed to my company as if they work for it. rooted at the retail consumer level. For example, Parasuraman, Zeithaml, and Berry [3] conducted executive and focus group interviews from retail banking, credit card, securities brokerage, product repair and maintenance, and long-distance telephone services. Other researchers have followed the same pursuit. Carman [4] surveyed respondents in a dental school patient clinic, a business school placement center, a tire store, and an acute care hospital. In another study, Bolten and Drew [5] surveyed consumers’ perceptions for residential telephone services, Babakus and Boller [6] for household utilities (gas and electric), and Cronin and Taylor [7] for banking, pest control, dry cleaning, and fast food restaurants. Clearly indicative, all of these projects surveyed consumers for retail purchases. Perhaps business-to-business service transactions differ in their underlying dimensions for service quality; thus, a gap remains in the marketing literature for suggestions for other salient variables germane to industrial customers’ choosing a services vendor. There are three primary purposes of this article: (1) to test whether the underlying determinants advanced in SERVQUAL are applicable to industrial purchasing decisions; (2) to assess whether there are other salient variables that are not included in SERVQUAL, but are applicable to industrial settings; and (3) to assess whether the underlying determinants advanced in SERVQUAL are heterogeneous and/or equally important across different industrial settings. The article is divided into four sections. First, a brief outline of the existing literature describing industrial services and industrial buying decisions is provided. The methodology and qualitative survey results are then reported. Finally, some conclusions and

KEVIN W. WESTBROOK is a doctoral candidate at the University of Memphis. ROBERT M. PETERSON is a doctoral candidate at the University of Memphis.

52

practical implications for marketing managers who provide industrial services will be extended. THEORETICAL BACKGROUND Service quality is often difficult to assess because of its subjective nature. According to the extant literature (e.g., [3, 8]), consumers, in the case of this study, corporate managers, have expectations which they compare to perceptions of performance for an overall evaluation of service quality. This evaluation is individualistic and subjective and is highly influenced by the modality of the service encounter [9, 10]. Tenner and DeToro [11] outline service delivery as co-productive, intangible, and non-repetitive. Service encounters require joint participation and shared responsibility during the encounter between the buyer and seller and become highly personal experiences. These encounters are evaluated individually as to whether they are customized to meet specific needs, expectations, and aspirations [12]. In industrial settings, the evaluation of service quality is much more complex. Czepiel et al. [13] suggest that “organizational evaluations” applied to industrial service encounters are founded on whether the organization attains goals, receives added value, or promotes employee motivation and retention. Parasuraman, Zeithaml, and Berry [3] posit that services are evaluated by 10 underlying determinants that influence quality perceptions. In their SERVQUAL scale, reliability deals with the provider’s dependability and performance according to expectations. A service company’s responsiveness is their willingness to perform the service in a timely fashion, and a competent provider is skillful and knowledgeable of the services rendered. An accessible provider is easily contacted or available to perform the needed service. Parasuraman, Zeithaml, and Berry [3] suggest that courtesy and communication relate to the service provider’s interpersonal skills while credibility addresses the salesperson’s and company’s integrity, honesty, and character. Customers want to feel safe and secure during the encounter and that information dis-

The determinants of service quality among businesses is highly congruous with SERVQUAL. closed must remain confidential. In addition, the service provider must know and understand the customer’s needs, business, and desires. Finally, customers pay attention to such tangibles during the encounter as atmospherics, equipment used to perform the service, and appearance of the service personnel. Parasuraman, Zeithaml, and Berry [8] later simplified their model by reducing these variables to five attributes which they term tangibles, reliability, responsiveness, assurance, and empathy. Assurance and empathy contain the original determinants: communication, credibility, security, competence, courtesy, understanding and knowing the customer, and access. Since SERVQUAL’s development, it has assisted as the basis for numerous other studies measuring service quality in different settings (cf. [4, 7, 14, 15]). These collective efforts have enriched our understanding of how consumers evaluate service quality and how service providers can better measure their performance against consumer expectations. One of the initial goals of SERVQUAL was directed toward ascertaining what “quality” meant in regards to intangible products. Parasuraman, Zeithaml, and Berry were instrumental in delineating the domain of service quality and subsequently devised a scale to measure it. They noted that quality was derived from the comparison between a customer’s expectations for service quality performance versus the actual perceived performance of service quality (expectations-performance). After conducting extensive interviews with corporate executives and gathering focus group feedback, Parasuraman, Zeithaml, and Berry developed the SERVQUAL model. It highlighted the discrepancies, or gaps, that appear within perceptions of service quality between service providers and customers for the service encounter (Figure 1). The gaps are seen as significant obstacles to the delivery of high quality service. For example, the consumer-expectation-management perception gap shown as Gap 1 connotes that management fails to know pre-

cisely what customers desire, and in turn, the provider fails to customize the service delivery around customer needs. The management perception-service quality specification gap exists when management may adequately ascertain customer expectations, but fails to translate those expectations into service specifications. As stated in Parasuraman, Zeithaml, and Berry, firms often find it difficult to “establish specifications to deliver quick response consistently because of a lack of trained service personnel and wide fluctuations in demand.” Next, the service quality specifications-service delivery gap centers on the service personnel failing to provide services that meet

FIGURE 1.

Service quality model.

53

Services need to be responsive, competent, and consultative. service specification levels. Fourth, the service deliveryexternal communication gap encompasses a service providers overstating promised service delivery levels which raise customer expectations above what can be reasonably attained. Finally, the expected service-perceived service gap exists when customer expectations are unmet vis-a-vis the firm’s service level performance, and hence the customer perceives poor service quality. Carman [3] and Babakus and Boller [5] later tested SERVQUAL’s reliability. Both note that SERVQUAL’s underlying dimensions are not consistent across all service industries and that SERVQUAL is context specific. In their conclusions, they recommend that while SERVQUAL offers a good structural foundation for measuring quality, it may require customization to accommodate unique service situations. Although the literature describing industrial services is sparse ([16, 17]), there are a few examples of service quality as measured within a business-to-business context. For example, Kong and Mayo [16] suggest a variation of SERVQUAL for evaluating perceptions in channel relationships, and Brensinger and Lambert [18] apply SERVQUAL to assess purchasers’ perceptions of less-thantruckload motor carrier services. Brensinger and Lambert posit that SERVQUAL only explains approximately 40% of the variance associated with overall perceived quality and that the scale provides little toward designing action plans for the improvement of services. Translating these findings to business-to-business transactions, there are opportunities to investigate the underlying determinants of industrial service quality for further scale development. Other Determinants of Quality in Industrial Settings CONSULTATIVE SELLING. Business-to-business exchanges are often predicated on enduring relationships with sellers. Despite this premise, Dwyer, Schurr, and Oh [19] submit that sellers fail to see the importance of managing 54

relationships with their clients. Moreover, relationship generalization implies that good, enduring relationships adding value are a “quality surrogate” since buyers transform their positive perceptions of the relationship with the seller to the service provided [20]. Intuitively, those sellers who adequately assess customer needs and apply problem-solving approaches during the interpersonal interaction will normally be perceived highly. How well a service provider manages the relationship is most often predicated on the type of selling posture. Consultative selling may best serve to strengthen buyer– seller relationships and is described as a strategy that is quite different from the more traditional styles of strong persuasion tactics which Tenner and DeToro [11] describe as the “selling concept.” Consultative selling translates to promoting goal congruence and providing solutions to problems encountered for mutual and beneficial outcomes for both parties involved. Salespersons as consultative sellers add value to the buyer–seller relationship which Hanan [21] suggests as one’s assuming a managerial role over the services and referring to the customer as a client. In this capacity, the salesperson’s objectives are to assist in attaining the client’s profit goals. To maximize the client’s profits, the consultative seller must be concerned with knowing, understanding, and meeting all of the client’s needs and providing services that are needsoriented. Having these insights requires the salesperson to incorporate her/himself into the client’s operations to participate actively in long-range planning, to offer solutions to problems, and to assume some of the risks of normal transacting. Thus the goal of consultative selling is to increase buyer dependence on the seller and her/his company’s services. Hanan [22] defines consultative selling as “profit improvement selling” through “win-win partnerships.” As partners, the client evaluates the quality of the service offering through performance values that Hanan describes as contributing to the overall value of the operations. Hanan states ([22], p. 20), “Your role [as consultant] will be that of a customer extender, acting

The marketing audit assists the company to gain needed information. as an extension of your customer’s own people and their capabilities to solve their problems. Thus you [consultant] can become positioned as a true adder of value.” The following responses recorded during the survey process in discussing customer perceptions of the “ideal broker” adequately reflect the general theme of consultative selling. One respondent suggested, A good broker would be someone who could help manage my total cost of risk, someone who could help me maintain consistent budgets and make better risk-based decisions. A good broker could help translate TQM concepts into the risk management world and would provide a comprehensive number of services in-house or through joint venture partnerships. In addition, the [ideal broker] would have the ability to help me communicate the cost of risk issue to the county decision makers through charts, data, assistance with the annual report, and highly customized reporting.

In another interview, a chief financial officer for a large Canadian lumber company ascertained, The ideal broker would be as committed to [respondent’s company] as if he worked for [respondent’s company]. He would know our business and our people and should recommend what we should be doing. The broker should continue building and strengthening the partnership.

allocation required to receive the service or product. Moreover, perceived nonmonetary price is how the client remembers the service encounter as simply being expensive or cheap or possibly fair [11]. A consumer’s sacrifice may be measured by the buyer’s time allocation [23] required to seek service information or psychological deliberation during high involvement purchases. Zeithaml states that the positive correlation between higher priced goods and services are product specific, and generally durable goods and services may follow that norm. Perceived value on the other hand is the perception of the customer’s sacrifice (e.g., “what I have to give up”) for the good or service [11]. Zeithaml [23] suggests that value is merely a perceptual construct and is highly tied to equity. Thus the perceived value of a product or service may be related to the amount of sacrifice required. Some tie value to acquiring a product or service at the lowest price. Rust and Oliver [24] and Zeithaml [23] suggest that value for many consumers increases as quality increases, but not as the price increases. Rust and Oliver further ascertain that economic theory of utility normatively describes price, value, and sacrifice. Basically, consumers seek to maximize their utility which is derived from quality, while attempting to reduce disutility as price or the sacrifice for the service or good.

Finally, a risk manager for a business-to-business service organization described the ideal broker as, I want more “front-end” attention rather than after the fact. I want a partnership with the broker. The ideal broker must perform all the risk management services that enables the risk manager to lead the process. The ideal broker has the ability to evaluate the insurer’s performance, claims management, and case reserve management.

VALUE THROUGH PRICE. Zeithaml [23] defines price as that which the consumer gives up or sacrifices for a product or service. She further posits that price is constituted by objective price, perceived nonmonetary price, and sacrifice. The objective price is the actual monetary

RESEARCH ISSUES AND QUESTIONS Previous studies in the service quality literature provide an essential framework for understanding customer expectations used to make industrial services purchasing decisions. However, as already stated, there remain opportunities for determining the applicability of earlier dimensions to industrial settings. The present study investigates the applicability of the earlier determinants from SERVQUAL to industrial settings. Additionally, further insights are gained for other dimensions that emerge in industrial sectors that are not seen in retailing environ55

ments. Specifically, the following research questions are raised and tested in this study: 1. How consistent are the underlying dimensions suggested in SERVQUAL for service quality in industrial settings with findings earlier in retail environments? 2. Is consultative selling an important underlying dimension for assessing service quality encounters with suppliers? 3. How important is monetary value (monetary cost for services) as an important consideration in a customer’s assessment of quality in a business-to-business service encounter? Answering these questions will provide practical insights into better ways to manage an industrial service company’s operations. A further understanding of these dimensions will assist managers who make decisions for training of account representatives, for improving deficient process areas, and for allocating capital and personnel to those process areas that impact service delivery. By ranking the variables along a continuum of importance (from least to most important based on relative percentages), service providers can determine which process areas need the most attention. METHODOLOGY Data Collection Data collection for this study utilized personal interviews of industrial customers for risk management services. It is recognized that the typical approach to studying quality perceptions is through quantitative means [17]. However, Hensel [25] notes that qualitative surveys may be the best mechanism for defining customer requirements. Others have noted the value of qualitative research as a means of gathering meaningful data for consumer perceptions in a number of environments (cf. [26, 27]). Data was gathered from customers of a large insurance brokerage company servicing accounts primarily in North America. Senior level sales management for the company and a team of university researchers designed the qualitative scale to assess customer service expectations. Account representatives employed with the insurance company scheduled and performed the personal interviews with past, current, and prospective clients. This data collection approach was selected for several reasons. (1) the account representatives had on-going contacts with the interviewees which assisted in scheduling the meetings; 56

(2) the account representatives were familiar with the subject domain (risk management and employee benefits services) and could inquire more deeply for truer meaning to the research questions; and (3) each account representative was able to obtain candid feedback relating to her/his company’s servicing of the account through a face-to-face dialogue. The method consisted of surveying managers from 300 companies representing various manufacturing, service, governmental, and publically-owned (e.g., public utilities) companies. Each firm was assigned a two-digit Standard Industrial Classification Code (SIC) based upon parameters established by the Office of Management and Budget [28]. Most of the firms interviewed were located in the United States (90%) while the remaining firms (9%) were located in either Canada, Bermuda, or Puerto Rico. Interviewees were company managers who managed risk management department operations (30.3%), held positions as senior level administrative personnel (23.7%), were financial managers and comptrollers (15%), were human resources directors (6.3%), or failed to indicate a classification (23.6%). Each interviewer was instructed to choose interviewees with whom the company would like to strengthen or improve relationships, rather than selecting firms which were considered to be the “best” clients. Some of the respondents were both past and perspective clients indicating a past relationship existed and efforts were being made to reservice the account. These clients were coded as past clients so that a clear delineation could be made regarding clients who had not had any exposure to the interviewing company, its representatives, or its products. Over 66% of the respondents were current clients who have some or all of their risk management services with the interviewing agency. Nine percent of the subjects were past clients while 24% were prospective clients. Each interview lasted approximately 30–45 minutes and consisted of asking opened-ended questions to assess each interviewee’s personal perceptions of quality, information about the client company’s quality initiative and criteria for risk management vendor selection, personal perceptions of the brokerage firm, and possible suggestions for change. Other questions asked related to perceptions of the interviewer company’s performance and suggestions for other service opportunities. These responses revealed information that was proprietary and was beyond the scope of this study. Two independent researchers conducted a content analysis to code the open-ended questions using the Parasuraman, Zeithaml, and Berry [3] framework. For those items

scored differently, the researchers corroborated to increase the validity of the scoring procedure. If a respondent mentioned one of the variables then the response was coded as a “yes” (1) while a lack of a response was coded as “no” (0). Special care was taken to not let preconceptions cloud a subjective evaluation of responses. As others have noted previously (cf. [4, 6, 18]), SERVQUAL may serve as a general guideline sparing modifications to help better exemplify perceptions in different situations. In this study, responses consistently revealed most of SERVQUAL’s underlying variables in addition to other salient variables which were added to the overall scheme. Other underlying determinants corresponded to price, scope of product offering, consultative selling, market clout, and geographical service area. For a more detailed description of how the underlying determinants were coded, see Table 1. ESSENTIAL FINDINGS AND RESULTS Underlying Determinants of Service Quality in Industrial Services Frequency distributions for the entire sample were calculated for each of the underlying determinants of quality as shown in Table 2. In response to the first research question, the underlying determinants are highly congruous with Parasuraman, Zeithaml, and Berry [3]. The data supports that there are other underlying dimensions which expand their model for industrial insurance services. As clearly seen, nearly three-quarters of the respondents feel that a provider’s responsiveness (71%) is a major determinant for quality followed by having competence (68%). Nearly 64% of the respondents feel that consultative selling is important while others feel that a reliable (52% and credible (26%) supplier is a determinant of quality. From a company perspective, offering the best pricing terms (39%) and having access to the salesperson and/or other company resources (31%) are cogent. Moreover, maintaining a sufficient product offering (29%) and having market power/clout (19%) are also salient attributes. Finally, having a large service area represented as geographical presence (7%) and offering computer automation, “tangible,” (3%) are the least popular quality factors. In summary, the relative percentages indicate that industrial clients evaluate service quality similarly to retailing environments studied earlier in the extant literature. Moreover, consultative selling (research, question 2), price (research question 3)

are cogent dimensions in industrial encounters and having a large product offering, company market power/ clout, and geographical presence are added to the model. Cross-Industrial Comparison of Underlying Determinants of Service Quality A frequency distribution of the underlying determinants was calculated by the type of industry (e.g., manufacturing, services, etc.) and a relative percentage for each variable was calculated as shown in Table 3. Each variable was classified as being as “highly regarded as quality” if a variable’s relative percentage of total responses fell within the range of approximately 66–100% of total responses given. Variables classified as “average regarded as quality” fell within the range of 33–66% and “lowly regarded as quality” variables have a relative percentage within the range of 0–33%. The highly regarded variables were responsive, competence, and consultative selling. As shown, responsiveness was the most frequently stated variable in the manufacturing, non-financial services, financial services, health care, and construction sectors. Responsive was the third most mentioned variable in public entities and retailing and entertainment industries. Competence was the first chosen determinant for public entities and the second most important variable within the manufacturing, nonfinancial services, retailing and entertainment, financial services, and construction sectors. Compared to other industries, health care organizations scored competence the least favored. Most firms viewed being a consultative seller as either the second or third highest response given; however, retailing and entertainment industries indicated that consultative selling was the most cogent attribute. Being reliable ranked fourth on all of the firms with the exception of retailing and entertainment and construction industries which ranked reliability as the fifth most important variable. The average to lower variables were somewhat more inconsistent across the various industries. For example, providers offering lowest pricing ranked highly on public entities and within the construction industry, but was less important for manufacturing; non-financial services, retailing and entertainment industries; financial services, and health care entities. Interpersonal skills ranked more highly on manufacturing, public entities, and health care firms; but ranked lower for non-financial services, retailing and entertainment industries, financial services, and construction firms. Non-financial, health care, and con57

TABLE 1 Underlying Determinants for Service Quality for Business-to-Business Service Encounters Responsiveness is the willingness and readiness for conducting the service. It encompasses: reduced cycle time and delivery for service; being on time to scheduled meetings and events; meeting deadlines for projects and assignments; having an aggressive spirit or being proactive to unmet needs or unperceived problems before being asked to respond. Competence is the possession of required skills and knowledge to properly perform the needed service. It entails: having expertise in the area of the provided service; possessing good problem-solving skills. Consultative selling involves the service provider’s ability to embed within the client’s operations. Some of its attributes are: establishing partnerships with joint planning and goal setting; acting as an advocate with senior company executives; incurring risk for the client; absorbing duties and responsibilities for the client; providing profit driven alternatives; understanding and knowing the client’s business; offering advice to include programs, operational procedures and processes, or training and education. Reliability is the salesperson’s accuracy, and dependability of the service performance. It includes: proper follow-through on projects and assignments; “doing it right the first time”; consistently performing the service correctly. Price is the monetary allocation in return for the service. It involves: meeting the client’s budget objectives; securing multiple competitive bids for most cost effective options. Interpersonal skills are the service provider’s willingness to openly communicate, to show respect and courtesy, and to be likable during the encounter. This variable may be: promoting a highly interactive environment; being sociable and friendly; being polite and respecting the privacy of others. Accessibility is having approachability and being easily contacted. It may entail: being solely dedicated to the account; having technical resources and other experts that can assist the client when needed; being available at all times to assist the client. Credibility extends to the perceptions of a salesperson’s character and integrity. This variable is: being believable and honest; having a good personal and company reputation in the market; demonstrating ethical conduct; protecting confidential and proprietary information. Product offering extends to the scope (amount) of services available to the client. It entails: having multiple options and programs to choose; being a “one-stop-shop” vendor; having the ability to assemble creative packages of services from multiple providers if needed; providing customized and unique services. Market clout is the service provider’s ability to secure the best service offerings and the lowest prices for other suppliers in the market. This is accomplished through: having leverage in the market; having a large market share or presence in the market; having ability to coordinate and consolidate resources with other companies; acting as an advocate with other companies in the market. Geographical presence is being able to offer services in other distal markets. It may encompass: having the ability to offer standardized services in other cities nationally; having the ability to coordinate standardized services in other countries. Tangibles relate to provisions for offering on-line computer services or other automation for access and information. Offering idiosyncratic investments [38] may include: offering computer processing capabilities like hardware or software; offering database management systems, fax machines, order entry devices, etc.

58

TABLE 2 Relative Percentage of Underlying Determinants for Service Quality in Business-to-Business Transactions (n 5 300)

Rank 1 2 3 4 5 6 7 8 9 10 11 12 13

Variable

Relative Percentage

Responsive Competence Consultative Marketing Reliable Price Access Interpersonal Skills Product Offering Credibility Market Clout Other Geographical Presence Tangibles

71 67 63 51 39 31 30 30 26 19 10 7 3

struction firms scored the highest of all firms on having market power/clout, however, all of the responding industries ranked market power/clout as a lesser desired variable (less than 33%). Offering a wide range of service products (“product offering”) ranked highest for financial services while all other industries reported product offering within the lowest ranked variables. Moreover, accessible (“access to salesperson and resources”) was ranked higher for health care, retailing and entertainment, manufacturing, and financial services while others ranked accessible as a lower variable. All of the firms ranked having a large geographical presence as a lower variable. Health care, manufacturing, financial services, and construction firms showed the most interest in a service provider having a geographical presence (8–15%). Additionally, all of the firms indicated that tangibles offered were of minimal priority, but health care and non-financial services reported this variable as important. In summation, responsive, competence, and consultative selling are considered to be highly important across all industries surveyed. The remaining variables—reliable, price, interpersonal skills, access, credibility, product offering, market clout, geographical presence, and tangibles differed in importance across the various firms. CAVEATS AND LIMITATIONS Although the findings in this study support previous research efforts in the development of SERVQUAL and offer pragmatic criteria for quality to service providers,

this study engenders some general concerns common to qualitative studies. First, despite the fact that 300 companies were surveyed across a myriad of different industries, all of the research data was gathered by a single business-to-business insurance provider. Thus the criteria for service quality which emerges in this study may be industry specific. The fact that numerous interviewers gathered and recorded the data during on-site sales meetings sets the potential for measurement error. Moreover, the study relied upon the subjective assessment of single respondents per firm which introduces the potential for reliability and validity errors [29, 30].

DISCUSSION AND CONCLUSIONS This study’s implications go beyond simply defining the underlying determinants for service quality to seeking information from the customer on what betters a service relationship. Relationships are a result of accumulative, discrete exchanges that develop into enduring interactive exchanges [31]. However, relationships with customers must be earned [32] and only through mutual exchange and fulfillment of promises and allocation of resourcespersonnel, technology and systems, can service providers expect to build lasting relationships. The burden of fulfilling promises to customers lies with the firm’s top management [25]. Top management’s role is tied to being market-oriented consisting of market intelligence generation, intelligence dissemination, and responsiveness within the organization [33]. It is through adequate inquiry of customer expectations and needs that firms access this information and requirements for stronger buyer/seller relationships. However, many firms tragically have no quantitative or qualitative measures for customer satisfaction in place [3], and many salespersons avoid listening to ideas for improvement and change from their client base [35]. This study serves as a good example of top management’s desire to gain access to needed information— what drives service quality, how are suppliers evaluated, and what makes a salesperson an ideal representative according to customers. The selling company’s desire is to learn what is needed to establish better relationships between salespersons and present and prospective clients. This focus corresponds to being a market-driven and a client-oriented organization where information comes directly from the customer [35]. The key to what is learned through the data collected via personal interviews is that 59

TABLE 3 Frequency Distribution Of Determinants Financial Services, Real Estate

Manufacturing

Non-Financial Services

Public Entities

Retailing Entertainment

High

Response (70%) Competence (63%) Consulting (63%)

Response (78%) Competence (69%) Consulting (65%)

Competence (77%) Consulting (70%)

Consulting (74%) Competence (70%)

Medium

Reliable (52%) Price (35%) Interpersonal skills (34%) Access (33%)

Reliable (57%) Price (41%)

Response (61%) Reliable (56%) Price (54%)

Response (57%) Access (44%) Reliable (39%)

Interpersonal skills (35%)

Price (39%)

Product (30%)

Interpersonal skills (30%) Access (26%)

Credible (30%)

Credible (30%)

Credible (27%)

Access (26%)

Price (19%)

Ranking

Low

Credible (26%) Marketing clout (19%) Other (11%)

Product (26%)

Product (26%)

Credible (24%)

Geographic presence (9%) Tangibles (2%)

Marketing clout (22%) Other (11%)

Marketing clout (17%) Other (17%)

Marketing clout (17%) Other (17%)

Geographic presence (4%) Tangibles (0%)

Geographic presence (4%) Tangibles (0%)

most types of companies perceive quality similarly and their perceptions for quality are systemic. In other words, the customer views quality as a whole—a composite of converging multiple factors—all used to evaluate the quality of the service encounter. It is therefore imperative that corporation policy makers commit to enhancing an awareness and acceptance to these customer-defined quality specifications [25]. It is now up to corporate management to implement programs, like proper training, that instill these customer values into the employees. Corporate policy-making and strategic planning should 60

Construction

Other

Response (89%) Competence (85%) Consulting (62%)

Response (70%)

Response (74%) Competence (57%) Consulting (65%)

Competence (71%) Response (67%)

Reliable (42%) Product (39%) Access (35%)

Consulting (60%) Reliable (55%) Competence (50%)

Price (52%) Reliable (48%) Marketing clout (39%)

Consulting (57%) Reliable (52%) Price (48%)

Interpersonal skills (35%) Product (30%)

Interpersonal skills (30%) Product (30%)

Interpersonal skills (38%) Access (29%)

Credible (30%)

Credible (30%)

Product (29%)

Access (26%)

Access (26%)

Credible (29%)

Geographic presence (9%) Other (9%)

Geographic presence (9%) Other (9%)

Tangibles (0%)

Tangibles (0%)

Marketing clout (14%) Geographic presence (14%) Other (10%) Tangibles (5%)

Access (45%)

Interpersonal skills (26%) Product (26%)

Tangibles (6%) Geographic presence (4%)

Health Care

Interpersonal skills (12%) Marketing clout (12%) Other (8%) Geographic presence (15%) Other (5%) Tangibles (5%)

center on better ways to meet these customer needs in the everyday operations of the organization. What are other implications from this study for top management? First, every company should conduct a services marketing audit consisting of what is important to the customer and how the company’s performing in comparison to those important factors. The literature offers suggestions for these types of assessments. For example, Berry, Conant, and Leonard [36] describe a general framework for conducting a marketing audit defined as “Index of Services Marketing Excellence.” They outline

their six defining constructs as: marketing orientation, marketing organization, new customer marketing, existing customer marketing, internal marketing, and service quality. Cina [37] also suggests that companies should compare their services to their competition, look for differentiation opportunities, and assess the extent of loyalty of switching behavior. While this appears to be an obvious suggestion, top management should always be encouraged to undertake efforts that allow them to have a better understanding of client desires. Second, each company manager should develop an action plan for correcting the deficient areas and shortcomings. Third, every company should continue to monitor its performance against customer expectations on an on-going basis and adapt appropriately as market changes take place. Only through persistent monitoring and direct contact with the customer will companies strengthen relationships with their clients. This initiative should be expansive to every policy and every worker within the organization. What this study offers relates to the original three-fold purpose of the project. First, are the underlying determinants in SERVQUAL as originally suggested in the Parasuraman, Zeithaml, and Berry [3, 8] studies applicable to business-to-business transactions? Second, are there additional underlying determinants for service quality applicable to business-to-business encounters? And third, are there cross-industrial differences for the evaluation of these underlying variables? This study confirms what others in the literature have espoused—that the original workings of Parasuraman, Zeithaml, and Berry [3] are solid theoretical underpinnings for understanding customer expectations for service quality. As an illustration from this study’s results, over 72% of the total responses given as perceptions for quality were consistent with salient variables earlier given in SERVQUAL, and the top variables in this study were responsiveness, competence, and reliability, all original SERVQUAL determinants. However, as some of the earlier studies revealed [4, 6, 18] and confirmed likewise in this project, SERVQUAL is improved with modifications in wording for specific settings. Second, the authors intended to investigate what other salient variables revealed in industrial settings, but not in retailing environments, are important to decision makers in assessing service quality. One variable, consultative selling, is defined and revealed as sellers who actively participate in the operations of the client to include mutual goal-setting and consulting for the improvement of the overall profitability and operations. Additionally, of-

fering the lowest pricing proved to be quite important since inferably most of the respondents were concerned with meeting budget goals and lowering the costs of risk management decisions. The respondents were interested in companies who have the capability of offering several multiple combinations of service options from which to choose, and maintaining market clout and market leverage with other suppliers was also mentioned frequently, As a result of the globalization of the services market, many companies desire dealing with suppliers who maintain operations and contacts in other distal markets. Thus, a firm that markets nationally or internationally is perceived as offering higher quality services. These results also suggest that companies desire a risk management supplier to offer computer automation as idiosyncratic investments [38] used to communicate and access needed information. Third, the study intended to assess any differences which may exist between companies regarding the salient underpinnings of service quality. The most salient variables reported were responsiveness, competence, consultative selling, and reliability for most of the firms. Public entities felt that competence was the most important variable while all others prefer suppliers to be responsive or consultative selling (retailers and entertainers) as their first choice. Providing the lowest pricing was most salient for public entities and construction firms while others responded that these factors were important, but to a lesser degree. Intuitively, both the public entities and construction industries are facing price elasticity forcing many firms to focus on cost savings. Additionally, manufacturing, public entities, and health care firms indicated that interpersonal skills were more important than other companies surveyed. Scope of the service offering was most important for financial services (39%). Also health care and retailing and entertainment firms felt that having access to the salesperson was important while other firms preferred this variable less. Health care organizations scored the highest for service providers who have a large geographical presence. Implications may indicate that many health care organizations are part of larger chains and are dispersed regionally or even nationally. A complete breakdown of how each firm scored on the determinants was outlined in the results section. In summary, although there are slight variations in terms of the relative importance of these variables across different industries, it is important to note that all of these attributes are significant to the respondents. This finding suggests that managers offering business-to-busi61

ness services should focus on offering all of these salient variables concurrently with the hopes of achieving differentiation and perceptions of offering unparalleled service quality. REFERENCES 1. Peters, Tom, Thriving on Chaos. Harper & Row, Inc., New York, 1987. 2. Fisk, Raymond P., Brown, Stephen W., and Bitner, Mary Jo, Tracking the Evolution of the Services Marketing Literature. Journal of Retailing 69, 61–103 (1993). 3. Parasuraman, A., Zeithaml, Valarie A., and Berry, Leonard L., A Conceptual Model of Service Quality and Its Implications for Future Research. Journal of Marketing 49, 41–50 (1985). 4. Carman, James M., Consumer Perceptions of Service Quality: An Assessment of the SERVQUAL Dimensions. Journal of Retailing 66, 33–55 (1990). 5. Bolton, Ruth N., and Drew, James H., A Multistage Model of Customers’ Assessments of Service Quality and Value. Journal of Consumer Research 17, 375–384 (1991). 6. Babakus, Emin, and Boller, Gregory W., An Empirical Assessment of the SERVQUAL Scale. Journal of Business Research 24, 253–268 (1992). 7. Cronin, J. Joseph, and Taylor, Steven A., Measuring Service Quality: A Reexamination and Extension. Journal of Marketing 58, 55–68 (1992). 8. Parasuraman, A., Zeithaml, Valarie A., and Berry, Leonard, SERVQUAL: A Multiple-Item Scale for Measuring Consumer Perceptions of Service Quality. Journal of Retailing 64, 12–40 (1988). 9. Holbrook, Morris, The Nature of Customer Value: An Axiology of Services in the Consumption Experience. Service Quality: New Directions in Theory and Practice, 1994. 10. Soloman, Michael R., Suprenaut, Carol, Czepiel, John A., and Gutman, Evelyn G., A Role Theory Perspective on Dyadic Interactions: The Service Encounter. Journal of Marketing 49, 99–111 (1985). 11. Tenner, Arthur R., and DeToro, Irving J., Total Quality Management, Addison-Wesley, Reading, MA, 1992. 12. Beaven, Mary H., and Scotti, Dennis J., Service-oriented Thinking and Its Implications for the Marketing Mix. Journal of Services Marketing 4, 5– 19 (1990). 13. Czepiel, John A., Solomon, Michael R., Suprenaut, Carol F., and Gutman, Evelyn G., Service Encounters: An Overview, in The Service Encounter. John A. Czepiel, Michael R. Soloman, and Carol F. Surprenaut, eds., Lexington Books: Lexington, MA, 1985. 14. Brown, Stephen W., and Swartz, Teresa A., A Gap Analysis of Professional Service Quality. Journal of Marketing 53, 92–98 (1989). 15. Mangold, W. Glynn, and Babakus, Emin, Service Quality: The Front-stage vs. The Back-stage Perspective. Journal of Services Marketing 5, 59–70 (1991). 16. Kong, Raymond, and Mayo, Michael C., Measuring Service Quality in the Business-to-business Context. Journal of Business and Industrial Marketing 8, 5–15 (1990). 17. Pedrick, Dennis, Babakus, Emin, and Richardson, Andrea, The Value of Qualitative Data in Quality Improvement Efforts. Journal of Services Marketing 7, 26–35 (1993). 18. Brensinger, Ronald P., and Lambert, Douglas M., Can the SERVQUAL Scale Be Generalized to Business-to-Business Services? 1990 Proceedings American Marketing Association, Washington, DC, 289 (1990). 19. Dwyer, F. Robert, Schurr, Paul H., and Oh, Sejo, Developing Buyer-Seller Relationships. Journal of Marketing 51, 11–27 (1987). 20. Crosby, Lawrence A., and Stephens, Nancy, Effects of Relationship Marketing on Satisfaction, Retention, and Prices in the Life Insurance Industry. Journal of Marketing Research 24, 404–411 (1987). 21. Hanan, Mack, Cribbin, James, and Heiser, Herman, Consultative Selling. American Marketing Association, Inc., Chicago, IL, 1972.

62

22. Hanan, Mack, Consultative Selling. American Marketing Association, Inc., Chicago, IL, 1990. 23. Zeithaml, Valarie A., Consumer Perceptions of Price, Quality, and Value: A Means-End Model and Synthesis of Evidence. Journal of Marketing 52, 2–22 (1988). 24. Rust, Roland T., and Oliver, Richard L., Service Quality: Insights and Managerial Implications From the Frontier, in Service Quality: New Directions in Theory and Practice. Roland T. Rust and Richard L. Oliver, eds., Sage Publications, Thousand Oaks, CA, 1994. 25. Hensel, James S., Service Quality Improvement and Control: A CustomerBased Approach. Journal of Business Research 20, 43–54 (1990). 26. Easterby-Smith, Mark, Thorpe, Richard, and Lowe, Andy, Management Research. Sage Publications, London, (1993). 27. Gummesson, Evert, Qualitative Methods in Management Research. Sage Publications, Newbury Park, CA, 1991. 28. Office of Management and Budget, Standard Industrial Codes. U.S. Government Printing Office. Washington, DC, 1972. 29. Huber, G. P., and Power, D. J., Retrospective Reports of Strategy-level Managers: Guidelines for Increasing Their Accuracy. Strategic Management Journal 6, 171–180 (1985). 30. John, George, and Reve, Torger, The Reliability and Validity of Key Informant Data from Dyadic Relationships in Marketing Channels. Journal of Marketing Research 19, 517–524 (1982). 31. Czepiel, John A., Service Encounters and Service Relationships: Implications for Research. Journal of Business Research 20, 13–21 (1990). 32. Gronroos, Christian, Relationship Approach to Marketing in Service Contexts: The Marketing and Organizational Behavior Interface. Journal of Business Research 20, 3–11 (1990). 33. Jaworski, Bernard J., and Kohli, Ajay K., Market Orientation: Antecedents and Consequences. Journal of Marketing 57, 53–70 (1993). 34. Lascelles, D. M., and Dale, B. G., The Buyer-Supplier Relationship in Total Quality Management. Journal of Purchasing and Materials Management 10–19 (1989). 35. Morgan, Robert E., and Chadha, Sanjay, Relationship Marketing at the Service Encounter: The Case of Life Insurance. The Services Industries Journal 13, 112–125 (1993). 36. Berry, Leonard L., Conant, Jeffrey S., and Parasuraman, A., A Framework for Conducting a Services Marketing Audit. Journal of Academy of Marketing Science 19, 255–268 (1991). 37. Cina, Craig, Five Steps to Service Excellence. Journal of Services Marketing 4, 39–47 (1990). 38. Anderson, Erin, and Weitz, Barton, The Use of Pledges to Build and Sustain Commitment in Distribution Channels. Journal of Marketing Research 29, 18–34 (1992). 39. Gronroos, Christian, A Service Quality Model and its Marketing Implications. European Journal of Marketing 18, 36–44 (1984). 40. Roland T. Rust, and Oliver, Richard L., eds., Thousand Oaks, CA, Sage Publications. 41. Klaus, Peter G., Quality Epiphenomenon: The Conceptual Understanding of Quality in Face-to-Face Service Encounters, in The Service Encounter, John A. Czepiel, Michael R. Soloman, and Carol F. Suprenaut, eds., Lexington Books, Lexington, MA, 1985. 42. Norusis, Marija, J., SPSS for Windows Base System User’s Guide Release 6.0. SPSS, Inc., Chicago, IL, 1993. 43. Schneider, Benjamin, Wheeler, Jill K., and Cox, Jonathan F., A Passion for Service: Using Content Analysis to Explicate Service Climate Themes. Journal of Applied Psychology 77, 705–716 (1992). 44. Schurr, Paul H., and Ozanne, Julie L., Influences on Exchange Processes: Buyers’ Preconceptions of a Seller’s Trustworthiness and Bargaining Toughness. Journal of Consumer Research 11, 939–953 (1985). 45. Weitz, Barton A., Effectiveness in Sales Interactions: A Contingency Framework. Journal of Marketing 45, 85–103 (1981). 46. Zand, David E., Trust and Managerial Problem Solving. Administrative Science Quarterly 2, 229–239 (1972).