SERVAQUA
Towards a service quality model in potable reticulated water services

Peter PrevosPhD Candidate, School of BusinessManager Land Development, Coliban Water

Outline problem definition and describe tap water as a serviceSpecific characteristics of tap water services

Current service quality models cannot be applied

Purpose of this presentation: propose model for service quality measurement in tap water

Looking back: existing service quality methodologiesServQual

Nordic Model

ServAqua hypothesis

Looking forward: construct validation

Water services are embedded in the natural hydraulic cycleWater never changes ownership customers pay for usage rights: water is a service, not a product; not widgets, but moments of truth

Consumption of water is a reduction in quality; a reduction in the usability of the water. Value is added through purification (increase options for usage) and transport (adding pressure).

Natural monopoly: economies of scale prevent new entrantsCustomers cannot change service provider

Without threat of defection, there is no intrinsic motivation to provide customer centric service

Markets are regulated to force customer focusNumerous measurement models for service provision exists, but most are internally focused (engineering) instead of customer focused.

Majority of literature in water focused on technological aspects of service

Water supply is a service factoryLow degree of human interaction (Low labour intensity)

Minimal customisation

High ability to manage heterogeneity

ProblemNo validated customer focused methodology for assessing performance exists

Existing service quality models focus on intangible elements and face-to-face service

Tap Water Quality

Water quality has two dimensions safe water and good water

Safe water: meeting technical regulationsRelates to engineering (rational dimension)

Predictable outcomes

Intrinsic quality (not directly perceivable by consumer)

Quality perceived from the service provider

Intangible

High in credence qualities

Good water: meets customer expectationsRelates to sensory customer experience

Extrinsic quality: as perceived by customer

Perceived from the customer perspective

Based on marketing (non rational dimension)

Unpredictable

High in experience qualities

Safe water is a necessary, but not a sufficient condition to ensure customer satisfaction.Service quality paradox: Addition of chemicals necessary to create safe water can lead to lower service quality: chlorine for disinfection; fluoride as tooth decay preventative

Service quality: model of how the quality of service provision is perceived by customers

Decades of research has led to two major modelsAnglo-Saxon Model (SERVQUAL)

Nordic Model

Anglo-Saxon Service Quality

ServQual

Gap modelClass of firms

Weighted towards intangible elements

Focus on process

Discourse dominated by ServQual by PZB

Gap modelConsumer compares service provider with ideal service provider

e.g. service level of the Langham compared to similar hotels

Construct with five dimensions: RATER

Four dimensions are related to intangible aspects

Dimensionality has been disputed high intercorrelationBabakus found that service quality in essential services is uni-dimensional: related to the presumed low level of involvement

Service quality models are mostly industry specificHedPERF

LibQUAL+

ServQual has not been applied to tap water

SERVQUAL does not distinguish between process quality and outcome quality

SERVQUAL not suitable for tap waterDominated by tangible elements

Service factory: Importance of outcome quality over process quality

Nordic Service Quality

Context specific

Process and outcomeFunctional quality

Technical quality

Grnroos (1990) model of service quality.

Popularised by Finnish scholar Christiaan Grnroos

Context specific evaluation of service not comparison with class of service providers

Expected service influenced by:marketing activities of service provider

public image, word-of-mouth and consumer needs

Recognises the way the service is provided and the outcome of the serviceConsumption of services is inseparable from the production

the what and the how are connected

Interrelationship between technical and functional qualityFunctional quality more important

Good contact between customers and staff can mitigate lower technical quality.

ServAqua Principles

Based on Nordic Model

Incorporate service process and outcomes

Technical qualityCore services

Functional qualitySupplementary servicesFacilitating

Enhancing

Flower of Service (Lovelock, 1992)

ServAqua based models heavily focused on supplementary services, ignoring the tangible elements of service

Nordic model most suitable because it can deal better with the tangible elements of the service (outcomes)

Lack of customer interactionTechnical quality relates to core services, i.e. the provision of water.

Functional quality relates to supplementary services

Core services are delivered at arm's length

Supplementary services are delivered often through direct customer-staff interaction

ServAqua: Core Services

Technical QualityExtrinsicExperience qualities

Sensory experience

IntrinsicLikelihood of disconfirmation

Pressure

Purity

Consumer pays time price

Consumers are mainly interested in sensory qualities of water service

Core service dominated by tangible elements: the water

Each opening of a tap is a moment of truth that can be confirmed or disconfirmed.

Extrinsic quality: Sensory experience by the customerEvaluation based on experience qualities: Taste, sound, touch, smell, sight. Simplified to pressure and purity

Extrinsic to the provision of service

Cannot be fully controlled by the service provider

Taste, for example, influenced by characteristics of container

Intrinsic quality is a technical vectorMeasured from the customer's perspective

Likelihood of expectations not being met

The consumer pays a time price

Well developed system time price is negligible

No water system high time price (African women)

Time price is incurred when the system does not meet expectations

How often will the water meet expectations when it is being used?Pressure?

Purity?

The perfect water company is invisible to the consumerRelates to low involvement.

ServAqua: Supplementary Services

Functional QualityCustomer understanding

Responsiveness

Information provision

Billing

Based on model by Babakus (1993)

Assisting customers with supplementary services.

Functional quality expressed in the model described by BabakusBilling accuracy and clarity

Reliability and efficiency of services

Customer service

Safety consciousness

Dependability

Knowledge level of employees

Providing services at the promised time, responsiveness

Reassurance and understanding

Having customers interest at heart

Willingness of employees to assist customers

Quality of management

Billing clarity

Politeness of employees

Similar to SevQual items

ServAqua Hypothesis

Technical Quality (core services):Intrinsic: Likelihood of confirmation of expectationsMeasured through technology

Extrinsic: Consumer perception of technical qualityTaste panels

Customer surveys

Functional quality (supplementary services)Latent variable

Basedon uni-dimensional model identified by Babakus (1993).

Content Validity

Qualitative researchInterviews: consumer stakeholder groups

Content ValidityRelationship to ability to pay bills

Low involvement

Engineering focus

Interviewed six consumer advocacy organisations that deal with water customers

Questions geared to find out what constitutes good service

Core servicesHigh level of service provided in Melbourne

Passive receivers of service

Low involvement with service, but high expectations of level of service

Involvement increases when expectations are not met

During drought many people became water-aware

Supplementary servicesFinancial hardship often mentioned as a determinant of service quality

Billing issues (clarity and accuracy)

High degree on individual service

Monopoly creates risk averse industry

SummaryModel has a high level of face validity

Content validity largely confirmed15 items from Babakus scale reduced to 13 items

Additional issues of low involvement and hardship as possible moderating variables

Looking Forward

Quantitative data collection

Confirmatory factor analysis

Online ServAqua survey

Currently collecting data from water utilities in Victoria

Using confirmatory factor analysis to test assumptions of one-dimensional

Function quality13 items based on Babakus (7 point Likert scale)

Extrinsic technical quality7 survey items

Testing impact of involvement and hardship as a moderator on service quality

In the past water utilities were managed by engineers. Now they are managed by economists. In the future they should be managed by marketers