Research proposal

CUSTOMER SATISFACTION AND SERVICE QUALITY IN UK FINANCIAL SERVICES 1 (Accepted for inclusion in the International Journal of Production and Operations Management) 1 H Maddern 1 Dr R S Maull Dr P A Smart 2 P Baker 1 University of Exeter Discussion Papers in Management Paper number 07/10 ISSN 1472-2939 Exeter Centre for Strategic Processes and Operations (XSPO), School of Business & Economics, University of Exeter, Streatham Court, Rennes Drive, Exeter, EX4 4PU 2 Director of Group Operations, Lloyds TSB, 25 Gresham Street, London, EC2V 7HN CUSTOMER SATISFACTION AND SERVICE QUALITY IN UK FINANCIAL SERVICES ABSTRACT This paper reports the results of a longitudinal study into the drivers of customer satisfaction in a large UK Bank. The findings confirm the significance of staff satisfaction and service quality, suggested by the service profit chain literature, but dispute that this comprises a simple linear relationship. The findings also question the pre-eminence afforded to the soft elements of the service encounter suggested by much of the Services Marketing literature. A five year study of the relationship between customer satisfaction and the technical and functional aspects of service quality suggests that technical service quality plays a critical role in determining customer satisfaction. Further analysis identifies Business Processes Management as a significant driver of technical service quality. Key Words: Service Quality; Business Process Management; Financial Services INTRODUCTION Satisfying customers is a core business challenge which has attracted considerable research attention. The existing customer satisfaction literature is dominated by two theoretical perspectives: the service profit chain (Heskett et al, 1994) and SERVQUAL (Parasuranam, Zeithmal & Berry, 1985). In brief, the service profit 1 chain posits a positive relationship between staff satisfaction, service quality and

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(1997), ‘Business process management: a boundaryless approach to modern competitiveness’, Business Process Management Journal, Vol 3, No 1, pp 64-8 Appendix 1: Technical service quality data Correlations between service level performance and levels of complaints (TSQ) Service level achievement Group Operations Jan 02 - Sep 04 Period % SLA achieved TSQ q1 2002 0.604651 0.000166 q2 2002 0.665733 0.000222 q3 2002 0.703515 0.000247 q4 2002 0.777778 0.000308 q1 2003 0.790724 0.000286 q2 2003 0.739130 0.000269 q3 2003 0.848039 0.000300 q4 2003 0.848701 0.000288 q1 2004 0.925803 0.000288 q2 2004 0.905096 0.000273 q3 2004 0.920875 0.000293 Correlation 0.79 Service level achievement Branch Queuing - Jan 00-Dec 02 Period % SLA achieved TSQ q1 2001 65.30 0.000183 q2 2001 63.83 0.000154 q3 2001 62.43 0.000124 q4 2001 63.20 0.000144 q1 2002 66.80 0.000166 q2 2002 68.97 0.000222 q3 2002 68.53 0.000247 q4 2002 68.80 0.000308 Correlation 0.871402 36 20 5 5 25 5 3 15 81 20 5 4 20 5 3 15 80 20 5 4 20 4 3 12 80 20 5 3 15 4 3 12 79 20 5 3 15 4 3 12 79 20 5 3 15 3 3 9 76 15 5 3 15 3 3 9 67 15 5 3 15 3 3 9 67 9 3 3 9 3 3 9 51 6 3 3 9 3 3 9 48 6 3 3 9 3 3 9 45 9 3 3 9 3 3 9 48 9 3 3 9 3 3 9 48 9 3 3 9 3 3 9 48 9 3 3 9 3 3 9 48 9 3 3 9 3 2 6 39 TOTAL TOTAL ment Deploy structure TOTAL Infra ment Deploy structure TOTAL Infra 4 4 4 4 4 4 3 3 3 2 2 3 3 3 3 3 ment Deploy structure TOTAL Infra ment Deploy structure TOTAL Infra ment Deploy structure 37 2004-Q4 3 4 12 3 3 9 5 4 20 5 5 25 5 4 20 86 2004-Q3 3 4 12 3 3 9 5 4 20 5 5 25 5 4 20 86 2004-Q2 3 4 12 3 3 9 5 4 20 5 5 25 5 3 15 81 2004-Q1 3 4 12 3 3 9 5 2003-Q4 4 4 16 3 3 9 5 2003-Q3 4 4 16 4 3 12 5 2003-Q2 4 4 16 4 4 16 5 2003-Q1 4 4 16 4 4 16 5 2002-Q4 4 4 16 4 4 16 5 2002-Q3 4 3 12 4 4 16 5 2002-Q2 4 3 12 4 4 16 5 2002-Q1 4 3 12 4 3 12 3 2001-Q4 4 3 12 4 3 12 3 2001-Q3 3 3 9 4 3 12 3 2001-Q2 3 3 9 4 3 12 3 2001-Q1 3 3 9 4 3 12 3 2000-Q4 3 3 9 4 3 12 3 2000-Q3 3 3 9 4 3 12 3 2000-Q2 3 2 6 3 3 9 3 2000-Q1 3 2 6 3 3 9 3 3 9 3 2 6 3 2 6 36 Infra Strategy Architecture Ownership Measurement Improvement Appendix 2: Business Process Management Assessment 650 staff trained 160 projects ongoing 39 processes measured Sigma training launched reduced from 300k to 90k dashboard (PPs) opportunities reported Launch of 14 UKRB POTs 100 quick win reduction in complaints Lending POT reports 43% Improvement method measured 98% of customer touches Launch of 5 Enterprise POTs Development of Process published Detailed process definitions Governance Enterprise Framework UKRB POTs launched Authority 38 2003-Q4 34 dashboards in place £3m benefits: defects 2003-Q3 2003-Q2 ARIS training launched 2003-Q1 Group Sigma reporting ARIS as new software POTs recognised as integral Improvement targets 2002-Q4 17 dashboards in place 2002-Q3 Review of software launched 2002-Q2 Full Time resource allocated 2002-Q1 IT, HR, Audit use EF Full Time Process Owners 1 st processes’ Standard ARIS dropped as Bank POTs created for ‘sub launched 2004-Q4 Customer Experience Teams launched 2004-Q3 Waste reduction programme of some POTS 2004-Q2 Distribution take ownership Six Sigma 2004-Q1 PDA restructured – focus on 2001-Q4 New CEO attends launch of 2001-Q3 Group Process Forum 2001-Q2 Launch of Intranet Site Introduction of Process 2001-Q1 Process Repository 2000-Q4 Processes mapped /IDEF0 Measurement pilot POT Quick Wins 2000-Q3 Development of initial 2000-Q2 Launch of Process Design 2000-Q1 Strategy Architecture Ownership Measurement Improvement Appendix 3: Business Process Management - Summary Time Line