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Importance of Customer Service Quality

This document discusses the importance of customer satisfaction and quality service through examples from Southwest Airlines and The Ritz-Carlton hotel. It notes that Southwest Airlines broke even on flights with their 75th customer on average in 1994. It then shares a formula devised by Southwest's chief pilot that showed their total annual profit was equal to the profit from only five customers per flight on average. The document suggests hotels can monitor quality through customer feedback questionnaires, follow-ups, tracking complaints, and occupancy rates. It also lists some strategies for continuous quality improvement like empowering employees, benchmarking, and just-in-time approaches.

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anhnguyen1990
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80 views2 pages

Importance of Customer Service Quality

This document discusses the importance of customer satisfaction and quality service through examples from Southwest Airlines and The Ritz-Carlton hotel. It notes that Southwest Airlines broke even on flights with their 75th customer on average in 1994. It then shares a formula devised by Southwest's chief pilot that showed their total annual profit was equal to the profit from only five customers per flight on average. The document suggests hotels can monitor quality through customer feedback questionnaires, follow-ups, tracking complaints, and occupancy rates. It also lists some strategies for continuous quality improvement like empowering employees, benchmarking, and just-in-time approaches.

Uploaded by

anhnguyen1990
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

The Ritz-Carlton video (7 minutes) is available on the video cassette

from Prentice Hall that accompanies this text. A shorter 2 minute


version of the video also appears on the student CD in the text.
As an introductory note, students may appreciate the following.
The cost of poor service is tremendous, and the cost is magnified
by the negative impact unsatisfied customers have on prospective
customers, as noted in the following example from Southwest
Airlines.
How important is every Customer to our future? Our Finance
Department reports that our break-even Customer per flight in
1994 was 74.5, which means that, on average, only when Customer
#75 came on board did a flight become profitable.
Aside from that statistical data, let me share with you a downto-
earth formula devised by our Dallas chief pilot, Ken Gile, It
utilizes our annual profit and total flights flown to clearly
illustrate how vital each Customer is to our profitability and our
very existence.
When you divide our 1994 annual profit by total flights flown,
you get profit per flight
Then, divide per flight by Southwestern’s system-wide average
one-way fare of $58:
The bottom line, only five Customers per flight accounted for
our total 1994 profit!
Source: Freiburg, Kevin and Jackie Freiburg, “Nuts! Southwest Airlines’
Crazy Recipe for Business and Personal Success,” Bard Press, 1996, p. 120.
$287 (profit per flight)
$58 (average one-way fares)
5 one-way fares [Customers!
$179, 331, 000 (annual profit)
624, 476 (total flights flown)
= $287 (profit per flight)
1. The Ritz-Carlton can monitor quality in the short run
by customer feedback. Questionnaires in the room, follow-up
letters and phone calls by independent services, tracking complaints,
and ultimately by occupancy rates. There are, of course,
objective measures in many aspects of hotel operations. These include
room cleanliness, quality of food, accuracy of billing, and
reservations.
2. For companies that expect quality to be more than a slogan we
suggest they follow the ideas of the text:
_ A philosophy of continuous improvement
_ Employee empowerment
_ Benchmarking
_ Just-in-time (JIT)
_ Knowledge of tools
3. The lack of quality will manifest itself in room rate reductions,
extra supervision, complaints, and ultimately lower occupancy.
4. Great question for class discussion: control charts can be
used for tracking customer complaints, Pareto diagrams to find
where to focus improvement efforts, cause-and-effect diagrams
to analyze the source of causes, in the kitchen, reservations,
billing, etc.
5. Some nonfinancial measures of quality might include those
noted above: room service, food quality, customer complaints, etc.

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