The Difference between Service Quality and Customer Satisfaction


What’s the Difference between Service Quality and Customer Satisfaction?

Although they are interrelated concepts, there is a difference between service quality and customer satisfaction. As discussed further in a separate article on customer satisfaction (CSAT), CSAT is the customer’s evaluation of the product/service relative to the customer’s prior expectations.

Service quality, however, is the consumer’s estimate of the firm’s overall level of quality. (Please note that the components of service quality are discussed further in a review of the SERVQUAL model.)

To understand this distinction better, let’s consider a simple example below.

Service Quality versus Customer Satisfaction example

Assume that there is a small fast-food store in a local area. The store provides a basic quality of burgers and fries on a take-away basis only, but at very reasonable prices. The store is generally clean, but not overly attractive, and tends to serve its meals with a 5-10 minute turnaround.

This type of store tends to appeal to local residents who are attracted to its convenience and price value. The customers would tend purchase food on a regular basis (say every few weeks) when they don’t have time to cook (or don’t feel like cooking), simply as a replacement for lunch or dinner prepared at home.

difference between service quality and customer satisfaction
difference between service quality and customer satisfaction
(Click to enlarge)

These regular customers would know what to expect from this store and, therefore, would be generally satisfied with the food, price and service. However, they would generally acknowledge that the overall quality of this business (in terms of service – take-away only, physical facilities, food quality) is relatively low as compared to most other restaurants and food outlets.

Therefore, even though the customers recognize that the firm’s overall (service) quality is low, they are satisfied because it fits within their range of expectations for this store. The opposite situation might apply when visiting a very expensive restaurant – where a consumer may recognize the high overall quality of the firm, but be disappointed on some aspects due to quite high expectations.

This is demonstrated the above diagram/model.

 Strategy or tactics?

It is important that the marketers clearly understand the distinction between service quality and customer satisfaction.

If an organization has a significant number of dissatisfied customers, then the organization should look to improve customer satisfaction levels either by shaping more realistic expectations for customers OR by improving their service quality. These moves, in general, should be a realignment of expected and delivered value, rather than a substantial change.

This is because overall service quality needs to be aligned to the firm’s competitive strategy. By dramatically increasing or decreasing the firm’s service quality they will appeal to a different target market and be faced with a different set of competitors.

For example, think of a hotel chain. If they are a low quality budget hotel, then they will be targeting budget conscious consumers and also be competing against caravan parks and backpacking hostels. Whereas a five-star hotel chain targets corporate clients, upper social class consumers and those people enjoying special occasions.

Therefore, in summary, dramatic changes in service quality, either up or down, are quite strategic, whereas customer satisfaction goals are an alignment of consumer’s expectations to delivered service quality (that is, tactical).

In many situations, improving service quality is more important than increasing customer satisfaction scores.

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