Service Quality versus 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.

What is Customer Satisfaction?

As discussed 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.

Because it is an evaluation, the assessment of customer satisfaction occurs AFTER a service encounter. It is a form of post-purchase (or encounter) evaluation. Customer satisfaction is a consumer’s conscious or unconscious evaluation of the service quality that they received as compared to their prior expectations.

If the service quality that they received was equal or greater than what they were expecting, then the consumer will be satisfied or potentially delighted. However, if the service quality was less than their expectations, then the consumer will be dissatisfied with the service or encounter.

What is Service Quality?

Service quality, however, is the consumer’s estimate of the firm’s OVERALL level of quality, taking into account a wide variety of aspects. Please note that the components of service quality are discussed further in a review of the SERVQUAL model.

While there are several variations of what is included as potential service quality components, here is one accepted list of the scope of service quality:

  • reliability and consistency of the service
  • responsiveness of the firm
  • perceived competence of the skills and knowledge of the service provider
  • access and approachability, and ease of contact
  • courtesy, respect, and friendliness
  • communication and information
  • credibility, trustworthiness and honesty
  • security, personal safety, and reassurance
  • understanding and meeting customer needs by the service provider
  • physical surroundings and other tangibles

As can be seen, service quality considers a variety of elements in the service encounter/s itself.

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.

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.

And 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 following simple model:

As can be seen above, it is possible for consumers to be SATISFIED with a low quality offering, as well as a high quality offering. Therefore, higher service quality does not necessarily guarantee higher levels of customer satisfaction, primarily because the consumer’s expectations will generally be higher.

This means that businesses should look to manage both expectations and service quality accordingly.

Where are the Service Gaps?

Customer satisfaction tends to be an overall assessment. We may ask consumers whether they are satisfied or not on some form of market research scale. This will help measure the overall customer satisfaction metric, but it tells us very little else. If we find out that our average satisfaction score is 3.7/5 – so what? What do we do now?

That’s where the assessment of service quality comes in and can be very important for a service organization. If we use the SERVQUAL style questionnaire, or the list of service quality components above, or some other variation in our research – then we can identify where are our service gaps and what is driving the consumer’s overall satisfaction evaluation.

For example, if we are a fitness center with a low level of customer satisfaction – does that relate to: the quality of our equipment, the perceived skill level of our staff, how our staff and customers interact with each other, do our customers feel safe using our equipment, and so on?

By digging deeper into the elements of service quality, and comparing that against what consumers expected – then we can identify the underlying drivers of our good/poor customer satisfaction levels – in other words, what are our service gaps?

Manage Expectations or Modify Service Quality?

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

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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