Elsevier

Industrial Marketing Management

Volume 82, October 2019, Pages 52-69
Industrial Marketing Management

Service quality versus service experience: An empirical examination of the consequential effects in B2B services

https://doi.org/10.1016/j.indmarman.2019.02.017Get rights and content

Highlights

  • Examines the relative consequential effects of service quality versus service experience.

  • Highlights the importance of service experience over service quality in B2B services

  • Extends the current understanding in B2B in terms of creating better customer outcomes.

  • Provides managerial implications to enhance satisfaction, customer loyalty and WOM in B2B services.

Abstract

The present study investigates the role of service experience in B2B services vis-a-vis service quality. In particular, the study addresses the question: how do the relative effects of service quality versus service experience in a B2B setting influence the immediate (satisfaction and perceived value) and subsequent customer outcomes (loyalty and word of mouth)? To this end, three surveys were conducted (with a combined sample size of 626) of customers of financial consultancy services. The collected data is subjected to factor analysis and structural equation modeling to test the study hypotheses. Major findings indicate a stronger influence of service experience on satisfaction and perceived value as compared to service quality. Results also show a stronger indirect effect of service experience on loyalty and word of mouth (via satisfaction) compared to service quality. In addition, service experience was found to influence both perceived utilitarian and hedonic value derived from service while service quality was found to influence only utilitarian value. The findings underline the importance of service experience in a B2B setup.

Introduction

The concepts of service quality and service experience have been discussed as important variables that create a competitive advantage for a service provider (e.g., Greenwell, Lee, & Naeger, 2007; Hollyoake, 2009; Maklan & Klaus, 2011; Millard, 2006; O'Donohoe & Turley, 2007; Sandström, Edvardsson, Kristensson, & Magnusson, 2008). While service quality is conceptualized ‘as the customers’ overall judgment or attitude about the quality of the service’ (Parasuraman, Zeithaml, & Berry, 1985), service experience is conceptualized as “customers' internal and subjective response to any direct or indirect interaction with the service provider across different touchpoints” (Meyer & Schwager, 2007; p. 117). This brings out the fundamental difference between service experience and service quality. While service quality is more related to rational ‘judgments' (Parasuraman et al., 1985), service experience is about emotional ‘internal responses' (Klaus & Maklan, 2012). For example, the evaluation of whether the service is delivered on time would be a measure of service quality, while the way the representative behaved with the client (e.g., was understanding and flexible) would be a measure of experience.

Both these two concepts have been extensively researched in the domain of business to consumer (B2C) marketing (for service quality, refer to studies such as Bloemer, De Ruyter, & Wetzels, 1999; Parasuraman & Grewal, 2000; Kang & James, 2004; Chang, 2008), (for service experience, refer to studies such as: Carú & Cova, 2005; Berry & Carbone, 2007; Bolton, Lemon, & Bramlett, 2006; Greenwell et al., 2007; Millard, 2006; O'Donohoe & Turley, 2007). However, the domain of business to business (B2B) marketing shows a dominance of studies in service quality e.g., Brown & Swartz, 1989; Swartz & Brown, 1989; Moore & Schlegelmilch, 1994; Zeng, Yang, Li, & Fam, 2011; Sarapaivanich & Patterson, 2015; Ng, Plewa, & Sweeney, 2016; Pomirleanu, Mariadoss, & Chennamaneni, 2016; Casidy & Nyadzayo, 2017) and a much less emphasis on service experience (Biedenbach & Marell, 2010).

Interestingly enough, a keyword search using “service experience” leads to only a few papers that discuss the concept of service experience (and/or its consequences) in the B2B setting. Of these papers, some have discussed the concept of service experience at the conceptual level (e.g., Helkkula, 2011); while others have explored the consequences of service experience in the B2B domain (e.g., Biedenbach & Marell, 2010). However, none of these studies has comparatively explored service quality and service experience in the B2B context. This raises the relevance of our study. Researchers emphasize that the intangible nature of services makes it difficult for the service receiver to evaluate the service based solely on quality aspects in B2B setting (Geigenmüller & Bettis-Outland, 2012), as the experience generated by the service provider may be an important component of all customer-centric business (Lusch & Vargo, 2006; Schembri, 2006; Vargo & Lusch, 2008). In addition, there may exist fundamental differences between B2C and B2B services (such as the level of complexity and the number of decision makers involved) concerning the recipient of the service and the mode of interaction between the service provider and the receiver. It could also be argued that service quality pertains to non-experiential or rational aspects of services that are related to functional utility (Batra & Ahtola, 1991; Stock, 2011), for example, maintaining consistency in expected standards. On the other hand, service experience corresponds to experiential or emotional aspects that are related to hedonic utility (Batra & Ahtola, 1991; Strahilevitz & Myers, 1998; Tontini, Søilen, & Silveira, 2013).

To summarize the issues, designing and delivering services that match customers' specific needs and is substantially differentiated from the competitors' through experiential service offerings may work as a critical touch point for B2B services, and may be different from the way it manifests in B2C (Marquardt, Golicic, & Davis, 2011). As per Hague and Hague (2018), most B2B firms are good at quality control, manufacturing and logistics but not at managing customer emotions and experience. The service interaction will be more profound and involve key decision makers in the service relationship that contributes to the B2B customers' evaluation of the concerned service including customer experiences (Biedenbach & Marell, 2010). Hence, a study that examines the consequences of service experience and service quality (at the same time) has the potential to point out the relative effectiveness/importance of one over another (if any) while designing and delivering B2B services (rather than just drawing inferences from B2C services).

Thereby, we investigate the effects of service quality and service experience jointly on their consequent outcomes such as satisfaction, perceived value (utilitarian and hedonic), and subsequent behavior such as loyalty and word of mouth. The understanding of the relative effects of service quality and service experience on the immediate (such as perceived value and satisfaction) and subsequent (such as loyalty) customer outcomes may provide guidance on where to focus efforts to build favorable customer outcomes. In the course of the same, we address the call for research that explores additional constructs beyond service quality that may influence customer attitudes and behavior in the B2B service setting (e.g., Geigenmüller & Bettis-Outland, 2012.

Based on the arguments discussed, the present research poses an important research question: What are the differential effects of service quality and service experience on the immediate (satisfaction and perceived value) and subsequent customer outcomes (loyalty and word of mouth) of a B2B customer? To this end, we conduct three surveys (with sample sizes of 176, 200 and 250) of customers of financial consultancy services and apply factor analysis and structural equation modeling to test the study hypotheses.

The rest of the paper is organized as follows: in Section 2, we provide a review of the literature on service quality, service experience and their consequences followed by the theoretical background of our study in Section 3. This leads to the formulation of the study hypotheses in Section 4. Following this, we outline the study methodology in detail (Section 5). In Section 6, we discuss the results of the first two surveys followed by the rationale, methodology and findings from the additional study in 7 Exploring the nuances: Survey 3, 8 Survey 3: details. The theoretical and managerial implications are discussed in 9 Discussions, 10 Managerial implications respectively. Finally, we conclude the study in Section 11 with the limitations and scope.

Section snippets

Literature review

In addition to the arguments presented in the introduction, we presume that service quality and service experience are developed through different sources in a B2B service setting. Service quality is generated through the perception or evaluation of the quality of service attributes that are under control of the B2B service provider that is predominantly rational (Helkkula, 2011; Lemke, Clark, & Wilson, 2011). On the contrary, service experience is the psychological outcome that is generated

The theoretical paradigm of the study

In this research, we utilize two main theoretical streams that can be used to explain the importance of service experience over service quality and its impact on customer-driven outcomes in B2B service settings. These streams are rooted in (a) Idiosyncratic Service Experience (ISE: Collier, Barnes, Abney, & Pelletier, 2018), and (b) Cognitive-Experiential Self-Theory (CEST: Epstein, 2003).

ISE explains the importance of developing a unique service experience for the customer in a service

Hypothesis formulation

In the literature review section, we presented the differences between service quality and service experience in the context of B2B services and raised the need to investigate both in the same study. In this section, we build upon the discussions in the literature review and introduce the linkage between managerial processes in B2B service purchase (and consumption) and service experience. The need for service experience over service quality could be argued from the relationship marketing

Choice of the country

We selected India as the focal country for study. India has shown significant economic growth and held potential for the service sector internally and externally (Clark & Rajaratnam, 1999; Javalgi & Steven White, 2002). India experienced a shift from agriculture to the services sector (Jain & Ninan, 2010) owing to its liberalization and economic reforms (Jain & Ninan, 2010). The economic growth, in turn, has led to a rise in per capita income that has stimulated demand for non-discretionary

Results

The survey data were collected in such a way that balance is maintained in factors such as industry, company size, age, turnover and term with the present financial consultancy firm (Refer to Table 1 for sample demographics). The question to check for the perceived experiential level of the focal service resulted in a mean of 3.3 (survey 1) and 3.19 (survey 2). This implied that the respondents perceived FC services to be moderate on experience.

Exploring the nuances: Survey 3

In surveys 1 and 2, we considered perceived value in a generic form. However, in marketing, a consensus has emerged over time that supports the notion that value derived out a product or service consist of two distinct aspects: hedonic and utilitarian values (Batra & Ahtola, 1991; Block, 1995; Dhar & Wertenbroch, 2000). For example, Diefenbach, Kolb, and Hassenzahl (2014) conceptualized hedonic and utilitarian product values as distinct that are derived out of distinct drivers and have a

Questionnaire and methodology

The questionnaire in survey 3 included both the ISV and the EXQ items as in surveys 1 and 2. Measures for perceived utilitarian and hedonic values were adopted from Rintamäki, Kanto, Kuusela, and Spence (2006). The scale developed by Rintamäki et al. (2006) has six items each to measure utilitarian and hedonic value respectively. We also replaced the satisfaction scale used in survey 1 and 2 with a more direct “performance-based” approach as suggested by researchers (Cronin and Taylor, 1992;

Discussions

The current study contributes to a better understanding of the consequential effects of service quality versus service experience in professional B2B services. The uniqueness of the study, which differentiates it from previous research, is the emphasis on relative consequential effects of service quality and service experience on value dimensions and customer outcomes in B2B services (as indicated by Meyer & Schwager, 2007). B2B services are designed to fulfill the specific requirements of the

Managerial implications

The study brings forward some managerial implications that urge B2B service providers to differentiate service quality from service experience. First, the service provider must underline the role of service experience in a B2B service delivery rather than having a traditional approach of a rational orientation. While the findings do not undermine the role of service quality, it only displays the relatively stronger effects of service experience on satisfaction and perceived value. Thereby,

Limitations and scope

The present study answers the call for more research on service experience in the B2B domain (Voorhees et al., 2017). However, the present study also has a few limitations that may lead to the scope for future research. First, the study was conducted in a developing nation. Researchers have noted several differences in service delivery and consumption between developed and developing countries (Malhotra, Agarwal, & Peterson, 1996). Therefore, an interesting extension of the study would be

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    1

    Subhadip Roy is Associate Professor of Marketing at the Indian Institute of Management Ahmedabad. His research interests include services marketing, B2B brand management and advertising. His publications have appeared in Marketing Letters, Psychology and Marketing, Journal of Marketing Communications among others. He is also an avid case writer and his teaching cases have appeared in Ivey Case Collection and The Case Journal.

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    Sreejesh S is Assistant Professor of Quantitative Methods & Marketing at the School of Management Studies, Cochin University of Science and Technology, Kochi, India. His main research interests include brand management, services marketing, online marketing & advertising. His publications have appeared in Journal of Travel and Tourism Marketing, Internet Research, Journal of Product and Brand Management, British Food Journal, Management Research Review, International Journal of Bank Marketing, Journal of Hospitality and Tourism Technology, among others. He has also authored books of international repute with Pearson India and Springer International.

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    Sandhya Bhatia is qualified Chartered Accountant with Master degrees in Commerce and Management. She earned her PhD in commerce from Mohanlal Sukhadia University, Udaipur. Her research interest is in the area of financial marketing, financial disclosures, corporate governance and audit quality. Prior to joining academia, she was engaged as practicing chartered accountant. She also has experience of serving as director on corporate boards.

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