The CPA Journal

Service Quality

By Robin L. Wakefield

In 1994, the Special Committee on Assurance Services recommended that CPAs begin to broaden their list of service offerings to include new assurance services such as WebTrust, Eldercare, Performance View, and SysTrust. For many years, CPAs have enjoyed all the advantages of the audit franchise, developing and maintaining a high level of integrity recognized by the public. Similarly, CPAs have sustained growth in accounting and tax services despite increased competition. It is not known, however, whether the CPA’s reputation provides a competitive advantage in these markets for assurance services. Ensuring success in competitive environments may require implementing competitive strategies such as the critical evaluation of service quality.

Market-oriented organizations make frequent use of service quality surveys to assess the company’s performance at the point of contact with the customer. Service quality is so important for success that banks, hospitals, restaurants, and other organizations tie executive compensation to corporate service quality results. Service quality feedback information in new assurance service areas can help the CPA establish a foothold in the market by—

determining whether client expectations are being met
providing accountability for staff
pinpointing the changes in staff or service levels needed to sustain growth
determining the need for office renovation or relocation.

Managing Defections

During a given year, any service organization will experience customer turnover. Most firms, however, have little objective information as to why clients leave. The defection of just one client represents a loss of a revenue stream that continues over many years. Firms that focus on the value of a client, measured in terms of expected cash flows over the client’s lifetime, understand these long-term implications. Firms that both manage defections and attract new clients can position themselves for future growth.

Marketing research reveals that clients are unlikely to verbally tell the service provider why they are dissatisfied. Dissatisfied clients simply leave and generate negative word-of-mouth, frequently without the knowledge of the service provider. Because reputation is a critical element of marketing, the firm that recognizes the value of service quality will not only retain loyal clients, but also stand out in an increasingly competitive market. CPAs cannot afford not to know what clients really think about their service offerings, especially in newer assurance services areas.

Defining Tangible and Intangible Service Quality

Service quality is defined as the difference between expectations of service and perceptions of service actually received. Service quality reflects both the manner and the location of the service delivery. Clients often make inferences about service quality based upon tangible and intangible cues observed during interactions with the firm.

The tangible aspects of service quality comprise all that the client can see, touch, hear, and smell when the services are delivered. It includes not only the physical output of the service, but also the physical facilities, the equipment, and the appearance of personnel. Firms should consider facilities design and promote a positive employee image to current and prospective clients.

The intangible aspects of service quality comprise the manner in which services are delivered. Service performance describes all aspects of the delivery of services, such as reliability, responsiveness, assurance, and empathy:

Reliability means consistency and dependability. It means the service is performed right the first time, when promised. A sincere interest is shown in solving the client’s problems. Reliability also includes accurate billing and record keeping.
Responsiveness concerns the willingness of staff to provide prompt and attentive service. Clients must feel that the CPA knows, and can quickly respond to, their questions.
Assurance encompasses the client’s feelings of security, safety, and confidentiality. Personal information must be kept private to earn trust.
Empathy means seeing things from the vantage point of the client. Practically speaking, the CPA is available to the client when needed, convenient hours are provided, specific client needs are understood, personal attention is given, and the CPA has the client’s best interests at heart.

Measuring Perceptions of Service Quality

Measuring the perception of service quality is a relatively easy undertaking thanks to the research and development of a reliable survey that is applicable to practically any service industry. Current research has demonstrated the success of variations of the SERVQUAL scale in measuring service quality for both management advisory services (MAS) and audit services. Exhibit 1 illustrates an adapted version of the much-used SERVQUAL scale that can be used by CPAs to measure perceptions of the tangible and intangible aspects of service quality. Each survey line item is averaged to obtain a mean client score for each service quality statement. Firms can then evaluate their average rating for each aspect of service quality and take appropriate remedial actions. Survey feedback can provide a valuable basis for service initiatives. The following are two possible results-directed approaches to conducting the survey:

Target clients that did not renew services in a specified area. This survey may provide a more useful evaluation of service quality strengths and weaknesses than a survey of current, contented clients.
Survey present clients and group them according to their responses. Pay attention to what may seem like minor deviations from excellence, and act immediately to correct major deviations.

In conducting any survey, be sure to enclose a self-addressed stamped envelope and guarantee anonymity and confidentiality. Allow for open-ended responses that can provide an opening for clients to expand on their responses and provide additional information. Make personal contacts via a visit, card, letter, phone call, or e-mail to remedy commonly mentioned service problems.

Strategies to Enhance Service Quality

Service providers routinely implement a variety of strategies aimed at enhancing service quality. Firms that regularly require the client’s presence on site use the tangible aspects of service quality to project a desired firm image. When the unique feature of the service offering is intangible (e.g., tax return preparation), it may be even more important to stress the tangible service quality cues. Clients form an overall judgment about their experience with the firm based on both types of cues. Several strategies for improving tangible and intangible cues are listed in Exhibit 2.

In the final tally, the client’s perceptions are the only reality that matters. A competitive edge is created when a firm takes steps to assess how clients perceive the quality of the services delivered and acts to improve upon those perceptions. The firm engaging in new assurance services areas can create an advantage in these competitive environments by focusing on delivering quality service.

Robin L. Wakefield, PhD, CPA, is visiting professor in MIS and a PhD candidate in accountancy at the University of Mississippi, Oxford, Miss.

Editors:
Anthony H. Sarmiento
The CPA Journal

Robert H. Colson, PhD, CPA
The CPA Journal

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The CPA Journal is broadly recognized as an outstanding, technical-refereed publication aimed at public practitioners, management, educators, and other accounting professionals. It is edited by CPAs for CPAs. Our goal is to provide CPAs and other accounting professionals with the information and news to enable them to be successful accountants, managers, and executives in today's practice environments.

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