Service Gap Analysis 101: Reshape Your Service Strategy

Are you in a situation where your company offers perfect services or products, but most of your potential customers gravitate toward the competitors even though they have longer delivery times and higher prices? If this sounds familiar, you might have a service gap issue.

A customer service gap is a difference between what your customers expect and what they get based on their perceptions. How do these situations occur? Why do so many companies have service gaps? And how can you fix them? We’ll answer those questions for you in this blog post.

What Is a Service Gap Analysis? How Does It Work?

As proposed by Parasuraman, Zeithaml, and Berry (PZB) in 1985, a service gap analysis is an effective methodology used to evaluate and improve customer satisfaction levels. Also known as the Gap Model for Customer Service, it rests upon two concepts:

Customer expectations.

These are a customer’s beliefs and thoughts about a product or a service before accessing it. These expectations are subjective and largely depend on the cultural and ethnographic background, family status, age, lifestyle, and past experiences of your customers, as well as what they already know about your brand.

Customer perception.

It’s a subjective opinion about your brand that consumers form after interacting with it. This opinion is based solely on their experience with your company, its services, and their communications with your staff.

By taking a closer look at these two aspects, the service gap analysis allows you to determine which part of your business strategy causes customer dissatisfaction (a customer service gap) and what you need to change or improve. Besides this, it identifies four types of gaps that cover various aspects of customer-company relationships.

The Four Gaps in Customer Service

Based on the PZB approach, a customer service gap occurs when perception falls short of expectations. But the main caveat here is, it’s often not so easy to identify the causes for this discrepancy. That’s where the four service gaps come in.

The Knowledge Gap

The knowledge gap is the difference between the customer’s expectations and the company’s perception of customer needs. It occurs due to a lack of proper market research, insufficient communication between the company and the clients, or a knowledge silo between the management and the employees working with customers.

In this case, the management doesn’t know (or understand) what the customers want or need. For example, a bookstore failing to stock the most popular books or books from famous authors is doomed to fall behind the competition no matter how many offerings it has.

The Policy Gap

The policy gap means that the management understands the customer needs but fails to implement them fully or accurately in their products or services. Such gaps manifest in poor customer service, lack of regular quality checks, or lack of timely updates of service level standards.

For instance, if a company sells trendy tote bags of poor quality, the customers will look for the same bags (but of better quality) from competitors. And this is not an assumption: a whopping 89% of customers are willing to stop purchasing from a company due to a poor experience and will look for alternatives instead.

The Delivery Gap

The delivery gap exposes the differences between the service in theory and how employees carry it out. This occurs when a company has poor human resource policies and doesn’t have proper onboarding and training practices. As a result, employees may lack the qualifications, knowledge, or motivation to manage the customer needs.

In this case, it all comes down to the customer experience with company representatives. Even if the product or service itself fulfills customer needs, this won’t matter if the experience with the employees was unsatisfactory.

Imagine going to a beauty store to buy some face cream, and asking employees for advice, only for them to direct you to the nail polish section. Even if the store stocks exactly the right face cream for you, this doesn’t matter if the employees can’t direct you to it.

The Communication Gap

The communication gap appears when the company advertises its products and services in a way that doesn’t reflect reality. Creating a flawless promotional campaign is one thing but delivering on what you’ve promised is another.

If the company’s description of the services doesn’t match the actual service delivery, customers will be disappointed and distrustful. Of course, most companies don’t put invalid information out there intentionally. But poor analysis and evaluation of a company’s capabilities may lead to unrealistic promo campaigns. For example, a company promises fast delivery but cannot manage the flow of orders, and some customers don’t get their orders in the expected time.

The combination of these gaps leads to a global customer service gap. Even one of the mentioned gaps can lead to customer dissatisfaction and reduced income levels. Meanwhile, companies that manage to keep their customer satisfaction level above average in their sector achieve 9.1% revenue growth compared to 0.4% for those below the average.

A proper analysis of customer satisfaction will help you increase your company’s income. So, let’s find out how to do it in a way that will benefit you.

Understanding the Discrepancy Between Customer Expectations and Perceptions

Being a pivotal component of the gap model of service quality, the customer gap highlights the disparity between the service customers anticipate and the service they perceive. This gap is crucial in assessing customer satisfaction and loyalty. To bridge the Customer Gap effectively, companies must delve into the intricacies of customer expectations and align their service delivery accordingly.

Factors Contributing to the Customer Gap

Unclear Communication

When companies fail to communicate their offerings clearly, customers may form inaccurate expectations. For instance, ambiguous product descriptions or misleading advertisements can create a significant gap.

Example: A technology company introduces a new product with a complex technical description that is not easily understood by the average consumer. The gap widens when customers misinterpret the product’s features, expecting functionalities that the product does not possess.

Inconsistent Service Quality

Fluctuations in service quality contribute to the gap in service. If customers experience inconsistencies in the level of service across different interactions or touchpoints, it can lead to dissatisfaction.

Example: A hotel chain maintains high service standards in some locations but experiences inconsistencies in others. Customers who have positive experiences in one branch may anticipate a similar level of service elsewhere, leading to a perceptual gap when their expectations are not met.

Unmet Promises

When companies make promises regarding their products or services and fail to fulfill them, it widens the gap in service. Unmet expectations can result from delayed deliveries, poor customer support, or product defects.

Example: An e-commerce platform guarantees next-day delivery during a promotional campaign but fails to fulfill this promise due to unforeseen circumstances. The resulting gap arises when customers expect prompt delivery based on the company’s assurance, only to be disappointed.

Lack of Personalization

Customers increasingly expect personalized experiences. When companies overlook individual preferences and provide generic services, it can contribute to a significant gap between what customers anticipate and what they actually receive.

Example: An online streaming service recommends content solely based on popularity without considering individual viewing habits. Subscribers may feel a gap between their expectation of personalized content recommendations and the generic suggestions they receive.

Instances Illustrating the Gap Models of Service Quality

The Knowledge Gap Example

Tech Company: Fails to conduct regular market research to understand evolving customer needs. As a result, the company continues to produce outdated products that do not align with current consumer expectations, creating a significant knowledge gap.

The Policy Gap Example

eCommerce Platform: Acknowledges the importance of swift deliveries but lacks effective logistics policies. The gap widens as delayed shipments persist, showcasing a policy gap where the company’s understanding of customer needs is not translated into efficient service delivery.

The Delivery Gap Example

Restaurant: Boasts about providing exceptional customer service, yet inadequately trains its staff. The gap emerges when customers encounter unsatisfactory dining experiences due to untrained employees, highlighting a delivery gap between the promised service and the actual customer experience.

The Communication Gap Example

Telecommunications Provider: Advertises seamless connectivity but fails to address network issues promptly. Customers experience disruptions, emphasizing a communication gap where the company’s promotional messaging doesn’t align with the actual service delivery.

The Personalization Gap Example

Fashion Retailer: Sends generic marketing emails without considering individual preferences. Customers feel overlooked, underlining a personalization gap where the company’s outreach lacks tailored content, leading to a disconnect between customer expectations and the actual customer experience.

How to Run a Service Gap Analysis Properly

Running the service gap analysis is complex and involves many steps. Unfortunately, many managers prioritize the wrong details or focus on insignificant factors, making the whole process inefficient and pointless.

So, here’s a list of a few key ideas to keep in mind while conducting a service gap analysis:

1 Define Clear End-Goals Before Conducting an Analysis

Clearly articulate the objectives and outcomes you aim to achieve through the service gap analysis. Whether it’s enhancing overall customer satisfaction, reducing delivery times, or improving specific service touchpoints, defining end-goals provides a focused direction for the analysis.

2 Research Each Part of Your Customer Service Process Carefully to Discover Every Problem Spot

Conduct an in-depth examination of each facet of your customer service process. Identify touchpoints, communication channels, and operational aspects that may contribute to service gaps. Thorough research lays the foundation for a comprehensive analysis by uncovering potential issues and areas for improvement.

3 Determine Your Customer Expectations by Conducting Interviews, Gathering Feedback, Researching the Market

Engage with your customers directly through interviews and gather feedback to understand their expectations. Additionally, conduct market research to comprehend broader industry trends and customer preferences. This step ensures a holistic view of customer expectations, allowing you to align your analysis with the diverse needs of your target audience.

4 Set Measurable Goals You Want to Achieve Through the Service Gap Analysis

Establish specific, measurable, achievable, relevant, and time-bound (SMART) goals for your service gap analysis. Whether it’s improving customer satisfaction scores, reducing complaint resolution times, or enhancing product delivery accuracy, having measurable goals provides a framework for evaluating the success of your analysis and subsequent actions.

5 After You Identify Your Service Gaps, Create a Prioritized List of Changes and Actions to Fix Them

Once service gaps are identified, prioritize them based on their impact on customer satisfaction and business objectives. Develop a detailed action plan that outlines the changes, improvements, and initiatives required to address each identified gap. Creating a prioritized list ensures that resources are allocated efficiently to tackle the most critical issues first.

A service gap analysis takes a lot of time and resources, so be sure to perform it in the right way.

SWOT Analysis vs Service Gap Analysis: Which One Is Better?

A service gap analysis isn’t the only approach to business assessment. For instance, a SWOT (strengths, weaknesses, opportunities, and threats) analysis is another technique widely used by marketing specialists. Since each of these methods requires significant time and money to be implemented, you don’t want to go with the wrong one. So, how do you choose the proper analysis approach? First, consider what you want to get out of it.

A SWOT analysis is applied to evaluate a company’s performance against its competitors. It’s more applicable for establishing a company’s long-term goals and analyzing the company’s place in the market. Meanwhile, a service gap analysis is an internal evaluation of a company’s activity to highlight weak spots in its work process. A service gap analysis is appropriate when you want to course correct one of your processes and solve a specific issue that causes customer dissatisfaction.

Thus, the question isn’t which method is better or worse, but which one matches your goals the best.

Customer Experience Gap in Digital Banking

Banks are feeling the pressure to upgrade their services and meet customer expectations, but even with big investments, success isn’t always guaranteed. A real-life story shows how a European bank tried to improve its mobile app but ended up with delays, higher costs, and unhappy customers. The app’s user rating dropped from 3.5 to 2.4, and satisfaction kept falling. What went wrong? The answer lies in the customer experience gap—the disconnect between what the bank thought it was delivering and what users actually experienced.

The bank poured time and money into a new app, but internal issues like poor design, lack of customer feedback, and teams working in silos made things worse. Even though management was confident, they didn’t realize how out of touch they were with the real needs of customers and frontline employees.

Here’s what customer service managers need to know to avoid these CX gaps:

• Culture Gap: The company isn’t fully customer-focused.
• Feedback Gap: Customer feedback isn’t used effectively to make improvements.
• Design Gap: The product design doesn’t prioritize user experience.
• Execution Gap: Projects aren’t delivered on time or up to standard.
• Value Gap: The product doesn’t align with what customers want or need.
• Overpromise Gap: The marketing promises don’t match what the product delivers.
• Emotional Gap: There’s no strong emotional connection between the brand and customers.

To close these gaps, it’s crucial for customer service teams to stay in tune with both customers and employees. Better communication and collaboration between teams can help catch issues early, preventing frustration and keeping customers happy during digital transformations.

Recap

If you fail to meet customer needs, your business has slim chances of succeeding. Luckily, a service gap analysis allows you to target specific problems that lead to a mismatch between what consumers expect and what they perceive you deliver.

Analyzing different service gaps allows you to focus on different parts of the customer experience and identify weak and strong aspects of your work process. It’s the first step toward an improved and more efficient service strategy.

Summary: Master Service Gap Analysis