Managing Service Quality in Luxury Organizations

Hakan Ozel

Service is intangible, inseparable, variable, and perishable. Considering these, all great service providing companies have great customer service and employee cultures and focus their undivided attention on both customers and employees.

They understand the service-profit chain, which links the service firm’s profits with employee and customer satisfaction. Service quality model calls not only for external, but internal initiatives to motivate the employees for superior performance and interactive tactics to create luxury service delivery skills in luxury organizations. To succeed, especially against the fierce competition of today, executives must create competitive differentiation, find ways to increase service productivity, but more importantly, offer highest possible service quality.  

One of the major ways that a luxury firm can differentiate itself is delivering consistently a higher quality of everything than its competitors do. Many service industries have joined the total quality movement over the years. Customer retention is perhaps the best measure of quality – a service firm’s ability to hang onto its customers is based on how consistently it delivers the value to them.

Target Customers and Quality Models

Luxury service providers and operators need to identify the expectations of target customers concerning the service quality. In this way, they should design their service quality models. Service quality is harder to define and judge than product quality. It is harder to get agreement on the quality of a haircut than on the quality of a hair dryer. Moreover, although greater service quality results in greater customer satisfaction, it also results in higher cost. Still, investments in service usually pay off through increased customer retention and sales.

Recovery to gain Loyalty

Many luxury service companies have been investing heavily to develop streamlined and efficient service-delivery systems. They want to ensure that customers will receive consistently high-quality service in every service they encounter. However, unlike product manufacturers who can adjust their machinery and input until everything is perfect, service quality will always vary, and depend on the interactions and engagements between employees and customers. Problems will inevitably occur. As hard as they try, even the best companies occasionally have a late delivery, medium steak instead medium well, or grumpy employee at the entrance of the shop.

Although the company cannot always prevent service problems, they can learn to recover from them. And good service recovery can turn unhappy customers into loyal ones. In fact, good recovery can win more customers purchasing and loyalty than if things had gone well in the first place. Therefore, companies should take steps not only to provide good service every time, but also to recover from service mistakes when they do occur.


Well-trained employees should be given authority to delight the customer at the impact point when the customers are frustrated for any reason and that it is an opportunity for the employees to recover their trust and loyalty. When the firms empower the front-line service employees while giving them the authority, responsibility, and incentives that they need to recognize, care about, and delivery customer needs, employees keep guests happy.

Common Virtues

Well-managed luxury companies have common virtues regarding service quality. First and foremost, they are customer obsessed. They have a distinctive strategy for delighting and exciting the customers that wins enduring loyalty. They have a top management commitment to quality. These companies look not only to financial performance, but also at service quality. The best service providing companies set high service quality standards. They do not settle merely for good service but aim for 100 percent defect-free service. A 98 percent performance standard may sound good, but using this standard, thousands of dissatisfied guests move from one mid-size company to competitor, or 10 words are spelt wrongly in each page of a book.

Top service companies watch service performance closely, both their own and that of competitors. They use methods such as comparison shopping, customer surveys, and suggestions and complaints platforms. Finally, best service companies communicate their concerns about service quality to employees and provide performance feedback as well as tools to improve themselves.


Luxury service is a pleasure to receive when you are a customer, and an art to provide when you are an employee of a luxury servicing company. Service quality is the most significant differentiating factor that distinguishes the best companies from their peers in competition.    

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