GAP ANALYSIS

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Gap analysis generally refers to the activity of studying the differences between standards and the delivery of those standards. For example, it would be useful for a firm to document differences between customer expectation and actual customer experiences in the delivery of medical care. The differences could be used to explain satisfaction and to document areas in need of improvement.

However, in the process of identifying the gap, a before-and-after analysis must occur. This can take several forms. For example, in lean management we perform a Value Stream Map of the current process. Then we create a Value Stream Map of the desired state. The differences between the two define the "gap". Once the gap is defined, a game plan can be developed that will move the organization from its current state toward its desired future state.

Another tool for identifying the gap is a step chart. With the step chart, various "classes" of performance are identified—including world-class status. Then, current state and desired future state are noted on the chart. Once again, the difference between the two defines the "gap".

The issue of service quality can be used as an example to illustrate gaps. For this example, there are several gaps that are important to measure. From a service quality perspective, these include: (1) service quality gap; (2) management understanding gap; (3) service design gap; (4) service delivery gap; and (5) communication gap.

Service Quality Gap.

Indicates the difference between the service expected by customers and the service they actually receive. For example, customers may expect to wait only 20 minutes to see their doctor but, in fact, have to wait more than thirty minutes.

Management Understanding Gap.

Represents the difference between the quality level expected by customers and the perception of those expectations by management. For example, in a fast food environment, the customers may place a greater emphasis on order accuracy than promptness of service, but management may perceive promptness to be more important.

Service Design Gap.

This is the gap between management's perception of customer expectations and the development of this perception into delivery standards. For example, management might perceive that customers expect someone to answer their telephone calls in a timely fashion. To customers, "timely fashion" may mean within thirty seconds. However, if management designs delivery such that telephone calls are answered within sixty seconds, a service design gap is created.

Service Delivery Gap.

Represents the gap between the established delivery standards and actual service delivered. Given the above example, management may establish a standard such that telephone calls should be answered within thirty seconds. However, if it takes more than thirty seconds for calls to be answered, regardless of the cause, there is a delivery gap.

Communication Gap.

This is the gap between what is communicated to consumers and what is actually delivered. Advertising, for instance, may indicate to consumers that they can have their cars's oil changed within twenty minutes when, in reality, it takes more than thirty minutes.

IMPLEMENTING GAP ANALYSIS

Gap analysis involves internal and external analysis. Externally, the firm must communicate with customers. Internally, it must determine service delivery and service design. Continuing with the service quality example, the steps involved in the implementation of gap analysis are:

• Identification of customer expectations
• Identification of customer experiences
• Identification of management perceptions
• Evaluation of service standards
• Evaluation of customer communications

The identification of customer expectations and experiences might begin with focus-group interviews. Groups of customers, typically numbering seven to twelve per group, are invited to discuss their satisfaction with services or products. During this process, expectations and experiences are recorded. This process is usually successful in identifying those service and product attributes that are most important to customer satisfaction.

After focus-group interviews are completed, expectations and experiences are measured with more formal, quantitative methods. Expectations could be measured with a one to ten scale where one represents "Not At All Important" and ten represents "Extremely Important." Experience or perceptions about each of these attributes would be measured in a similar manner.

Gaps can be simply calculated as the arithmetic difference between the two measurements for each of the attributes. Management perceptions are measured much in the same manner. Groups of managers are asked to discuss their perceptions of customer expectations and experiences. A team can then be assigned the duty of evaluating manager perceptions, service standards, and communications to pinpoint discrepancies. After gaps are identified, management must take appropriate steps to fill or narrow the gaps.

THE IMPORTANCE OF SERVICE
QUALITY GAP ANALYSIS

The main reason gap analysis is important to firms is the fact that gaps between customer expectations and customer experiences lead to customer dissatisfaction. Consequently, measuring gaps is the first step in enhancing customer satisfaction. Additionally, competitive advantages can be achieved by exceeding customer expectations. Gap analysis is the technique utilized to determine where firms exceed or fall below customer expectations.

Customer satisfaction leads to repeat purchases and repeat purchases lead to loyal customers. In turn, customer loyalty leads to enhanced brand equity and higher profits. Consequently, understanding customer perceptions is important to a firm's performance. As such, gap analysis is used as a tool to narrow the gap between perceptions and reality, thus enhancing customer satisfaction.

PRODUCT APPLICATIONS

It should be noted that gap analysis is applicable to any aspect of industry where performance improvements are desired, not just in customer service. For example, the product quality gap could be measured by (and is defined as) the difference between the quality level of products expected by customers and the actual quality level. The measurement of the product quality gap is attained in the same manner as above. However, while service delivery can be changed through employee training, changes in product design are not as easily implemented and are more time consuming.

Gap analysis can be used to address internal gaps. For example, it is also applicable to human resource management. There may be a gap between what employees expect of their employer and what they actually experience. The larger the gap, the greater the job dissatisfaction. In turn, job dissatisfaction can decrease productivity and have a negative effect on a company's culture.

Ford Motor Co., for example, utilized gap analysis while developing an employee benefit program. While management may believe it has a handle on employee perceptions, this is not always true. With this in mind, Ford's management set out to understand employee desires regarding flexible benefits. Their cross-functional team approach utilized focus groups, paper and pencil tests, and story boards to understand employee wants and needs. Their team, consisting of finance, human resources, line managers, benefits staff, and consultants, identified gaps in benefit understanding, coverage, and communications. As a result of gap analysis, Ford implemented a communications program that gained employee acceptance.