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Return on Quality at Chase Manhattan Bank

Author

Listed:
  • Roland T. Rust

    (Owen Graduate School of Management, Vanderbilt University, Nashville, Tennessee 37203)

  • Timothy Keiningham

    (Marketing Metrics, Inc., 305 Route 17, Paramus, New Jersey 07652-2905)

  • Stephen Clemens

    (HealthStream, 209 10th Avenue South, Nashville, Tennessee 37203)

  • Anthony Zahorik

    (Burke Institute, 517 32nd Avenue South, Nashville, Tennessee 37212)

Abstract
A method called “return on quality (ROQ)” has been proposed to evaluate the financial impact of efforts to improve service quality. It quantifies the projected net present value of an improvement project and calculates return on investment. During 1995 and 1996, Chase Manhattan Bank applied the method in a controlled experiment with four test branches and four control branches within the retail banking network, with a two-day training program aimed at enhancing service delivery and customer satisfaction. Its primary purpose was to assess the usefulness of the ROQ approach in improving customer service. Largely because of the bank's merger with Chemical Bank, the study was not executed as planned. Despite this, the study showed favorable results from the training effort. The ROQ model facilitated interpretation of the study and appears useful for estimating the financial returns arising from service quality initiatives.

Suggested Citation

  • Roland T. Rust & Timothy Keiningham & Stephen Clemens & Anthony Zahorik, 1999. "Return on Quality at Chase Manhattan Bank," Interfaces, INFORMS, vol. 29(2), pages 62-72, April.
    • Handle: RePEc:inm:orinte:v:29:y:1999:i:2:p:62-72
    DOI: 10.1287/inte.29.2.62
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    References listed on IDEAS

    as
    1. Easton, George S & Jarrell, Sherry L, 1998. "The Effects of Total Quality Management on Corporate Performance: An Empirical Investigation," The Journal of Business, University of Chicago Press, vol. 71(2), pages 253-307, April.
    2. Kevin B. Hendricks & Vinod R. Singhal, 1997. "Does Implementing an Effective TQM Program Actually Improve Operating Performance? Empirical Evidence from Firms That Have Won Quality Awards," Management Science, INFORMS, vol. 43(9), pages 1258-1274, September.
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    Cited by:

    1. Yuhan Ge & Qing Yuan & Yaxi Wang & Keunsoo Park, 2021. "The Structural Relationship among Perceived Service Quality, Perceived Value, and Customer Satisfaction-Focused on Starbucks Reserve Coffee Shops in Shanghai, China," Sustainability, MDPI, vol. 13(15), pages 1-19, August.
    2. Roland T. Rust & Tuck Siong Chung, 2006. "Marketing Models of Service and Relationships," Marketing Science, INFORMS, vol. 25(6), pages 560-580, 11-12.
    3. Gabriel R. Bitran & Juan-Carlos Ferrer & Paulo Rocha e Oliveira, 2008. "OM Forum--Managing Customer Experiences: Perspectives on the Temporal Aspects of Service Encounters," Manufacturing & Service Operations Management, INFORMS, vol. 10(1), pages 61-83, July.
    4. Chen, Kuan-Yu, 2014. "Improving importance-performance analysis: The role of the zone of tolerance and competitor performance. The case of Taiwan's hot spring hotels," Tourism Management, Elsevier, vol. 40(C), pages 260-272.

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