How Service Gap Analysis Can Improve Your Small Business

A service gap analysis is a time-tested method of improving business performance and outcomes. It relies on the common-sense principle of determining the gaps between your company’s current metrics of customer service and perception and their desired performance. Upon determining what’s missing, these gaps are then looked at individually and addressed to ensure the necessary changes are implemented to benefit the business. 

This can be especially useful for small businesses that are looking to enhance their capabilities but feel stuck when it comes to progress. If you’re a small business owner looking to tangibly improve your establishment’s outcomes, it may be time to consider a service gap analysis. The technique can be applied to several aspects of your business and has various approaches you can take before getting started on the exercise. Read on as we discuss the many aspects of understanding and performing service gap analyses. 

What Is Service Gap Analysis?

Gap analysis involves understanding the current status and performance of your small business and comparing it with your vision or the ideal performance outcomes. This allows you to estimate the difference between your business’ desired performance and its current metrics. The knowledge of these differences will then point you toward addressing them with concrete strategies and methods. This has been used by numerous businesses to optimize their growth and fix areas of their operations that do not quite meet expectations.

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Quite often, gap analyses are performed to scale sales and production operations within businesses to enhance revenue and profitability. However, other aspects of the business such as customer service, outreach, and marketing can also be resolved using a gap analysis. Service gap analysis is a sub-type that focuses primarily on addressing deficiencies in customer satisfaction and perception. Businesses often contemplate organizational change based on the outcomes of their gap analysis studies. One powerful tool to identify and address customer service gaps is live chat software.

Core Concepts

Conducting an exercise like service gap analysis requires a concrete and structured approach. Two main concepts are important as the entire superstructure of the exercise relies on these metrics:

Customer Expectations

This entails the customer’s thoughts and presumptions about a particular product or service being offered at a business. Customer expectations can vary vastly based on the groups you’re looking to sell to, along with socioeconomic, ethnographic, lifestyle, age, and current market trends.

Businesses need to gauge their customers’ expectations so that they can tailor their offerings in line with what their customers really want. This can often be achieved by carrying out market research and surveys in targeted locations while also defining the business’ ideal customer. 

Customer Perceptions

A customer’s perception of your business and your brand’s recognition rests on the products or services you offer and the interactions they have with your business representatives. It is often ideal for a customer’s perception of your business to match their expectations to achieve prolonged customer loyalty. Consistently scoring well on the customer perceptions benchmark also promotes better word-of-mouth marketing and enhances your business’s reputation in the market, allowing for better growth and revenue. 

The Types of Service Gap Analyses

The types of service gap analyses are derived from the gap model approach. The gap model brings your attention to five core aspects or gaps that succinctly describe why your customers feel dissatisfied or distant from your business. The gaps are: 

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The Knowledge Gap

The knowledge gap involves the distinction between customer expectations and the business’ understanding of those expectations. A business that does not know what its customers want is sure to not find success in building a lasting client base. An example of this would be a restaurant not catching up on food trends and failing to offer popular varieties on its menu. The knowledge gap often occurs due to incomplete market studies, the failure to define the ideal customer, and insufficient feedback mechanisms. 

The Policy Gap

This service gap describes a situation where the business fully understands its customer’s needs, but does not implement effective measures to fulfill them in its functional capacity. Policy gaps arise when customer feedback is not taken seriously or is not implemented. Customers are often receptive to company policies in action and will eventually switch to a competitor that performs better on their expectations scale. Substandard customer service or the lack thereof also falls under policy gaps. 

The Delivery Gap

This gap entails the difference in the delivery of services and its theoretical conceptualization in your business’ policies. Delivery gaps occur due to poor human resource management, an inadequately trained workforce, or because of the lack of capable employees. The customer experience often gets impacted by their interactions with the company’s representatives, which impacts both customer retention and your future business prospects. Even if your business can meet the customer’s expectations about a product or service, a bad or dissatisfactory interaction with company representatives is bound to impact the overall customer experience. 

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The Communication Gap

Communication gaps occur when the business’ portrayal of its products or services does not match those products or services in reality. This is often a cause for customer distrust and the eventual lack of interest in all offerings. Communication gaps are often encountered when promotional campaigns go overboard with their extravagant portrayal of the products and services, only for the customer to find the business’ offerings not matching up to their expectations. 

Communication gaps can impact your brand’s recognition and reputation in the market, eventually leading to a drop in revenue. However, numerous methods to improve customer service and communication exist today, such as those that involve human customer representatives supported by canned responses

The Customer Gap

An analysis of this gap brings the business’ attention to the customer’s difference of perception about the business’ offerings. This often occurs due to the customer being unaware of the nature of the service being offered to them by the business. This is a reason for customers to become dissatisfied with their overall experience even if your business has offered exactly what it promised to the customer. Most small businesses are oblivious to this gap and lose several customers by not addressing it.

How to Run a Service Gap Analysis

Small business owners need to understand how to run a successful service gap analysis to optimize their business performance in the market. The following steps will help you conduct an objective service gap analysis at your business: 

  • Determine the areas for improvement. It is important to understand the areas for your business improvement before you set out to make fixes in your business structure. Similarly, it’s equally important to define what will be the ideal level of operations for your business to achieve the desired service level. 
  • Identify key performance indicators (KPIs) that can help you gauge your business’ customer service performance in its current stages. Clear and defined data points are crucial to your business’ scalability. 
  • Define a tangible goal for your business to attain in a set period of time. 
  • Once the gaps become apparent, get down to defining the methods by which you intend on making changes to your business functioning to bridge them. 
  • Implement the methods and track your business’ progress alongside collecting feedback from customers concerning their experience at your business.
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The Benefits of Running a Service Gap Analysis

Running a service gap analysis entails numerous benefits, a few of which include: 

  • It allows businesses to quickly identify key issues that are holding back their performance. 
  • It promotes introspection and allows business owners to re-evaluate their approach based on real-world metrics and guidelines surrounding customer satisfaction. 
  • It enhances business results by improving the implementation of accurate solutions to bridge the detected gaps in its performance. 
  • It enables businesses to take a look at even the most granular aspects of their business, often coming across minute, yet key points that might be affecting performance. 
  • It helps businesses remain in touch with their customers’ opinions and also allows business representatives to gauge market trends. 

Sum Up

Service gap analyses can help you identify several different issues that might be impacting your business growth even without your knowledge. While this might sound like a tedious task, starting small and proceeding to the larger parts of your business might help. Businesses are often quick to deploy technologies such as AI chatbots to manage customer service in their businesses without completely understanding its consequences. A service gap analysis will instead provide a more holistic view of what is actually amiss in your business while pointing you in the direction of the right solutions. 

Author’s Bio: Anna McKenzie is a former financial analyst and advisor with a master’s degree in business administration. With 15+ years of experience in consulting businesses of different sizes, verticals, and locals for better financial, operational, and marketing practices, Anna now works with to share her knowledge and educate through the company blog. Her favorite pastimes include reading about human resources and psychology.