Post on 18-Jan-2018
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Complaint Handling and Service Recovery
Think of a time when, as a customer, you had a particularly satisfying (or dissatisfying) interaction with service provider.
• When did the incident happen?• What specific circumstances led up to this
situation?• Exactly what did the employee (or firm) say or do?• What resulted that made you feel the interaction
was satisfying or (or dissatisfying)?• What could or should have been done differently?
Complaints• Customers have a low
propensity to complain. • Only about 4 % of
customers with problems report those problems as complaints.
• It is not important whether or not a service failure actually occurred, but rather, if it was perceived by the customer to have occurred.
Impact of Service Failure
The average customer who experiences a service failure tells nine or ten others about the failure.
Customer Response Following Service Failure
Service Failure
Do NothingTake Action
Stay with ProviderSwitch Providers
Complain to Provider
Complain to Family & Friends
Complain to Third Party
Stay with ProviderSwitch Providers
Entry Points for Complaints• Employees serving customers face-to-face or by phone
• Intermediaries acting for original supplier
• Managers contacted by customers at head/regional office
• Complaint cards mailed or placed in special box
• Complaints passed to company by third-party recipients
– consumer advocates– trade organizations– legislative agencies– other customers
Components of an Effective Service Recovery System
Do the Job Rightthe First Time
Identify ServiceComplaints
Resolve ComplaintsEffectively
Learn fromRecovery
Effective ComplaintHandling
Increased Satisfactionand Loyalty
-Conduct Research-Monitor Complaints-Develop Complaints as Opportunity Culture
Develop EffectiveSystems and Trainingin Complaints Handling
Conduct Root CauseAnalysis
Feedback
Learn from R
ecovery E
xperiences
Act
Qui
ckly
Treat Customers Fairly
Fail-safethe Service
Cultivate Relationships
with Customers
Encourage and Track
Complaints
Provide
Ade
quate
Explan
ation
s
Learn
from Lo
st
Custom
ers
ServiceRecoveryStrategies
Service Recovery Strategies
Causes Behind Service Switching
Service Switching Behavior
• High Price• Price Increases• Unfair Pricing• Deceptive Pricing
Pricing
• Location/Hours• Wait for Appointment• Wait for Service
Inconvenience
• Service Mistakes• Billing Errors• Service Catastrophe
Core Service Failure
• Uncaring• Impolite• Unresponsive• Unknowledgeable
Service Encounter Failures
• Negative Response• No Response• Reluctant Response
Response to Service Failure
• Found Better ServiceCompetition
• Cheat• Hard Sell• Unsafe• Conflict of Interest
Ethical Problems
• Customer Moved• Provider Closed
Involuntary SwitchingSource: Sue Keaveney
Unhappy Customers’ Repurchase Intentions
82%
54%
19%
9%
Complaints Resolved Quickly
Complaints Resolved
Complaints Not Resolved
Unhappy Customers Who Don’t Complain
Unhappy Customers Who Do Complain
Percent of customers who will buy again after a major complaint (over $100 in losses)
Source: Adapted from data reported by the Technical Assistance Research Program.
Service Guarantees• guarantee = an assurance of the fulfillment of
a condition (Webster’s Dictionary)
• for products, guarantee often done in the form of a warranty
• services are often not guaranteed–cannot return the service–service experience is intangible
–(so what do you guarantee?)
Service Guarantees Help Promote and Achieve Service Loyalty
• Force firms to focus on what customers want
• Set clear standards• Compensation highlights
cost of service failures• Require systems to get, act
on, customer feedback• Reduce risks of purchase
and build loyalty• Builds “marketing muscle”
Characteristics of an Effective Service Guarantee
Unconditional The guarantee should make its promise unconditionally - no
strings attached. Meaningful
It should guarantee elements of the service that are important to the customer.
The payout should cover fully the customer's dissatisfaction.
Easy to Understand and Communicate For customers - they need to understand what to expect. For employees - they need to understand what to do.
Easy to Invoke and Collect There should not be a lot of hoops or red tape in the way of
accessing or collecting on the guarantee.
Reasons companies do NOT offer guarantees:
Reasons companies do NOT offer guarantees:– too many uncontrollable external variables– fears of cheating by customers– costs of the guarantee are too high
Over-compensating concerns?
• Service providers should probably be more concerned about under-compensating complaining customers than over-compensating them.
• Track the customers who are given compensation for reported complaints.
Service Guarantees• service guarantees work for companies who are
already customer-focused• effective guarantees can be BIG deals - they put
the company at risk in the eyes of the customer• customers should be involved in the design of
service guarantees• the guarantee should be so stunning that it comes
as a surprise -- a WOW!! factor• “it’s the icing on the cake, not the cake”
Recovery• Service providers need
to decide on policy for service recovery.
• Will all customers with a particular type of problem be given the same service recovery?
RecoveryDo Don’t
• Acknowledge problem• Apologize• Take responsibility• Explain causes • Lay out options • Compensate/
upgrade
• Ignore customer• Blame customer• Leave customer
to “fend for him/herself”
• Downgrade• Act as if nothing
is wrong• Pass the buck
Early Communication Early Recovery
• The service company must decide when and how to appropriately open communication with customers in the service process.
• Communication with the customer throughout the service delivery process can decrease the magnitude and expense of service failures
• Failure to communicate early in the service process can allow small customer concerns to grow into large problems.
• If complaints are resolved in a timely manner, 95% of the time the customer will return.
Ways to Increase
Customer Communication• Actively solicit
feedback.• Offer a channel of
communication that is open to customers through the service process.
Retaining CustomersWhen Things Go Wrong
• Track and anticipate recovery opportunities- The customer who complains is your friend?
• Take care of customer problems on the front line.
• Solve problems quickly.• Empower the front line to solve
problems.• Learn from service recovery.
Effective Recovery Skills
• Hear the customer’s problems.• Improvise• Bend the rules from time-to-time• Employees must have the
authority, usually within certain defined limits, to solve the customer’s immediate problem.
When service customers have been disappointed on
the first try,doing it right the second time is
essential to maintaining customer
loyalty
OOPS!
Service Recovery
Discussion Develop guidelines for an effective
complaint handling policy for a service organization in the industry you selected to study this session.
Summary of Guidelines for Effective Problem Resolution
• Act fast• Admit mistakes but
don’t be defensive• Understand problem
from customer’s viewpoint
• Don’t argue• Acknowledge
customer’s feelings
• Give benefit of doubt• Clarify steps to solve
problem• Keep customers
informed of progress• Consider
compensation• Persevere to regain
goodwill