Service recovery
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Transcript of Service recovery
Achieving Service Recovery and Obtaining Customer Feedback
Learning Objectives
•Uncover customer complaining behaviour•Design effective service recovery strategies•Determine the usefulness of service
guarantees•Outline front line staff response to abusive
and/or opportunistic customer behaviour•Create institutionalized systematic learning
from feedback
Customer Complaining Behaviour
Customer Response Categories to Service Failures
Service Encounter is Dissatisfactory
Service Encounter is Dissatisfactory
Take some form of Public Action
Take some form of Public Action
Take some form of Private Action
Take some form of Private Action
Take No Action
Take No Action
Complain to the service firm
Complain to the service firm
Complain to a third party
Complain to a third party
Take legal action to seek redress
Take legal action to seek redress
Defect (switch provider)
Defect (switch provider)
Negative word-of-mouth
Negative word-of-mouth
Any one or a combination of these responses is possible
Any one or a combination of these responses is possible
Understanding Customer Responses to Service Failure
• Why do customers complain?• What proportion of unhappy customers complain?• Why don’t unhappy customers complain?• Who is most likely to complain?• Where do customers complain?• What do customers expect once they have made a
complaint?
Customers Often View Complaining as Difficult and Unpleasant (Fig 13.2)
Three Dimensions of Perceived Fairness in Service Recovery Process
Procedural Justice
Procedural Justice
Interactive
Justice
Interactive
JusticeOutcome
Justice
Outcome
Justice
Complaint Handling and Service Recovery Process
Complaint Handling and Service Recovery Process
Justice Dimensions of the Service Recovery Process
Customer Satisfaction with
Service Recovery
Customer Satisfaction with
Service Recovery
Customer Responses to Effective Service Recovery
Importance of Service Recovery
•Plays a crucial role in achieving customer satisfaction
•Tests a firm’s commitment to satisfaction and service quality▫Employee training and motivation is highly
important•Impacts customer loyalty and future
profitability▫Complaint handling should be seen as a profit
centre, not a cost centre
The Service Recovery Paradox
• Customers who experience a service failure that is satisfactorily resolved more likely to make future purchases than customers without problems (Note: not all research supports this paradox)
• If second service failure occurs, the paradox disappears—customers’ expectations have been raised and they become disillusioned
• Severity and “recoverability” of failure (e.g., spoiled wedding photos) may limit firm’s ability to delight customer with recovery efforts
• Best strategy: Do it right the first time
Principles of Effective Service Recovery Systems
Components of an Effective Service Recovery System
Do the job right the first time
Effective Complaint Handling
Identify Service Complaints
Resolve Complaints Effectively
Learn from the Recovery Experience
Increased Satisfaction and Loyalty
Conduct research
Monitor complaints
Develop “Complaints as opportunity” culture
Develop effective system and training in complaints handling
Conduct root cause analysis
=+
Close the loop via feedback
Strategies to Reduce Customer Complaint BarriersComplaint Barriers for Dissatisfied Customers
Strategies to Reduce These Barriers
Inconvenience
Hard to find right complaint procedure
Effort involved in complaining
Put customer service hotline numbers, e-mail and postal addresses on all customer communications materials
Doubtful Pay Off
Uncertain if action will be taken by firm to address problem
Have service recovery procedures in place, communicate this to customers
Feature service improvements that resulted from customer feedback
Unpleasantness
Fear of being treated rudely
Hassle, embarrassment
Thank customers for their feedback
Train frontline employees
Allow for anonymous feedback
How to Enable Effective Service Recovery
•Be proactive—on the spot, before customers complain
•Plan recovery procedures•Teach recovery skills to relevant personnel•Empower personnel to use judgment and
skills to develop recovery solutions
How Generous Should Compensation Be?
•Rules of thumb for managers to consider:▫What is positioning of our firm?▫How severe was the service failure?▫Who is the affected customer?
Service Guarantees
Service Guarantees Help Promote and Achieve Service Loyalty
• Force firms to focus on what customers want• Set clear standards• Highlight cost of service failures• Require systems to get and act on customer
feedback• Reduce risks of purchase and build loyalty
How to Design Service Guarantees
•Unconditional•Easy to understand and communicate•Meaningful to the customer•Easy to invoke•Easy to collect•Credible
Types of Service Guarantees
• Single attribute-specific guarantee ▫One key service attribute is covered
• Multiattribute-specific guarantee ▫A few important service attributes are covered
• Full-satisfaction guarantee▫All service aspects covered with no exceptions
• Combined guarantee▫All service aspects are covered ▫Explicit minimum performance standards on important attributes
Discouraging Abuse and Opportunistic Behaviour
Dealing with Customer Fraud
• Treating all customers with suspicion is likely to alienate them▫ TARP found only 1 to 2 percent of customer base engages in
premeditated fraud—so why treat remaining 98 percent of honest customers as potential crooks?
• Insights from research on guarantee cheating▫ Amount of a guarantee payout had no effect on customer cheating▫ Repeat-purchase intention reduced cheating intent▫ Customers are reluctant to cheat if service quality is high (rather
than just satisfactory)• Managerial implication
▫ Firms can benefit from offering 100 percent money-back guarantees
▫ Guarantees should be offered to regular customers as part of membership program
▫ Excellent service firms have less to worry about than average providers
Learning from Customer Feedback
Key Objectives of Effective Customer Feedback Systems
• Assessment and benchmarking of service quality and performance
• Customer-driven learning and improvements• Creating a customer-oriented service culture
Customer Feedback Collection Tools• Total market surveys• Post-transaction surveys• Ongoing customer surveys• Customer advisory panels• Employee surveys/panels• Focus groups• Mystery shopping• Complaint analysis• Capture service operating data
Key Customer Feedback Collection Tools:
Strengths and Weaknesses (Table 13.3)
COLLECTION TOOLS FIRM PROCESSTRANSACTION SPECIFIC ACTIONABLE
REPRESENTATIVE RELIABLE
POTENTIAL
FOR
SERVICE
RECOVERY
FIRST
HAND
LEARNING
COST
EFFECTIVENESS
LEVEL OF MEASUREMENT
TOTAL MARKET SURVEY (INCLU. COMPETITORS)ANNUAL SURVEY ON OVERALL SATISFACTION
TRANSACTIONAL SURVEY
SERVICE FEEDBACK CARDS
MYSTERY SHOPPING
UNSOLICITED FEEDBACK (e.g., COMPLAINTS)
FOCUS GROUP DISCUSSIONS
SERVICE REVIEWS
Source: Adapted from Jochen Wirtz and Monica Tomlin, “Institutionalizing Customer-Driven Learning Through Fully Integrated Customer Feedback Systems.” Managing Service Quality,10, no.4 (2000): p. 210.
Entry Points for Unsolicited Feedback•Frontline employees
•Intermediaries acting for original supplier
•Managers contacted by customers at head/regional office
•Complaint cards deposited in special box or mailed
•Telephone or e-mail
•Complaints passed to company by third-party recipients
•Disseminate the information to relevant parties to take action Immediately•Track over time
Summary
• Customer can complain by taking public action, private action or no action at all
• Components of an effective recovery system include:
▫ Doing it right the first time▫ Effective complaint handling▫ Identifying service complaints▫ Resolving complaints effectively▫ Learning from the recovery experience
• Service guarantees should be unconditional, easy for customers to understand and invoke
• Dealing with abusive and/or opportunistic customer behaviours is dealing with customer fraud, most customers are honest, but guarantees should be monitored
• Institutionalized systematic learning from feedback delivers valuable feedback to management