Service Recovery Mtg. 410 Donna J. Hill, Ph.D. Fall 2000.
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Transcript of Service Recovery Mtg. 410 Donna J. Hill, Ph.D. Fall 2000.
Service RecoveryService Recovery
Mtg. 410Mtg. 410
Donna J. Hill, Ph.D.Donna J. Hill, Ph.D.
Fall 2000Fall 2000
Service RecoveryService Recovery
Refers to the actions taken by an Refers to the actions taken by an organization in response to a organization in response to a service failureservice failure
Figure 7-1Figure 7-1
Unhappy Customers’ Unhappy Customers’ Repurchase IntentionsRepurchase Intentions
95%
70%
46%
37%
82%
54%
19%
9%
Complaints Resolved Quickly
Complaints Resolved
Complaints Not Resolved
Minor complaints ($1-$5 losses) Major complaints (over $100 losses)
Unhappy Customers Who Don’t Complain
Unhappy Customers Who Do Complain
Percent of Customers Who Will Buy Again
Source: Adapted from data reported by the Technical Assistance Research Program.
Recovery ParadoxRecovery Paradox
Companies should plan to Companies should plan to disappoint customers so that they disappoint customers so that they can recover and gain even greater can recover and gain even greater loyalty from them as a result!loyalty from them as a result!
Figure 7-3Figure 7-3
Customer Response Customer Response Following Service FailureFollowing 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
Types of ComplainersTypes of Complainers
PassivesPassives VoicersVoicers IratesIrates ActivistsActivists
FairnessFairness
Outcome (fair compensation)Outcome (fair compensation) Procedural (policies, rules, and Procedural (policies, rules, and
timeliness)timeliness) Interactional (politeness, courtesy, Interactional (politeness, courtesy,
honesty)honesty)
Figure 7-5Figure 7-5
Service Recovery StrategiesService Recovery Strategies
Learn fromRecovery Experiences
Treat C
ustomers
Fairly
Learn
from
Lo
st Cu
stom
ers
Welcome and
Encourage ComplaintsFail S
afe the S
ervice
Act Q
uickly
Service Recovery Strategies
Figure 7-6Figure 7-6
Causes Behind Causes Behind Service SwitchingService 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 Service
Competition
• Cheat• Hard Sell• Unsafe• Conflict of Interest
Ethical Problems
• Customer Moved• Provider Closed
Involuntary SwitchingSource: Sue Keaveney
Service GuaranteesService Guarantees
guarantee = an assurance of the fulfillment guarantee = an assurance of the fulfillment of a condition (of a condition (Webster’s DictionaryWebster’s Dictionary))
for products, guarantee often done in the for products, guarantee often done in the form of a warrantyform of a warranty
services are often services are often notnot guaranteed guaranteed•cannot return the servicecannot return the service•service experience is intangibleservice experience is intangible
–(so what do you guarantee?)(so what do you guarantee?)
Table 7-7Table 7-7 Characteristics of an Characteristics of an Effective Service GuaranteeEffective Service Guarantee
Unconditional The guarantee should make its promise unconditionally -
no strings attached.Meaningful
It should guarantee elements of the service that areimportant to the customer.
The payout should cover fully the customer'sdissatisfaction.
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.
Source: Christopher W.L. Hart, “The Power of Unconditional Guarantees,” Harvard Business Review, July-August, 1988, pp. 54-62.
Why a Good Guarantee Why a Good Guarantee WorksWorks
forces company to focus on customersforces company to focus on customers
sets clear standardssets clear standards
generates feedbackgenerates feedback
forces company to understand why it forces company to understand why it failedfailed
builds “marketing muscle”builds “marketing muscle”
Service GuaranteesService Guarantees
Does everyone need a guarantee?Does everyone need a guarantee?
Reasons companies do NOT offer Reasons companies do NOT offer guarantees:guarantees:• guarantee would be at odds with company’s guarantee would be at odds with company’s
imageimage• too many uncontrollable external variablestoo many uncontrollable external variables• fears of cheating by customersfears of cheating by customers• costs of the guarantee are too highcosts of the guarantee are too high
Service GuaranteesService Guarantees
service guarantees work for companies who service guarantees work for companies who are already customer-focusedare already customer-focused
effective guarantees can be BIG deals - they effective guarantees can be BIG deals - they put the company at risk in the eyes of the put the company at risk in the eyes of the customercustomer
customers should be involved in the design of customers should be involved in the design of service guaranteesservice guarantees
the guarantee should be so stunning that it the guarantee should be so stunning that it comes as a surprise -- a comes as a surprise -- a WOW!!WOW!! factor factor
““it’s the icing on the cake, not the cake”it’s the icing on the cake, not the cake”
Lessons from the Hampton Inn Lessons from the Hampton Inn GuaranteeGuarantee
Focus on customer needs.Focus on customer needs. KISSKISS Deep management conviction is fundamental.Deep management conviction is fundamental. Empowerment is the key.Empowerment is the key. Train, train, train. Reinforce, reinforce, Train, train, train. Reinforce, reinforce,
reinforce.reinforce. Perpetuate stories of the guarantee in actionPerpetuate stories of the guarantee in action Understand the moments of truth.Understand the moments of truth. Teach customers to complain.Teach customers to complain. Develop tracking systems.Develop tracking systems. Give regular feedback on reasons the Give regular feedback on reasons the
guarantee was invoked.guarantee was invoked. Use internal guarantees to support the Use internal guarantees to support the
external guarantees.external guarantees.