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5A Service Recovery

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25 views21 pages

5A Service Recovery

Uploaded by

romeotettehlartey
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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PRESENTATION 5

SERVICE FAILURE AND RECOVERY


Chapter Objectives

 The concept of service failure and


recovery
 Customer response to service failure
 Service recovery strategies
 Customer switching
WHAT IS SERVICE FAILURE?

HOW DOES IT HAPPEN?


Reliability is Critical in Service but…

 In all service contexts, service failure is inevitable.

 Service failure occurs when service performance falls


below a customer’s expectations in such a way that
leads to customer dissatisfaction.

 Service recovery refers to the actions taken by a firm in


response to service failure.

7-4
Figure 7.1: Complaining Customers:
The Tip of the Iceberg

Source: Data from TARP Worldwide Inc., 2007


7-5
The Service Recovery Paradox

 Is a customer who has experienced a service


failure and exemplary service recovery more
likely to be more satisfied – impressed even –
with the service provider?

 Should a firm “screw up” just a little so that it


can “fix the problem” superbly?

7-6
The Service Recovery Paradox
 “A good recovery can turn angry, frustrated customers
into loyal ones. ..can, in fact, create more goodwill than
if things had gone smoothly in the first place.” (Hart et al.
1990)

 HOWEVER:
 Only a small percentage of customers complain

 Service recovery must be SUPERLATIVE


 Only with responsiveness, redress, and empathy/courtesy
 Only with tangible rewards

 Service recovery is expensive


7-7
The Service Recovery Paradox
 The service recovery paradox is more likely to occur
when:
 The failure is not considered by the customer to be severe

 The customer has not experienced prior failures with the firm

 The cause of the failure is viewed as unstable by the customer

 The customer perceives that the company had little control


over the cause of the failure

7-8
Customer Complaint Actions Following Service
Failure

7-9
Types of Complainers

 Passives: least likely to take any action, say anything to


the provider, spread negative WOM, or complain to a
third party; doubtful of the effectiveness of
complaining

 Voicers: Actively complain to the provider but are not


likely to spread negative WOM; believe in the positive
consequences of complaining—the service provider’s
best friends!

7-10
Types of Complainers

 Irates: more likely to engage in negative WOM to


friends and relatives and to switch providers; average
in complaints to the provider; unlikely to complain to
third parties; more angry, less likely to give provider a
second chance

 Activists: above average propensity to complain on all


levels; more likely to complain to a third party; feel
most alienated from the marketplace compared to
other groups; in extreme cases can become “terrorists”
7-11
WHAT SHOULD THE ORGANISATION DO IN
THE FACE OF CUSTOMER COMPLAINT(S)?
Service Recovery Strategies

7-13
Fixing the Customer

 When customers take the time to complain,


they generally have high expectations.
 They expect the company to respond quickly and to
be accountable.
 They expect to be compensated for their grief and
for the hassle of being inconvenienced.
 They expect to be treated nicely in the process!

7-14
Treat Customers Fairly
 Outcome fairness
 Outcome (compensation) should match the customer’s level of
dissatisfaction; equality with what other customers receive; choices

 Procedural fairness
 Fairness in terms of policies, rules, and timeliness of the complaint
process; clarity, speed, no hassles; also choices: “What can we do to
compensate you…?”

 Interactional fairness
 Politeness, care, and honesty on the part of the company and its
employees; rude behaviour on the part of employees may be due to
lack of training and empowerment

7-15
Fixing the Problem

 After “fixing the customer” the company should


address the actual problem that created the poor
service delivery in the first place.
 If the problem is likely to recur for other customers,
then the service delivery process may need to be fixed,
too.
 Strategies for fixing the problem include encouraging
and tracking complaints, learning from recovery
experiences and from lost customers, and making the
service fail-safe.
7-16
Service Guarantees
 In a business context, a guarantee is not just a pledge or
assurance, but a crucial commitment that a product offered by a
firm will perform as promised and, if not, then some form of
reparation will be undertaken by the firm

 For tangible products, a guarantee is often made in the form of a


warranty

 Services are often not guaranteed


 Cannot return the service
 Service experience is intangible (so what do you guarantee?)

7-17
Characteristics of an Effective
Service Guarantee
 Unconditional
 The guarantee should make its promise unconditionally – no strings
attached
 Meaningful
 The firm should guarantee elements of the service that are important to
the customer
 The payout should cover fully the customer’s dissatisfaction
 Easy to Understand
 Customers need to understand what to expect
 Employees need to understand what to do
 Easy to Invoke
 The firm should eliminate red tape in the way of accessing or collecting on
the guarantee

What benefits can be derived from effective service guarantees?


7-18
Benefits of Service Guarantees
 A good guarantee forces the company to focus on its customers.
 An effective guarantee sets clear standards for the organization.
 A good guarantee generates immediate and relevant feedback
from customers.
 When the guarantee is invoked there is an instant opportunity
to recover.
 Information generated through the guarantee can be tracked
and integrated into continuous improvement efforts.
 A service guarantee reduces customers’ sense of risk and builds
confidence in the organization.

7-19
When to Use (or Not Use) a Guarantee

 Reasons companies might NOT want to offer a


service guarantee:
 Existing service quality is poor
 Service quality is truly uncontrollable
 Potential exists for customer abuse of the guarantee
 Costs of the guarantee outweigh the benefits
 Customers perceive little risk in the service

Why do customers switch service providers?


7-20
Causes Behind Service Switching

7-21

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