SERVICE RECOVERY

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Service Recovery Defined

Service recovery refers to the actions taken by an organizations in response to a service failure Service failures bring about negative feelings and responses from customers Left unfixed, failures can result in customers leaving, spreading bad word-of-mouth and even challenging the organization through consumer rights organizations

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Failure occur for all kinds of reasons

The service may be unavailable when promised It may be delivered late or too slowly The outcome may be incorrect or poorly executed Employee may be rude or uncaring

This type of failures bring about negative feelings and response from 11/9/12 customers.

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Service Recovery Effects

Has a strong impact on customers satisfaction, loyalty, wordof-mouth communication Customers who experience service failures but who are ultimately satisfied based on recovery efforts by the firm, tend to be more loyal than those whose problems are not resolved Recovery Paradox rare instances when an initially dissatisfied customer experiences an excellent service recovery. Eg: hotel front desk person upgrades his guest to a better room at the original price on non availability of room
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Customer Response Following Service Failure

Service Failure

Take Action

Do Nothing

Switch Providers Complain to Provider

Complain to Family & Friends

Stay with Provider

Complain to Third Party

Switch Providers

Stay with Provider

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Why Do (and Dont) People Complain?

People complain because:

They believe that positive consequences may occur They believe they will and should be provided compensation for the service failure They feel a social obligation to complain to help others avoid similar situations Waste of their time and effort They dont believe anything positive will occur

People dont complain because:

Engage in emotion focused coping to deal with their 11/9/12 negative experiences like denial, social support, self

Types of complainers

Passives

This group of customers are least likely to take any action. They are unlikely to say anything to the provider, less likely than others to spread negative word of mouth, and unlikely to complain to a third party.

Voicers
These customers actively complain to the service provider, but they are less 11/9/12

Types of complainers (contd.)

Irates

These consumers are more likely to engage in negative word-of-mouth communication with friends and relatives and to switch providers. These consumers are characterized by above average propensity to complain on all dimensions

Activists

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When They Complain, What Do Customers Expect?

Outcome Fairness

Customers expect outcomes or compensation, that match the level of their dissatisfaction Compensation in form of money, an apology, future free services, reduced charges repairs or/ and replacements Equity in exchange they want to feel that the company has paid for its mistakes

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Service Recovery Strategies

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Act Quickly

Service Recovery Strategies

Learn from ers Lost Custom

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Le Re arn f co ro ve m ry Ex pe ri e nc es

C at e Tr

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Pricing

High Price Price Increases Unfair Pricing Deceptive Pricing

Inconvenience

Location/Hours Wait for Appointment Wait for Service

Causes Behind Service Switching

Core Service Failure

Service Mistakes Billing Errors Service Catastrophe

Service Encounter Failures

Uncaring Impolite Unresponsive Unknowledgeable

Response to Service Failure

Service Switching Behavior

Negative Response No Response Reluctant Response

Competition

Found Better Service

Ethical Problems

Cheat Unsafe Conflict of Interest

Involuntary Switching

Customer Moved Provider Closed

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Service Guarantees

guarantee = an assurance of the fulfillment of a condition for products, guarantee often done in the form of a warranty

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Characteristics of an Effective Service Guarantee

Unconditional Meaningful
The guarantee should make its promise uncon ditionally. It should guarantee elements of the service that are important to the customer. The payout should cover fully the customer's dissatisfaction. For customers they need to understand what to expect. For employees they need to understand what to do. There should not be a lot of hoops or red tape in the way of accessing or collecting on the gua rantee.

Easy to Un derstand and Communicate

Easy to Invoke and Collect

Why a Good Guarantee Works

forces company to focus on customers sets clear standards generates feedback forces company to understand why it failed

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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

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