service recovery
Content
SERVICE RECOVERY
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
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
Unhappy Customers’ Repurchase Intentions
Unhappy Customers Who Don’t Complain
9% 37%
Unhappy Customers Who Do Complain Complaints Not Resolved
19% 46% 54% 70% 82%
Complaints Resolved
Complaints Resolved Quickly
95%
Percent of Customers Who Will Buy Again
Minor complaints ($1-$5 losses)
Major complaints (over $100 losses)
Source: Adapted from data reported by the Technical Assistance Research Program.
How Customers Respond to Service Failures
When a dissatisfied customer choose to complain on the spot or later to the service provider, the company gets a second chance to satisfy the customer, keep his/her business in future, and potentially avoid negative word-of-mouth
This proactive type of complaining behavior is known as voice response or seeking redress Spreading bad word-of-mouth can be extremely detrimental as it reinforces customer’s feeling of negativism
Why Do (and Don’t) 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 People don’t complain because: ◦ Waste of their time and effort ◦ They don’t believe anything positive will occur ◦ Engage in “emotion focused coping” to deal with their negative experiences like denial, social support, self blame
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
Interaction Fairness
◦ Customers expect to be treated politely, with car and honesty ◦ This form of fairness can dominate the others
Procedural Fairness
◦ Fairness in terms of policies, rules, and timeliness of complaint process ◦ They want easy access to the complaint process, things to be handled quickly
◦ Fair procedures are characterized by clarity, speed and absence of hassles
◦ Unfair procedures are slow, prolonged and inconvenient ◦ Customers feel unfair if they have to prove their point
Service Recovery Strategies
Service Recovery Strategies
Do it Right the First Time!!
◦ Recovery is unnecessary, customers get what they expect, and the costs of redoing the service and compensating of errors can be avoided ◦ Create a culture of “zero defections”
Welcome and Encourage Complaints
◦ Complaints should be anticipated, encouraged and tracked
◦ A complaining customer should truly be viewed as a friend
◦ Ways to encourage and track complaints – satisfaction surveys, lost customers research, frontline discovering the sources of dissatisfaction ◦ Teach customers how to complain ◦ Use technology to simplify complaining process – Toll free numbers, email
Act Quickly
◦ This requires systems and procedures that allow quick action and empowered employees
Treat Customers Fairly
◦ Fairness in terms of outcome they receive, the process by which recovery takes place, and the interpersonal treatment
Learn from Recovery Experience
◦ Conduct root cause analysis to modify or eliminate processes
Learn from Lost Customers
◦ Learn from customers who defect or decide to leave ◦ Its essential to prevent the same mistakes and losing more customers in future
Causes behind Service Switching
Pricing
• • • • High Price Price Increases Unfair Pricing Deceptive Pricing
Response to Service Failure
• Negative Response • No Response • Reluctant Response
Inconvenience
• Location/Hours • Wait for Appointment • Wait for Service
Competition
Core Service Failure
• Service Mistakes • Billing Errors • Service Catastrophe
Service Switching Behavior
• Found Better Service
Ethical Problems
• • • • Cheat Hard Sell Unsafe Conflict of Interest
Service Encounter Failures
• • • • Uncaring Impolite Unresponsive Unknowledgeable
Involuntary Switching
• Customer Moved • Provider Closed
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
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
Unhappy Customers’ Repurchase Intentions
Unhappy Customers Who Don’t Complain
9% 37%
Unhappy Customers Who Do Complain Complaints Not Resolved
19% 46% 54% 70% 82%
Complaints Resolved
Complaints Resolved Quickly
95%
Percent of Customers Who Will Buy Again
Minor complaints ($1-$5 losses)
Major complaints (over $100 losses)
Source: Adapted from data reported by the Technical Assistance Research Program.
How Customers Respond to Service Failures
When a dissatisfied customer choose to complain on the spot or later to the service provider, the company gets a second chance to satisfy the customer, keep his/her business in future, and potentially avoid negative word-of-mouth
This proactive type of complaining behavior is known as voice response or seeking redress Spreading bad word-of-mouth can be extremely detrimental as it reinforces customer’s feeling of negativism
Why Do (and Don’t) 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 People don’t complain because: ◦ Waste of their time and effort ◦ They don’t believe anything positive will occur ◦ Engage in “emotion focused coping” to deal with their negative experiences like denial, social support, self blame
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
Interaction Fairness
◦ Customers expect to be treated politely, with car and honesty ◦ This form of fairness can dominate the others
Procedural Fairness
◦ Fairness in terms of policies, rules, and timeliness of complaint process ◦ They want easy access to the complaint process, things to be handled quickly
◦ Fair procedures are characterized by clarity, speed and absence of hassles
◦ Unfair procedures are slow, prolonged and inconvenient ◦ Customers feel unfair if they have to prove their point
Service Recovery Strategies
Service Recovery Strategies
Do it Right the First Time!!
◦ Recovery is unnecessary, customers get what they expect, and the costs of redoing the service and compensating of errors can be avoided ◦ Create a culture of “zero defections”
Welcome and Encourage Complaints
◦ Complaints should be anticipated, encouraged and tracked
◦ A complaining customer should truly be viewed as a friend
◦ Ways to encourage and track complaints – satisfaction surveys, lost customers research, frontline discovering the sources of dissatisfaction ◦ Teach customers how to complain ◦ Use technology to simplify complaining process – Toll free numbers, email
Act Quickly
◦ This requires systems and procedures that allow quick action and empowered employees
Treat Customers Fairly
◦ Fairness in terms of outcome they receive, the process by which recovery takes place, and the interpersonal treatment
Learn from Recovery Experience
◦ Conduct root cause analysis to modify or eliminate processes
Learn from Lost Customers
◦ Learn from customers who defect or decide to leave ◦ Its essential to prevent the same mistakes and losing more customers in future
Causes behind Service Switching
Pricing
• • • • High Price Price Increases Unfair Pricing Deceptive Pricing
Response to Service Failure
• Negative Response • No Response • Reluctant Response
Inconvenience
• Location/Hours • Wait for Appointment • Wait for Service
Competition
Core Service Failure
• Service Mistakes • Billing Errors • Service Catastrophe
Service Switching Behavior
• Found Better Service
Ethical Problems
• • • • Cheat Hard Sell Unsafe Conflict of Interest
Service Encounter Failures
• • • • Uncaring Impolite Unresponsive Unknowledgeable
Involuntary Switching
• Customer Moved • Provider Closed
