Service Recovery
Content
SM
SERVICE RECOVERY
Presented By:Nidhi Garg Nidhi Gupta Vandana Gulab Singh
Subject matter to be covered
Illustrate the importance of recovery from service failures in building loyalty Discuss the nature of consumer complaints and why people do and do not complain Provide evidence of what customers expect and the kind of responses they want when they complain Provide strategies for effective service recovery Discuss service guarantees
Meaning of service recovery
Service recovery refers to the actions taken by an organization in response to a service failure. Failures occur for all kinds of reasons-the service may be unavailable when promised ,it may b delivered late or too slowly, the outcome may be incorrect or poorly executed, or employees may be rude or uncaring. This all types of failures result in customers leaving, telling other customers about their negative experience or can go in consumer court against the organization.
Service recovery effects
Unhappy Customers¶ Repurchase Intentions
Unhappy Customers Who Don t Complain Unhappy Customers Who Do Complain
9% 37% 19% 46% 54% 70% 82% 95% Percent of Customers Who Will Buy Again
Complaints Not Resolved
Complaints Resolved
Complaints Resolved Quickly
Minor complaints ($1-$5 losses)
Major complaints (over $100 losses)
Source: Adapted from data reported by the Technical Assistance Research Program.
Customer Complaint Actions Following Service Failure
www.a2zmba.com
Types of Complainers
Passive Voicers Activitist ± ± _ No complain, stay or exit/switch complain to provider, stay complain to provider, negative word of mouth, complaint to third party negative word of mouth, switch to other providers but don¶t complaint to third parties
www.a2zmba.com
Irates
±
Complaint Barriers for Dissatisfied Customers
Inconvenience Difficult to find the right complaint procedure. Effort, e.g., writing a letter. Doubtful Pay Off Uncertain whether any action, and what action will be taken by the firm to address the issue the customer is unhappy with. Unpleasantness Complaining customers fear that they may be treated rudely, may have to hassle, or may feel embarrassed to complain.
www.a2zmba.com
Service Recovery Strategies
Service Recovery Strategies
Service recovery strategies
Service recovery is really a combination of a variety of strategies that need to work together. Make the service fail- safe- do it right the first time : The first rule of service quality is to do it right the first time. In this way recovery is unnecessary customers get what they expect and the costs of redoing the service and compensate for errors can be avoided. It can be achieve through service quality.(TQM ± achieve realiability)
Encourage and track complaints
Even in a zero defections organization that aims for 100 % service quality, failures occur. A critical component of a service recovery strategy is thus to encourage and track complaints. A number of ways to encourage and track complaints. Customer research can be designed specifically for this purpose through satisfaction survey, critical incidents studies and lost customer research.
For eg. Toll-free call centers, e-mail, pagers are now used to facilitate, encourage and track complaints. Act quickly Complaining customers want quick responses. Thus if the company welcomes even encourages, complaints it must be prepared to act on them quickly. Immediate response requires not only systems and procedures that allow quick action but also empowered employees.
Treat customers fairly Customers expect to be treated fairly in terms of the outcome they receive, the process by which the service recovery takes place. Learn from Recovery Experiences By service recovery efforts and solutions, managers can learn about systematic problems in the delivery system that need fixing. ExRitz-Carlton Hotels
Learn from lost customers A firm must focus on important or profitable customers who have left- not just everyone who has left the company. Ex ± Insurance co. in Australia once began research to learn about their lost customers, they find the least profitable customers. They quickly determined that to keep these unprofitable customers would not be a good investment.
Service Guarantees
Guarantee = an assurance of the fulfillment of a condition (Webster's dictionary) For products, guarantee often done in the form of a warranty Services are often not guaranteed ±Cannot return the service ±Service experience is intangible ±(So what do you guarantee?)
Characteristics of an Effective Service Guarantee
Unconditional
y The guarantee should make its promise unconditionally no strings attached.
Meaningful
y It should guarantee elements of the service that are important to the customer. y The payout should cover fully the customer's dissatisfaction.
Easy to Understand and Communicate
y For customers - they need to understand what to expect. y For employees - they need to understand what to do.
Easy to Invoke and Collect
y 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 Works
Forces company to focus on customers Sets clear standards Generates feedback Forces company to understand why it failed
Service Guarantees
Does everyone need a guarantee? Reasons companies do NOT offer guarantees:
± guarantee would be at odds with company¶s image ± too many uncontrollable external variables ± fears of cheating by customers ± costs of the guarantee are too high
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 ³it¶s the icing on the cake, not the cake´
THANK YOU
SERVICE RECOVERY
Presented By:Nidhi Garg Nidhi Gupta Vandana Gulab Singh
Subject matter to be covered
Illustrate the importance of recovery from service failures in building loyalty Discuss the nature of consumer complaints and why people do and do not complain Provide evidence of what customers expect and the kind of responses they want when they complain Provide strategies for effective service recovery Discuss service guarantees
Meaning of service recovery
Service recovery refers to the actions taken by an organization in response to a service failure. Failures occur for all kinds of reasons-the service may be unavailable when promised ,it may b delivered late or too slowly, the outcome may be incorrect or poorly executed, or employees may be rude or uncaring. This all types of failures result in customers leaving, telling other customers about their negative experience or can go in consumer court against the organization.
Service recovery effects
Unhappy Customers¶ Repurchase Intentions
Unhappy Customers Who Don t Complain Unhappy Customers Who Do Complain
9% 37% 19% 46% 54% 70% 82% 95% Percent of Customers Who Will Buy Again
Complaints Not Resolved
Complaints Resolved
Complaints Resolved Quickly
Minor complaints ($1-$5 losses)
Major complaints (over $100 losses)
Source: Adapted from data reported by the Technical Assistance Research Program.
Customer Complaint Actions Following Service Failure
www.a2zmba.com
Types of Complainers
Passive Voicers Activitist ± ± _ No complain, stay or exit/switch complain to provider, stay complain to provider, negative word of mouth, complaint to third party negative word of mouth, switch to other providers but don¶t complaint to third parties
www.a2zmba.com
Irates
±
Complaint Barriers for Dissatisfied Customers
Inconvenience Difficult to find the right complaint procedure. Effort, e.g., writing a letter. Doubtful Pay Off Uncertain whether any action, and what action will be taken by the firm to address the issue the customer is unhappy with. Unpleasantness Complaining customers fear that they may be treated rudely, may have to hassle, or may feel embarrassed to complain.
www.a2zmba.com
Service Recovery Strategies
Service Recovery Strategies
Service recovery strategies
Service recovery is really a combination of a variety of strategies that need to work together. Make the service fail- safe- do it right the first time : The first rule of service quality is to do it right the first time. In this way recovery is unnecessary customers get what they expect and the costs of redoing the service and compensate for errors can be avoided. It can be achieve through service quality.(TQM ± achieve realiability)
Encourage and track complaints
Even in a zero defections organization that aims for 100 % service quality, failures occur. A critical component of a service recovery strategy is thus to encourage and track complaints. A number of ways to encourage and track complaints. Customer research can be designed specifically for this purpose through satisfaction survey, critical incidents studies and lost customer research.
For eg. Toll-free call centers, e-mail, pagers are now used to facilitate, encourage and track complaints. Act quickly Complaining customers want quick responses. Thus if the company welcomes even encourages, complaints it must be prepared to act on them quickly. Immediate response requires not only systems and procedures that allow quick action but also empowered employees.
Treat customers fairly Customers expect to be treated fairly in terms of the outcome they receive, the process by which the service recovery takes place. Learn from Recovery Experiences By service recovery efforts and solutions, managers can learn about systematic problems in the delivery system that need fixing. ExRitz-Carlton Hotels
Learn from lost customers A firm must focus on important or profitable customers who have left- not just everyone who has left the company. Ex ± Insurance co. in Australia once began research to learn about their lost customers, they find the least profitable customers. They quickly determined that to keep these unprofitable customers would not be a good investment.
Service Guarantees
Guarantee = an assurance of the fulfillment of a condition (Webster's dictionary) For products, guarantee often done in the form of a warranty Services are often not guaranteed ±Cannot return the service ±Service experience is intangible ±(So what do you guarantee?)
Characteristics of an Effective Service Guarantee
Unconditional
y The guarantee should make its promise unconditionally no strings attached.
Meaningful
y It should guarantee elements of the service that are important to the customer. y The payout should cover fully the customer's dissatisfaction.
Easy to Understand and Communicate
y For customers - they need to understand what to expect. y For employees - they need to understand what to do.
Easy to Invoke and Collect
y 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 Works
Forces company to focus on customers Sets clear standards Generates feedback Forces company to understand why it failed
Service Guarantees
Does everyone need a guarantee? Reasons companies do NOT offer guarantees:
± guarantee would be at odds with company¶s image ± too many uncontrollable external variables ± fears of cheating by customers ± costs of the guarantee are too high
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 ³it¶s the icing on the cake, not the cake´
THANK YOU
