Service Recovery
Content
Service Recovery
Service Recovery
It refers to the actions taken by an
organization in response to a service failure. Reasons of failure: Service may be unavailable when promised It may be delivered later or too slowly Outcome may be incorrect or poorly executed Employees may be rude or uncaring
The Impact of Service Failure and Recovery
Resolving customer problems effectively has
a strong impact on: Customer satisfaction Loyalty Word of mouth communication Bottom line performance
How Customers Respond to Service Failures
Types of Complainers
Passives- Don’t Complain Voicers- complain but don’t do negative
things Irates- Angry, Negative WOM, likely to switch Activists- beyond complaining
Unhappy Customers’ Repurchase Intentions
Unhappy Customers Who Don’t Complain
9%
Unhappy Customers Who Do Complain Complaints Not Resolved
19% 54% 82% Percent of customers who will buy again after a major complaint (over $100 in losses)
Complaints Resolved
Complaints Resolved Quickly
Source: Adapted from data reported by the Technical Assistance Research Program.
Customers’ Recovery Expectations
Understanding & accountability on the part of
the service provider Fair treatment
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
Core Service Failure
• Service mistakes • Billing errors • Service catastrophe
Service Switching Behavior
Competition
• 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
Source: Sue Keaveney, “Customer Switching Behavior in Service Industries: An Exploratory Study,” Journal of Marketing, April, 1995, pp. 71-82.
Service Recovery Strategies
Do it right the first time- make the service fail
safe Encourage & track complaints Act quickly Provide adequate explanations Treat customers fairly Cultivate relationship with customers Learn from recovery experiences Learn from lost customers
Service Guarantees
Guarantee: an assurance of the fulfillment of a
condition
in a business context, a guarantee is a pledge or
assurance 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 form of a warranty
for tangible products, a guarantee is often done in the services are often not guaranteed cannot return the service service experience is intangible
Benefits of service guarantees
It forces the company to focus on its
customers Sets clear standards for the organization Generates immediate and relevant feedback from the customers Instant opportunity for service recovery Helps in continuous improvement effort Enhance employees morale & loyalty Reduces the sense of risk
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 and Communicate customers need to understand what to expect employees need to understand what to do Easy to Invoke and Collect the firm should eliminate hoops or red tape in the way of accessing or collecting on the guarantee
Characteristics of an Effective Service Guarantee
Service Recovery
It refers to the actions taken by an
organization in response to a service failure. Reasons of failure: Service may be unavailable when promised It may be delivered later or too slowly Outcome may be incorrect or poorly executed Employees may be rude or uncaring
The Impact of Service Failure and Recovery
Resolving customer problems effectively has
a strong impact on: Customer satisfaction Loyalty Word of mouth communication Bottom line performance
How Customers Respond to Service Failures
Types of Complainers
Passives- Don’t Complain Voicers- complain but don’t do negative
things Irates- Angry, Negative WOM, likely to switch Activists- beyond complaining
Unhappy Customers’ Repurchase Intentions
Unhappy Customers Who Don’t Complain
9%
Unhappy Customers Who Do Complain Complaints Not Resolved
19% 54% 82% Percent of customers who will buy again after a major complaint (over $100 in losses)
Complaints Resolved
Complaints Resolved Quickly
Source: Adapted from data reported by the Technical Assistance Research Program.
Customers’ Recovery Expectations
Understanding & accountability on the part of
the service provider Fair treatment
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
Core Service Failure
• Service mistakes • Billing errors • Service catastrophe
Service Switching Behavior
Competition
• 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
Source: Sue Keaveney, “Customer Switching Behavior in Service Industries: An Exploratory Study,” Journal of Marketing, April, 1995, pp. 71-82.
Service Recovery Strategies
Do it right the first time- make the service fail
safe Encourage & track complaints Act quickly Provide adequate explanations Treat customers fairly Cultivate relationship with customers Learn from recovery experiences Learn from lost customers
Service Guarantees
Guarantee: an assurance of the fulfillment of a
condition
in a business context, a guarantee is a pledge or
assurance 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 form of a warranty
for tangible products, a guarantee is often done in the services are often not guaranteed cannot return the service service experience is intangible
Benefits of service guarantees
It forces the company to focus on its
customers Sets clear standards for the organization Generates immediate and relevant feedback from the customers Instant opportunity for service recovery Helps in continuous improvement effort Enhance employees morale & loyalty Reduces the sense of risk
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 and Communicate customers need to understand what to expect employees need to understand what to do Easy to Invoke and Collect the firm should eliminate hoops or red tape in the way of accessing or collecting on the guarantee
Characteristics of an Effective Service Guarantee
