Service Recovery
Content
SERVICE
RECOVERY
Service Guarantees
What should be guaranteed? Is a service guarantee appropriate in an educational setting? How should such a guarantee be written? How should such a guarantee would be administered and paid out? What is appropriate compensation? What are the advantages of providing a guarantee to students? What are the advantages of providing a guarantee to the instructor? What are the advantages of providing a guarantee to the university? What are the disadvantages of providing such a guarantee? Why is it that universities typically do not offer such guarantees?
Unconditional Guarantee
Guarantee a customer can invoke for any reason
Bugs Burger Bug Killers Guarantee
You don¶t owe one penny until all pests on your premise have been eradicated If a guest spots a pest on your premises, the exterminator will pay for the guest¶s meal or room, send a letter of apology and pay for a future meal or stay.
Good Service Guarantee
The guarantee shd. Be unconditional The guarantee shd. Be easy to understand and easy to communicate. The guarantee shd. Be easy to invoke Customers shd. Find it easy and quick to collect payments The compensation given to customers shd. Be meaningful to them.
Service recovery program
Develop a service recovery program Encourage customers to complain Data from service failures needs to be used to reduce service problems Firm needs to allocate resources to the service recovery process.
Impact of Service Failure and Recovery
Service Recovery ± Actions taken by an organization in response to a service failure. Failures occur ±
± ± ± ± Service was unavailable when it was promised It may be delivered late or too slowly The outcome may be incorrect or poorly executed Employees may be rude or uncaring
Resolving customer problems effectively
Has a strong impact on
± Customer satisfaction ± Loyalty ± Bottom-line performance
Recovery Paradox
Companies should plan to disappoint customers so that they can recover and gain even greater loyalty from them as a result. More complex than it may seem ±
± It is expensive to fix mistakes ± It is absurd to encourage service failures ± Only under very highest levels of customers¶ service recovery ratings increased satisfaction and loyalty was observed.
Recovery Paradox
Customer Complaint Actions Following Service Failure
Types of Complainers
Passives
± Gp of customers least likely to take any action
Voicers
± Actively complain to the service providers, but are less likely to spread negative WOM and third party complaining.
Irates
± Likely to engage in negative WOM and switch providers. Less active in complaining to provider and unlikely to complain to third-party.
Activists
± Above avg. tendency to complain on all dimensions
When they complain what do customers expect?
Customers expect fair treatment
± Outcome fairness ± Procedural fairness ± Interactional fairness
Outcome fairness
Outcomes or compensation, that match the level of their dissatisfaction.
± ± ± ± ± ± Actual monetary compensation An apology Future free services Reduced charges Repairs Replacements
Procedural fairness
Along with fair compensation, customers expect fairness in terms of policies, rules and timeliness of complaint process.
± ± ± ± Easy access to complaint process Things to be handled quickly First-contact person solvable Adaptability in procedures
Interaction fairness
Customers expect to be treated
± Politely ± With care and ± Honesty
Service Recovery Strategies
Welcome and Encourage Complaints Act Quickly Treat Customers Fairly Learn from Recovery Experiences Learn from Lost Customers Fail Safe the Service
Causes Behind Service Switching
Pricing High Price Price Increases Unfair Pricing Deceptive Pricing Inconvenience Location/Hours Wait for Appointment Wait for Service Core Service Failure Service Mistakes Billing Errors Service Catastrophe Service Encounter Failures Uncaring Impolite Unresponsive Unknowledgeable Response to Service Failure Negative Response No Response Reluctant Response Competition Found Better Service Ethical Problems Cheat Hard Sell Unsafe Conflict of Interest Involuntary Switching Customer Moved Provider Closed
Service Switching Behavior
Source: Sue Keaveney, ³Customer Switching Behavior in Service Industries: An Exploratory Study,´ Journal of Marketing, April, 1995, pp. 71-82.
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
The guarantee should make its promise unconditionally - no strings attached.
Meaningful
It 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
For customers - they need to understand what to expect. For employees - they need to understand what to do.
Easy to Invoke and Collect
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, ³The Power of Unconditional Guarantees,´ Harvard Business Review, July-August, 1988, pp. 54-62.
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´
S e eG u rvic arante e
B uines327± S e e M arke s s rvic s ting D r. D w ayneD . G re le I ns c r m r, tru to F all S e ete 1 m s r 999
If you are dissatisfied with the instructor¶s performance you are entitled to receive your money back.
-- T e s-rm
1. The student must be a ³good customer´ and not abuse the product. 2. This guarantee covers the instructor's performance. The instructor is not responsible for occurrences outside his control. Such events include, but are not limited to, udent illness, personal emergencies, or financial hardship that st may require the student to withdraw from the class or the university. Likewise, the activities of other students are not guaranteed. 3. This guarantee does not apply to the studen satisfaction with his/her final course grade. t¶s 4. A student invoking the guarantee will receive his/her earned grade and credit for the course. 5. The guarantee may be invoked by submitting, in person, a written request to the instructor or to Randall Byers C. (Chair, Department of Business). Students who wish to remain anonymous to the instructor may do so. Offer void after February 1, 2000
RECOVERY
Service Guarantees
What should be guaranteed? Is a service guarantee appropriate in an educational setting? How should such a guarantee be written? How should such a guarantee would be administered and paid out? What is appropriate compensation? What are the advantages of providing a guarantee to students? What are the advantages of providing a guarantee to the instructor? What are the advantages of providing a guarantee to the university? What are the disadvantages of providing such a guarantee? Why is it that universities typically do not offer such guarantees?
Unconditional Guarantee
Guarantee a customer can invoke for any reason
Bugs Burger Bug Killers Guarantee
You don¶t owe one penny until all pests on your premise have been eradicated If a guest spots a pest on your premises, the exterminator will pay for the guest¶s meal or room, send a letter of apology and pay for a future meal or stay.
Good Service Guarantee
The guarantee shd. Be unconditional The guarantee shd. Be easy to understand and easy to communicate. The guarantee shd. Be easy to invoke Customers shd. Find it easy and quick to collect payments The compensation given to customers shd. Be meaningful to them.
Service recovery program
Develop a service recovery program Encourage customers to complain Data from service failures needs to be used to reduce service problems Firm needs to allocate resources to the service recovery process.
Impact of Service Failure and Recovery
Service Recovery ± Actions taken by an organization in response to a service failure. Failures occur ±
± ± ± ± Service was unavailable when it was promised It may be delivered late or too slowly The outcome may be incorrect or poorly executed Employees may be rude or uncaring
Resolving customer problems effectively
Has a strong impact on
± Customer satisfaction ± Loyalty ± Bottom-line performance
Recovery Paradox
Companies should plan to disappoint customers so that they can recover and gain even greater loyalty from them as a result. More complex than it may seem ±
± It is expensive to fix mistakes ± It is absurd to encourage service failures ± Only under very highest levels of customers¶ service recovery ratings increased satisfaction and loyalty was observed.
Recovery Paradox
Customer Complaint Actions Following Service Failure
Types of Complainers
Passives
± Gp of customers least likely to take any action
Voicers
± Actively complain to the service providers, but are less likely to spread negative WOM and third party complaining.
Irates
± Likely to engage in negative WOM and switch providers. Less active in complaining to provider and unlikely to complain to third-party.
Activists
± Above avg. tendency to complain on all dimensions
When they complain what do customers expect?
Customers expect fair treatment
± Outcome fairness ± Procedural fairness ± Interactional fairness
Outcome fairness
Outcomes or compensation, that match the level of their dissatisfaction.
± ± ± ± ± ± Actual monetary compensation An apology Future free services Reduced charges Repairs Replacements
Procedural fairness
Along with fair compensation, customers expect fairness in terms of policies, rules and timeliness of complaint process.
± ± ± ± Easy access to complaint process Things to be handled quickly First-contact person solvable Adaptability in procedures
Interaction fairness
Customers expect to be treated
± Politely ± With care and ± Honesty
Service Recovery Strategies
Welcome and Encourage Complaints Act Quickly Treat Customers Fairly Learn from Recovery Experiences Learn from Lost Customers Fail Safe the Service
Causes Behind Service Switching
Pricing High Price Price Increases Unfair Pricing Deceptive Pricing Inconvenience Location/Hours Wait for Appointment Wait for Service Core Service Failure Service Mistakes Billing Errors Service Catastrophe Service Encounter Failures Uncaring Impolite Unresponsive Unknowledgeable Response to Service Failure Negative Response No Response Reluctant Response Competition Found Better Service Ethical Problems Cheat Hard Sell Unsafe Conflict of Interest Involuntary Switching Customer Moved Provider Closed
Service Switching Behavior
Source: Sue Keaveney, ³Customer Switching Behavior in Service Industries: An Exploratory Study,´ Journal of Marketing, April, 1995, pp. 71-82.
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
The guarantee should make its promise unconditionally - no strings attached.
Meaningful
It 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
For customers - they need to understand what to expect. For employees - they need to understand what to do.
Easy to Invoke and Collect
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, ³The Power of Unconditional Guarantees,´ Harvard Business Review, July-August, 1988, pp. 54-62.
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´
S e eG u rvic arante e
B uines327± S e e M arke s s rvic s ting D r. D w ayneD . G re le I ns c r m r, tru to F all S e ete 1 m s r 999
If you are dissatisfied with the instructor¶s performance you are entitled to receive your money back.
-- T e s-rm
1. The student must be a ³good customer´ and not abuse the product. 2. This guarantee covers the instructor's performance. The instructor is not responsible for occurrences outside his control. Such events include, but are not limited to, udent illness, personal emergencies, or financial hardship that st may require the student to withdraw from the class or the university. Likewise, the activities of other students are not guaranteed. 3. This guarantee does not apply to the studen satisfaction with his/her final course grade. t¶s 4. A student invoking the guarantee will receive his/her earned grade and credit for the course. 5. The guarantee may be invoked by submitting, in person, a written request to the instructor or to Randall Byers C. (Chair, Department of Business). Students who wish to remain anonymous to the instructor may do so. Offer void after February 1, 2000
