copy of service recovery

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4 Courses of Action Available to

a Dissatisfied Customer Do Nothing

Complain in some form to the Service Firm

Take Action Through a 3rd Party

Switch to a Competitor & Spread Negative

WOM



Customer Complaint Behaviour

Propensity for customers not to complain

Complaints often don¶t identify the root of the problem

Complaints often don¶t reach management.

Satisfying complaining customers can increase brandloyalty

Increase in ease of access to firms can increasecomplaints

Likelihood of complaining is directly related to theseverity of the problem

Complainers tend to be the heaviest users of theservice

Dissatisfied customers spread negative WOM.



Guidelines for Dealing with

Complaining Customers Understand the source of the anger

Apologise

Sympathise & Empathise

Accept 100% Responsibility

Prepare to help



What is service recovery???

Service recovery has been defined by manyauthors as :

³ the effort an organisation expends to win back

customers goodwill once it has been lost due toservice failure´- (Fisk, Grove et al 2000)

³refers to actions taken by an organisation inresponse to some service failures´ (Zeithaml &

Bitner, 2003)³any situation where something has gone wrong,

irrespective of responsibility ́ (Palmer, 2001)



History of Service Recovery

1970¶s and 1980¶s service recovery was the plan for dealing with telecommunications problems or recovering particular services.

Companies adopted systems that produced µzerodefects¶, to produce a high quality service and a costeffective production line approach.

In the late 1970s marketers began to recognise theimportance of service recovery for different areas of

business and specific service problems. However the idea of zero defects in services is simply

an unattainable goal.

Use of the word µrecovery¶ originated from British Airways µP utting the Customer First Campaign¶ in the

late 1990s



Issues in Service Recovery

The role of service recovery in the event of aservice failure is recognised as ³doing the servicevery right the second time´ ( Brown, Cowles et al .

1996). In order to understand service recovery, it is

necessary to understand how the customer experiences the service and the impact of theservice encounter on customer satisfaction.

Effective service recovery can improve the imageof the firm and reduce perceived risk to thecustomer.

One issue of great importance in service

recovery is the µrecovery paradox¶ .



Issues in Service Recovery

Customer satisfaction

Develops into an attitude about a product, services or afirm, which in turn guides consumer behaviour, brandloyalty and WOM

Satisfaction occurs at the point where experiencematches expectation. If the experience is not what¶sexpected, customers are likely to complain.

Costs of Service Recovery

Costs to customer include monetary, psychological,emotional and costs of inconvenience.

Costs to firm include monetary, cost of lost customers,cost of negative WOM and costs associated with settingup recovery strategy.



Service Recovery and Strategy«.

Recovery must be considered as part of the

overall strategy for identifying and responding to

customers expectations, while at the same time

empowering staff and providing a platform for maintaining long-term relationships with

customers.



Service Recovery Strategies

Fail-safe

the

Service

Welcome

and

Encourage

Complaints Act

Quickly

TreatCustomers

FairlyLearn form

Recovery

Experiences

Learn

from LostCustomers

Service

Recovery



Service Guarantees

³Customers value reliability over all other dimensions´

Statement explaining the service the customer

may expect (the promise) and what the company will do if it fails to deliver (the payout).

Promise of consistency compared to other services

Cover customer costs Repeat business

Assure customers subsequent service will behigher quality => change attitudes



Benefits ³T he guarantee counts most in services´

It forces: ± Provision of error free service due to promise

± Focus on knowing what the customer really wants ± Increases volume of customers and lifetime value to

firm

Reduces risk therefore:

± Encourages purchase ± Positive word of mouth

± Customer loyalty

± Reduced price sensitivity to service



BenefitsInternally: ± Sets performance standards

± Boosts employee performance & morale

± => tangibilises commitment to the employee &customer

± Examination of service delivery failure points

± Generates reliable data through payouts

± Guards against over promises

± => honest communication between firm and customer

± Justified expense as customer retention improves



Why it works ³Greatest ailment afflicting service firms is lack of decent

systems for generating and acting on customer data´.

Customer has less incentive to complain: ± No evidence

± No warranty

± Customers don¶t know their rights (e.g. is 15 mins too long towait?)

± Often have to complain to the person rendering the poor service

± Comment cards: too short, impersonal, & perceived as uselessfor resolving problems

± => guarantee is incentive and vehicle for bringing complaints tomanagement.



Conclusion

Service firms are unable to implement service

recovery strategies if they are not informed of their

shortcomings, therefore customers must be

encouraged to complain.

Service recovery is the key to customer satisfaction

and achieving this should be a primary goal for

service organisations

Service recovery strategies play a crucial role incustomer satisfaction, as illustrated through the use

of Zeithaml and Bitners diagram

Service guarantees are an incentive and a vehicle for

bringing customer complaints to the organisation.

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