Slide 1:SERVICE RECOVERY


Slide 2: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 Defined


Slide 3:Has a strong impact on customers satisfaction, loyalty, word-of-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 Service Recovery Effects


Slide 4:95% 70% 46% 37% 82% 54% 19% 9% Complaints Resolved Quickly Complaints Resolved Complaints Not Resolved Minor complaints ($1-$5 losses) Major complaints (over $100 losses) Unhappy Customers Who Don’t Complain Unhappy Customers Who Do Complain Percent of Customers Who Will Buy Again Source: Adapted from data reported by the Technical Assistance Research Program. Unhappy Customers’ Repurchase Intentions


Slide 5:How Customers Respond to Service Failures


Slide 6: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


Slide 7: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 Why Do (and Don’t) People Complain?


Slide 8: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 When They Complain, What Do Customers Expect?


: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


Slide 10:Service Recovery Strategies


Slide 11: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, e-mail


Slide 12: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


Slide 13:Service Switching Behavior High Price Price Increases Unfair Pricing Deceptive Pricing Pricing Location/Hours Wait for Appointment Wait for Service Inconvenience Service Mistakes Billing Errors Service Catastrophe Core Service Failure Uncaring Impolite Unresponsive Unknowledgeable Service Encounter Failures Negative Response No Response Reluctant Response Response to Service Failure Found Better Service Competition Cheat Hard Sell Unsafe Conflict of Interest Ethical Problems Customer Moved Provider Closed Involuntary Switching Source: Sue Keaveney, “Customer Switching Behavior in Service Industries: An Exploratory Study,” Journal of Marketing, April, 1995, pp. 71-82. Causes behind Service Switching