Utsav Mahendra : Customer Feedback and Service Recovery

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Customer Feedback and Service Recovery

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Chapter 13:

Chapter 13 Customer Feedback and Service Recovery

American Customer Satisfaction Index: Selected Industry Scores, 2002:

American Customer Satisfaction Index: Selected Industry Scores, 2002 Industry: Soft drinks Express mail, parcels Cars, vans, etc. Life insurance Comm. banks Hotels Personal computers Airlines Hospitals Fast food Restaurants Broadcasting (natl. news) IRS (tax) 85 79 80 79 74 71 71 66 70 76 65 62 0 10 20 30 40 50 60 70 80 90 100 3.7% 1.3% 0.0% 1.3% 2.8% 0.0% 0.0% 8.2% 2.9% -2.6% 4.8% 3.3% % Change 2002 vs 2001 Score (Max = 100)

Key Questions for Managers to Ask about Customer Complaining Behavior:

Key Questions for Managers to Ask about Customer Complaining Behavior Why do customers complain? What proportion of unhappy customers complain? Why don’t unhappy customers complain? Who is most likely to complain? Where do customers complain?

Courses of Action Open to a Dissatisfied Customer (Figure 13.1):

Courses of Action Open to a Dissatisfied Customer (Figure 13.1) Service Encounter is Dissatisfactory Take some form of public action Take some form of private action Take no action Complain to the service firm Complain to a third party Take legal action to seek redress Defect (switch provider) Negative word-of-mouth Any one or a combination of these responses is possible

Dimensions of Perceived Fairness in Service Recovery Process (Figure 13.2):

Dimensions of Perceived Fairness in Service Recovery Process (Figure 13.2) Procedural Justice Interactive Justice Outcome Justice Complaint Handling & Service Recovery Process Justice Dimensions of the Service Recovery Process Customer Satisfaction with the Service Recovery Source: Tax and Brown

Proportion of Unhappy Customers Who Buy Again Depending on the Complaint Process :

Proportion of Unhappy Customers Who Buy Again Depending on the Complaint Process 9% 37% 19% 46% 54% 70% 82% 95% 0 10 20 30 40 50 60 70 80 90 100 Customer did not complain Complaint was not resolved Complaint was resolved Complaint was resolved quickly Problem cost > $100 Problem cost $1 - 5 Source: TARP study

Impact of Effective Service Recovery on Retention:

Impact of Effective Service Recovery on Retention No Problem Problem Unresolved Customer Retention 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 84% 92% 46% Source: IBM-Rochester study Problem, but effectively resolved

Components of an Effective Service Recovery System (Figure 13.3):

Components of an Effective Service Recovery System (Figure 13.3)

Strategies to Reduce Customer Complaint Barriers (Table 13.1):

Strategies to Reduce Customer Complaint Barriers (Table 13.1) Complaint Barriers for Dissatisfied Customers Strategies to Reduce These Barriers Inconvenience Difficult to find the right complaint procedure. Effort, e.g., writing a letter . Make feedback easy and convenient by: Printing Customer Service Hotline numbers, e-mail and postal addresses on all customer communications materials. 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. Reassure customers that their feedback will be taken seriously and will pay off by: Having service recovery procedures in place, and communicating this to customers. Featuring service improvements that resulted from customer feedback. Unpleasantness Complaining customers fear that they may be treated rudely, may have to hassle, or may feel embarrassed to complain . Make providing feedback a positive experience: Thank customers for their feedback. Train the frontline not to hassle and make customers feel comfortable. Allow for anonymous feedback.

How to Enable Effective Service Recovery:

How to Enable Effective Service Recovery Be proactive—on the spot, before customers complain Plan recovery procedures Teach recovery skills to relevant personnel Empower personnel to use judgment and skills to develop recovery solutions

Guidelines for Effective Problem Resolution (Management Memo 13.1):

Guidelines for Effective Problem Resolution (Management Memo 13.1) Act fast Admit mistakes but don’t be defensive Understand problem from customer’s viewpoint Don’t argue Acknowledge customer’s feelings Give benefit of doubt Clarify steps to solve problem Keep customers informed of progress Consider compensation Persevere to regain goodwill

Service Guarantees Help Promote and Achieve Service Loyalty:

Service Guarantees Help Promote and Achieve Service Loyalty Force firms to focus on what customers want Set clear standards Highlights cost of service failures Require systems to get & act on, customer feedback Reduce risks of purchase and build loyalty

Types of Service Guarantees:

Types of Service Guarantees Single attribute-specific guarantee – one key service attribute is covered Multiattribute-specific guarantee – a few important service attributes are covered Full-satisfaction guarantee – all service aspects covered with no exceptions Combined guarantee – like the full-satisfaction, adding explicit minimum performance standards on important attributes

The Hampton Inn 100% Satisfaction Guarantee (Figure 13.4):

The Hampton Inn 100% Satisfaction Guarantee (Figure 13.4) What are the benefits of such a guarantee? Are there any downsides?

Key Objectives of Effective Customer Feedback Systems:

Key Objectives of Effective Customer Feedback Systems Assessment and benchmarking of service quality and performance Customer-driven learning and improvements Creating a customer-oriented service culture

Building a Customer Feedback System:

Building a Customer Feedback System Total market surveys Post-transaction surveys Ongoing customer surveys Customer advisory panels Employee surveys/panels Focus groups Mystery shopping Complaint analysis Capture of service operating data

Strengths and Weakness of Key Customer Feedback Collection Tools (Table 13.3):

Strengths and Weakness of Key Customer Feedback Collection Tools (Table 13.3) Selection of a cocktail of effective customer feedback collection tools . Potential for Service Recovery Collection Tools Multi-level Measurement Action-able Represen-tative, Reliable First Hand Learning Cost Effective Service Satisfaction Process Satisfaction Specific Feedback Total Market Survey (inclu. competitors) Annual Survey on overall satisfaction Transactional Survey (process specific) Service Feedback Cards (process specific) Mystery Shopping (service testers) Unsolicited Feedback Recd (Online feedback system) Focus Group Discussions Service Reviews Meets Requirements: Fully Moderate Little/Not at all

Entry Points for Unsolicited Feedback:

Entry Points for Unsolicited Feedback Employees serving customers face-to-face or by phone Intermediaries acting for original supplier Managers contacted by customers at head/regional office Complaint cards mailed or placed in special box Complaints passed to company by third-party recipients consumer advocates trade organizations legislative agencies other customers

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