Service Recovery Mgt 664

Service Recovery You can please - all of the people some of the time; some of the people all of the time; BUT, you can never please all of the people all the time. A group of four people go out to dinner on Friday night. Three people’s food is brought to the table, one person’s order was lost. What is an adequate recovery? What if it happened at lunch on Wednesday?

Services loved and despised Name a service to which you have committed to never return? Name a service where you have experienced a great recovery?

“Reworking” customers not easy Recoveries fix circumstances and attitude 96% of disgruntled customers “walk” rather than complain. Complaining customers are an asset Demanding customers are an asset

Key to a quick recovery Shift efforts from recovery to prevention  Capture/document the failures  Insert counter measures If 96% of service failures “walk,” service providers may know of failures that are not obvious to management. How management responds to the providers will determine how much is revealed to them in the future.

Learning vs. Accountability open reporting   Full investigation Blame- free culture  A preliminary model Process improvement learning  accountability  Punishment    X X X

The Value of Open Reporting Failures Observed (without voluntary reporting) All failures Near Misses

Accountability AND Open Reporting just culture just, a. 2. Equitable; impartial; fair; as, a just decision provides a fair and productive alternative to the two extremes of punitive or blame- free cultures. balances the need to have a non-punitive learning environment with the need to hold persons accountable for their actions. David Marx, Just Culture: A Primer for Health Care Executives

Just Culture at a Glance Normal Error At-Risk Behavior Reckless Conduct Intended actionNoYes Knew risk of action No Yes Recommended response Blame Free Account- ability

The Problematic Middle Ground At-risk behavior  Did the employee intend to violate the rule? Yes  Did the employee understand the risk? No Some deviations from rules may be justified Sometimes, the written procedure and the actual procedure performed by employees don’t match.

Changing Standards Normal Error At-Risk Behavior Reckless Conduct Intended actionNoYes Knew risk of action No Yes Recommended response Blame Free Account- ability Old Standard New Standard

Just Culture without it with it Ignorance is not bliss.

Service Recovery Policies Bumper to bumper warranty Unconditional Guarantee Replacement or money back Discount on current service Discount coupons for future service

Service Recovery Policies Effective Unconditional Guarantees Unconditional without exceptions Easy to understand and communicate Meaningful (valued by customer) Easy and painless to invoke Easy to collect

Won’t customer take advantage? Negative word of mouth (customer tell an average of 9-10 people) Low propensity to complain. Only 4% complain about actual failures Actual failure vs. perceived failure: only perceptions matter May save a lifetime customer

Quitting is an option There are customers that it would be better for your competitor to have.  Perpetually dissatisfied  Unprofitable Short-term customers Long-term customers ProfitableButterfliesTrue Friends UnprofitableStrangersBarnacles