1. Think about the last time you received a less than satisfactory service-Did you complain?
Why/Why not???

2. SERVICE RECOVERY & CUSTOMER FEEDBACK
Chapter 13: Lovelock
Chapter 8: Zeithaml
SERVICE RECOVERY & CUSTOMER FEEDBACK

3. Reliability is Critical in Service but…
In all service contexts, service failure is inevitable.
Service failure occurs when service performance that falls below a customer’s expectations in such a way that leads to customer dissatisfaction.
Service recovery refers to the actions taken by a firm in response to service failure.

4. Complaining Customers: The Tip of the Iceberg

5. Have you ever experienced any outstanding service recovery????

6. Service Recovery Paradox
“A good recovery can turn angry, frustrated customers into loyal ones. ..can, in fact, create more goodwill than if things had gone smoothly in the first place.” (Hart et al.)
HOWEVER:
only a small percent of customers complain
service recovery must be SUPERLATIVE
only with responsiveness, redress, and empathy/courtesy
only with tangible rewards
service recovery is expensive

7. Service Recovery Paradox
The service recovery paradox is more likely to occur when:
the failure is not considered by the customer to be severe
the customer has not experienced prior failures with the firm
the cause of the failure is viewed as unstable by the customer
the customer perceives that the company had little control over the cause of the failure
Conditions must be just right in order for the recovery paradox to be present!

8. Customer Complaint Actions Following Service Failure

9. Why Do Customers Complain?
Vent their anger
Obtain compensation
Help to improve the service
Create an impression of being more intelligent and discerning

10. Why Don’t Customers Complain?
Don’t know who to complain to
Don’t think it will do any good-waste of time
May doubt their own subjective evaluation
May accept part of the blame
May want to avoid confrontation
May lack expertise
Personal relevance of the problem

11. Type of Complainers Passives Voicers Irates Activists
Least likely to take any action.
Often doubt the effectiveness of complaining.
Voicers
Actively complain to the service provider.
Less likely to spread negative word of mouth, to switch patronage or to go to third parties with their complaints.
Irates
Less likely to give the service provider a second chance.
More likely to switch to a competitor.
More likely to engage in negative word of mouth.
Activists
above average propensity to complain on all dimensions.
In extreme cases can become terrorists.

12. What Drives Customers to Switch?
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
Pricing
High Price
Price Increases
Unfair Pricing
Deceptive Pricing
Inconvenience
Location/Hours
Wait for Appointment
Wait for Service
Competition
Found Better Service
Service Failure/Recovery
Value Proposition
Service
Switching
Involuntary Switching
Customer Moved
Provider Closed
Ethical Problems
Cheat
Hard Sell
Unsafe
Conflict of Interest
Others
Source: Adapted from Susan M. Keaveney, “Customer Switching Behavior in Service Industries: An Exploratory Study,” Journal of Marketing 59 (April 1995), pp. 71–82.

14. Causes Behind Service Switching

15. Components of an Effective Service Recovery System

16. Effective Service Recovery
Service Recovery should be
Proactive
Planned
Trained
Empowered

17. Service Recovery Strategies

18. Guidelines for Effective Problem Resolution
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

19. Eight Most Common Remedies Customers Seek with Serious Problems
Have the product repaired or service fixed
Be reimbursed for the hassle of having experienced a problem
Receive a free product or service in the future
Explanation by the firm as to what happened
Assurance that the problem will not be repeated
A thank you for the customer’s business
An apology from the firm
An opportunity for the customer to vent his or her frustrations to the firm

20. Service Guarantees
guarantee = an assurance of the fulfillment of a condition
in a business context, a guarantee is a pledge or assurance that a product offered by a firm will perform as promised and, if not, then some form of reparation will be undertaken by the firm
for tangible products, a guarantee is 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?)

21. The Hampton Inn 100 Percent Satisfaction Guarantee

22. Characteristics of an Effective Service Guarantee
Unconditional
the guarantee should make its promise unconditionally – no strings attached
Meaningful
the firm 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
customers need to understand what to expect
employees need to understand what to do
Easy to Invoke and Collect
the firm should eliminate hoops or red tape in the way of accessing or collecting on the guarantee

23. 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

24. British Airways Guarantee

25. Why a Good Guarantee Works
forces company to focus on customers
sets clear standards
generates feedback
forces company to understand why it failed
builds “marketing muscle”

26. Does everyone need a service guarantee?
Reasons companies might NOT want to offer a service guarantee:
existing service quality is poor
guarantee does not fit the company’s image
too many uncontrollable external variables
fears of cheating or abuse by customers
costs of the guarantee outweigh the benefits
customers perceive little risk in the service
customers perceive little variability in service quality among competitors

27. Building a Customer Feedback System
Total market surveys
Post-transaction surveys
Employee surveys/panels
Focus groups
Mystery shopping
Complaint analysis

28. You ordered steak but the meat was raw
You ordered steak but the meat was raw. What would be an effective service recovery if you were dining out in:
Time Out
Steak House
The Westin