1. 8 Service Recovery The Impact of Service Failure and Recovery
Chapter
Service Recovery 8
The Impact of Service Failure and Recovery
How Customers Respond to Service Failures
Customers’ Recovery Expectations
Service Recovery Strategies
Service Guarantees

2. Chapter 8 - Service Recovery
Service recovery: actions taken in response to a ___________________
What do you do when you receive poor service?

3. Unhappy Customers’ Repurchase Intentions (Figure 8.1)
Unhappy Customers Who Don’t Complain 9%
Unhappy Customers Who Do Complain
19%
Complaints Not Resolved
54%
Complaints Resolved
82%
Complaints Resolved Quickly
Percent of Customers Who Will Buy Again after a
Major complaint (over $100 losses)

4. Figure 8.3 Customer Complaint Actions Following Service Failure

5. Recovery Paradox
According to the recovery paradox, service failures should be encouraged
Fallacy of Recovery Paradox
Fixing mistakes is ______________
Service failure may be too much to be ________ by any recovery effort
Best strategy: ___________________________

6. Response to Failures
If the service failure is really important, if it has critical consequences for the customer, or if the customer has much ego involvement in the service experience, he is more likely to complain (p.219)

7. Customers’ Recovery Expectations (p. 221-222)
An apology
An explanation as to what happened
An assurance problem would not be repeated
An opportunity for customer to vent his frustrations
If firm does nothing about service failure, 86 percent of customers are dissatisfied. If firm provides apology, percentage of dissatisfied customers drops to 20 percent

8. When They Complain, What Do Customers Expect?
_________ fairness: outcomes, or compensation should match the level of their dissatisfaction:
“Their refusal to refund our money or make up for inconvenience and cold food was inexcusable”

9. When They Complain, What Do Customers Expect?
__________ fairness: fairness in terms of policies, rules, and timeliness to the complaint process: Ex-
“They should have assisted me with the problem instead of giving me a phone number to call”

10. When They Complain, What Do Customers Expect?
______________ fairness: the interpersonal treatment received during the complaint process
“The receptionist was very rude; she made it seem like the doctor’s time was important but mine was not.”

11. Service Recovery Strategies
Fail-Safe the Service – Do It Right the First Time
Welcome and Encourage Complaints – complaints should be anticipated, encouraged, and tracked:
Act Quickly – e.g., empower employees
Provide Adequate Explanations – honest, sincere, and not manipulative

12. Service Recovery Strategies
Treat Customers Fairly
Cultivate Relationships with Customers
Learn from Recovery Experiences:
Learn from Lost Customers:

13. Service Guarantees services are often __________________
guarantee = an assurance of the fulfillment of a condition (Webster’s Dictionary)
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 __________________
cannot return the service
service experience is ______________________

14. Exhibit 8.6 Characteristics of an Effective Service Guarantee
Unconditional
The guarantee should make its promise unconditionally - no strings attached.
Meaningful
It should guarantee elements of the service that are _________ to the customer.
The payout should cover fully the customer's dissatisfaction.
Easy to Understand and Communicate
For customers - they need to understand what to expect.
For employees - they need to understand what to do.
Easy to Invoke and Collect
There should not be a lot of ________________ in the way of accessing or collecting on the guarantee.

15. When to (not use) Service Guarantee
Existing service quality in the service is poor
Service quality is truly _______________
______ of the guarantee outweigh the benefits
Customers perceive little risk in the service
Little perceived ___________ in service quality among competitors