Week 3 DB
ghounds50
Chapter_7.pptx
McGraw-Hill/Irwin © 2018 The McGraw-Hill Companies, All Rights Reserved
Chapter 7-‹#›
Service Recovery
The Impact of Service Failure and Recovery
How Customers Respond to Service Failures
Service Recovery Strategies: Fixing the Customer
Service Recovery Strategies: Fixing the Problem
Service Guarantees
Switching versus Staying Following Service Recovery
Chapter
7
McGraw-Hill/Irwin © 2018 The McGraw-Hill Companies, All Rights Reserved
Chapter 7-‹#›
Objectives for Chapter 7: Service Recovery
Illustrate the importance of recovery from service failures in keeping customers and building loyalty.
Discuss the nature of consumer complaints and why people do and do not complain.
Provide evidence of what customers expect and the kind of responses they want when they do complain.
Present strategies for effective service recovery, including ways to “fix the customer” after a service failure and to “fix the problem.”
Discuss service guarantees—what they are, the benefits of guarantees, and when to use them—as a particular type of service recovery strategy.
McGraw-Hill/Irwin © 2018 The McGraw-Hill Companies, All Rights Reserved
Chapter 7-‹#›
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 to improve the situation for the customer.
McGraw-Hill/Irwin © 2018 The McGraw-Hill Companies, All Rights Reserved
Chapter 7-‹#›
Complaining Customers: The Tip of the Iceberg (Figure 7.1)
McGraw-Hill/Irwin © 2018 The McGraw-Hill Companies, All Rights Reserved
Chapter 7-‹#›
Unhappy Customers’ Repurchase Intentions
McGraw-Hill/Irwin © 2018 The McGraw-Hill Companies, All Rights Reserved
Chapter 7-‹#›
The Internet Spreads the Story of Poor Service Recovery (Exhibit 7.1)
© 2009 Big Break Enterprises/Dave Carroll
McGraw-Hill/Irwin © 2018 The McGraw-Hill Companies, All Rights Reserved
Chapter 7-‹#›
The Service Recovery Paradox (Exhibit 7.2)
Is a customer who has experienced a service failure and exemplary service recovery more likely to be more satisfied – impressed even – with the service provider?
Should a firm “screw up” just a little so that it can “fix the problem” superbly?
What are the problems with such an approach?
McGraw-Hill/Irwin © 2018 The McGraw-Hill Companies, All Rights Reserved
Chapter 7-‹#›
Customer Complaint Actions Following Service Failure (Figure 7.3)
McGraw-Hill/Irwin © 2018 The McGraw-Hill Companies, All Rights Reserved
Chapter 7-‹#›
Types of Complainers
Passives: least likely to take any action, say anything to the provider, spread negative WOM, or complain to a third party; doubtful of the effectiveness of complaining
Voicers: actively complain to the provider, but not likely to spread negative WOM; believe in the positive consequences of complaining - the service provider’s best friends!
McGraw-Hill/Irwin © 2018 The McGraw-Hill Companies, All Rights Reserved
Chapter 7-‹#›
Types of Complainers
Irates: more likely to engage in negative WOM to friends and relatives and to switch providers; average in complaints to provider; unlikely to complain to third parties; more angry, less likely to give provider a second chance
Activists: above average propensity to complain on all levels; more likely to complain to a third party; feel most alienated from the marketplace compared to other groups; in extreme cases can become “terrorists”
McGraw-Hill/Irwin © 2018 The McGraw-Hill Companies, All Rights Reserved
Chapter 7-‹#›
Service Recovery Strategies (Figure 7.4)
McGraw-Hill/Irwin © 2018 The McGraw-Hill Companies, All Rights Reserved
Chapter 7-‹#›
Fixing the Customer
When customers take the time to complain, they generally have high expectations.
They expect the company to respond quickly and to be accountable.
They expect to be compensated for their grief and for the hassle of being inconvenienced.
They expect to be treated nicely in the process!
McGraw-Hill/Irwin © 2018 The McGraw-Hill Companies, All Rights Reserved
Chapter 7-‹#›
Respond Quickly
McGraw-Hill/Irwin © 2018 The McGraw-Hill Companies, All Rights Reserved
Chapter 7-‹#›
Provide Appropriate Communication
McGraw-Hill/Irwin © 2018 The McGraw-Hill Companies, All Rights Reserved
Chapter 7-‹#›
Top 12 Remedies Customers Seek (Table 7.1)
McGraw-Hill/Irwin © 2018 The McGraw-Hill Companies, All Rights Reserved
Chapter 7-‹#›
Treat Customers Fairly
Outcome fairness
Outcome (compensation) should match the customer’s level of dissatisfaction; equality with what other customers receive; choices
Procedural fairness
Fairness in terms of policies, rules, timeliness of the complaint process; clarity, speed, no hassles; also choices: “What can we do to compensate you…?”
Interactional fairness
Politeness, care, and honesty on the part of the company and its employees; rude behavior on the part of employees may be due to lack of training and empowerment
McGraw-Hill/Irwin © 2018 The McGraw-Hill Companies, All Rights Reserved
Chapter 7-‹#›
Fixing the Problem
After “fixing the customer” the company should address the actual problem that created the poor service delivery in the first place.
If the problem is likely to recur for other customers, then the service delivery process may need to be fixed, too.
Strategies for fixing the problem include:
encouraging and tracking complaints
learning from recovery experiences and from lost customers
making the service fail-safe
McGraw-Hill/Irwin © 2018 The McGraw-Hill Companies, All Rights Reserved
Chapter 7-‹#›
Service Guarantees
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?)
McGraw-Hill/Irwin © 2018 The McGraw-Hill Companies, All Rights Reserved
Chapter 7-‹#›
Characteristics of an Effective Service Guarantee
Limited Restrictions and Exclusions
The guarantee should make its promise free of “if, and or but” conditions or exclusions associated with many legal documents.
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
Customers need to understand what to expect
Employees need to understand what to do
Easy to Invoke
The firm should eliminate hoops or red tape in the way of accessing or collecting on the guarantee
McGraw-Hill/Irwin © 2018 The McGraw-Hill Companies, All Rights Reserved
Chapter 7-‹#›
The Hampton Inn Service Guarantee (Figure 7.6)
McGraw-Hill/Irwin © 2018 The McGraw-Hill Companies, All Rights Reserved
Chapter 7-‹#›
Benefits of Service Guarantees
A good guarantee forces the company to focus on its customers.
An effective guarantee sets clear standards for the organization.
A good guarantee generates immediate and relevant feedback from customers.
When the guarantee is invoked there is an instant opportunity to recover.
Information generated through the guarantee can be tracked and integrated into continuous improvement efforts.
A service guarantee reduces customers’ sense of risk and builds confidence in the organization.
McGraw-Hill/Irwin © 2018 The McGraw-Hill Companies, All Rights Reserved
Chapter 7-‹#›
When to Use (or Not Use) a Guarantee
Reasons companies might NOT want to offer a service guarantee:
Existing service quality is poor
A guarantee does not fit the company’s image
Service quality is truly uncontrollable
Potential exists for customer abuse of the guarantee
Costs of the guarantee outweigh the benefits
Customers perceive little risk in the service
McGraw-Hill/Irwin © 2018 The McGraw-Hill Companies, All Rights Reserved
Chapter 7-‹#›
Causes Behind Service Switching
McGraw-Hill/Irwin © 2018 The McGraw-Hill Companies, All Rights Reserved
Chapter 7-‹#›
