Marketing services and customer experience
Michelle_Michy
Lecture_Servicefailureandrecovery.pptxService failure and recovery Marketing Services and the Customer Experience Study unit 7
What is service failure?
Service performance falls below a customer’s expectations
Can be due to employees, technology, customer co-production errors, and other customer behaviour
The real test of a service provider takes place after a service failure has occurred
Failure is inherent in services
Intangibility
Subjective expectations
Variability
Variations in service delivery
Perishability
Inability to match supply to demand
Inseparability
Customer and provider face-to-face
Lots of opportunity for failure
| Pre-sales | Initial telephone/web enquiry Making reservation Issue of ticket |
| Post-sales, pre-consumption | Baggage check-in/issue of boarding pass Advice of departure gate Quality of waiting conditions |
| Consumption | Welcome on boarding aircraft Assistance in finding seat Assistance in stowing baggage Reliability of departure time Attentiveness of in-flight service Quality of food service Comfort |
| Post-consumption | Baggage reclaim Information for forward travel |
Service failure in restaurants
| Group 1 | Service delivery failures | Product defects, slow service, cleanliness | 45% |
| Group 2 | Response to customer requests | Food not cooked to order, seating problems | 18% |
| Group 3 | Unprompted employee actions | Inappropriate behaviour (e.g. rude), wrong order, mischarged | 37% |
(Hoffman et al., 1995)
In 21% of service failure incidents, employees did not implement recovery strategies
Where recovery took place, customer retention rate was 75%
Customer response options
Unsatisfactory service encounter
No action
Some form of private action
Some form of public action
Negative WOM
Defect
(switch provider)
Complain to third party
Take legal action to seek redress
Complain to service firm
Complaining
45% of dissatisfied customers complain to frontline employees
5% of dissatisfied customers complain to firm’s head office
Why don’t more unhappy customers complain?
Too much effort
Don’t know the complaint procedure
Don’t believe it will make any difference
Avoid confrontation - embarrassed
Believe they may be partly responsible
(Luria et al., 2009)
Complaining
‘Thank goodness I’ve got a dissatisfied customer
on the phone.
The ones I worry about are the ones I never hear from.’
(Anon)
Omni-channel failure and recovery
Customers are channel-blurring: complaining on social media about in-store issues
More transparency means the stakes are high for service recovery
Service providers need a joined-up and rapid approach to tracking, and responding to, failures
Facebook complaints for department stores
(Rosenmayer et al., 2018)
Failure category
Percentage of total failures
Switching Factors (% of respondents mentioning)
| Core Service Failure: 44% (service mistakes; billing errors) |
| Service Encounter Failure: 34% (uncaring, impolite, unknowledgeable staff) |
| Pricing: 30% (unfair or deceptive or high) |
| Inconvenience: 20% (inconvenient access/hours) |
| Response to Service Failure: 17% (reluctant, or no, response to failure) |
| Competition: 10% (attracted by competition) |
| Ethical Issues: 7% (unethical behaviour) |
| Involuntary Switching: 6% (provider or customer moved) |
(Keaveney, 1995)
Recovery
Systematic efforts of a firm to correct a problem following a service failure and to retain a customer’s goodwill.
True test of a firm’s commitment to quality and satisfaction
Costs of obtaining new customers are three to five times higher than retaining existing customers (Reichheld, 1996)
Service recovery paradox
Customers who experience a service failure and then have it resolved are sometimes more satisfied than customers who had no problem in the first place
But research suggests this only works for the first service failure
Moderated by the severity of the service failure
(De Matos et al., 2007)
Service recovery framework
(Vaerenbergh et al., 2019)
Compensation
Monetary compensation
New/exchanged goods
Favourable employee behaviour
Courtesy
Justification
Organizational procedures
Recovery time
Flexibility
Reperformed service
Apology
Effort
Empathy
Employee empowerment
Customer participation
Customer evaluation of recovery
Satisfaction is maximised and potential for negative WOM minimised when service recovery is:
Handled swiftly
Implemented by a courteous and caring employee
(Hocutt et al., 2006)
Customer evaluation of recovery
BUT, appropriate recovery strategy may depend on emotional state of customer:
High-intensity negative emotional state
Delayed economic and psychological recovery
(Tang et al., 2018)
Low-intensity negative emotional state
Swift economic recovery
Service guarantees
A service guarantee is an explicit promise made by the service provider to:
deliver a certain level of service to satisfy the customer
remunerate the customer if the service is not sufficiently delivered.
Reduces perception of risk
Indicates to employees the required level of service
(Hogreve and Gremler, 2009)
If you aren’t satisfied with something, please let us know during your stay and
we’ll make it right or you won’t pay.
It’s guaranteed.
Service guarantee
References
De Matos, C., Henrique, J., and Rossi, C. (2007) Service recovery paradox: Meta analysis. Journal of Service Research, 1 (August), 60-77.
Hocutt, M., Bowers, M., and Donavan, D. (2006) The art of service recovery: fact or fiction. Journal of Services Marketing, 20 (3), 199-207.
Hoffman, K.D., Kelley, S., and Rotalsky, M. (1995) Tracking service failures and employee recovery efforts. Journal of Services Marketing, 9 (2), 49-61.
Hogreve, J. and Gremler, D. (2009) Twenty years of service guarantee research. Journal of Service Research, 11 (4), 322-343.
Keaveney, S. (1995) Customer switching behaviour in service industries: an exploratory study. Journal of Marketing, 59 (April), pp. 71-82.
Luria, G., Gal, I., and Yagil, D. (2009) Employees’ willingness to report service complaints. Journal of Service Research, 12 (2), 156-174.
Reichheld, F. (1996) The Loyalty Effect. Boston: Harvard Business School Press.
Rosenmayer, A., McQuilken, L., Robertson, N., and Ogden, S. (2018) Omni-channel service failures and recoveries: Refined typologies using Facebook complaints. Journal of Services Marketing, 32 (3), 269-285.
Tang, X., Chang, E., Xing, H., and Zhang, M. (2018) Timing and compensation strategies in service recovery. Journal of Services Marketing, 32 (6), 755-766.
Vaerenbergh, Y., Varga, D., Keyser, A., and Orsingher, C. (2019) The service recovery journey. Journal of Service Research, 22 (2), 103-19.
