quiz
AKA-Pro
MGT345_545Class6.pptClass 6
Service Recovery
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Some statistics of note…
- Around the globe, __ of consumers say customer service is an important factor in their choice of loyalty to a brand.
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96%
- Americans will pay __ more to do business with firms with great reputations when it comes to customer service.
17%
- The average American tells __ people when they’ve had a poor customer service experience.
15. Men tell 21, Women tell 10.
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In Class Exercise
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Reliability is Critical in Service but…
In all service contexts, service failure is inevitable
- Service failure occurs when service performance falls below a customer’s expectations in such a way that leads to customer dissatisfaction
- Service recovery refers to the actions taken by a company in response to service failure
Complaining Customers:
The Tip of the Iceberg
Unhappy Customers’ Repurchase Intentions
Dissatisfied Consumers’ Behavior
Exponential power of storytelling:
As people tell the story, the negativity is embellished and grows
- 2014 Accenture Study
- 50% of customers switched service providers after a poor customer service experience in a single year
- Eighty-one (81%) of consumers who switched loyalties say the company could have done something differently to keep them as customers.
- 2014 Dimensional Research Study
- Forty-five (45%) percent of people share negative customer experiences on social media, with 35% of people likely to post negative online reviews after a poor experience.
- 86% of consumers will not purchase from a company that has negative online reviews.
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4 Types of Complainers
- Passive
- Voicers
- Irates
- Activists
Types of Complainers
- Passive –
- Least likely to take action and say anything to others
- Feel their personal values or norms argue against complaining
- Doubt effectiveness of complaining
Types of Complainers
- Voicers
- Actively complain
- Not likely to spread negative word of mouth, switch patronage, or go to third parties
- Believe complaints can be positive
- Can be your best friend
Types of Complainers
- Irates –
- Negative word of mouth with friends and relatives
- Tend to feel alienated in the marketplace
- Less likely to give a second chance
- More angry with the provider
- Likely to create blogs and other online postings about their service experience
Types of Complainers
- Activists:
- Above average propensity to complain on all dimensions (provider, word of mouth, third parties
- Complaining fits their personal norms
How Do Customers Express Their Displeasure?
Sheet1
| Expressions of displeasure | Respondents - Problem |
| Shared the story with my friends/other people | 85% |
| Complained to the org. that caused the problem1 | 84% |
| Decided I'd never do business/come back again | 59% |
| Threatened to talk with/contact management | 55% |
| Yelled or raised my voice | 24% |
| Threatened to report the org. that caused the problem to a gov't regulatory agency | 16% |
| Threatened legal action | 7% |
| Threatened to contact the media | 6% |
| Cursed/used profanity | 6% |
Sheet2
Sheet3
What Do Customers Want?
Non-monetary remedies
Sheet1
| Wanted to get | Respondents - Problem |
| Product repaired/service fixed | 85% |
| Explanation of why problem occurred | 78% |
| Assurance problem wouldn't be repeated | 78% |
| Apology | 59% |
| Chance to vent | 58% |
| Money back | 49% |
| Free product or service in the future | 30% |
| Financial compensation for my lost time, inconvenience or injury | 23% |
| Revenge -- make them pay for the hassle and inconvenience | 11% |
| Other | 9% |
Sheet2
Sheet3
What Most Complainants Got:
56% of complainants felt they got NOTHING
Length of Time to Resolve Complaints
% complainants
Service Recovery Strategies
Service Guarantees
- 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 company will perform as promised and, if not, then some form of reparation will be undertaken by the company
- For tangible products, a guarantee (warranty)
- Services are often not guaranteed
- Cannot return the service
- Service experience is intangible (so what do you guarantee?)
The Hampton Inn 100%
Satisfaction Guarantee
L.L. Bean
Satisfaction Guarantee
Costco
Satisfaction Guarantee
Characteristics of an Effective
Service Guarantee
- Unconditional
- Guarantee should make its promise unconditionally – no strings attached
- Meaningful
- Guarantee elements of the service that are important to the customer
- Payout should fully cover 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
- Eliminate hoops or red tape in the way of accessing or collecting on the guarantee
Benefits of Service Guarantees
- A good guarantee:
- Forces the company to focus on its customers
- Sets clear standards for the organization
- Generates immediate and relevant feedback from customers
- When the guarantee is invoked there is an instant opportunity to recover
- Thus satisfying the customer
- Helps retain loyalty
Benefits of Service Guarantees (cont.)
- Information generated through the guarantee can be tracked and integrated into continuous improvement efforts
- Employee morale and loyalty can be enhanced as a result of having a service guarantee in place
- Service guarantees:
- Reduces customers’sense of risk
- Builds confidence in the organization
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
Service Guarantees
- Service guarantees work for companies who are already customer-focused
- Effective guarantees can be BIG deals – they put the company at risk in the eyes of the customer
- Customers should be involved in the design of service guarantees
- The guarantee should be so stunning that it comes as a surprise – a WOW!! factor
- “It’s the icing on the cake, not the cake”
BREAK
JetBlue Case Study
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Expressions of displeasure
Respondents -
Problem
Shared the story with my friends/other people85%
Complained to the org. that caused the problem
1
84%
Decided I'd never do business/come back again59%
Threatened to talk with/contact management55%
Yelled or raised my voice24%
Threatened to report the org. that caused the
problem to a gov't regulatory agency
16%
Threatened legal action7%
Threatened to contact the media6%
Cursed/used profanity
6%
Wanted to get
Respondents -
Problem
Product repaired/service fixed85%
Explanation of why problem occurred78%
Assurance problem wouldn't be repeated78%
Apology59%
Chance to vent58%
Money back49%
Free product or service in the future30%
Financial compensation for my lost time,
inconvenience or injury
23%
Revenge -- make them pay for the hassle
and inconvenience
11%
Other
9%
