Customer as Stakeholder in Service Crisis

Group Members

• Chhaya Fulsunge C-12

• Anu Pillai C-28

• Simi Samkutty C-41

• Shweta Dedhia C-10

• Anandita Singh C-34• Akanksha Thanekar

C-37

Flow of Presentation

• Case Study Overview• Aurora Crisis 1• Aurora Crisis 2• Live cases- Taj & Trident Hotel• Service recovery strategies

Services

“Economic activities between two parties, implying an exchange of value between seller and buyer in the market place”

Service Includes

Perishability – Cannot be changed according to the fluctuations in Demand and Supply

Heterogeneity – Difficulty to Standardized

Intangibility – Increase risk for the purchasing consumer

Characteristics seen

as Negative

Service failure and Recovery

National Health Services (NHS)

• Notions- Service failure may or may not lead

to service recovery- Service recovery results in outcomes- Outcomes result in consequences for

a service organization

Service Failure Inevitable Dissatisfied customers Categories of service

failures 1) Failure in advice,

process, interactions, documents, information, conditions, systems and third parties.

2) Service provider error, customer error, and associated organization error.

Service Recovery Discussed in

terms of organizational philosophy or strategy Process

approach

Identify the contingencies

( • Distributive Justice

• Procedural Justice

• Interactional Justice

Outcomes of Service Recovery

Consequences for a service organization• Negative Consequences - Lost Customers - Negative word of mouth - Employee

Dissatisfaction - Lack of loyalty - Complaints - Exit from the

organization

crisis

Crisis Critical event or point of decision, if not handled in an

appropriate manner may turn into a disaster.

Threat to the organization

Element of surprise

Short decision time

3 co

mm

on

elem

ents

• Process to deal with major unpredictable event that

threatens to harm the organization, its stakeholders or the

general public.

• Includes :

development of plans to reduce risk of crisis occurring

and to deal with any crises that do arise.

implementation of plans to minimize impact of crises.

assist the organization to recover.

Crisis Management

• UK-based cruise line

• First cruise line in the world

• Peninsular & Oriental Steam Navigation Company until 2003

• Part of Carnival Corporation

Arcadia

Ventura

Oriana

Artemis

Azura Oceana

Aurora

Adonia

• Entered service in April 2000.

• Built by Meyer Werft in Germany.

• Gross Registered Tonnage of 76,152 tonnes, 270 metres long, with a beam of 32.20 metres.

• Draught of 7.9 metres enables easy entry and exit to most commercial ports.

• 1,950 passengers in 939 cabins with around 850 crew.

Aurora

The Beginning………

• The Jinxed Ship

• 27th April, 2000 : Champagne bottle did not break.

• Engine problems during her maiden voyage.

• March 2001: Ship capsized and sank in South China Sea

• July 2003 : Crank case explosion in engine while at anchor in Mediterranean.

Crisis-- 1

Threat of Virus

Virus Outbreak• November 2003 : 600 passengers suffered

stomach infections caused by Noro virus.

• highly infectious and spreads through food, water and close contact with infected people

• Sick passengers to remain in their cabins.

• Denied the right to land at Greece.

• Spanish government closed border between Gibraltar and Spain.

• Led to an international row with Britain.

• Border reopened 13 hours later, when ship departed Gibraltar waters.

• Political and media- induced crisis difficult to manage.

• Passengers criticizing the company for slow response.

• Holiday from Hell

Precautions taken• Unaffected passengers allowed to leave the

ship.

• Received emergency medicine and supplies.

• British doctors ferried the aid to sick passengers aboard.

• Warning notices in all public restrooms.

• Paper towel dispensers for door opening and special bin outside for disposal.

• Contact surfaces are sanitized with accelerated peroxide.

Crisis --2

Delayed to set sail from Southampton

Over 1700 passengers paid huge price for once in a lifetime holiday cruise

Departure date was delayed from Southampton. Problems arised one after another.

Problems attracted media's attention. Recognized Passengers as stakeholder

Continuance of problems resulted cancelling the cruise Maintained customer confidence in this luxury market

Headlines-12-01-05

“Jinxed cruise ship Aurora still stuck in the Solent”

Service Recovery Efforts

• Dissatisfied customers in crisis-1

v/s Positive response in crisis-2• Research focus on customer

“satisfaction” as outcome of service recovery.

• 6 dimensions of service recovery (“Boshoff’s model)

• Results in to satisfaction & Customer Loyalty.

“I won’t go through this again .As far as I ‘m concerned ,its P& O once & once only”“10 days holiday in a five star hotel, all free-you can’t ask P &O for anything more ,can you?”

Communication

Empowerment

Feedback

Atonement

explanation

Tangibles

Six Dimensions of Service Recovery

Boshoff’s Model

Outcome of Service effortsPositive word of mouth in C-2

Research states 5 features of organizational crisis:-• Wide range of stakeholder• Time pressures • Surprise to organization• Ambiguity• A threat to organization

Crisis -1 was more subject to above features than Crisis-2

Consumers participation in services

Identification of “Social Service cape”

Research findings : Consumers must utilize their

resources properly. Organizations need to know their

consumers. Dysfunctional /jay consumers &

functional consumer. Jay consumers exhibits different

forms of behaviour. Vindictive consumers.

Crisis-1 customer

“I believe someone came on board with it(virus)who didn't have a good personal hygiene

standards”

Opportunity to consumers to interact with each other.Mutual help.Research findings:

Higher the level of dissatisfaction, a stabilizing impact on consumer expectations .

In relation to c-2-c interactions,2 differences in C-1& C-2

C-1:Blaming other fellow passengersC-2:Consumers repeatedly engaged with each

other

Consumer- to- Consumer interaction

Hotel Industry

• Nearly 40% of annual income lost – Financial Crisis.

• 2007 – 16% Growth• 2008 – 1.8% growth compared to 2007.• Went down due to terrorism.

Entry in India

• Attackers travelled by sea from Karachi, Pakistan across the Arabian Sea.

• 10 Urdu-speaking men arrived.• The first events were detailed around 20:00

Indian Standard Time(IST) on 26 November.• 156 people lost their lives, 400 injured, 250

walked free

CRISIS AT

Trident

• This 22-floor hotel features 550 guestrooms.

• The Trident, Nariman Point Mumbai is an ultra-modern high-rise hotel.

• Owned and managed by Oberoi Hotels & Resorts.

The commandos have taken positions at the NCPA

Two attackers at the Trident entered one of the hotel restaurants looking for U.S. and British nationals.

They fire at policemen and army commandos

At 5 pm, one of the security personnel came under fire.

The intensity of fire was very high.

The Siege At Trident

The30 persons at the hotel were killed during the terror attack. 316 guests from the Trident and 135 guests from the Oberoi were evacuated following the attack since the 60-hour terror strike began the Nov 26 night. But four resident guests, another 18 visitors dining in the restaurants and 10 staff members lost their lives.

Service Failure of Trident

• The damages amounted to nearly Rs 45 lakh. • There has been a significant reduction in the number

of events held at Trident • lesser number of press conferences. • Sharp drop in visitors to Mumbai, especially

foreigners.

Trident Reopened

• On 21 December 2008. • The Trident Hotel was the least damaged.• The Oberoi opened only one of its towers.

Service recovery

• Opened with all its services, guestrooms, restaurants and banquet halls.

• Oberoi Care Fund.• Offering discounts on room tariffs.• Enhanced security.• Retrieved the garments• 100 rooms at the Trident were booked on the

first night itself.

• Compulsory identification cards, bag checks, X-ray scanners to screen luggage, metal detectors, car checks and sniffer dogs greeted guests along with burly doormen.

• Unobtrusive armed guards in the hotel, as well as background checks on the employees.

• The Oberoi Group has already received Rs 25 Crore from New India Assurance for assistance in the rebuilding efforts.

CRISIS AT

TAJ

THE CHRONOLOGYReasons behind 26/11 terror attacks.

Flaws in the services.

Disaster Recovery Planning.

The Taj Mahal Palace & Tower

• Founder: Jamshetji Nusserwanji Tata.

• December 16, 1903.• Iconic 105-year old heritage

building.• The flagship property of the group

and contains 565 rooms.• Hosted a long list of notable

guests.• Pride of India.• Ratan Tata – TATA Group Chairman.

Reasons behind the 26/11 terror attacks

Filled with people - foreigners and the local elite.

International media coverage.

The message to India.

The selection of targets—Americans, Britons, and Jews, as well as Indians.

The Siege At Taj HeritageAt least seven gunmen enter the lobby of the Taj Mahal Palace hotel, where about 450 people were staying, and begin firing.

60 hours of siege.

Left 195 people dead and hundreds injured.

Large fire reported.

Took Indian security forces nearly three days to eliminate the last of the attackers.

SERVICE FLAWSIntelligence Failures.

Gaps in Coastal Surveillance.

Incomplete Execution of Response Protocols.

Response Timing Problems.

Inadequate Counterterrorism Training and Equipment for the Local Police.

Limitations of Municipal Fire and Emergency Services.

Flawed Hostage-Rescue Plan.

Poor Strategic Communications and Information Management by the Govt.

Employees of taj during THE SERVICE crisis

Staff- Waiters, Executives, Chefs.

Providing food and other necessary things to the guests as needed by them.

Established a helpline in Wellington Mews in the midst of the crisis.

Security staff.

The telephone operators.

Karamveer Singh Kang, Taj's general manager.

Hotel management.

Ratan tata - Chairman of the Tata group.

Service recovery

Immeditely created the Taj Public Welfare Trust.

Assisting people affected by the attack.

Not laid off a single employee.

Promised to rebuild and restore every inch of the hotel to its original glory.

Ratan Tata, surveyed the heritage building.

The Indian National Trust for Art and Cultural Heritage (INTACH).

Planned to reopen the Hotel in phases.

Opening the Hotel as soon as possible.

reopeningRe-opened the doors of its 268-room Tower Wing on Sunday 21 December 2008.

Guest services have been upgraded.

Use of the Taj Club, with free breakfast and tea, coffee and cocktails.

Free use the hotel's personal butler service.

SECURITYInvestment of large sums of money on security systems and procedures.

Created a security team headed by a retired Major General from the army.

Retained the services of a top international security service company.

Around 75 people have been trained overseas.

Equipped them to be the first line of defence in the event of an attack.

Trained security people in plain clothes at the lobby and other key points.

Security ring outside the hotel.

Mock attacks to assess the preparedness of our people, system and procedures.

Maitaining hotel image

The hotel’s biggest loss was the death of 10 staff members and 21 guests.

November - spent in quiet reflection and remembrance.

Private multi-faith prayers.

Nov. 26, 2009

Mr Tata unveiled the new permanent memorial at the lobby.

The memorial has the names of the thirty one victims.

Gathering of private staff and employees which was also attended by family members of the martyrs.

“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.”

Complaining Customers: The Tip of the Iceberg

Service Recovery Strategy

Fail-safe your service – “Do it right the first

time”

Welcome & encourage complaints

Act quickly

Treat customers

fairly

Learn from recovery

experiences

Learn from lost customers

FAIL-SAFE YOUR SERVICE – “DO IT RIGHT THE FIRST TIME”

Recovery is Unnecessary; because - Customers get what they expect. Cost of Redoing can be avoided. Compensating for errors can be avoided.

TQM – Zero Defects

Poka Yokes (Japanese Term): Fail safing or Mistake proofing. To ensure essential procedures are followed. To ensure service steps carried out in proper order and in timely manner.

E.g.: Trays for Surgical Instruments

Everyone understands “Zero Defection” Culture

Understand and Appreciate “ Lifetime Value of Customers”

WELCOME AND ENCOURAGE COMPLAINTS

Critical Component of Service Recovery.

Can be done through:

Satisfaction Survey, Critical Incident Studies, Lost Customer Research , etc.

E.g.: At Ritz-Carlton Hotel – “Instant Action Forms”

Teaching Customers – “HOW TO COMPLAIN………???”

Simple Process – Through Technology {Toll free call centers, Emails, Free SMS}

E.g.: British Airways

ACT QUICKLY Complaining Customers want QUICK RESPONSE.

1. Take Care of Problems on Frontline: Customers want the person to her them Speedy Way: Call Customers E.g.: Smith and Hawken, a Garden Supply Mail Order Company (California)

2. Empower Employees: Training and Empowerment to solve problems E.g.: Advance PCS, a large pharmacy Advantage: Employees can anticipate problems before they arise [Situation]

3. Allow Customers To Solve Their Own Problems: Done through Advanced Technology Customers can directly interface with Company’s Technology E.g.: FedEx and Cisco.

TREAT CUSTOMERS FAIRLY

Customers expect to be treated FAIRLY.

Outcomes, Process by which recovery takes place, Interpersonal treatment.

LEARN FROM RECOVERY EXPERIENCES

Problem and It’s Solution – Customer Database.

Previous Cases Handled.

Ensure that it will not happen again for particular customer.

LEARN FROM LOST CUSTOMERS

To learn from Customers who decide to leave.

For preventing mistakes and loosing more customers in future.

Can be done through In depth Interview.

SERVICE RECOVERY : CONCLUSION

Service recovery shifts the emphasis from the COST of pleasing a customer to the VALUE of doing so, and it entrusts frontline employees with sing their judgment.

Recovery is fundamental to SERVICE EXCELLENCE and therefore should be regarded as AN INTEGRAL PART of a service company’s strategy.