What is service What is service recovery??? recovery??? Service recovery has been defined by Service recovery has been defined by many authors as : many authors as : “ “ the effort an organisation expends to win back the effort an organisation expends to win back customers goodwill once it has been lost due to customers goodwill once it has been lost due to service failure service failure ”- (Fisk, Grove ”- (Fisk, Grove et al et al 2000) 2000) “ “ refers to actions taken by an organisation in refers to actions taken by an organisation in response to some service failures response to some service failures ” (Zeithaml & ” (Zeithaml & Bitner, 2003) Bitner, 2003) “ “ any situation where something has gone wrong, any situation where something has gone wrong, irrespective of responsibility irrespective of responsibility ” (Palmer, 2001) ” (Palmer, 2001)
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What is service What is service recovery???recovery???
Service recovery has been defined by many Service recovery has been defined by many authors as :authors as :
“ “ the effort an organisation expends to win back the effort an organisation expends to win back customers goodwill once it has been lost due customers goodwill once it has been lost due to service failureto service failure”- (Fisk, Grove ”- (Fisk, Grove et alet al 2000) 2000)
““refers to actions taken by an organisation in refers to actions taken by an organisation in response to some service failuresresponse to some service failures” (Zeithaml ” (Zeithaml & Bitner, 2003)& Bitner, 2003)
““any situation where something has gone any situation where something has gone wrong, irrespective of responsibilitywrong, irrespective of responsibility” (Palmer, ” (Palmer, 2001)2001)
History of Service History of Service RecoveryRecovery
1970’s and 1980’s service recovery was the 1970’s and 1980’s service recovery was the plan for dealing with telecommunications plan for dealing with telecommunications problems or recovering particular services. problems or recovering particular services.
Companies adopted systems that produced Companies adopted systems that produced ‘zero defects’, to produce a high quality service ‘zero defects’, to produce a high quality service and a cost effective production line approach.and a cost effective production line approach.
In the late 1970s marketers began to recognise In the late 1970s marketers began to recognise the importance of service recovery for different the importance of service recovery for different areas of business and specific service areas of business and specific service problems.problems.
However the idea of zero defects in services is However the idea of zero defects in services is simply an unattainable goal.simply an unattainable goal.
Use of the word ‘recovery’ originated from Use of the word ‘recovery’ originated from British Airways ‘British Airways ‘Putting the Customer First Putting the Customer First Campaign’ in the late 1990sCampaign’ in the late 1990s
Table 14.1 Service Failures Types
Primary Failure TypePrimary Failure Type
Service Delivery System Failures
Customer Needs and Requests
Unprompted/Unsolicited Employee Actions
Problematic Customers
Service Delivery System Failures
Customer Needs and Requests
Unprompted/Unsolicited Employee Actions
Problematic Customers
Failure SubgroupsFailure SubgroupsUnavailable ServiceUnreasonably Slow ServiceOther Core Service Failure
Group 3 FailuresGroup 3 Failures• Unprompted/Unsolicited employee actionsUnprompted/Unsolicited employee actions
level of attentionlevel of attention unusual actionunusual action cultural normscultural norms gestaltgestalt adverse conditionsadverse conditions
Group 4 Failures (Employee-reported Group 4 Failures (Employee-reported incidents)incidents)• Problematic customer behaviorProblematic customer behavior
drunkennessdrunkenness verbal and physical abuseverbal and physical abuse breaking company policies or lawsbreaking company policies or laws uncooperative customersuncooperative customers
Types of Service Failures
InstrumentalInstrumental• expressed for the purpose of altering expressed for the purpose of altering
an undesirable state of affairsan undesirable state of affairs
Non InstrumentalNon Instrumental• expressed without the expectation expressed without the expectation
that an undesirable state will be that an undesirable state will be alteredaltered
Types of Complaints
Correct the problemCorrect the problem Emotional release from frustrationEmotional release from frustration Regain some measure of control by Regain some measure of control by
spreading negative word-of-mouthspreading negative word-of-mouth Solicit sympathy Solicit sympathy Test for consensusTest for consensus Create an impression of being more Create an impression of being more
intelligent and discerningintelligent and discerning
Why Do Customers Complain?
Don’t know who to complain toDon’t know who to complain to Don’t think it will do any goodDon’t think it will do any good May doubt their own subjective May doubt their own subjective
evaluationevaluation May accept part of the blameMay accept part of the blame May want to avoid May want to avoid
confrontationconfrontation May lack expertiseMay lack expertise
Why Don’t Customers Complain?
VoiceVoice
• High => store managerHigh => store manager• Medium => sales clerkMedium => sales clerk• Low => no one associated with the Low => no one associated with the
storestore
ExitExit
• High => never purchases againHigh => never purchases again• Medium => only purchases if other Medium => only purchases if other
alternatives are not availablealternatives are not available• Low => continues to shop as usualLow => continues to shop as usual
Complaining Outcomes
RetaliationRetaliation
• High => tells lots of people and High => tells lots of people and attempts to physically damage the attempts to physically damage the storestore
• Medium => tells a few people and Medium => tells a few people and created minor inconveniencescreated minor inconveniences
• Low => does not retaliate at allLow => does not retaliate at all
Complaining Outcomes
Issues in Service RecoveryIssues in Service Recovery The role of service recovery in the event of a The role of service recovery in the event of a
service failure is recognised as “service failure is recognised as “doing the doing the service very right the second timeservice very right the second time” ( Brown, ” ( Brown, Cowles Cowles et alet al. 1996).. 1996).
In order to understand service recovery, it is In order to understand service recovery, it is necessary to understand how the customer necessary to understand how the customer experiences the service and the impact of the experiences the service and the impact of the service encounter on customer satisfaction. service encounter on customer satisfaction.
Effective service recovery can improve the Effective service recovery can improve the image of the firm and reduce perceived risk to image of the firm and reduce perceived risk to the customer.the customer.
One issue of great importance in service One issue of great importance in service recovery is the ‘recovery is the ‘recovery paradox’recovery paradox’. .
Issues in Service RecoveryIssues in Service Recovery
Customer satisfactionCustomer satisfaction Develops into an attitude about a product, services or a Develops into an attitude about a product, services or a
firm, which in turn guides consumer behaviour, brand firm, which in turn guides consumer behaviour, brand loyalty and WOMloyalty and WOM
Satisfaction occurs at the point where experience Satisfaction occurs at the point where experience matches expectation. If the experience is not what’s matches expectation. If the experience is not what’s expected, customers are likely to complain.expected, customers are likely to complain.
Costs of Service RecoveryCosts of Service Recovery Costs to customer include monetary, psychological, Costs to customer include monetary, psychological,
emotional and costs of inconvenience.emotional and costs of inconvenience. Costs to firm include monetary, cost of lost customers, Costs to firm include monetary, cost of lost customers,
cost of negative WOM and costs associated with setting cost of negative WOM and costs associated with setting up recovery strategy.up recovery strategy.
Service recovery paradoxService recovery paradox• Situation in which the customer rates Situation in which the customer rates
performance higher if a failure occurs performance higher if a failure occurs and the contact personnel and the contact personnel successfully recover from it than if the successfully recover from it than if the service had been delivered correctly service had been delivered correctly in the first placein the first place
The Art of Service Recovery
Guidelines for Dealing with Guidelines for Dealing with Complaining CustomersComplaining Customers
Understand the source of the Understand the source of the angeranger
ApologiseApologise Sympathise & EmpathiseSympathise & Empathise Accept 100% ResponsibilityAccept 100% Responsibility Prepare to helpPrepare to help
4 Courses of Action 4 Courses of Action Available to a Dissatisfied Available to a Dissatisfied CustomerCustomer
Do NothingDo Nothing Complain in some form to the Complain in some form to the
Service FirmService Firm Take Action Through a 3Take Action Through a 3rdrd Party Party Switch to a Competitor & Spread Switch to a Competitor & Spread
Service Recovery and Service Recovery and Strategy….Strategy….
Recovery must be considered as part of Recovery must be considered as part of the overall strategy for identifying and the overall strategy for identifying and responding to customers expectations, responding to customers expectations, while at the same time empowering while at the same time empowering staff and providing a platform for staff and providing a platform for maintaining long-term relationships with maintaining long-term relationships with customers.customers.
Service Recovery Service Recovery StrategiesStrategies
Fail-safe the
Service
Welcome and
Encourage Complaints
Act Quickly
TreatCustomers
Fairly Learn form Recovery
Experiences
Learn from Lost Customers
Service Recovery
Service GuaranteesService Guarantees ““Customers value reliability over all other Customers value reliability over all other
dimensions”dimensions” Statement explaining the service the Statement explaining the service the
customer may expect (the promise) and customer may expect (the promise) and what the company will do if it fails to deliver what the company will do if it fails to deliver (the payout).(the payout).
Promise of consistency compared to other Promise of consistency compared to other servicesservices
Cover customer costsCover customer costs Repeat businessRepeat business Assure customers subsequent service will be Assure customers subsequent service will be
BenefitsBenefits ““The guarantee counts most in services”The guarantee counts most in services” It forces:It forces:
Provision of error free service due to promiseProvision of error free service due to promise Focus on knowing what the customer really wantsFocus on knowing what the customer really wants Increases volume of customers and lifetime value Increases volume of customers and lifetime value
to firmto firm Reduces risk therefore:Reduces risk therefore:
Encourages purchaseEncourages purchase Positive word of mouthPositive word of mouth Customer loyaltyCustomer loyalty Reduced price sensitivity to serviceReduced price sensitivity to service
BenefitsBenefits
Internally:Internally: Sets performance standardsSets performance standards Boosts employee performance & moraleBoosts employee performance & morale => tangibilises commitment to the employee & => tangibilises commitment to the employee &
customer customer Examination of service delivery failure pointsExamination of service delivery failure points Generates reliable data through payoutsGenerates reliable data through payouts Guards against over promisesGuards against over promises => honest communication between firm and => honest communication between firm and
customercustomer Justified expense as customer retention improvesJustified expense as customer retention improves
Why it worksWhy it works ““Greatest ailment afflicting service firms is lack of Greatest ailment afflicting service firms is lack of
decent systems for generating and acting on decent systems for generating and acting on customer data”.customer data”.
Customer has less incentive to complain:Customer has less incentive to complain: No evidenceNo evidence No warrantyNo warranty Customers don’t know their rights (e.g. is 15 mins too long Customers don’t know their rights (e.g. is 15 mins too long
to wait?) to wait?) Often have to complain to the person rendering the poor Often have to complain to the person rendering the poor
serviceservice Comment cards: too short, impersonal, & perceived as Comment cards: too short, impersonal, & perceived as
useless for resolving problemsuseless for resolving problems => guarantee is incentive and vehicle for bringing => guarantee is incentive and vehicle for bringing
complaints to management.complaints to management.
ConclusionConclusion Service firms are unable to implement service Service firms are unable to implement service
recovery strategies if they are not informed of recovery strategies if they are not informed of their shortcomings, therefore customers must their shortcomings, therefore customers must be encouraged to complain. be encouraged to complain.
Service recovery is the key to customer Service recovery is the key to customer satisfaction and achieving this should be a satisfaction and achieving this should be a primary goal for service organisationsprimary goal for service organisations
Service recovery strategies play a crucial role Service recovery strategies play a crucial role in customer satisfaction.in customer satisfaction.
Service guarantees are an incentive and a Service guarantees are an incentive and a vehicle for bringing customer complaints to vehicle for bringing customer complaints to the organisation. the organisation.
