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4 Courses of Action Available to
a Dissatisfied Customer Do Nothing
Complain in some form to the Service Firm
Take Action Through a 3rd Party
Switch to a Competitor & Spread Negative
WOM
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Customer Complaint Behaviour
Propensity for customers not to complain
Complaints often don¶t identify the root of the problem
Complaints often don¶t reach management.
Satisfying complaining customers can increase brandloyalty
Increase in ease of access to firms can increasecomplaints
Likelihood of complaining is directly related to theseverity of the problem
Complainers tend to be the heaviest users of theservice
Dissatisfied customers spread negative WOM.
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Guidelines for Dealing with
Complaining Customers Understand the source of the anger
Apologise
Sympathise & Empathise
Accept 100% Responsibility
Prepare to help
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What is service recovery???
Service recovery has been defined by manyauthors as :
³ the effort an organisation expends to win back
customers goodwill once it has been lost due toservice failure´- (Fisk, Grove et al 2000)
³refers to actions taken by an organisation inresponse to some service failures´ (Zeithaml &
Bitner, 2003)³any situation where something has gone wrong,
irrespective of responsibility ́ (Palmer, 2001)
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History of Service Recovery
1970¶s and 1980¶s service recovery was the plan for dealing with telecommunications problems or recovering particular services.
Companies adopted systems that produced µzerodefects¶, to produce a high quality service and a costeffective production line approach.
In the late 1970s marketers began to recognise theimportance of service recovery for different areas of
business and specific service problems. However the idea of zero defects in services is simply
an unattainable goal.
Use of the word µrecovery¶ originated from British Airways µP utting the Customer First Campaign¶ in the
late 1990s
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Issues in Service Recovery
The role of service recovery in the event of aservice failure is recognised as ³doing the servicevery right the second time´ ( Brown, Cowles et al .
1996). In order to understand service recovery, it is
necessary to understand how the customer experiences the service and the impact of theservice encounter on customer satisfaction.
Effective service recovery can improve the imageof the firm and reduce perceived risk to thecustomer.
One issue of great importance in service
recovery is the µrecovery paradox¶ .
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Issues in Service Recovery
Customer satisfaction
Develops into an attitude about a product, services or afirm, which in turn guides consumer behaviour, brandloyalty and WOM
Satisfaction occurs at the point where experiencematches expectation. If the experience is not what¶sexpected, customers are likely to complain.
Costs of Service Recovery
Costs to customer include monetary, psychological,emotional and costs of inconvenience.
Costs to firm include monetary, cost of lost customers,cost of negative WOM and costs associated with settingup recovery strategy.
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Service Recovery and Strategy«.
Recovery must be considered as part of the
overall strategy for identifying and responding to
customers expectations, while at the same time
empowering staff and providing a platform for maintaining long-term relationships with
customers.
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Service Recovery Strategies
Fail-safe
the
Service
Welcome
and
Encourage
Complaints Act
Quickly
TreatCustomers
FairlyLearn form
Recovery
Experiences
Learn
from LostCustomers
Service
Recovery
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Service Guarantees
³Customers value reliability over all other dimensions´
Statement explaining the service the customer
may expect (the promise) and what the company will do if it fails to deliver (the payout).
Promise of consistency compared to other services
Cover customer costs Repeat business
Assure customers subsequent service will behigher quality => change attitudes
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Benefits ³T he guarantee counts most in services´
It forces: ± Provision of error free service due to promise
± Focus on knowing what the customer really wants ± Increases volume of customers and lifetime value to
firm
Reduces risk therefore:
± Encourages purchase ± Positive word of mouth
± Customer loyalty
± Reduced price sensitivity to service
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BenefitsInternally: ± Sets performance standards
± Boosts employee performance & morale
± => tangibilises commitment to the employee &customer
± Examination of service delivery failure points
± Generates reliable data through payouts
± Guards against over promises
± => honest communication between firm and customer
± Justified expense as customer retention improves
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Why it works ³Greatest ailment afflicting service firms is lack of decent
systems for generating and acting on customer data´.
Customer has less incentive to complain: ± No evidence
± No warranty
± Customers don¶t know their rights (e.g. is 15 mins too long towait?)
± Often have to complain to the person rendering the poor service
± Comment cards: too short, impersonal, & perceived as uselessfor resolving problems
± => guarantee is incentive and vehicle for bringing complaints tomanagement.
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Conclusion
Service firms are unable to implement service
recovery strategies if they are not informed of their
shortcomings, therefore customers must be
encouraged to complain.
Service recovery is the key to customer satisfaction
and achieving this should be a primary goal for
service organisations
Service recovery strategies play a crucial role incustomer satisfaction, as illustrated through the use
of Zeithaml and Bitners diagram
Service guarantees are an incentive and a vehicle for
bringing customer complaints to the organisation.