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Service Recovery Notes

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					Service Recovery
Service Recovery
 It refers to the actions taken by an
  organization in response to a service failure.
 Reasons of failure:
 Service may be unavailable when promised
 It may be delivered later or too slowly
 Outcome may be incorrect or poorly executed
 Employees may be rude or uncaring
The Impact of Service Failure and
Recovery
 Resolving customer problems effectively has
  a strong impact on:
 Customer satisfaction
 Loyalty
 Word of mouth communication
 Bottom line performance
How Customers Respond to Service
Failures
Types of Complainers
 Passives- Don’t Complain
 Voicers- complain but don’t do negative
  things
 Irates- Angry, Negative WOM, likely to switch
 Activists- beyond complaining
         Unhappy Customers’ Repurchase
         Intentions
Unhappy Customers Who Don’t Complain                 9%

Unhappy Customers Who Do Complain

            Complaints Not Resolved                           19%


                Complaints Resolved                                                             54%


         Complaints Resolved Quickly                                                                    82%


                                            Percent of customers who will buy again
                                            after a major complaint (over $100 in losses)
                     Source: Adapted from data reported by the Technical Assistance Research Program.
Customers’ Recovery Expectations

 Understanding & accountability on the part of
  the service provider
 Fair treatment
               Causes Behind Service Switching
Pricing
•   High price
•   Price increases                                                                                        Response to Service Failure
•   Unfair pricing                                                                                         • Negative response
•   Deceptive pricing                                                                                      • No response
                                                                                                           • Reluctant response
Inconvenience
• Location/hours                                                                                           Competition
• Wait for appointment
• Wait for service
                                                                Service                                    • Found better service

                                                               Switching                                   Ethical Problems
Core Service Failure                                                                                       •
• Service mistakes                                             Behavior                                    •
                                                                                                               Cheat
                                                                                                               Hard sell
• Billing errors                                                                                           •   Unsafe
• Service catastrophe                                                                                      •   Conflict of interest

Service Encounter Failures                                                                                 Involuntary Switching
•   Uncaring
•   Impolite                                                                                               • Customer moved
•   Unresponsive                                                                                           • Provider closed
•   Unknowledgeable




     Source: Sue Keaveney, “Customer Switching Behavior in Service Industries: An Exploratory Study,” Journal of Marketing, April, 1995, pp. 71-82.
Service Recovery Strategies

 Do it right the first time- make the service fail
  safe
 Encourage & track complaints
 Act quickly
 Provide adequate explanations
 Treat customers fairly
 Cultivate relationship with customers
 Learn from recovery experiences
 Learn from lost customers
Service Guarantees
 Guarantee: an assurance of the fulfillment of a
  condition

 in a business context, a guarantee is a pledge or
  assurance that a product offered by a firm will
  perform as promised and, if not, then some form of
  reparation will be undertaken by the firm

 for tangible products, a guarantee is often done in the
  form of a warranty

 services are often not guaranteed
      cannot return the service
      service experience is intangible
Benefits of service guarantees
 It forces the company to focus on its
  customers
 Sets clear standards for the organization
 Generates immediate and relevant feedback
  from the customers
 Instant opportunity for service recovery
 Helps in continuous improvement effort
 Enhance employees morale & loyalty
 Reduces the sense of risk
     Characteristics of an Effective
     Service Guarantee
 Unconditional
    the guarantee should make its promise unconditionally
     – no strings attached
 Meaningful
    the firm should guarantee elements of the service that
     are important to the customer
    the payout should cover fully 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
    the firm should eliminate hoops or red tape in the way
     of accessing or collecting on the guarantee