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Service Failure Brief Overview (Service recovery strategies (Act quickly -…
Service Failure Brief Overview
Benefits of good service quality and resolution
Resolving customer problems has a strong impact on customer satisfaction, loyalty, WOM, and bottom-line performance
Doesn't matter if a failure occurred, if it gets resolved to a satisfactory manner it can actually improve a company's customer loyalty
Effective service recovery can:
Increase customer satisfaction
Generate positive WOM
Provide info that can be used to improve service as part of a continuous improvement effort
Prevent failures from occurring, and can enable a company to get it right first time, therefore reducing the costs of failures
Service guarantees
Benefits of service guarantees
Forces the company to focus on its customers
Sets clear standards for the organisation
Generates immediate and relevant feedback from customers
Studies of impact of service guarantee suggest that employee morale and loyalty can be enhanced as a result
Reduces risk and builds confidence for customers
Types of service guarantees
Satisfaction vs. service attribute
Unconditional satisfaction guarantees, if the customer is not satisfied they get their money back
Similar thing offered by Tesco's One in Front
Pizza Hut - if not delivered in 20 mins to the table it's free
Both cases, the company promises elements of service they know are important to the customer
External vs. internal
Internal guarantees that help align internal service operations, therefore reflecting upon the service that customers get
E.g. Embassy Suites housekeeping supplies department guarantees its internal customer. the housekeeping staff, that they can get supplies guaranteed on the day
When service guarantees are not appropriate
Existing service quality is poor
Guarantee does not fit the company's image
Service quality is truly uncontrollable
Potential exists for customer abuse of guarantee
Costs of guarantee outweigh the benefits
Customers perceive little risk in the service
Complaints
Why do consumers complain?
To get some form of compensation
To vent their anger
To help improve the service
Altruistic reasons
Types of complainers
Passives - Least likely to take action, wont speak out and less likely to spread negative WOM, don't think complaining is effective
Voicers - active complainers but less likely to spread bad WOM. SERVICES BEST FRIENDS, less likely to switch, give company a second chance, complaining is a positive thing
Irates - More likely to engage in bad WOM, get angrier with the provider, wont give a second chance and will moan and switch to a competitor
Activists - Above average on all complaint metrics, will complain, tell others, and complain to third parties
Reducing Complaint Barriers
Inconvenient (can't find the right procedure, effort with complaining) = Make feedback easy and convenient (put customer service hotline numbers, e-mails, and postal addresses on all customer comm. materials)
Doubtful Pay Off (uncertain that action will be taken by the firm to address the situation) = Assure that Feedback is Taken Seriously (have service recovery procedures in place, communicate this to customers, feature service improvements based on customer feedback)
Unpleasantness (fear of being treated rudely, hassle, embarrassment) = Make Feedback Experience Positive (thank customers, train frontline employees not to hassle, allow anonymous feedback)
Service recovery strategies
Act quickly - take care of problems on the front line, empower employees to solve problems, allow customers to solve their own problems
Provide adequate explanations
Treat customers fairly
Cultivate relationships with customers
Learn from recovery experience
Learn from lost customers
Make the service fail-safe
Encourage and track complaints - mind set that complaints are good, make it easy, be an active listener, ask customers about specific service issues, conduct short surveys
Recovery paradox
Occurs when a business has customers who are initially dissatisfied with a service, and then experience high level of service recovery leading them to be even more satisfied and likely to repurchase than if a problem had not arisen
Argument that businesses should perhaps screw up sometimes in order to satisfy their customers with their service recovery
This is a problem though because many customers don't actually complain, and therefore the chance to show these skills would be missed, and would reflect badly on them