Service Failure Basics (Switching and loyalty following service recovery…
Service Failure Basics
Impact of Service Failure & Recovery
Service Recovery Effects
Research shown that resolving customer problems effectively has a strong impact on customer satisfaction, loyalty, word-of-mouth and bottom line performance.
Customers who experience service failure but are ultimately satisfied based on recovery by the firm will be more loyal than those whose problems are not fixed.
Those who never complain about their service failure experience are the least likely to repurchase from a firm.
Good service recovery strategy can improve service as part of a continuous improvement effort.
By making adjustments to services based on previous service recovery experiences, this will increase the likelihood of 'doing it right the first time'.
When a customer is initially dissatisfied with a service experience and then receive a high level of service recovery, leading them to be even more satisfied after service failure than they otherwise would have been.
E.g. hotel customer arrives and finds no room is available, but the hotel receptionist immediately upgrades them at no extra cost. Customer is thrilled with the compensation and more impressed with the hotel than before
This paradox, however, does not suggest that companies should purposefully mess up - they should just be prepared with excellent service recovery strategies
How customers respond to service failures
Why people complain
Some people are more likely to believe that positive consequences may occur and that there are social benefits of complaining
Believe they should and will be provided with compensation
Believe fair treatment and good service are their due, and that in cases of service failure someone should make good
A small number of consumer have complaining personalities - they just like complaining and causing trouble
Feel a social obligation to complain - help others avoid similar situations or punish the service provider
Personal relevance - if the failure has critical consequences of if consumer has much ego involvement in service experience or if took place during the use of a high risk, expensive service (holiday package, airline travel, medical service) then complaining is much more likely.
Types of customer complaint actions
Can be on the spot complaint to service provider, giving the company the chance to respond immediately (often the best case scenario for a company because it has a second chance at that moment to satisfy the customer and keep their business).
Sometimes people complain later via telephone, internet or writing. Again gives a chance for company to recover.
Spread negative word of mouth to friends, relatives and co-workers. Can be extremely detrimental to the business, and gives no chance of recovery. Angry customers now have the option to take to special websites to vent their anger to a wider audience.
Complaining to third parties such as Consumers Association, trading standards or to radio or TV programmes that focus on consumer issues e.g. Watchdog, Cowboy Builders.
Types of complainers
- Don't think that complaining will change anything, least likely to take any action. Not as likely to spread negative word of mouth and unlikely to complain to a third party.
- Company's best friend. Actively complain to service providers, but less likely to spread negative word of mouth. Give services a second change, believe complaining is a good thing.
- More likely than others to engage in negative word of mouth, and are likely to switch providers. Unlikely to complain to third parties. More angry with the provider, however they believe complaining is good.
- Complain on all dimensions. Will tell others, will complain to third parties, and will complain to the provider. Very optimistic sense of potential positive consequences of all types of complaining.
Why people don't complain
See complaining as a waste of time and effort
Don't believe anything positive will occur for them or others based on their actions
Sometimes they don't know how to complain - don't understand the process or don't realise the avenues open to them to voice their complaints
Some non-complainers engage in 'emotion-focused coping' to deal with negative experiences, involving self-blame, denial and possibly seeking social support. May somehow see it as their fault and that they don't deserve redress.
Personal relevance - if services are simply not important enough to warrant time to complain.
Customer Recovery Expectations
Understanding and accountability
Looking for firms to take accountability for their actions
This costs the firm very little, comes in the form of a simple apology and explanation of what happened.
When service failures occur, customers see this as an injustice, and someone needs to take the blame and explain how this won't happen again
- Customers expect compensation that match their level of dissatisfaction. This can take the form of monetary, apology, future free service, reduced charge etc. All about equality.
- Customers expect fairness in terms of policies, rules and timeliness of complaint process. They want easy access to the complaint process, and want things handled quickly. Fair procedures characterised by clarity, speed, and absence of difficulty.
- Customers expect to be treated politely, with care and honesty. This type of fairness can dominate other forms if the customer feels the company & employees have uncaring attitudes.
Switching and loyalty following service recovery
How a service failure is handled and the customer's reaction to recovery effort can influence future decisions to remain loyal to the service provider or switch to another.
Magnitude and criticality of the failure will be a factor in future repurchase decisions. The more serious the failure, the more likely the customer is to switch no matter what the recovery effort.
Customer relationship with firm - if customer has a 'true relationship' with the company they are less likely to switch than those with a 'first-time encounter'.
Service switching may not happen immediately, it can follow as an accumulation of events.
Customer attitude towards switching will influence if they stay - certain customers have a greater propensity to switch no matter how the service recovery is handled and vice versa