Chapter 13 Complaint Handling and Service Recovery, Service Guarantee,…
Chapter 13 Complaint Handling and Service Recovery
How customers respond to service failures
Customer Responses to Service Failure
Customer Expectation Once a Complaint is Made
Customer Responses to an Effective Service Recovery
Principles of Effective Service Recovery Systems
Service Encounter is Unsatisfactory
Take Some Form of Public Action
Complain to the Service Firm
Any One or a Combination of These Responses is Possible
Complain to a Third Party
Take Legal Action to Seek Redress
Take Some Form of Private Action
Defect (switch provider)
Take No Action
Why customers complain?
Why do customers complain?
Release their anger
Help to improve the service
Out of concern for others
What proportion of unhappy customers complain?
Why don’t unhappy customers complain?
Who is most likely to complain?
Where do customers complain?
What do customers expect once they have made a complaint?
What customers expect from the firm when they complain
Complaint Handling and Service Process
How customers respond to effective service recovery
Tests a firm’s commitment to satisfaction and service quality
Plays a crucial role in achieving customer satisfaction
Impacts customer loyalty and future profitability
The service recovery paradox
Customers who experience a service failure that is satisfactorily resolved may be more likely to make future purchases than customers without problems
If second service failure occurs, the paradox disappears—customers’ expectations have been raised and they become disillusioned
Severity and “recoverability” of failure may limit firm’s ability to delight customer with recovery efforts
Best strategy: Do it right the first time
The principles of effective service recovery systems
Do The Job Right The First Time
Effective Complaint Handling
Identify Service Complaints
Resolve Complaints Effectively
Learn from the Recovery Experience
Increased Satisfaction and Loyalty
-Develop a "Complaints as Opportunity" Culture
Develop Effective System and Training in Complaints Handling
Conduct a Root-Cause Analysis
Strategies to Reduce Customer Complaint Barriers
Make feedback easy and convenient
Reassure customers that their feedback will be taken seriously and will pay off
Make providing feedback a positive experience
How to Enable Effective Service Recovery
On the spot, before customers complain
Plan recovery procedures
Identify most common service problems and have prepared scripts to guide employees in service recovery
Teach recovery skills to relevant personnel
Empower personnel to use judgment and skills to develop recovery solutions
How Generous Should Compensation Be?
Rules of thumb for managers to consider
What is positioning of our firm?
How severe was the service failure?
Who is the affected customer?
The power of service guarantees
Force firms to focus on what customers want
Set clear standards
Require systems to get & act on customer feedback
Force organizations to understand why they fail and to overcome potential fail points
Reduce risks of purchase and build loyalty
How to design effective service guarantees
Whatever is promised in the guarantee must be totally unconditional.
The customer must be clearly aware of the benefits that can be gained from the guarantee.
The guarantee must be on something that is important to the customer; the compensation should be more than adequate to cover the service failure.
It should be easy for the customer to invoke the guarantee.
If a service failure occurs, the customer should be able to easily collect on the guarantee.
The guarantee should be believable
When firms should not offer service guarantees
Companies that already have a strong reputation for service excellence may not need a guarantee.
A firm whose service is poor must first work to improve quality to a level above what is guaranteed.
Service firms whose quality is truly uncontrollable should not offer a guarantee.
If consumers see little risk associated with a service, a guarantee adds little value.
The seven groups of jaycustomers
A customer who behaves in a thoughtless or abusive fashion, causing problems for the firm, its employees, and other customers
More potential for mischief in service businesses, especially when many customers are present
No organization wants an ongoing relationship with an abusive customer
The Cheat: thinks of various way to cheat the firm
The Thief: No intention of paying―sets out to steal or pay less
Shouts loudly, maybe mouthing insults, threats and curses
Family Feuders: People who get into arguments with other customers ― often members of their own family
Customers who fail to pay (as distinct from “thieves” who never intended to pay in the first place)
Dealing with Customer Fraud
If in doubt, believe the customer
Keep a database of how often customers invoke service guarantees or of payments made for service failure
Insights from research on guarantee cheating
Justice Dimension of the Service Recovery Process
Customer Satisfaction with the Service Recovery