8 chapter service recovery the impact of service failure and recovery how customers respond to...
TRANSCRIPT
8ChapterChapter
Service RecoveryService Recovery
The Impact of Service Failure and Recovery
How Customers Respond to Service Failures
Customers’ Recovery Expectations Service Recovery Strategies Service Guarantees
© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
Figure 8.1
Unhappy Customers’ Repurchase IntentionsFigure 8.1
Unhappy Customers’ Repurchase Intentions
82%
54%
19%
9%
Complaints Resolved Quickly
Complaints Resolved
Complaints Not Resolved
Unhappy Customers Who Don’t Complain
Unhappy Customers Who Do Complain
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.
© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
Complaining BehaviorComplaining Behavior
Don’t Complain Waste of time Don’t know how Self blame Social norms
Do Complain Positive consequences Social responsibility Revenge Social norms
PASSIVES NO ACTION
VOICERS 2ND CHANCE
IRATES EMOTIONAL
ACTIVIST SOCIAL
OUTCOMES
© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
Figure 8.3
Customer Complaint Actions Following Service Failure
Figure 8.3
Customer Complaint Actions Following Service Failure
© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
Figure 8.4
Causes Behind Service SwitchingFigure 8.4
Causes Behind Service Switching
Service Switching Behavior
• High price• Price increases• Unfair pricing• Deceptive pricing
Pricing
• Location/hours• Wait for appointment• Wait for service
Inconvenience
• Service mistakes• Billing errors• Service catastrophe
Core Service Failure
• Uncaring• Impolite• Unresponsive• Unknowledgeable
Service Encounter Failures
• Negative response• No response• Reluctant response
Response to Service Failure
• Found better service
Competition
• Cheat• Hard sell• Unsafe• Conflict of interest
Ethical Problems
• Customer moved• Provider closed
Involuntary Switching
Source: Sue Keaveney, “Customer Switching Behavior in Service Industries: An Exploratory Study,” Journal of Marketing, April, 1995, pp. 71-82.
© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
Learn from R
ecovery E
xperiences
Act
Qui
ckly
Treat Customers Fairly
Fail-safethe Service
Cultivate Relationships
with Customers
Encourage and Track
Complaints
Provid
e Ade
quat
e
Explan
ation
s
Lear
n fro
m L
ost
Custo
mer
s
ServiceRecoveryStrategies
Figure 8.5
Service Recovery StrategiesFigure 8.5
Service Recovery Strategies
© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
Service GuaranteesService Guarantees
guarantee = an assurance of the fulfillment of a condition (Webster’s Dictionary)
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
(so what do you guarantee?)
© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
Figure 8.2
The Hampton Inn 100 PercentSatisfaction Guarantee
Figure 8.2
The Hampton Inn 100 PercentSatisfaction Guarantee
© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
Exhibit 8.6
Characteristics of an EffectiveService Guarantee
Exhibit 8.6
Characteristics of an EffectiveService 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 guaranteeSource: Christopher W.L. Hart, “The Power of Unconditional Guarantees,” Harvard Business Review, July-August, 1988, pp. 54-62.
© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
Benefits of Service GuaranteesBenefits of Service Guarantees
A good guarantee forces the company to focus on its customers. An effective guarantee sets clear standards for the organization. A good guarantee generates immediate and relevant feedback
from customers. When the guarantee is invoked there is an instant opportunity to
recover, thus satisfying the customer and helping retain loyalty. Information generated through the guarantee can be tracked
and integrated into continuous improvement efforts. Employee morale and loyalty can be enhanced as a result of
having a service guarantee in place. A service guarantee reduces customers’ sense of risk and builds
confidence in the organization.
© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
Why a Good Guarantee WorksWhy a Good Guarantee Works
forces company to focus on customers
sets clear standards
generates feedback
forces company to understand why it failed
builds “marketing muscle”
© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
Service GuaranteesService Guarantees
Does everyone need a guarantee?
Reasons companies might NOT want to offer a service guarantee: existing service quality is poor guarantee does not fit the company’s image too many uncontrollable external variables fears of cheating or abuse by customers costs of the guarantee outweigh the benefits customers perceive little risk in the service customers perceive little variability in service quality among
competitors
© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
Service GuaranteesService Guarantees
service guarantees work for companies who are already customer-focused
effective guarantees can be BIG deals – they put the company at risk in the eyes of the customer
customers should be involved in the design of service guarantees
the guarantee should be so stunning that it comes as a surprise – a WOW!! factor
“it’s the icing on the cake, not the cake”