Service Failures and Recovery Strategies

8/6/2019 Service Failures and Recovery Strategies

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Week 11:

Service Failures and Recovery Strategies


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Customer Complaint Actions Following

Service Failure


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Figure 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 Failure

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.


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Reasons for service failures:-

Marketers assess the marketing climateinadequately.

The wrong group is targeted.

A weak positioning strategy is used.


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A less-than-optimal "configuration" of productor service attributes and benefits is selected.

A questionable pricing strategy isimplemented.

The advertising campaign generates aninsufficient level of new product/new serviceawareness.


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Cannibalization depresses corporate profits.

Over-optimism about the marketing plan

leads to a forecast that cannot be sustained

in the real world.


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The marketing plan for the new product or

service is not well implemented in the real

world.

The marketer believes that the service and

its marketing plan has died and cannot be

revived, when, in fact there is the potential forresurrection.


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Service recovery

Negotiation

Communication

Advertising Incentives

Relationship Marketing approaches

Other motivation techniques


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Customer Complaint Behavior

Why do customers

complain?

Correct the problem

Emotional release fromfrustration

Regain some measure of

control by spreading

negative w-o-m

Solicit sympathy

Why dont customers

complain?

Dont know who to complain

to Dont think it will do any good

May doubt their own

subjective evaluation

M

ay accept part of the blame May want to avoid

confrontation

May lack expertise


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Service Recovery Paradox

Service Recovery Paradox scenario:

states that with a highly effective service

recovery, a service failure offers a

chance to achieve higher satisfactionfrom customers than if the failure had

never happened. This means that a

good recovery can turn angry and

frustrated customers into loyalcustomers.


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Service Recovery Strategies

Figure 8.5


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Service Guarantees

service guarantees work for companies who are

already

effective guarantees can be BIG deals - they

customers should be involved in the of service

guarantees

the guarantee should be so stunning that itcomes as a surprise -- a factor


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Eight Most Common Remedies

Customers Seek with Serious Problems Have the product repaired or service fixed

Be reimbursed for the hassle of having experienceda problem

Receive a free product or service in the future Explanation by the firm as to what happened

Assurance that the problem will not be repeated

A thank you for the customers business

An apology from the firm An opportunity for the customer to vent his or her

frustrations to the firm


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Recovery

Dont

Ignore customer

Blame customer

Leave customer to fendfor himself

Downgrade

Act as if nothing is

wrong pass the buck

Do

Acknowledge problem

Explain causes

Apologise

Compensate/upgrade

Lay out options

Take responsibility


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Adaptability

Dont

Promise and fail tokeep them

Show unwillingness totry

Embarrass thecustomer

Laugh at the customer Avoid responsibility

Do

Recognise the

seriousness

Acknowledge

Anticipate

Accommodate

Adjust Explain rules/policies


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Spontaneity

Dont

Exhibit impatience

Yell/laugh/swear

Steal from customers

Discriminate

Ignore

Do

Take time

Be attentive

Anticipate needs

Listen

Provide information

Show empathy


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Coping

Dont

Take customers

dissatisfaction

personally Let customers

dissatisfaction affect

others

Do

Listen

Try to accommodate

Explain

Let go of the customer


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Types of complainers

Passives

Voicers

Irates Activists


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Customer complaints

It pays to resolve customer complaints

On an average only 5 % dissatisfied customers

complain. Others simply go over to the competitor

A satisfied consumer speaks to an average of 3people on his her experience

A dissatisfied consumer gripes to on an average 11

persons about his/her unpleasant experience


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Companies that focus on resolving

customer complaints Pay attention to quality and training of manpower

recruited

Have clear benchmarks on service quality and

communicate to employees Take remedial steps to improve customer

satisfaction and prevent repeats of customerdissatisfaction

Have a data base on customer complaints that is

periodically analysed and policies adjusted


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Satisfied employees will produce

satisfied customers Morale

Motivation

Mood


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Managing Service Productivity

Giving quality service is an expensive business

Not every consumer is willing to pay extra forservice quality

Service providers would have to find their optimumservice quality/cost ratios

Can technology substitute part of the labourcontent?

Can customers substitute part of the labour content?

Making services obsolete by product innovations

Documents

Service Failures and Recovery Strategies