Services Marketing - Service Encounter Failure & RecoveryPresentation Transcript

CHAPTER 5 SERVICE ENCOUNTERS, SERVICE FAILURE AND RECOVERY 1

Service Recovery Strategies Most companies have to learn the importance of excellent
service recovery for disappointed customers and practice them. This in reality is a
combination of several different strategies that need to work together, as given below : 2
Make Services Failsafe Do it Right for the First Time The first rule of the service
quality is to do it right the very first time. Thus, in one go several objectives can be
achieved : (1) service recovery is saved, (2) the customers get what they expect, (3)
compensating for the errors can be avoided, and (4) cost of repetition is saved. So its the
most important dimension of service quality. 3
Do it Right for the First Time Its important for a firm to create a culture of zero defect
to ensure doing it right the first time. Within this culture every one understands the
importance of reliability, and the relationship value of a customer. The managers and
the employees aim to satisfy every customer and look for the ways to improve the
service. 4
Encourage Complaints and Track Them A critical component for the service recovery
is to encourage complaints and document them. Firms can use a no. of ways to achieve
the above goal. 5
Customer Research Customer research is very useful here, like : survey, critical
incidents study, lost customer research, etc. In addition to these, now-a-days, these are
also used: e-mail, toll-free no., software applications for sorting and analysis of
complaints, etc. 6
Act Quickly Customers want a quick response in case of a complaint. If a firm
welcomes or even encourages complains, then it must be prepared for quick response.
It needs a system, procedures, and also ever ready employees. 7
Take Care of Problems on the Frontline Normally, customers want the person who
hears their complaints should resolve it whether its registered in person, over phone or
via the internet. So firms fix their responsibilities of resolving as binding on them. 8
Empower Employees Employees must be trained and empowered to solve problems as
they occur. A problem if not solved can quickly escalate leading to undesirable extreme
or drastic action. Some times employees can anticipate the problems and take care to
solve immediately. Service employees have a specific and real need for necessary
service recovery training. 9
Recovery Then & There Customers want the recovery to be then and there, and this
calls for the employees to have skills and authority, and motivation and incentives for
effective recovery. These include : (1) hearing customers problems, (2) taking
initiative, (3) identifying solutions, (4) improving, and (5) bending the rules for
time to time. 10
Allow Customers to Solve their own Problems Another way to handle the customer
problems is to allow the customers themselves to solve their problems thro a built-in
system. This can be done best by technology, where the customers directly access the
companys systems. This gives quick answers, information etc. to the customers. Ex., a
courier tracking system, the IRCTC ticket booking and ticket tracking system. 11
Provide Adequate Explanations In many cases of service failures, customers try to
understand why the failure occurred. Research shows that if a service recovery is not
successful, giving adequate explanation can substantially reduce further dissatisfaction.
For an explanation to be adequate, it must have two qualities : 12
Provide Adequate Explanations The content must be appropriate supported by
relevant facts, figures, and sufficient information. The delivery must be appropriate
how the explanation is delivered, the style of delivery etc. Style includes : honesty,
sincerity, credibility, knowledgeability, and NOT being manipulative. 13
Treat Customers Fairly In responding quickly, fairness in treating each customer is
very critical and important. Customers expect to be treated fairly in three counts. They
are : 1. In terms of the outcome they receive, 2. The process by which the service
recovery takes place, 3. The interpersonal treatment they receive. 14
Cultivate Relationship with Customers Customer relationship is the key focus area
today, and there are several benefits of it. One additional benefit for the service
marketer is that if the firm fails in service delivery, those customers who have a strong
relationship with the firm are often more forgiving, and also are more cooperative in the
firms service recovery effort. 15
Cultivate Relationship with Customers Researches show that the presence of rapport
between customers and employees provide several benefits like : Increased post-failure
satisfaction, Increased loyalty intentions, Decreased negative word-of-mouth
communication, Lower service recovery expectation, Demand less immediate
compensation for a failure. 16
Learn from Recovery Experiences The problem-resolution situation is very valuable
for the improvement of service quality delivery and future reference. This is a very
reliable source of diagnostic, prescriptive, information for improving customer services.
Managers often learn from these situations about problem areas, system / process
related flaws, problem fixing methods. 17
Learn from Recovery Experiences Hence the term learning from the past
experiences. By conducting the root cause analysis, the firms can identify the source
of problems and modify the process, sometimes eliminating almost completely the need
for recovery. 18
Learn from the Lost Customers Some of the dissatisfied customers leave the company
and patronage another. Here, if the firm finds out what went wrong that lead to such a
losing proposition, then it may work out the strategy to prevent such situations. This is
called learning from lost customers. There are several methods in MR to discover the
reasons of leaving or defect. This kind of MR is very difficult and painful and sometimes
also wasteful. 19
Learn from the Lost Customers This type of in-depth analysis often requires series of
why questions, tell us more questions, what went wrong questions, which will
bring out the actual, core and immediate reasons for a customers defection. On the
other hand while conducting this kind of MR the focus must be on profitable customers
and not just any customer who has defected in this case the result will be misleading
and the whole MR process may be a wasteful expenditure. 20
Service Guarantees A guarantee is a specific type of recovery system. A guarantee is
a pledge, assurance or commitment that a product or service offered by a firm will
perform or satisfy as promise, and if not, some sort of compensation will be undertaken
by the firm. 21
Service Guarantees In a product the performance is guaranteed, and in services the
satisfaction, the expectation or the experience is guaranteed. Now, more and more
companies are finding guarantees as an excellent service recovery strategy because of the
tremendous benefits the firms derive out of these guarantees. 22
Benefits of Service Guarantees Service firms are realising that guarantees can serve not
only as a strategic marketing tool, but also as a means to define, cultivate, and maintain
quality throughout the organisation. Some of the numerous benefits are given below :
23
A good guarantee forces the company to focus on its customers To develop a
meaningful guarantee, the firm must know what is important to its customers, and what
they expect and value. In most cases the satisfaction is guaranteed. But for the
guarantee to work effectively, the firms must understand what satisfaction means to
customers in terms of quality, value, expectation, convenience, etc. 24
An effective guarantee sets clear standards for the firm It prompts the company to
define clearly what it expects of its employees, and to communicate this to them. The
guarantee gives employees service oriented goals, which can quickly orient the
employees behaviours to customer strategies. (Ex., We will make it right or give your
money back lets the employees precisely what they should do if a customer complains).
It also makes it clear to the employees that doing it right for the customers is a critical
company goal. 25
A good guarantee generates immediate and relevant feedback from customers It
provides an incentive for the customers to complain and thereby provides more relevant
feedback to the firm regarding their services. This guarantee also tells the customers
that they have the right to complain any service failure. 26
When the guarantee is invoked there is an instant opportunity to recover thus
satisfying the customer and helping to retain customer loyalty. Information generated
thro the guarantee can be traced and integrated into continuous or ongoing improvement
efforts. A feedback link between customers and service operations decisions can be
strengthened thro the guarantee. 27
For customers, the guarantee reduces their sense of risk and builds confidence in the
company. Because services are intangible, and often highly personal, or ego-involving,
customers seek information, cues, hints that will help reduce their sense of uncertainty.
Studies show that guarantees reduce risk and increase positive and favourable evaluation
of the service prior to purchase. 28
Finally, the bottom line for the company is that an effective guarantee can affect
profitability thro building customer awareness, loyalty thro positive word of mouth,
reduction of costs thro service improvements, reduction in service expenses, reduce
costs of employee turn over thro creating a more positive service culture. 29
Thank You END of SM Chapter 5 Himansu S M / 12-08-2010 30
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