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Service Recovery

Service recovery refers to actions taken in response to service failures. It is important as resolving issues effectively impacts customer satisfaction, loyalty, and financial performance. Customers respond differently - some complain, some don't. Most unhappy customers who complain but have their issues resolved will repurchase. Effective service recovery includes understanding the customer, treating them fairly, acting quickly, and learning from failures and recoveries. Service guarantees can help focus on customers and set service standards if they are unconditional, meaningful, easy to understand and invoke.

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1K views12 pages

Service Recovery

Service recovery refers to actions taken in response to service failures. It is important as resolving issues effectively impacts customer satisfaction, loyalty, and financial performance. Customers respond differently - some complain, some don't. Most unhappy customers who complain but have their issues resolved will repurchase. Effective service recovery includes understanding the customer, treating them fairly, acting quickly, and learning from failures and recoveries. Service guarantees can help focus on customers and set service standards if they are unconditional, meaningful, easy to understand and invoke.

Uploaded by

Heavy Gunner
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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Service Recovery

Service Recovery
 It refers to the actions taken by an
organization in response to a service failure.
 Reasons of failure:
 Service may be unavailable when promised
 It may be delivered later or too slowly
 Outcome may be incorrect or poorly executed
 Employees may be rude or uncaring
The Impact of Service Failure and
Recovery
 Resolving customer problems effectively has
a strong impact on:
 Customer satisfaction
 Loyalty
 Word of mouth communication
 Bottom line performance
How Customers Respond to Service
Failures
Types of Complainers
 Passives- Don’t Complain
 Voicers- complain but don’t do negative
things
 Irates- Angry, Negative WOM, likely to switch
 Activists- beyond complaining
Unhappy Customers’ Repurchase
Intentions
Unhappy Customers Who Don’t Complain 9%

Unhappy Customers Who Do Complain

Complaints Not Resolved 19%

Complaints Resolved 54%

Complaints Resolved Quickly 82%

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.
Customers’ Recovery Expectations

 Understanding & accountability on the part of


the service provider
 Fair treatment
Causes Behind Service Switching
Pricing
• High price
• Price increases Response to Service Failure
• Unfair pricing • Negative response
• Deceptive pricing • No response
• Reluctant response
Inconvenience
• Location/hours Competition
• Wait for appointment
• Wait for service
Service • Found better service

Switching Ethical Problems


Core Service Failure
• Service mistakes Behavior •
•
Cheat
Hard sell
• Billing errors • Unsafe
• Service catastrophe • Conflict of interest

Service Encounter Failures Involuntary Switching


• Uncaring
• Impolite • Customer moved
• Unresponsive • Provider closed
• Unknowledgeable

Source: Sue Keaveney, “Customer Switching Behavior in Service Industries: An Exploratory Study,” Journal of Marketing, April, 1995, pp. 71-82.
Service Recovery Strategies

 Do it right the first time- make the service fail


safe
 Encourage & track complaints
 Act quickly
 Provide adequate explanations
 Treat customers fairly
 Cultivate relationship with customers
 Learn from recovery experiences
 Learn from lost customers
Service Guarantees
 Guarantee: an assurance of the fulfillment of a
condition
 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
Benefits of service guarantees
 It forces the company to focus on its
customers
 Sets clear standards for the organization
 Generates immediate and relevant feedback
from the customers
 Instant opportunity for service recovery
 Helps in continuous improvement effort
 Enhance employees morale & loyalty
 Reduces the sense of risk
Characteristics of an Effective
Service 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 guarantee

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