service recovery process in case of service failure

7/27/2019 service recovery process in case of service failure

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Service Recovery

Chapter # 08


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The 9/11 attacks "geared organizations toward a completely different way ofthinking,". "Everyone has always had backup and co-location and back-upplans, every large company has.

After 9/11 and Katrina and the string of other things, even a three-person lawfirm, a three-person insurance agency, a doctor with his files, if your buildinggets wiped out and you have six decades of files, not only is your businessgone, not only is your credibility gone, but you're putting hundreds of lives

at risk.

The loss of a doctor's records could be fatal in some cases, and with the lossof a law firm's records, "you could have people tied in knots legally until youfind alternative records, if you find them,"

9/11


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It refers to the actions taken by an organization in response to service failure.

Complaints are inevitable, no matter how large or small a firm is.

But what is important is to have a strong complaint management technique.

Contained within each complaint is a customer that has tried your product or serviceand was dissatisfied. Customer complaints are valuable. They give the firm the

opportunity to restore endangered customers confidence while strengtheningunderlying weakness that cause complaints.

Complaints should be converted into the voice of change for the organization. It mustbe a first step towards changing service design and contingency planning.

Service Recovery


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Unhappy CustomersRepurchase Intentions

1% - 5% tomanagement

45% complain tofrontline

employees

50% Customers

do not complain


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Customer Response Following Service

Failure

Service Failure

Do NothingTake Action

Stay with ProviderSwitch Providers

Complain to

Provider

Complain to

Family & Friends

Complain to

Third Party

Stay with ProviderSwitch Providers


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The company should plan to disappoint customers so that they can recover

well and hopefully gain even greater loyalty from them!!

Should this be the strategy?

Customers weigh their most recent experience heavily in theirdetermination of whether to buy again.

If the most recent experience is negative then the overall feelingsabout the company will decrease.

The Recovery Paradox


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Passives

Unlikely to say anything, less likely to spread negative word-of- mouth. Voicers

Service providers best friends.

Irates

More likely to engage in negative WOM and to switch providers.

ActivistsAbove average propensity to complain on all dimensions of service.

Sometimes called the terrorists

Types of Complainers


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1. Understanding and Accountability

o Product repaired/service fixedo Reimbursement all/part of moneyo An apology from a firmo Explanation of failure causeo Assuranceo Customer to vent his/her frustration to the firm

2. Fair Treatment

o Outcome fairnesso Procedural fairnesso Interactional fairness

Customers Recovery Expectations


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Do it right the first time Encourage and track complaints

Act quickly

Empower Employees

Allow customers to solve their own problems

Provide adequate explanations Treat customers fairly

CRM

Learning

Service Recovery Strategies


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Service Recovery Strategies

Service

Recovery

Strategies


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Clear cut standard setting for the organization

Customer focus

Immediate and relevant feedback

Instant recovery of service failure

Continuous Improvement

Reduction in risk and confidence building

Service Guarantees

Unconditional

The guarantee should make its promise unconditionally - no strings attached.

Meaningful

It 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

For customers - they need to understand what to expect. For employees - they need to understand what to do.Easy to Invoke and Collect

There should not be a lot of hoops or red tape in the way of accessing or collectingon the guarantee.


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Otter Tail Power Company

We will provide timely, courteous customer service. If everwere discourteous, or if customersinquiries are not handled in a timely manner, we encourage customers to let us know. Customer

comments will help us to better serve them.

We will connect a customers service by the date promised. If we fail, well automatically creditthat customers account $50. This commitment does not apply during severe storm conditionsor emergency events, if access to that premises is not available or is deemed unsafe, ifcontractors are the cause of the delay, or if extenuating circumstances prevent a timelyconnection.

We will provide customers with an accurate bill. If a customers bill is inaccurate, in addition tocorrecting it, well automatically credit that account ($25 for residential customers and $150 forcommercial customers). This does not apply to estimated or prorated bills or to self-readmeters.

We will respect each customers property. Respecting the property of others is a fundamentalcourtesy. If our employees damage property, they will initiate a prompt, mutually agreeableresolution of the problem.

Example #1Customer service guarantee
http://www.otpco.com/http://www.otpco.com/http://www.otpco.com/


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Pearle Vision

We want you to be happy with your new glasses.Thats why well repair or exchange them for up to 30days at no charge to you. This guarantee does notcover accidental damage, scratches or breakage. Valid

at participating locations.

Example #2customer service guarantee
http://www.pearlevision.com/http://www.pearlevision.com/http://www.pearlevision.com/


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Domino's Pizza promised "delivery within 30 minutes or the pizza is free."

Management found that customers considered this too generous; they feltuncomfortable accepting a free pizza for a mere 5- to 15- minute delay and did notalways take advantage of the guarantee.

Consequently, Domino's changed the guarantee to "delivery within 30 minutes or$3 off," and customers appear to consider this commitment reasonable.

The important point here is that you want your customers to use your warranty asmuch as possible. It a sure way to discover cracks in your service or products andavoid customer defection.

Example #3

Domino's Pizza


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Guarantee is the icing on the cake, not the cake

REMEMBER


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Existing service quality in the company is poor

When guarantee does not fit the company's image

Service Quality is truly uncontrollable

Cost of the guarantee outweigh the benefits

Customers perceive little risk in the service

Customers perceive little variability in service quality among

competitors

When to Use (or Not Use) aGuarantee

service recovery process in case of service failure

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