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Chapter13.ComplaintHandlingandServiceRecoveryEssentialsofServicesMarketing,SecondEdition

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Chapter 13. Complaint Handling and Service Recovery

LearningObjectives
Bytheendofthischapter,thereadershouldbeableto:

Highlights

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LO1Recognizetheactionsthatcustomersmaytakeinresponsetoservicefailures.

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LO2Understandwhycustomerscomplain.

LO3Knowwhatcustomersexpectfromthefirmwhentheycomplain.

LO4Understandhowcustomersrespondtoeffectiveservicerecovery.

LO5Explaintheservicerecoveryparadox.

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LO6Knowtheprinciplesofeffectiveservicerecoverysystems.

LO7Befamiliarwiththeguidelinesforfrontlineemployeesonhowtohandle

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complainingcustomersandrecoverfromaservicefailure.

LO8Recognizethepowerofserviceguarantees.

LO9Understandhowtodesigneffectiveserviceguarantees.

LO10Knowwhenfirmsshouldnotofferserviceguarantees.

LO11Befamiliarwiththesevengroupsofjaycustomersandunderstandhowto

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managethemeffectively.

Figure13.1.JetBluesreputationforcustomerserviceexcellencewas
temporarilygrounded.

OpeningVignette:TooLittle,TooLateJetBluesServiceRecovery

ItwasaterribleicestormintheEastCoastoftheUnitedStates.Hundredsofpassengers
weretrappedfor11hoursinsideJetBlueplanesattheJohnF.KennedyInternational
AirportinNewYork.Thesepassengerswerefurious.NooneinJetBluedidanythingtoget
thepassengersofftheplanes.Ontopofthat,JetBluecancelledmorethan1,000flights
oversixdays,leavingevenmorepassengersstranded.Thisincidentcancelledoutmuchthat
JetBluehaddonerighttobecomeoneofthestrongestcustomerservicebrandsinthe
UnitedStates.JetBluewasgoingtoberankednumberfourbyBusinessWeekinalistof
top25customerserviceleaders,butbecauseofthisincidentitwaspulledfromtherankings.
Whathappened?
Therewasnoservicerecoveryplan.Noonenotthepilot,flightattendants,orstation
managerhadtheauthoritytogetthepassengersofftheplane.JetBluesofferofrefunds
andtravelvouchersdidnotseemtoreducetheangerofthepassengers,whohadbeen
strandedforsomanyhours.DavidNeeleman,JetBluesCEO,sentapersonalemailtoall
customersinthecompanysdatabasetoexplainwhatcausedtheproblem,apologized
profusely,anddetaileditsservicerecoveryefforts.Heevenappearedonlatenight
televisiontoapologizeandadmittedthattheairlineshouldhavehadbettercontingency
planning.However,theairlinestillhadalongwaytogotorepairthedamagedonetoits
reputation.
Slowly,theairlinerebuiltitsreputation,startingwithitsnewCustomerBillofRights.The
billrequiredtheairlinetoprovidevouchersorrefundsincertainsituationswhenflights
weredelayed.NeelemanalsochangedJetBluesinformationsystemstokeeptrackofthe
locationsofitscrew,upgradedthewebsitetoallowonlinerebooking,andtrainedstaffat
theheadquarterstohelpoutattheairportwhenneeded.Alltheseactivitieswereaimedat
climbingitswaybackuptotheheightsitfellfrom.InJune2011,JetBlueAirwayswason
thelistofJ.D.PowerCustomerServiceChampionsfortheseventhconsecutiveyear.(J.D.
PowerandAssociatesconductscustomersatisfactionresearchbasedonsurveyresponses
frommillionsofcustomersworldwide.)ThisshowsthatJetBluescustomershavefinally

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forgivenitsservicefailureandsupportitseffortstodelivercontinuedserviceexcellence.

Figure13.2.JetBluesnewCustomerBillofRightsandpublicity
campaignsinvolvingtheSimpsonsweremeasurestakentowincustomers
back.

Customer Complaining Behavior

Thefirstlawofservicequalityandproductivitymightbe:Doitrightthefirsttime.Butwe
cantignorethefactthatfailurescontinuetooccur,sometimesforreasonsoutsidethe
organizationscontrolsuchastheicestormthatcausedtheJetBlueincidentinouropening
vignette.

Howwellafirmhandlescomplaintsandresolvesproblemswilldecide

whetheritbuildscustomerloyaltyorwatchesitscustomerstaketheirbusinesselsewhere.

LO1
Recognizetheactionsthatcustomersmaytakeinresponsetoservicefailures.

Customer Response Options to Service Failure

Chancesare,yourenotalwayssatisfiedwithatleastsomeoftheservicesyoureceive.How
doyourespondtoyourdissatisfactionwiththeseservices?Doyoucomplaintoan
employee,asktospeaktothemanager,orfileaformalcomplaint?Orperhapsdoyoujust
grumbletoyourfriendsandfamily,andchooseanothersupplierthenexttimeyouneeda
similartypeofservice?
Ifyouareamongthosewhodonotcomplaintothefirmaboutpoorservice,youarenot
alone.Researcharoundtheglobehasshownthatmostpeoplewillchoosenottocomplain,
especiallyiftheythinkitwilldonogood.Figure13.3showsthecoursesofactionacustomer
maytakeinresponsetoaservicefailure.Thismodelsuggestsatleastthreemajorcourses
ofaction:
1.Takesomeformofpublicaction(includingcomplainingtothefirmortoathirdparty,
suchasaconsumeraffairsbodyoronethatcontrolstheindustry,orevencivilorcriminal
court).
2.Takesomeformofprivateaction(includingabandoningthesupplier).
3.Takenoaction(Figure13.4).

Figure13.3.Customerresponsecategoriestoservicefailures.

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Figure13.4.Somecustomersmayjustbefrustratedbutdonottakeany
actiontocomplain,asseenhereinaninteractionwithanonlineservice.

Itsimportanttorememberthatacustomercantakeanyoneoracombinationofactions.
Managersneedtobeawarethattheimpactofadefectioncangofarbeyondthelossofthat
customersfuturerevenuestream.Angrycustomersoftentellmanyotherpeopleabout
theirproblems.

TheInternetallowsunhappycustomerstoreachthousandsofpeople

bypostingcomplaintsonbulletinboards,blogsandevensettinguptheirownwebsitesto
talkabouttheirbadexperienceswithspecificorganizations.

LO2
Understandwhycustomerscomplain.

Understanding Customer Complaining Behavior

Tobeabletodealeffectivelywithdissatisfiedandcomplainingcustomers,managersneed
tounderstandkeyaspectsofcomplainingbehavior,startingwiththequestionsposedbelow.
Why Do Customers Complain?

Ingeneral,studiesofconsumercomplainingbehaviorhaveidentifiedfourmainpurposesfor
complaining:
1.Obtainrestitutionorcompensation.Consumersoftencomplaintorecoversome
economiclossbyseekingarefund,compensation,and/orhavetheserviceperformedagain.
4

2.Releasetheiranger.Somecustomerscomplaintorebuildselfesteemand/ortorelease
theirangerandfrustration.Whenserviceprocessesaretoofocusedonrulesand
unreasonable,orwhenemployeesarerude,customersselfesteem,selfworth,orsenseof
fairnesscanbenegativelyaffected.Theymaybecomeangryandemotional.
3.Helptoimprovetheservice.Whencustomersarehighlyinvolvedwithaservice(e.g.,at
acollege,analumniassociation,ortheirmainbankingconnection),theygivefeedbackto
tryandcontributetowardserviceimprovements.
4.Outofconcernforothers.Finally,somecustomersaremotivatedbyconcernforothers.
Theywanttospareothercustomersfromexperiencingthesameproblemsandmayfeel
goodraisingaproblemtoimproveaservice.
What Proportion of Unhappy Customers Complain?

Researchshowsthat,onaverage,only510%ofcustomerswhohavebeenunhappywitha
serviceactuallycomplain.

Sometimesthepercentageisfarlower.Areviewofthe

recordsofapublicbuscompanyshowedthatformalcomplaintsoccurredattherateof
aboutthreecomplaintsforeverymillionpassengertrips.Assumingtwotripsaday,a
personwouldneed1,370years(roughly27lifetimes)tomakeamilliontrips.Inother
words,therateofcomplaintswasincrediblylow,especiallysincepublicbuscompaniesare
rarelyknownforserviceexcellence.However,althoughusuallyonlyasmallnumberof
dissatisfiedcustomerscomplain,theresevidencethatconsumersacrosstheworldare
becomingbetterinformed,moreselfconfident,andmorefirmaboutseekingsatisfactory
outcomesfortheircomplaints.
Why Dont Unhappy Customers Complain?

Anumberofstudies,includingfindingsbyTARP,acustomersatisfactionandmeasurement
firm,haveidentifiedanumberofreasonswhycustomersdontcomplain.Customersmay
notwanttotakethetimetowritealetter,sendanemail,fillinaform,ormakeaphone
call,particularlyiftheydontseetheserviceasbeingimportantenoughtobeworththe
effort.Manycustomersbelievethatnoonewouldbeconcernedabouttheirproblemor
wouldbewillingtodealwithit,andthatcomplainingissimplynotworththeirwhile.In
somesituations,peoplesimplydontknowwheretogoorwhattodo.Also,manypeople
feelthatcomplainingisunpleasantandwouldliketoavoidthestressofaconfrontation
(Figure13.5).

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Figure13.5.Customersoftenviewcomplainingasdifficultandunpleasant.

Who Is Most Likely to Complain?

Researchfindingsshowthatpeopleinhighersocioeconomiclevelsaremorelikelyto
complainthanthoseinlowerlevels.Theirbettereducation,higherincome,andgreater
socialinvolvementgivethemtheconfidence,knowledge,andmotivationtospeakupwhen
theyencounterproblems.Furthermore,thosewhocomplainalsotendtobemore
knowledgeableabouttheproductinquestion.
Where Do Customers Complain?

Studiesshowthatthemajorityofcomplaintsaremadeattheplacewheretheservicewas
received.Oneoftheauthorsofthisbookcompletedaconsultingprojectdevelopingand
implementingacustomerfeedbacksystem.Hefoundthatanamazing99%ofcustomer
feedbackwasgivenfacetofaceoroverthephonetocustomerservicerepresentatives.
Lessthan1%ofallcomplaintsweresubmittedviaemail,letters,customerfeedbackcards,
orthefirmswebsite.Asurveyofairlinepassengersfoundthatonly3%ofrespondentswho
wereunhappywiththeirmealactuallycomplainedaboutit,andtheyallcomplainedtothe
flightattendant.Nonecomplainedtothecompanysheadquartersortoaconsumeraffairs
office.

Also,customerstendtouseinteractivechannelssuchasfacetofaceorthe

telephonewhentheywantaproblemtobefixed,butusenoninteractivechannelsto
complain(e.g.,emailorletters)whentheymainlywanttoreleasetheirangerand
frustration.

Inpractice,evenwhencustomersdocomplain,managersoftendonthearaboutthe
complaintsmadetofrontlineemployees.Withoutaformalcustomerfeedbacksystem,only
atinyproportionofthecomplaintsmayreachcorporateheadquarters.

Ifunhappy

customershavealreadyusedotherchannelsofcomplaint,buttheirproblemisnotsolved,
thentheyaremorelikelytoturntoonlinepubliccomplaining.Thisisduetodouble
deviation.Theserviceperformancealreadycauseddissatisfactioninthefirstinstance,and
10

theresolutionoftheproblemalsofailed.
LO3

Knowwhatcustomersexpectfromthefirmwhentheycomplain.

What Do Customers Expect Once They Have Made a Complaint?

Wheneveraservicefailureoccurs,peopleexpecttobetreatedfairly.However,recent
studieshaveshownthatmanycustomersfeelthattheyhavenotbeentreatedfairlynor
receivedgoodenoughcompensation.Whenthishappens,theirreactionstendtobe
immediate,emotional,andenduring.Incontrast,outcomesthatareperceivedasfairhave
11

apositiveimpactoncustomersatisfaction.

StephenTaxandStephenBrownfoundthatasmuchas85%ofthevariationinthe
satisfactionwithaservicerecoverywasduetothreedimensionsoffairness(seeFigure
12

13.6):

Proceduraljusticereferstothepoliciesandrulesthatanycustomerhastogothrough
toseekfairness.Customersexpectthefirmtotakeresponsibility,followedbyaconvenient
andresponsiverecoveryprocess.Thatincludesflexibilityofthesystemandconsiderationof
customerinputsintotherecoveryprocess.
Interactionaljusticeinvolvestheemployeesofthefirmwhoprovidetheservice
recoveryandtheirbehaviortowardthecustomer.Itisimportanttogiveanexplanationfor
thefailureandtomakeanefforttoresolvetheproblem.Furthermore,therecoveryeffort
mustbeseenasgenuine,honest,andpolite.
Outcomejusticeconcernsthecompensationthatacustomerreceivesasaresultofthe
lossesandinconveniencescausedbytheservicefailure.Thisincludescompensationfornot
onlythefailurebutalsotime,effort,andenergyspentduringtheprocessofservice
recovery.

Source:AdaptedfromStephenS.TaxandStephenW.Brown,Recoveringand
LearningfromServiceFailure,SloanManagementReview49,no.1(Fall
1998):7588.
Figure13.6.Threedimensionsofperceivedfairnessinservicerecovery
processes.

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LO4
Understandhowcustomersrespondtoeffectiveservicerecovery.

Customer Responses to Effective Service Recovery

ThankHeavensforComplainerswastheprovocativetitleofanarticleaboutcustomer
complainingbehavior,whichalsofeaturedasuccessfulmanagerexclaiming,Thank
goodnessIvegotadissatisfiedcustomeronthephone!TheonesIworryaboutaretheones
13

Ineverhearfrom. Customerswhodocomplaingiveafirmthechancetocorrect
problems(includingsomethefirmmaynotevenknowithas),restorerelationshipswith
thecomplainer,andimprovefuturesatisfactionforall.
Servicerecoveryisatermforthesystematiceffortsbyafirmtocorrectaproblem
followingaservicefailureandtoretainacustomersgoodwill.Servicerecoveryeffortsplay
14

animportantroleinachieving(orrestoring)customersatisfactionandloyalty. Inevery
organization,thingsmayoccurthathaveanegativeimpactonrelationshipswith
customers.Thetruetestofafirmscommitmenttosatisfactionandservicequalityisntin
theadvertisingpromises,butinthewayitrespondswhenthingsgowrongforthe
customer.Althoughcomplaintstendtohaveanegativeeffectonservicepersonnels
commitmenttocustomerservice,employeeswithapositiveattitudetowardserviceand
theirownjobsaremorelikelytoexploreadditionalwaysinwhichtheycanhelpcustomers,
15

andviewcomplaintsasapotentialsourceofimprovement.

Impact of Effective Service Recovery on Customer Loyalty

Whencomplaintsaresatisfactorilyresolved,thereisamuchhigherchancethatthe
customersinvolvedwillremainloyal.Infact,recentresearchhasshownthatcomplainants
whoaresatisfiedwiththeservicerecoverytheyexperiencedare15timesmorelikelyto
16

recommendacompanythandissatisfiedcomplainants. TARPresearchfoundthat
intentionstorepurchasefordifferenttypesofproductsrangedbetween9%and37%when
customersweredissatisfiedbutdidnotcomplain.Foramajorcomplaint,theretentionrate
increasedfrom9%whendissatisfiedcustomersdidnotcomplain,to19%ifthecustomer
complainedandthecompanyofferedalisteningearbutwasunabletoresolvethe
complainttothesatisfactionofthecustomer.Ifthecomplaintcouldberesolvedtothe
satisfactionofthecustomer,theretentionratejumpedto54%.Thehighestretentionrate
17

of82%wasachievedwhenproblemswerefixedquicklytypicallyonthespot!

Complainthandlingshouldbeseenasaprofitcenter,notacostcenter.Whenadissatisfied
customerdefects,thefirmlosesmorethanjustthevalueofthenexttransaction.Itmay
alsolosealongtermstreamofprofitsfromthatcustomerandfromanyoneelsewhois
deterredfrompatronizingthatfirmasaresultofnegativecommentsfromanunhappy
18

friend.

LO5
Explaintheservicerecoveryparadox.

The Service Recovery Paradox

Theservicerecoveryparadoxdescribesthephenomenonwherecustomerswhoexperience
anexcellentservicerecoveryafterafailurefeelevenmoresatisfiedthancustomerswho
19

hadnoprobleminthefirstplace. Forexample,apassengermayarriveatthecheckin
counterandfindthattherearenoseatsduetooverbooking,eventhoughhehasa
confirmedseat.Torecovertheservice,thepassengerisupgradedtoabusinessclassseatat
noadditionalcharge.Thecustomerendsupbeingdelightedandevenmoresatisfiedthan
beforetheproblemhadoccurred.
Theservicerecoveryparadoxmayleadtothethinkingthatitmaybegoodforcustomers
toexperienceservicefailuresothattheycanbedelightedasaresultofanexcellentservice
recovery.However,thisapproachwouldbetooexpensiveforthefirm.Itisalsoimportant
tonotethattheservicerecoveryparadoxdoesnotalwaysapply.Forexample,astudyof
repeatedservicefailuresinaretailbankingcontextshowedthattheservicerecovery

20

paradoxheldforthefirstservicefailurethatwasrecoveredtocustomersfullsatisfaction.
However,ifasecondservicefailureoccurred,theparadoxdisappeared.Itseemsthat
customersmayforgiveafirmoncebutbecomedisappointediffailureshappenagain.
Furthermore,thestudyalsoshowedthatcustomersexpectationswereraisedafterthey
experiencedaverygoodrecovery.Thus,excellentrecoverybecomesthestandardthey
expectfordealingwithfuturefailures.
Whetheracustomercomesoutdelightedfromaservicerecoveryprobablymayalso

dependonhowseriousthefailurewas.Noonecanreplacespoiledweddingphotos,aruined
holiday,oraninjurycausedbyserviceequipment.Insuchsituations,itshardtoimagine
anyonebeingtrulydelightedevenwhenamostprofessionalservicerecoveryisconducted.
Inconclusion,thebeststrategy,ofcourse,istodoitrightthefirsttime.

LO6
Knowtheprinciplesofeffectiveservicerecoverysystems.

Principles of Effective Service Recovery Systems

Managersneedtorecognizethatcurrentcustomersareavaluableassetbaseanddevelop
effectiveproceduresforservicerecoveryfollowingunsatisfactoryexperiences.Wediscuss
threeguidingprinciplesforhowtogetitright:(1)makeiteasyforcustomerstogive
feedback,(2)enableeffectiveservicerecovery,and(3)establishappropriatecompensation
levels.Afourthprinciple,learningfromcustomerfeedbackanddrivingservice
improvements,willbediscussedinChapter14inthecontextofcustomerfeedbacksystems.
ThecomponentsofaneffectiveservicerecoverysystemareshowninFigure13.7.

Source:ChristopherH.Lovelock,PaulG.Patterson,andJochenWirtz,
ServicesMarketing:AnAsiaPacificandAustralianPerspective,5thedition,
(Sydney:PearsonAustralia,2011,413.

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Figure13.7.Componentsofaneffectiveservicerecoverysystem.

Make It Easy for Customers to Give Feedback

Howcanmanagersovercomeunhappycustomersreluctancetocomplainaboutservice
failures?Thebestwayistoaddressthereasonsfortheirreluctancedirectly.Table13.1
givesanoverviewofwhatcanbedonetoovercomethosereasonsweidentifiedearlierin
thischapter.Manycompanieshaveimprovedtheircomplaintcollectionproceduresby
addingspecialtollfreephonelines,linksontheirwebsites,andclearlydisplayedcustomer
commentcardsintheirbranches(seeFigure13.8).Intheircustomernewsletters,some
companiesfeatureserviceimprovementsthatwerethedirectresultofcustomerfeedback
underthemottoYoutoldus,andweresponded.

Figure13.8.Commentcardsarecommonlyfoundinrestaurantsand
hotelstogathercustomersfeedback.
Table13.1.Strategiestoreducecustomercomplaintbarriers

Enable Effective Service Recovery

Recoveringfromservicefailuresrequirescommitment,planning,andclearguidelines.
Specifically,effectiveservicerecoveryshouldbe(1)proactive,(2)planned,(3)trained,and
(4)empowered.
Service Recovery Should Be Proactive

Servicerecoveryideallyisdoneonthespot,preferablybeforecustomershaveachanceto
complain(seeServiceInsights13.1).Servicepersonnelshouldbesensitivetosignsof
dissatisfactionandaskwhethercustomersmightbeexperiencingaproblem.Forexample,
thewaitermayaskaguestwhohasonlyeatenhalfofhisdinner:Iseverythingallright,
Sir?Theguestmaysay,Yes,thankyou.Iamnotveryhungry,orThesteakiswelldone
butIhadaskedformediumrare.Thesecondresponsethengivesthewaiterachanceto
recovertheservice,ratherthanhaveanunhappydinerleavetherestaurantwhomightnot
return.
Recovery Procedures Need to Be Planned

Backupplanshavetobedevelopedforservicefailures,especiallyforthosethatoccur
21

regularlyandcannotbedesignedoutofthesystem. Forexample,revenuemanagement
practicesinthetravelandhospitalityindustriesoftenresultinoverbooking.Therefore,
travelersaredeniedboardingorhotelguestsdonothaveroomseventhoughtheyhad
confirmedseatsorreservations.Firmsshouldidentifythemostcommonserviceproblems
suchasoverbookingandthendevelopsolutionsetsforemployeestofollow.Incontact
centers,thecustomerservicerepresentativeshavepreparedscriptstoguidethemina
servicerecoverysituation.
Recovery Skills Must Be Taught

Customersandemployeeseasilyfeelinsecureatthepointofservicefailurebecausethings
arenotturningoutastheyhadexpected.Witheffectivetrainingofhowtohandlerecovery
solutionsetsforroutineservicefailure(e.g.,asinourhotelexampleinServiceInsights13.1)
andfornonroutineservicefailures,frontlinestaffcanturndistressintodelightwith
22

confidenceandskill.

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ServiceInsights13.1:EffectiveServiceRecoveryinAction

Thelobbyisdeserted.Itsnothardtooverheartheconversationbetweenthe
nightmanagerattheMarriottLongWharfHotelinBostonandthelate
arrivingguest.
Yes,Dr.Jones,wevebeenexpectingyou.Iknowyouarescheduledtobe
hereforthreenights.Imsorrytotellyou,Sir,butwearebookedsolid
tonight.Alargenumberofguestsweassumedwerecheckingoutdidnot.
Whereisyourmeetingtomorrow,Sir?
Thedoctortoldtheclerkwhereitwas.
ThatsneartheOmniParkerHouse!Thatsnotveryfarfromhere.Letmecall
themandgetyouaroomfortheevening.Illberightback.
Afewminuteslater,thedeskclerkreturnedwiththegoodnews.
TheyreholdingaroomforyouattheOmniParkerHouse,Sir.And,of
course,wellpickupthetab.Illforwardanyphonecallsthatcomeherefor
you.Heresaletterthatwillexplainthesituationandexpediteyourcheckin,
alongwithmybusinesscardsoyoucancallmedirectlyhereatthefrontdesk
ifyouhaveanyproblems.
Thedoctorsmoodwasmovingfromexasperationtowardcalm.Butthedesk
clerkwasnotfinishedwiththeencounter.Hereachedintothecashdrawer.
Herearetwo$10bills.Thatshouldmorethancoveryourcabfarefromhere
totheParkerHouseandbackagaininthemorning.Wedonthavea
problemtomorrownight,justtonight.Andheresacouponthatwillgetyou
complimentarycontinentalbreakfastonourconciergelevelonthefifthfloor
tomorrowmorning...andagain,Iamsosorrythishappened.
Asthedoctorwalksaway,thenightmanagerturnstothedeskclerk,Give
himabout15minutesandthencalltomakesureeverythingwentokay.
Aweeklater,whenitwasstillapeakperiodforhotelsinthatcity,thesame
guestwhohadoverheardtheexchangeisinataxi,enroutetothesame
hotel.Alongtheway,hetellsaboutthegreatservicerecoveryepisodehe
hadwitnessedtheweekbefore.Thetwotravelersarriveatthehoteland
maketheirwaytothefrontdesk,readytocheckin.
Theyaregreetedwithunexpectednews:Iamsosorry,gentlemen.Iknow
youwerescheduledherefortwonights.Butwearebookedsolidtonight.
Whereisyourmeetingscheduledtomorrow?
Thewouldbeguestsexchangearuefulglanceastheygivethedeskclerk
theirfutureplans.ThatsneartheMridien.Letmecalloverthereandseeif
Icangetyouaroom.Itwontbuttakeaminute.Asthedeskclerkwalks
away,thetaletellersays,Illbethecomesbackwithaletterandabusiness
card.
Sureenough,thedeskclerkreturnstodeliverthesolutionitsnotarobotic
scriptbutalltheelementsfromthepreviousweeksshowareondisplay.
Whatthetaletellerthoughtwaspuredeskclerkinitiativethepreviousweek,
henowrealizeswasaplanned,seeminglyspontaneousyetpredetermined
responsetoaspecificcategoryofserviceproblem.
Source:RonZemkeandChipR.Bell,KnockYourSocksOffService
Recovery.NewYork:AMACOM,2000,5960.

Recovery Requires Empowered Employees

Employeesshouldbegiventhefreedomtousetheirjudgmentandcommunicationskillsto
developsolutionsthatwillsatisfycomplainingcustomers.Thisisespeciallytrueforoutof
theordinaryfailuresforwhichafirmmaynothavedevelopedandtrainedsolutionsets.
Employeesneedtobeabletomakedecisionsandspendmoneyinordertoresolveservice
problemspromptlyandrecovercustomergoodwill.AttheRitzCarltonandSheraton
hotels,employeesaregiventhefreedomtobeproactive,ratherthanreactive.Theytake
ownershipofthesituationandhelpresolvecustomersproblemstothebestoftheirability.
Inthisdayandage,whereonlinepubliccomplainingisgainingpopularity,employeesmay
evenbeempoweredtorespondonline,forexample,tocomplaintsintheformoftweets,by
23

tweetingbackwithasolutiontoresolvetheproblem.

How Generous Should Compensation Be?

Howmuchcompensationshouldafirmofferwhentherehasbeenaservicefailure?Or
wouldanapologybesufficientinstead?Thefollowingrulesofthumbcanhelpmanagersto
answerthesequestions:
Whatisthepositioningofyourfirm?Ifafirmisknownforserviceexcellenceand
chargesapremiumpriceforquality,thencustomerswillexpectservicefailurestoberare,
sothefirmshouldmakeamajorefforttorecoverthefewfailuresthatdooccurandbe
preparedtooffersomethingofgreatervalue.However,inamassmarketbusiness,
customersarelikelytoacceptanapologyandreworkoftheservice.
Howseverewastheservicefailure?Thegeneralguidelineisletthepunishmentfit
thecrime.Customersexpectlessforminorinconveniences(here,oftenasincereapology
willdo),butmuchmoreiftherewasmajordamageintermsoftime,effort,annoyance,or
anxiety.
Whoistheaffectedcustomer?Longtermcustomersandthosewhospendheavilyat
aserviceproviderexpectmore,anditisworthmakinganefforttosavetheirbusiness.
Onetimecustomerstendtodemandlessandalsocontributelesstoafirmsprofit.Hence,
compensationcanbeless,butshouldstillbefair.Thereisalwaysthepossibilitythatafirst
timeuserwillbecomearepeatcustomerifheorsheistreatedwell.
Theoverallruleofthumbforcompensationatservicefailuresshouldbewelldosed
generosity.Overlygenerouscompensationisexpensive,anditalsomayleadcustomersto
becomesuspiciousabouttheunderlyingmotives.Also,overgenerositydoesnotseemto
24

resultinhigherrepeatpurchaseratesthansimplyofferingafaircompensation. Thereisa
risk,too,thatareputationforovergenerositymayencouragedishonestcustomersto
25

activelyseekservicefailures.

Dealing with Complaining Customers

Bothmanagersandfrontlineemployeesmustbepreparedtodealwithupsetcustomers
whocanbecomeconfrontationalandsometimesbehaveinunacceptablewaystoward
servicepersonnelwhoarentatfaultinanyway.ServiceInsights13.2providesspecific
guidelinesforeffectiveproblemresolution,designedtohelpcalmupsetcustomersandto
deliverasolutionthattheywillseeasfairandsatisfying.

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LO7
Befamiliarwiththeguidelinesforfrontlineemployeesonhowtohandlecomplaining
customersandrecoverfromaservicefailure.

ServiceInsights13.2:GuidelinesfortheFrontLine:Howto

HandleComplainingCustomersandRecoverfromaServiceFailure
1.Actfast.Ifthecomplaintismadeduringservicedelivery,thentimeisvery
importanttoachieveafullrecovery.Whencomplaintsaremadeafterthefact,
manycompaniestrytorespondwithin24hoursorsooner.
2.Acknowledgethecustomersfeelings.Thishelpstobuildanemotional
connection,thefirststepinrebuildingarelationshipthathassomeproblems.
3.Dontarguewithcustomers.Thegoalshouldbetogatherfactstoreacha
solutionthatisacceptedbythefirmandthecustomer.Itisnottoargueand
provethatthecustomeriswrong.Arguinggetsinthewayoflisteningand
seldomreducesanger.
4.Showthatyouunderstandtheproblemfromeachcustomerspointof
view.Seeingsituationsthroughthecustomerseyesistheonlywayto
understandwhattheythinkhasgonewrongandwhytheyreupset.Service
personnelshouldavoidjumpingtoconclusionswiththeirowninterpretations.
5.Clarifythetruthandsortoutthecause.Afailuremayresultfrom
inefficiencyofservice,misunderstandingbycustomers,orthemisbehaviorof
athirdparty.Ifyouvedonesomethingwrong,apologizeimmediatelyin
ordertowintheunderstandingandtrustofthecustomer.Themorethe
customercanforgiveyou,thelessheexpectstobecompensated.Dontact
asifyouaretryingtodefendyourself.Actingthatwaymaysuggestthatthe
organizationhassomethingtohideorisnotwillingtofullylookintothe
situation.
6.Givecustomersthebenefitofdoubt.Notallcustomersaretruthfuland
notallcomplaintsaregenuine.However,customersshouldbetreatedas
thoughtheyhaveavalidcomplaintuntilclearevidenceprovesthatitisnot
true.Ifalotofmoneyisinvolved(asininsuranceclaimsorpotential
lawsuits),carefulinvestigationneedstobecarriedout.Iftheamountinvolved
issmall,itmaynotbewortharguingaboutarefundorothercompensation.
However,itsstillagoodideatocheckrecordstoseeifthereisapasthistory
ofdoubtfulcomplaintsbythesamecustomer.

7.Proposethestepsneededtosolvetheproblem.Whensolutionsarenot
immediatelyavailable,tellthecustomershowthefirmintendstotakeaction
todealwiththeproblem.Thisalsosetsexpectationsaboutthetimeinvolved,
sofirmsshouldbecarefulnottooverpromise!.
8.Keepcustomersinformedofprogress.Nobodylikesbeingleftinthe
dark.Uncertaintycausespeopletobeanxiousandstressed.Therefore,
customersshouldbekeptinformedaboutwhatisgoingonregularly.
9.Considercompensation.Whencustomersdonotreceivetheservice
outcomesthattheyhavepaidfor,orhavesufferedseriousinconvenience
and/orlossoftimeandmoneybecausetheservicefailed,thereshouldeither
beamonetarypaymentorsomeothercompensation(e.g.,anupgradeona
flightorafreedessertinarestaurant).Thistypeofrecoverymayalsoreduce
theriskoflegalactionbyangrycustomers.
10.Continuetryingtoregaincustomergoodwill.Whencustomershave
beendisappointed,oneofthehardestthingstodoistorestoretheir
confidenceandkeeptherelationshipgoing.Firmsmusttrytocalmthe
customersandconvincethemthatactionsarebeingtakentoavoidthesame
probleminthefuture.Trulyexceptionalrecoveryeffortscanbeextremely
effectiveinbuildingloyaltyandreferrals.
11.Selfcheckthesystemandimproveit.Afterthecustomerhasleft,you
shouldchecktoseewhethertheservicefailurewascausedbyanaccidental
mistakeorsystemproblems.Useeverycomplainttoperfectthewholeservice
system.Evenifthecomplaintisfoundtobeamisunderstandingby
customers,italsomeansthatapartofyourcommunicationsmaynotbe
effective.

Service Guarantees
Onewayforcustomerfocusedfirmstohaveprofessionalcomplainthandlingandeffective
servicerecoveryisthroughofferingserviceguarantees.Infact,agrowingnumberof
companiesoffercustomersaserviceguarantee,promisingthatifservicedeliveryfailsto
meetpredefinedstandards,thecustomercanhaveoneormoreformsofcompensation,
26

suchasaneasytoclaimreplacement,refund,orcredit.

LO8
Recognizethepowerofserviceguarantees.

The Power of Service Guarantees

Serviceguaranteesarepowerfultoolsforbothpromotingandachievingservicequalityfor
27

thefollowingreasons:

1.Guaranteesforcefirmstofocusonwhattheircustomerswantandexpectineachelement
oftheservice.
2.Guaranteessetclearstandards.Thesetellcustomersandemployeeswhatthecompany
standsfor.Payoutstocompensatecustomersforpoorservicecausemanagerstotake

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guaranteesseriouslybecausetheyhighlightthefinancialcostsofqualityfailures.
3.Guaranteesrequirethedevelopmentofsystemsforgeneratingmeaningfulcustomer
feedbackandactingonit.
4.Guaranteesforceserviceorganizationstounderstandwhytheyfailandencouragethem
toidentifyandovercomepotentialfailpoints.
5.Guaranteesbuildmarketingmusclebyreducingtheriskofthepurchasedecisionand
buildinglongtermloyalty.
Fromthecustomersperspective,theprimaryfunctionofserviceguaranteesistolowerthe
28

perceivedrisksassociatedwithpurchase. Sara

LidnandPerSklnfound

that,evenwhendissatisfiedcustomerswereunawarethataserviceguaranteeexisted
beforemakingtheircomplaint,theywerepositivelyimpressedtolearnthatthecompany
hasapreplannedprocedureforhandlingfailuresandtofindthattheircomplaintswere
29

takenseriously.

ThebenefitsofserviceguaranteescanbeseenclearlyinthecaseofHamptonInns100%
HamptonGuarantee(Ifyourenot100%satisfied,youdontpayseeFigure13.9).Asa
businessbuildingprogram,Hamptonsstrategyofofferingtorefundthecostoftheroomto
aguestwhoexpressesdissatisfactionhasattractednewcustomersandalsoservedasa
powerfulretentiondevice.PeoplechoosetostayataHamptonInnbecausetheyare
confidenttheywillbesatisfied.Atleastasimportant,theguaranteehasbecomeavitaltool
tohelpmanagersidentifynewopportunitiesforqualityimprovement.

Figure13.9.HamptonInnincludesits100%satisfactionguaranteedin
itsadvertising.

LO9
Understandhowtodesigneffectiveserviceguarantees.

How to Design Service Guarantees

Someguaranteesaresimpleandunconditional.Othersappeartohavebeenwrittenby
lawyersandcontainmanyrestrictions.ComparetheexamplesinServiceInsights13.3and
askyourselfwhichguaranteesyoutrustandareconfidentabout,andwhetheryouwould
liketodobusinesswiththatfirm.

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ServiceInsights13.3:ExamplesofServiceGuarantees

UnitedStatesPostalServiceExpressMailGuarantee
ServiceGuarantee:ExpressMailinternationalmailingsarenotcoveredby
thisserviceagreement.Militaryshipmentsdelayedduetocustoms
inspectionsarealsoexcluded.Iftheshipmentismailedatadesignated
USPSExpressMailfacilityonorbeforethespecifieddeposittimefor
overnightdeliverytotheaddressee,deliverytotheaddresseeoragentwillbe
attemptedbeforetheapplicableguaranteedtime.Signatureofthe
addresseesagent,ordeliveryemployeeisrequiredupondelivery.Ifa
deliveryattemptisnotmadebytheguaranteedtimeandthemailerfilesa
claimforarefund,theUSPSwillrefundthepostageunlessthedelaywas
causedby:properretentionforlawenforcementpurposesstrikeorwork
stoppagelatedepositofshipmentforwarding,return,incorrectaddressor
incorrectZIPcodedelayorcancellationofflightsgovernmentalaction
beyondthecontrolofthePostalServiceoraircarrierswar,insurrectionor
civildisturbancebreakdownsofasubstantialportionoftheUSPS
transportationnetworkresultingfromeventsorfactorsoutsidethecontrolof
thePostalServiceorActsofGod.
L.L.BeansGuarantee
OurGuarantee.Ourproductsareguaranteedtogive100%satisfactionin
everyway.Returnanythingpurchasedfromusatanytimeifitproves
otherwise.WedonotwantyoutohaveanythingfromL.L.Beanthatisnot
completelysatisfactory.
ExcerptfromtheQualityStandardGuaranteesfromanOfficeServices
Company
Weguaranteesixhourturnaroundondocumentsoftwopagesorless...
(doesnotincludeclientsubsequentchangesorequipmentfailures).
Weguaranteethattherewillbeareceptionisttogreetyouandyourvisitors
duringnormalbusinesshours...(shortbreaksoflessthanfiveminutesarenot
subjecttothisguarantee).
Youwillnotbeobligatedtopayrentforanydayonwhichthereisnota
manageronsitetoassistyou(lunchandreasonablebreaksareexpectedand
notsubjecttothisguarantee).
TheBugsBurgerBugKillerGuarantee(aPestControlCompany)
Youdontoweusapennyuntilallthepestsonyourpremiseshavebeen
eradicated.
IfyoureeverdissatisfiedwiththeBBBKsservice,youwillreceivearefund
forasmuchas12monthsofserviceplusfeesforanotherexterminatorof
yourchoiceforthenextyear.
Ifaguestspotsapestonyourpremises,theexterminatorwillpayforthe
guestsmealorroom,sendaletterofapology,andpayforafuturemealor
stay.
Ifyourpremisesarecloseddownbecauseofthepresenceofroachesor
rodents,BBBKwillpayanyfines,aswellasalllostprofit,plus$5,000.
Source:PrintedonbackofExpressMailreceipt,January2006.
PrintedinallL.L.Beancatalogsandonthecompanyswebsite,
www.llbean.com/customerService/aboutLLBean/guarantee.html
(http://www.llbean.com/customerService/aboutLLBean/guarantee.html) ,accessedMarch

12,2012.
ReproducedinEileenC.Shapiro,FadSurfingintheBoardroom.Reading,
MA:AddisonWesley,1995:18.
ReproducedinChristopherW.Hart,ThePowerofUnconditionalService
Guarantees.HarvardBusinessReview(JulyAugust1990).

ThetwoserviceguaranteesfromL.L.BeanandBBBKarepowerful,unconditional,and
earntrust.Theothertwoareweakenedbythemanyconditionsattachedtotheguarantee.
TheUnitedStatesPostalServicehasaddedsixnewconditionsinrecentyears!Hartargues
30

thatserviceguaranteesshouldbedesignedtomeetthefollowingcriteria :
1.UnconditionalWhateverispromisedintheguaranteemustbetotallyunconditional
andthereshouldnotbeanyelementofsurpriseforthecustomer.
2.Easytounderstandandcommunicatetothecustomersothatheisclearlyawareof
thebenefitsthatcanbegainedfromtheguarantee.
3.Meaningfultothecustomerinthattheguaranteeisonsomethingimportanttothe
31

customerandthecompensationshouldbemorethanenoughtocovertheservicefailure.
4.EasytoinvokeItshouldbeeasyforthecustomertoinvoketheguarantee.
5.EasytocollectonIfaservicefailureoccurs,thecustomershouldbeabletoeasily
collectontheguaranteewithoutanyproblems.
6.CredibleTheguaranteeshouldbebelievable(Figure13.10).

Figure13.10.Toleaveaclearstampofservicequalityoncustomers,the
guaranteemustbeunconditional,meaningful,credible,easilyunderstood,
invoked,andcollected.

Is Full Satisfaction the Best You Can Guarantee?

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Is Full Satisfaction the Best You Can Guarantee?

Fullsatisfactionguaranteeshavegenerallybeenconsideredthebestpossibledesign.
However,customersmayraisequestionssuchasWhatdoesfullsatisfactionmean?or
CanIinvokeaguaranteewhenIamdissatisfied,althoughthefaultdoesnotliewiththe
32

servicefirm? Anewtypeofguarantee,calledthecombinedguarantee,addressesthis
issue.Itcombinesthewidescopeofafullsatisfactionguaranteewiththelowuncertaintyof
attributespecificperformancestandards.Thecombinedguaranteetendstobemore
33

effectivethaneitherafullsatisfactionoranattributespecificguaranteedesign. Table13.2
showsexamplesofthevarioustypesofguarantees.
Table13.2.Typesofserviceguarantees

Source:Wirtz,J.andKum,D.DesigningServiceGuaranteesIsFull
SatisfactiontheBestYouCanGuarantee?JournalofServicesMarketing15,
no.14(2002):282299.

LO10
Knowwhenfirmsshouldnotofferserviceguarantees.

Is It Always Beneficial to Introduce a Service Guarantee?

Managersshouldthinkcarefullyabouttheirfirmsstrengthsandweaknesseswhendeciding
whetherornottointroduceaserviceguarantee.AmyOstromandChristopherHart
34

identifiedanumberofsituationsinwhichaguaranteemaybeinappropriate:

Companiesthatalreadyhaveastrongreputationforserviceexcellencemaynotneeda
guarantee.Infact,itmightnotfittheirimagetoofferone.Rather,bestpracticeservice
firmswillbeexpectedtodowhatsrightwithoutofferingaserviceguarantee.
Afirmwhoseserviceiscurrentlypoormustfirstworktoimprovequalitytoalevelabove
whatisguaranteed.Otherwise,toomanycustomerswillinvoketheguaranteewithserious
costimplications.
Servicefirmswhosequalityistrulyuncontrollablebecauseofexternalforceslikethe
weathershouldnotofferaguarantee.
Whenconsumersseelittlefinancial,personal,orphysiologicalriskassociatedwith
purchasingandusingaservice,aguaranteeaddslittlevaluebutstillcostsmoneytodesign,
implement,andmanage.
Inmarketswherethereislittleperceiveddifferenceinservicequalityamongcompeting
firms,thefirstfirmtoinstituteaguaranteemaybeabletoobtainafirstmoveradvantage
andcreatevaluedifferentiationforitsservices.Ifmorethanonecompetitoralreadyhasa
guaranteeinplace,thentheonlyrealwaytomakeanimpactistolaunchahighly
35

distinctiveguaranteebeyondwhatisalreadyofferedbycompetitors.

Discouraging Abuse and Opportunistic Customer Behavior

Throughoutthischapter,wehavediscussedtheimportanceofprofessionalcomplaint
handlingandservicerecovery.However,wehavetorecognizethatnotallcomplaintsare
honest.Whenfirmshavegenerousservicerecoverypoliciesorofferguarantees,thereis
alwaysthefearthatsomecustomersmaytakeadvantageofthat.Also,notallcomplaining
customersarerightorreasonableintheirbehavior,andsomecustomersmayactuallybe
36

thecauseofcomplaintsbyothercustomers. Werefertosuchpeopleasjaycustomers.
Ajaycustomerissomeonewhoactsinathoughtlessorabusiveway,causingproblemsfor
thefirm,itsemployees,andothercustomers.Everyservicehasitsshareofjaycustomers.
Jaycustomersareundesirable.Atbest,afirmshouldavoidattractingtheminthefirst
place,andatworst,afirmneedstocontrolorpreventtheirabusivebehavior.Letsfirst
describethemaintypesofjaycustomersbeforewediscusshowtodealwiththem.
37

Seven Types of Jaycustomers

Wehaveidentifiedsevenbroadcategoriesandgiventhemgeneralnames,butmany
customercontactpersonnelhavecomeupwiththeirownspecialterms.
LO11
Befamiliarwiththesevengroupsofjaycustomersandunderstandhowtomanagethem
effectively.
The Cheat

Therearemanywaysinwhichcustomerscancheatservicefirms.Cheatingrangesfrom
writingcompensationletterswiththesolepurposeofexploitingservicerecoverypolicies
andcheatingonserviceguarantees,toinflatingorfakinginsuranceclaimsandwardrobing
(e.g.,usinganeveningdressortuxedoforaneveningandthenreturningitbacktothe
38

39

retailer). Fakereturnshavebecomemorecommonandsociallyaccepted. Thefollowing

quotesdescribethethinkingofthesecustomersnicely:
Oncheckingintoahotel,Inoticedthattheyhada100%satisfactionoryourmoneyback
guarantee,Ijustcouldntresisttheopportunitytotakeadvantageofit,sooncheckingout,
ItoldthereceptionistthatIwantedarefundasthesoundofthetraffickeptmeawakeall
night.Theygavemearefund,noquestionsasked.Thesecompaniescanbesostupidthey
40

needtobemorealert.

Ivecomplainedthatservicewastooslow,tooquick,toohot,toocold,toobright,toodark,
toofriendly,tooimpersonal,toopublic,tooprivate...itdoesntmatterreally,aslongas

41

youencloseareceiptwithyourletter,youjustgetbackastandardletterandgiftcoupon.

Firmscannoteasilycheckwhetheracustomerisfakingdissatisfactionortrulyisunhappy.
Attheendofthissection,wewilldiscusshowtodealwiththistypeofconsumerfraud.
The Thief

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Thethiefjaycustomerhasnointentionofpayingandsetsouttostealgoodsandservices(or
topaylessthanfullpricebyswitchingpricetickets).Shopliftingisamajorprobleminretail
stores.Forthosewithtechnicalskills,itssometimespossibletobypasselectricitymeters,
accesstelephonelinesfreeofcharge,orbypassnormalcableTVfeeds.Ridingfreeonpublic
transportation,sneakingintomovietheaters,ornotpayingforrestaurantmealsarealso
popular.Findingouthowpeoplestealaserviceisthefirststepinpreventingtheftor
catchingthievesand,chargingthemincourtwherenecessary.However,firmsmusttake
intoaccountthattherearesomehonestbutabsentmindedcustomerswhoforgettopay.
The Rulebreaker

Manyservicebusinessesneedrulesofbehaviorforemployeesandcustomerstoguidethem
safelythroughthevariousstepsoftheserviceencounter.Someoftheserulesaresetdown
bygovernmentagenciesforhealthandsafetyreasons.Airtravelprovidesoneofthebestof
examplesofrulesdesignedtoensuresafety.
Rulessetbyserviceprovidersaremeanttohelpsmoothoperations,avoidunreasonable
demandsonemployees,preventmisuseofproductsandfacilities,protectthemselves
legally,anddiscourageindividualcustomersfrommisbehaving.Skiresorts,forinstance,are
gettingtoughoncarelessskiers.Skierscanbeseriouslyinjuredorevenkillediftheycrash
intoeachother.Therefore,skipatrolmembersmustsometimestakeonapolicingrole.
Justasdangerousdriverscanlosetheirlicenses,dangerousskierscanlosetheirlifttickets
(Figure13.11).

Figure13.11.Dangerousskiersarerulebreakerswhoposeadangerto
othersandneedtobepoliced.

Therearerisksattachedtomakinglotsofrules.Thefirmmaybecometooinflexible.
Insteadofbeingcustomeroriented,employeesbecomelikepoliceofficers,makingsure
thatcustomersfollowalltherules.However,thefewertherules,theclearertheimportant
onescanbe.
The Belligerent

Youveprobablyseenhim(orher)inastore,attheairport,inahotelorrestaurant.The
personisshoutingangrily,ormaybemouthinginsults,threats,andcurses.Service
personnelareoftenabused,evenwhentheyarenottoblame.Ifanemployeelacksthe
powertoresolvetheproblem,thebelligerentmaybecomeevenmoreangry,eventothe
pointofphysicalattack.Unfortunately,whenangrycustomersyellatservicepersonnel,the
lattersometimesrespondinthesameway.Thiscanleadtoargumentsandreducethe
likelihoodofsolvingtheproblem(Figure13.12).

Figure13.12.Confrontationsbetweencustomersandserviceemployeescan
easilyescalate.

Whatshouldanemployeedowhenanaggressivecustomerdoesnotlisten?Inapublic
place,themainaimshouldbetomovethepersonawayfromothercustomers.Sometimes,
supervisorsmayhavetosettledisagreementsbetweencustomersandstaffmembers.At
othertimes,theyneedtosupporttheemployeesactions.Ifacustomerhasphysically
attackedanemployee,thenitmaybenecessarytogetsecurityofficersorthepolice.
Telephonerudenessposesadifferentproblem.Onewaytohandlecustomerswhocontinue
toshoutatatelephonebasedemployeeisforthelattertosayfirmly,Thisconversation
isntgettingusanywhere.WhydontIcallyoubackinafewminuteswhenyouvehadtime
todigesttheinformation?Inmanycases,abreaktothink(andcooldown)isexactly
whatsneeded.
The Family Feuders

Peoplewhogetintoargumentswithmembersoftheirownfamilyorworse,withother
customersmakeupasubcategoryofbelligerentswecallfamilyfeuders.Employee
interventionmaycalmthesituationoractuallymakeitworse.Somesituationsrequire
detailedanalysisandacarefullythoughtoutresponse.Others,suchascustomersstartinga
foodfightinanicerestaurant(yes,suchthingsdohappen!),requireanalmostimmediate
response.Servicemanagersinthesesituationsneedtobepreparedtothinkontheirfeet
andactfast.
The Vandal

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The Vandal

Thelevelofphysicalabusetoservicefacilitiesandequipmentistrulysurprising.Softdrinks
arepouredintobankcashmachinesthereareburnholesfromcigarettesoncarpets,
tablecloths,andbedcovershotelfurnitureisbrokentelephonehandsetsaretornoffglassis
smashedandfabricsaretorn.Thelistisendless.Customersdontcauseallofthedamage,
ofcourse.Boredordrunkyoungpeoplearethesourceofmuchexteriorvandalism.
However,muchoftheproblemdoescomefrompayingcustomerswhochooseto
misbehave.
Thebestcureforvandalismisprevention.Improvedsecuritydiscouragessomevandals
(Figure13.13).Goodlightinghelps,aswellasopendesignofpublicareas.Companiescan
choosevandalresistantsurfacesandprotectivecoveringsforequipment.Educating
customerstouseequipmentproperlycanreducethelikelihoodofabuseorcareless
handling.Finally,customerscanbemadetoprovidesecuritydepositsorsignedagreements
inwhichtheyagreetopayforanydamagethattheycause.

Figure13.13.Installingsurveillancecamerasinpubliccarparkscan
discouragevandalism.

The Deadbeat

Theyaretheoneswhodelaypayment.Onceagain,preventiveactionisbetterthanacure.
Agrowingnumberoffirmsinsistonprepayment.Anyformofticketsaleisagoodexample
ofthis.Directmarketingorganizationsaskforyourcreditcardnumberastheytakeyour
order.Thenextbestthingistopresentthecustomerwithabillimmediatelyoncompletion
ofservice.Ifthebillistobesentbymail,thefirmshouldsenditpromptly,whiletheservice
isstillfreshinthecustomersmind.
Customersmayhavegoodreasonforthedelayandacceptablepaymentarrangementscan
beworkedout.Theremaybeotheraspectstothinkaboutaswell.Iftheclientsproblems
areonlytemporaryones,whatisthelongtermvalueofmaintainingtherelationship?Will
itcreatepositivegoodwillandwordofmouthtohelpthecustomerworkthingsout?If
creatingandmaintaininglongtermrelationshipsarethefirmsgoals,theyneedtoexplore
workingwiththecustomertowardasolution.

Dealing with Consumer Fraud

Dishonestcustomersmaystealfromthefirm,refusetopayfortheservice,pretendtobe
dissatisfied,orcauseservicefailurestooccuronpurpose.Whatstepscanafirmtaketo
protectitselfagainstsuchbehavior?
Theworkingassumptionsshouldbe,Ifindoubt,believethecustomer.However,as
ServiceInsights13.4shows,itisveryimportanttokeeptrackofcustomerswhorepeatedly
invokeserviceguaranteesoraskforcompensation.Forexample,oneAsianairlinefound
thatthesamecustomerlosthissuitcaseonthreeflightsinarow.Thechancesofthistruly
happeningareprobablylowerthanwinninginthenationallottery,sofrontlinestaffwere
madeawareofthisindividual.Thenexttimehecheckedinhissuitcase,thecheckinstaff
videotapedthesuitcasealmostfromcheckintopickupinthebaggageclaimatthe
travelersdestination.Itturnedoutthatacompanioncollectedthesuitcaseandtookit
awaywhilethetraveleragainmadehiswaytothelostbaggagecountertoreporthis
missingsuitcase.Thistime,thepolicewerewaitingforhimandhisfriend.Inanother
example,ContinentalAirlinesconsolidatedsome45separatecustomerdatabasesintoa
singledatawarehousetoimproveservicebutalsotodetectcustomerfraud.Theairline
foundonecustomerwhoreceived20bereavementfaresin12monthsoffthesamedead
grandfather!
Tobeabletoeffectivelydetectconsumerfraud,maintainingacentraldatawarehouseofall
compensationpayments,servicerecoveries,returnedgoods,andanyotherbenefitsgivento
customersbasedonspecialcircumstancesisneeded(i.e.,suchtransactionscannotbekept
onlyatthelocalorbranchlevel,butmustbecapturedinacentralizedsystem).Itis
importanttomergecustomerdataacrossdepartmentsandchannelsfordetectingunusual
42

transactionsandthesystemsthatallowthem.

Researchhasshownthatcustomerswhothinktheyweretreatedunfairlyinanyway(see
ourearlierdiscussionregardingfairness)aremuchmorelikelytotakeadvantageofafirms
servicerecoveryeffort.Inaddition,consumerstendtotakeadvantageoflargefirmsmore
oftenthansmallonescustomersthinkthatlargefirmscaneasilyaffordtherecoverycosts.
Also,onetimecustomersaremuchmorelikelytocheatthanloyalcustomers,and
customerswhodonothaveapersonalrelationshipwithserviceemployeesaremorelikely
totakeadvantageofservicerecoverypolicies.
Serviceguaranteesareoftenusedaspayoutsinservicerecovery,andithasbeenshown
thattheamountofaguaranteepayout(e.g.,whetheritisa10%or100%moneyback
guarantee)hadnoeffectonconsumercheating.Afurtherfindingwasthatcustomerswere
alsoreluctanttocheatiftheservicequalityprovidedwastrulyhighcomparedtowhenit
43

wasjustsatisfactory.

Thesefindingssuggestanumberofimportantmanagerialimplications:
1.Firmsshouldensurethattheirservicerecoveryproceduresarefair.
2.Largefirmsshouldrecognizethatconsumersaremorelikelytocheatonthemandhave
robustfrauddetectionsystemsinplace.
3.Firmscanimplementandthusreapthebiggermarketingbenefitsof100%moneyback
guaranteeswithoutworryingthatthelargepayoutswouldincreasecheating.
4.Guaranteescanbeofferedtoregularcustomersoraspartofamembershipprogram
becauserepeatcustomersareunlikelytocheatonserviceguarantees.
5.Trulyexcellentservicesfirmshavelesstoworryaboutcheatingthantheaverageservice
provider.

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ServiceInsights13.4:TrackingDownGuestsWhoCheat

Aspartofitsguaranteetrackingsystem,HamptonInnhasdevelopedwaysto
identifyguestswhoappearedtobecheating.Guestsshowinghighinvocation
trendsreceivepersonalizedattentionandfollowupfromthecompanys
GuestAssistanceTeam.Whereverpossible,seniormanagerstelephone
thesegueststoaskabouttheirrecentstays.Theconversationmightgoas
follows:Hello,Mr.Jones.ImthedirectorofguestassistanceatHampton
Inn,andIseethatyouvehadsomedifficultywiththelastfourproperties
youvevisited.Sincewetakeourguaranteeveryseriously,IthoughtIdgive
youacallandfindoutwhattheproblemswere.
Thetypicalresponseisdeadsilence!Sometimesthesilenceisfollowedwith
questionsofhowheadquarterscouldpossiblyknowabouttheirproblems.
Thesecallshavetheirhumorousmomentsaswell.Oneindividual,whohad
invokedtheguarantee17timesinwhatappearedtobeatripthattookhim
acrosstheUSandback,wasasked,Wheredoyouliketostaywhenyou
travel?HamptonInn,cametheenthusiasticresponse.But,saidthe
executivemakingthecall,ourrecordsshowthatthelast17timesyouhave
stayedataHamptonInn,youhaveinvokedthe100%Satisfaction
Guarantee.ThatswhyIlikethem!proclaimedtheguest(whoturnedoutto
bealongdistancetruckdriveronaperdiemforhisaccommodation
expenses).
Source:ChristopherW.HartandElizabethLong,Extraordinary
Guarantees(NewYork:AMACOM,1997).

Chapter Summary
LO1Whencustomersaredissatisfied,theyhaveseveralalternatives.Theycan
takesomeformsof:
Publicaction(e.g.,complaintothefirm,athirdpartyoreventakelegalaction).
Privateaction(e.g.,switchtoanotherproviderand/orspreadnegativewordofmouth).
Takenoaction.

LO2Toeffectivelyrecoverfromaservicefailure,firmsneedtounderstand
customercomplainingbehaviorandmotivations,andalsowhatcustomersexpectin
response.
Customerstypicallycomplainforanycombinationofthefollowingfourreasons.They
want(1)restitutionorcompensation,(2)venttheiranger,(3)helptoimprovetheservice,
and(4)spareothercustomersfromexperiencingthesameproblems(i.e.,theycomplainfor
altruisticreasons).
Inpractice,mostdissatisfiedcustomersdonotcomplainastheymaynotknowwhereto
complain,andfinditrequirestoomucheffortandisunpleasant,andperceivethepayoffsof
theireffortuncertain.
Thepeoplewhoaremostlikelytocomplaintendtobebettereducated,havehigher
income,aremoresociallyinvolved,andhavemoreproductknowledge.
LO3Oncecustomersmakeacomplaint,theyexpectfirmstodealwiththemina
fairmanneralongthreedimensionsoffairness:
ProceduralfairnessCustomersexpectthefirmtohaveaconvenient,responsive,and
flexibleservicerecoveryprocess.
InteractionaljusticeHere,customersexpectanhonestexplanation,agenuineeffortto
solvetheproblem,andpolitetreatment.
OutcomejusticeCustomersexpectcompensationthatreflectsthelossandinconvenience
sufferedasaresultoftheservicefailure.
LO4Effectiveservicerecoverycan,inmanycases,avoidcustomerswitchingand
restoreconfidenceinthefirm.Whencustomerscomplain,theygivethefirmachanceto
correctproblems,restoretherelationshipwiththecomplainer,andimprovefuture
satisfaction.Servicerecoveryis,therefore,animportantopportunitytoretainavalued
customer.

LO5Theservicerecoveryparadoxdescribesthephenomenonwherecustomers
whoexperienceanexcellentservicerecoveryafterafailurefeelevenmoresatisfiedthan
customerswhohadnoprobleminthefirstplace.However,itisimportanttonotethatthis
paradoxdoesnotalwaysapply.Itisstillbesttogetitrightthefirsttimeratherthan
provideexpensiveservicerecovery.
LO6Effectiveservicerecoverysystemsshould:

makeiteasyforcustomerstogivefeedback(e.g.,providehotlinenumbersandemail
addressesonallcommunicationsmaterials)andencouragethemtoprovidefeedback.
enableeffectiveservicerecoverybymakingit(1)proactive,(2)preplanned,(3)trained,
and(4)empowered.
establishappropriatecompensationlevels.Compensationshouldbehigherif(1)afirmis
knownforserviceexcellence,(2)theservicefailureisserious,and(3)thecustomeris
importanttothefirm.

LO7Theguidelinesforfrontlineemployeestoeffectivelyhandlecustomer
complaintsandservicerecoveryinclude(1)actfast(2)acknowledgethecustomers
feelings(3)dontarguewiththecustomer(4)showthatyouunderstandtheproblemfrom
thecustomerspointofview(5)clarifythetruthandsortoutthecause(6)givecustomers
thebenefitofdoubt(7)proposethestepsneededtosolvetheproblem(8)keepcustomers
informedofprogress(9)considercompensation(10)perseveretoregaincustomer
goodwilland(11)checktheservicedeliverysystemandimproveit.
LO8Serviceguaranteesareapowerfulwaytoinstitutionalizeprofessional
complainthandlingandservicerecovery.Serviceguaranteessetclearstandardsforthe
firm,andtheyalsoreducecustomersriskperceptionsandcanbuildlongtermloyalty.

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LO9Serviceguaranteesshouldbedesignedtobe(1)unconditional,(2)easyto
understandandcommunicate,(3)meaningfultothecustomer,(4)easytoinvoke,(5)easy
tocollecton,and(6)credible.
LO10Notallfirmsstandtogainfromserviceguarantees.Specifically,firms
shouldbecarefulofferingserviceguaranteeswhen(1)theyalreadyhaveareputationfor
serviceexcellence,(2)servicequalityistoolowandhastobeimprovedfirst(3)aspectsof
servicequalityareuncontrollablebecauseofexternalfactors(e.g.,weather)and(4)
customersperceivelowriskwhenbuyingtheservice.

LO11Notallcustomersarehonest,polite,andreasonable.Somemaywantto
takeadvantageofservicerecoverysituationsandothersmayinconvenienceandstress
frontlineemployeesandothercustomersalike.Suchcustomersarecalledjaycustomers.
Therearesevengroupsofjaycustomers:(1)theCheat,(2)theThief,(3)theRule
Breaker,(4)theBelligerent,(5)theFamilyFeuders,(6)theVandal,and(7)theDeadbeat.
Differenttypesofjaycustomerscausedifferentproblemsforfirmsandmayspoilthe
serviceexperienceofothercustomers.Hence,firmsneedtomanagetheirbehavior,evenif
thatmeans,forexample,keepingtrackofhowoftenacustomerinvokesaservice
guarantee,orasalastresort,blacklistingthemfromusingthefirmsfacilities.

Unlock Your Learning

ThesekeywordsarefoundwithinthesectionsofeachLearningObjective(LO).Theyare
integraltounderstandingtheservicesmarketingconceptstaughtineachsection.Havinga
firmgraspofthesekeywordsandhowtheyareusedisessentialtohelpingyoudowellon
yourcourse,andintherealandverycompetitivemarketingsceneoutthere.
LO11Complain
2Defection
3Noaction
4Privateaction
5Publicaction
6Servicefailure

LO27Anger
8Compensation
9Concernforothers
10Customercomplainingbehavior
11Customerfeedbacksystem
12Dissatisfiedcustomers
13Doubledeviation
14Interactivechannels
15Noninteractivechannels
16Onlinepubliccomplaining
17Restitution
18Socioeconomiclevels
19Unpleasant
LO320Interactionaljustice

21Outcomejustice
22Perceivedfairness
23Proceduraljustice
24Servicerecoveryprocesses

LO425Complainthandling
26Customersatisfaction
27Loyalty
28Servicefailure
29Servicerecovery

LO530Fullsatisfaction
31Repeatedservicefailure
32Servicerecoveryparadox
LO633Affectedcustomer
34Appropriatecompensation
35Complaintcollectionprocedures
36Customercomplaintbarriers

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37Empowered
38Faircompensation
39Feedback
40Onlinepubliccomplaining
41Overlygenerouscompensation
42Planned
43Positioning
44Proactive
44Revenuemanagementpractices
45Servicerecoverysystem
46Severeservicefailure
47Trained
LO748Complainingcustomers

49Confrontational
50Effectiveproblemresolution

LO851Marketingmuscle
52Customerfeedback
53Perceivedrisks
54Serviceguarantees
55Standards

LO956Combinedguarantee
57Attributespecificguarantee
58Believable
59Credible
60Easytoinvoke
61Easytounderstand
62Fullsatisfaction
63Meaningful
64Simple
65Unconditional
LO1066Distinctiveguarantee

67Guaranteeinappropriate
68Serviceexcellence
69Servicequality

LO1170100%moneybackguarantees
71Abuse
72Customerfraud
73Delaypayment
74Employeeintervention
75Fakereturns
76Fakingdissatisfaction
77Jaycustomer
78Misuse
79Physicalabuse
80Rudeness
81Shoplifting
82TheBelligerent
83TheCheat
84TheDeadbeat
85TheFamilyFeuders
86TheRulebreaker
87TheThief
88TheVandal
89Vandalism

Howwelldoyouknowthelanguageofservicesmarketing?Quizyourself!

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Notfortheacademicallyfaintofheart

Foreachkeywordyouareabletorecallwithoutreferringtoearlierpages,give
yourselfapoint(andapatontheback).Tallyyourscoreattheendandseeifyou
earnedtherighttobecalledaservicesmarketeer.

Score
017ServicesMarketingisdoneagreatdisservice.
1833Themidnightoilneedstobelit,pronto.
3450Iknowwhatyoudidntdoallsemester.
5167ByGeorge!Youregettingthere.
6884Now,goforthandmarket.
8589Thereshouldbeamarketingconceptnamedafteryou.

KnowYourESM
ReviewQuestions
1.Howdocustomerstypicallyrespondtoservicefailures?
2.Whydontmanymoreunhappycustomerscomplain?Andwhatdo
customersexpectthefirmtodooncetheyhavefiledacomplaint?
3.Whywouldafirmpreferitsunhappycustomerstocomeforwardand
complain?
4.Whatistheservicerecoveryparadox?Underwhatconditionsisthis
paradoxmostlikelytohold?Whyisitbesttodelivertheserviceasplanned,
eventhoughtheparadoxdoesholdinaspecificcontext?
5.Whatcanafirmdomakeiteasyfordissatisfiedcustomerstocomplain?
6.Whyshouldaservicerecoverystrategybeproactive,planned,trained,and
empowered?
7.Howgenerousshouldcompensationsrelatedtoservicerecoverybe?
8.Howshouldserviceguaranteesbedesigned?Whatarethebenefitsof
serviceguaranteesoverandaboveagoodcomplainthandlingandservice
recoverysystem?
9.Underwhatconditionsisitnotsuitabletointroduceaserviceguarantee?
10.Whatarethedifferenttypesofjaycustomersandhowcanaservicefirm
dealwithsuchcustomers?

WorkYourESM
ApplicationExercises
1.Thinkaboutthelasttimeyouexperiencedalessthansatisfactoryservice
experience.Didyoucomplain?Why?Ifyoudidnotcomplain,explainwhy
not.
2.Whenwasthelasttimeyouweretrulysatisfiedwithanorganizations
responsetoyourcomplaint.Describeindetailwhathappenedandwhat
madeyousatisfied.
3.Whatwouldbeanappropriateservicerecoverypolicyforawrongly
bouncedcheckfor(a)yourlocalsavingsbank,(b)amajornationalbank,(c)a
privatebankforhighnetworthindividuals.Pleaseexplainyourrationale,
andalsocomputetheeconomiccostsofthealternativeservicerecovery
policies.
4.Designaneffectiveserviceguaranteeforaservicewithhighperceivedrisk.
Explain(a)whyandhowyourguaranteewouldreduceperceivedriskof
potentialcustomers,and(b)whycurrentcustomerswouldappreciatebeing
offeredthisguaranteealthoughtheyarealreadyacustomerofthatfirmand,
therefore,arelikelytoperceivelowerlevelsofrisk.
5.Howgenerousshouldcompensationbe?Reviewthefollowingincident
andcomment.Thenevaluatetheavailableoptions,commentoneach,select
theoneyourecommend,anddefendyourdecision.
Theshrimpcocktailwashalffrozen.Thewaitressapologizedanddidnt
chargemeforanyofmydinner,wastheresponseofaverysatisfied
customerabouttheservicerecoveryhereceived.Considerthefollowing
rangeofservicerecoverypoliciesarestaurantchaincouldsetandtryto
establishthecostsforeachpolicy:
Option1:Smileandapologize,defrosttheprawncocktail,returnit,smile,
andapologizeagain.
Option2:Smileandapologize,replacetheprawncocktailwithanewone,
andsmileandapologizeagain.
Option3:Smile,apologize,replacetheprawncocktail,andofferafree
coffeeordessert
Option4:Smile,apologize,replacetheprawncocktail,andwaivethebillof
$80fortheentiremeal.
Option5:Smile,apologize,replacetheprawncocktail,waivethebillforthe
entiredinner,andofferafreebottleofchampagne.
Option6:Smile,apologize,replacetheprawncocktail,waivethebillforthe
entiredinner,offerafreebottleofchampagne,andgiveavouchervalidfor
anotherdinner,toberedeemedwithinthreemonths.
6.Identifythepossiblebehaviorofjaycustomersforaserviceofyourchoice.
Howcantheserviceprocessbedesignedtominimizeorcontrolthebehavior
ofjaycustomers?

Endnotes

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Endnotes
1 .AnExtraordinaryStumbleatJetBlue,BusinessWeek,March5,2007,
http://www.businessweek.com/magazine/content/07_10/b4024004.htm
(http://www.businessweek.com/magazine/content/07_10/b4024004.htm),accessedMarch12,2012Tschohl,

J.TooLittle,TooLate:ServiceRecoveryMustOccurImmediatelyasJetBlue
discovered.ServiceQualityInstitute,(May2007),http://www.customerservice.com
(http://www.customerservice.com),accessedMarch12,2012.

http://investor.jetblue.com/phoenix.zhtml?c=131045&p=irol
newsArticle_print&ID=1571778&highlight=(http://investor.jetblue.com/phoenix.zhtml?
c=131045&p=irolnewsArticle_print&ID=1571778&highlight=),accessedMarch12,2012.

2 .Evenfailuresbyothercustomersalsohaveanimpactonhowafirmscustomersfeel
aboutthefirm.SeeWenHsienHuang,OtherCustomerFailure:EffectsofPerceived
EmployeeEffortandCompensationonComplainerandNonComplainerService
Evaluations,JournalofServiceManagement21,no.2(2010):191211.

3 .RogerBougie,RikPieters,andMarcelZeelenberg,AngryCustomersDontCome
Back,TheyGetBack:TheExperienceandBehavioralImplicationsofAngerand
DissatisfactioninService,JournaloftheAcademyofMarketingScience31,no.4(2003):
377393andFlorianV.Wangenheim,PostswitchingNegativeWordofMouth,Journalof
ServiceResearch8,no.1(2005):6778.

4 .Forresearchoncognitiveandaffectivedriversofcomplainingbehavior,see:Jean
CharlesChebat,MosheDavidow,andIsabelleCodjovi,SilentVoices:WhySome
DissatisfiedConsumersFailtoComplain,JournalofServiceResearch7,no.4(2005):
328342.

5 .StephenS.TaxandStephenW.BrownRecoveringandLearningfromService
Failure,SloanManagementReview49,no.1(Fall1998):7588.

6 .KelliBodeyandDebraGrace,SegmentingServiceComplainersandNon
ComplainersontheBasisofConsumerCharacters,JournalofServicesMarketing20,no.
3(2006):178187JeanCharlesChebat,MosheDavidow,andIsabelleCodjovi,Silent
Voices:WhySomeDissatisfiedConsumersFailtoComplain,JournalofServiceResearch7,
no.4(2005):328342NancyStephensandKevinP.Gwinner,WhyDontSomePeople
Complain?ACognitiveEmotiveProcessModelofConsumerComplainingBehavior,
JournaloftheAcademyofMarketingScience26,no.3(1998):172189Technical
AssistanceResearchProgramsInstitute(TARP),ConsumerComplaintHandlingin
AmericaAnUpdateStudy,PartII,Washington,DC:TARPandUSOfficeofConsumer
Affairs,April1986APennyforYourThoughts:WhenCustomersDontComplainin
Knowledge@W.P.Carey,September27,2006,
http://knowledge.wpcarey.asu.edu/article.cfm?articleid=1303#
(http://knowledge.wpcarey.asu.edu/article.cfm?articleid=1303#),accessedMarch12,2012Customer

CareMeasurement&Consulting(CCMC),2007NationalCustomerRageStudy,Customer
CareAlliance,2007.

7 .JohnGoodman,BasicFactsonCustomerComplaintBehaviorandtheImpactof
ServiceontheBottomLine,CompetitiveAdvantage,(June1999):15.

8 .AnnaMattilaandJochenWirtz,ConsumerComplainingtoFirms:The
DeterminantsofChannelChoice,JournalofServicesMarketing18,no.2(2004):147155
KaisaSnellmanandTiinaVihtkari,CustomerComplainingBehaviorinTechnologyBased
ServiceEncounters,InternationalJournalofServiceIndustryManagement14,no.2
(2003):217231TerriShapiroandJenniferNiemanGonder,EffectofCommunication
ModeinJusticeBasedServiceRecovery.ManagingServiceQuality16,no.2(2006):124
144.

9 .TechnicalAssistanceResearchProgramsInstitute(TARP),ConsumerComplaint
HandlinginAmerica:AnUpdateStudy,PartII,Washington,DC:TARPandUSOfficeof
ConsumerAffairs,April1986.
10.ThomasM.TrippandYanyGregoire,WhenUnhappyCustomersStrikeBackonthe
Internet,MITSloanManagementReview52,no.3(Spring2011):3744SvenTuzovic,
Frequent(Flier)FrustrationandtheDarkSideofWordofWeb:ExploringOnline
DysfunctionalBehaviorinOnlineFeedbackForums,JournalofServicesMarketing24,no.
6(2010):446457.
11.Forreviewoncomplainthandlingandcustomersatisfaction,seeKatjaGelbrichand
HolgerRoschk,AMetaAnalysisofOrganisationalComplaintHandlingandCustomer
Responses,JournalofServiceResearch14,no.1(2011):2443.SeealsoKlausSchoeferand
AdamantiosDiamantopoulos,TheRoleofEmotionsinTransatingPerceptionsof
(In)JusticeintoPostcomplaintBehavioralResponses,JournalofServiceResearch11,no.1
(2008):91103YanyGrgoireandRobertJ.Fisher,CustomerBetrayalandRetaliation:
WhenYourBestCustomersBecomeYourWorstEnemies,JournaloftheAcademyof
MarketingScience36,no.2(2008):247261.
12.StephenS.TaxandStephenW.Brown,RecoveringandLearningfromService
Failure,SloanManagementReview49,no.1(Fall1998):7588SeealsoTorWallin
Andreassen,AntecedentsofServiceRecovery,EuropeanJournalofMarketing34,no.1
and2(2000):156175KodeRuyterandMartinWetzel,CustomerEquityConsiderations
inServiceRecovery,InternationalJournalofServiceIndustryManagement13,no.1
(2002):91108JanetR.McCollKennedyandBeverleyA.Sparks,ApplicationofFairness
TheorytoServiceFailuresandServiceRecovery,JournalofServiceResearch5,no.3
(2003):251266andJochenWirtzandAnnaMattila,ConsumerResponsesto
Compensation,SpeedofRecoveryandApologyafteraServiceFailure,International
JournalofServiceIndustryManagement15,no.2(2004):150166
13.OrenHarari,ThankHeavensforComplainers,ManagementReview(March1997):
2529.
14.TomDeWitt,DoanT.Nguyen,andRogerMarshall,ExploringCustomerLoyalty
FollowingServiceRecovery,JournalofServiceResearch10,no.3(2008):269281.
15.SimonJ.BellandJamesA.Luddington,CopingwithCustomerComplaints.Journal
ofServiceResearch8,no.3(February2006):221233.
16.CustomerCareMeasurement&Consulting(CCMC),2007NationalCustomerRage
Study,CustomerCareAlliance,2007.
17.TechnicalAssistanceResearchProgramsInstitute(TARP),ConsumerComplaint

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Chapter13.ComplaintHandlingandServiceRecoveryEssentialsofServicesMarketing,SecondEdition

HandlinginAmerica:AnUpdateStudy,PartII,Washington,DC:TARPandUSOfficeof
ConsumerAffairs,April1986.
18.Foradiscussiononhowtoquantifycomplaintmanagementprofitability,see:Bernd
StaussandAndreasSchoeler,ComplaintManagementProfitability:WhatDoComplaint
ManagersKnow?ManagingServiceQuality14,no.2/3(2004):147156,andfora
comprehensivetreatmentofallaspectsofeffectivecomplaintmanagement,seeBernd
StaussandWolfgangSeidel,ComplaintManagement:TheHeartofCRM,Mason,Ohio:
Thomson,2004andJanelleBarlowandClausMller,AComplaintIsaGift.2nded.,San
Francisco,CA:BerrettKoehlerPublishers,2008.
19.CelsoAugustodeMatos,JorgeLuizHenrique,andCarlosAlbertoVargasRossi,
ServiceRecoveryParadox:AMetaAnalysis,JournalofServiceResearch10,no.1(2007):
6077ChihyungOk,KiJoonBack,andCarolW.Shankin,MixedFindingsontheService
RecoveryParadox,TheServiceIndustriesJournal27,no.5(2007):671686Stefan
MichelandMatthewL.Meuter,TheServiceRecoveryParadox:TruebutOverrated?
InternationalJournalofServiceIndustryManagement19,no.4(2008):441457Randi
PriluckandVishalLala,TheImpactoftheRecoveryParadoxonRetailerCustomer
Relationships,ManagingServiceQuality19,no.1(2009):4259TorWallinAndreassen,
FromDisgusttoDelight:DoCustomersHoldaGrudge?JournalofServiceResearch4,
no.1(2001):3949
20.JamesG.MaxhamIIIandRichardG.Netemeyer,ALongitudinalStudyof
ComplainingCustomersEvaluationsofMultipleServiceFailuresandRecoveryEfforts,
JournalofMarketing66,no.4(2002):5772.
21.ChristianHomburgandAndreasFrst,HowOrganizatonalComplaintHandlingDrives
CustomerLoyalty:AnAnalysisoftheMechanisticandtheOrganicApproach,Journalof
Marketing69,(July2005):95114.
22.RonZemkeandChipR.Bell,KnockYourSocksOffServiceRecovery,NewYork:
AMACOM,2000,60.
23.JoshBernoffandTedSchadler,Empowered,HarvardBusinessReview,JulyAugust
2010,95101.
24.RhondaMack,ReneMueller,JohnCrotts,andAmandaBroderick,Perceptions,
CorrectionsandDefections:ImplicationsforServiceRecoveryintheRestaurantIndustry,
ManagingServiceQuality10,no.6(2000):33946.
25.JochenWirtzandJanetR.McCollKennedy,OpportunisticCustomerClaimingDuring
ServiceRecovery,JournaloftheAcademyofMarketingScience38,no.5(2010):654675.
26.Foranexcellentreviewofextantacademicliteratureonserviceguarantees,see:Jens
HogreveandDwayneD.Gremler,TwentyYearsofServiceGuaranteeResearch,Journal
ofServiceResearch11,no.4(2009):322343.
27.ChristopherW.L.Hart,ThePowerofUnconditionalServiceGuarantees,Harvard
BusinessReview(JulyAugust1988):5462.
28.L.A.TucciandJ.Talaga,ServiceGuaranteesandConsumersEvaluationofServices.
JournalofServicesMarketing11,no.1(1997):1018AmyOstromandDawnIacobucci,
TheEffectofGuaranteesonConsumersEvaluationofServices,JournalofServices
Marketing12,no.5(1998),36278.
29.SaraBjrlinLidnandPerSkln,TheEffectofServiceGuaranteesonService
Recovery,InternationalJournalofServiceIndustryManagement14,no.1(2003):3658.
30.ChristopherW.Hart,ThePowerofUnconditionalServiceGuarantees.
31.Forascientificdiscussionontheoptimalguaranteepayoutamount,see:TimBakerand
DavidA.Collier,TheEconomicPayoutModelforServiceGuarantees,DecisionSciences
36,no.2(2005):197220).
32.McDougall,H.Gordon,TerenceLevesque,andPeterVanderPlaat,Designingthe
ServiceGuarantee:UnconditionalorSpecific?JournalofServicesMarketing12,no.4
(1998):278293JochenWirtz,DevelopmentofaServiceGuaranteeModel,AsiaPacific
JournalofManagement15,no.1(1998):5175.
33.JochenWirtzandDoreenKum,DesigningServiceGuaranteesIsFullSatisfactionthe
BestYouCanGuarantee?JournalofServicesMarketing15,no.4(2001):282299.
34.AmyL.OstromandChristopherHart,ServiceGuarantee:ResearchandPractice,in
HandbookofServicesMarketingandManagement,T.SchwartzandD.Iacobucci,eds.,
(California:ThousandOaks,SagePublications,2000,299316).
35.Foradecisionsupportmodelandwhethertohaveaserviceguarantee,andifyes,on
howtodesignandimplementit,see:LouisFabien,DesignandImplementationofa
ServiceGuarantee,JournalofServicesMarketing19,no.1(2005):3338.
36.RayFisk,StephenGrove,LloydC.Harris,KateL.Daunt,DominiqueKeeffe,Rebekah
RussellBennett,andJochenWirtz,CustomersBehavingBadly:AStateoftheArtReview,
ResearchAgendaandImplicationsforPractitioners,JournalofServicesMarketing24,no.
6(2010):417429LloydC.HarrisandKateL.Reynolds,JaycustomerBehavior:An
ExplorationofTypesandMotivesintheHospitalityIndustry,JournalofServices
Marketing18,no.5(2004):339357KateL.ReynoldsandLloydC.Harris,Dysfunctional
CustomerBehaviorSeverity:AnEmpiricalExamination,JournalofRetailing85,no.3
(2009):321335KateL.DauntandHarrisC.Lloyd,CustomersActingBadly:Evidence
fromtheHospitalityIndustry,JournalofBusinessResearch64,no.10(2011):10341042.
37.ThissectionisadaptedandupdatedfromChristopherLovelock,ProductPlus.New
York:McGrawHill,1994,Chapter15.
38.LloydC.Harris,andKateL.Reynolds,TheConsequencesofDysfunctionalCustomer
Behavior,JournalofServiceResearch6no.2(2003):144161Wirtz,JochenandDoreen
Kum,ConsumerCheatingonServiceGuarantees,JournaloftheAcademyofMarketing
Science32,no.2(2004):159175ChuWujin,EitanGerstner,andJamesD.Hess,
ManagingDissatisfaction:HowtoDecreaseCustomerOpportunismbyPartialRefunds,
JournalofServiceResearch1,no.2(1998):14055.
39.LloydC.Harris,FraudulentReturnProclivity:AnEmpiricalAnalysis,Journalof
Retailing84,no.4(2008):461476.
40.KateL.ReynoldsandLloydC.Harris,WhenServiceFailureisNotServiceFailure:An
ExplorationoftheFormsandMotivesofIllegitimateCustomerComplaining,Journalof
ServicesMarketing19,no.5(2005):326
41.LloydC.Harris,andKateL.Reynolds,JaycustomerBehavior:AnExplorationofTypes
andMotivesintheHospitalityIndustry,JournalofServicesMarketing18,no.5(2004):
339
42.JillGriffin,WhatYourWorstCustomersTeachYouaboutLoyalty,January24,2006,
http://www.marketingprofs.com/6/griffin5.asp(http://www.marketingprofs.com/6/griffin5.asp),

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accessedMarch12,2012.
43.JochenWirtzandDoreenKum,ConsumerCheatingonServiceGuarantees,Journalof
theAcademyofMarketingScience32,no.2(2004):159175JochenWirtzandJanetR.
McCollKennedy,OpportunisticCustomerClaimingduringServiceRecovery,Journalof
theAcademyofMarketingScience38,no.5(2010):654675HeejungRoandJuneWong,
CustomerOpportunisticComplaintsManagement:ACriticalIncidentApproach,
InternationalJournalofHospitalityManagement,forthcoming(2012).

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