SERVICE RECOVERY

Service failure
 A core service failure occurs when a
customer is not able to use the product or
service they have purchased.
 A service encounter failure occurs when
customer interaction with employees of a
firm leave the customer feeling negative
about the firm. 
Reasons for service failures
 -Reasons beyond control of marketer
 -Controllable factors---
 communication failure
 service delivery not matching
expectations
 system failure
 laxity on the part of provider
Service recovery
 Service recovery is the action
initiated by the service provider in
response to a service failure, like
unavailability of service, a delayed
or slow service, an incorrect or
poorly executed service or
unempathetic or rude behavior by
service provider.
 Customer complaints

 On an average only 5 % dissatisfied
customers complaint. Others simply go
over to the competitor
 A satisfied consumer speaks to an average
of 3 people on his her experience
 A dissatisfied consumer gripes to on an
average 11 persons about his/her
unpleasant experience
 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)
WHY PEOPLE DON’T
COMPLAIN


 IT WILL NOT BE SOLVED

 WASTAGE OF TIME AND EFFORT
 DON’T KNOW HOW TO & WHOM TO
COMPLAIN

TYPES OF CUSTOMER
COMPLAINT

ACTIONS
1.On the spot to the service
provider - Best method
2.
3.On a later date , by phone, in
writing to the service
provider or the Corporate
office of the organisation.


3. The complainant could

just spread negative
word of mouth to all he
comes in contact. This is
extremely damaging to
the image of the
company.
 5. Finally the customer may
complain to consumer
redressal forums or any
governmental organisation
or NGO, taking care of the
rights of the consumer.



TYPES OF COMPLAINERS
 PASSIVE-least likely to take action
 VOICERS- -ve word of mouth to service
provider but not to others
 IRATES- -ve word of mouth, brand switching,
complain to third party
 ACTIVISTS- complain to all sections
Customer Complaint Actions Following Service Failure
Customer recovery
expectations
 Understanding and accountability
 Fair treatment
◦ Outcome fairness
◦ Procedural fairness
◦ Interactional fairness
 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 •Found better service
•Wait for service
Service Switching Behavior Ethical Problems
Core Service Failure •Cheat
•Service mistakes •Hard sell
•Billing errors •Unsafe
•Service catastrophe •Conflict of interest

Service Encounter Failures Involuntary Switching

•Uncaring
•Impolite •Customer moved
•Unresponsive •Provider closed
•Unknowledgeable
 Service Recovery Strategies

En om
C
co pla
te

ur in
ua

a g ts
q

e
e

an
Ad ons

Quickly
d
e
id ati

Tr
ov lan

Act
ck
r
P xp
E

Service
Fail-safe Recovery Treat Customers
the Service Fairly
Strategies

C
w ulti
it h v a
C te
st us R
to ela
Lo
Experiences
Learn from Recovery

m ti
m e r on
fro ers s s
hi
n
ar om ps
Le ust
C
 Service Guarantees
 guarantee = an assurance of the fulfillment of a condition
(Webster’s Dictionary)

 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
 (so what do you guarantee?)

 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
◦



 Benefits of Service
Guarantees
 A good guarantee forces the company to focus on its customers.
 An effective guarantee sets clear standards for the organization.
 A good guarantee generates immediate and relevant feedback
from customers.
 When the guarantee is invoked there is an instant opportunity to
recover, thus satisfying the customer and helping retain loyalty.
 Information generated through the guarantee can be tracked and
integrated into continuous improvement efforts.
 Employee morale and loyalty can be enhanced as a result of
having a service guarantee in place.
 A service guarantee reduces customers’ sense of risk and builds
confidence in the organization.

 Why a Good Guarantee
Works
 forces company to focus on customers

 sets clear standards

 generates feedback

 forces company to understand why it failed

 builds “marketing muscle”

 Service Guarantees
 Does everyone need a guarantee?

 Reasons companies might NOT want to offer
a service guarantee:
◦ existing service quality is poor
◦ guarantee does not fit the company’s image
◦ too many uncontrollable external variables
◦ fears of cheating or abuse by customers
◦ costs of the guarantee outweigh the benefits
◦ customers perceive little risk in the service
◦ customers perceive little variability in service
quality among competitors

 Service Guarantees
 service guarantees work for companies who
are already customer-focused
 effective guarantees can be BIG deals – they
put the company at risk in the eyes of the
customer
 customers should be involved in the design
of service guarantees
 the guarantee should be so stunning that it
comes as a surprise – a WOW!! factor
 “it’s the icing on the cake, not the cake”
