SERVICE RECOVERY Chapter 8 Why is Service Recovery

SERVICE RECOVERY Chapter 8

Why is Service Recovery so Important?

Why do some customers never complain?

Unhappy Customers’ Repurchase Intentions Unhappy Customers Who Don’t Complain 9% Unhappy Customers Who Do Complaints Not Resolved 19% 54% Complaints Resolved 82% Complaints Resolved Quickly 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.

Figure 8. 3 Customer Complaint Actions Following Service Failure

Types of Complainers Passives – doubt the effectiveness of complaining Voicers – actively complain, but may not spread negative word of mouth Irates – will engage in negative word of mouth communication Activists – tend to complain to providers, friends and to third parties

Classroom Discussion What do the following Quotes mean? “A complaint is a gift” “The customer who complains is your friend” What are some of your personal service recovery experiences?

Service Recovery Strategies k ac Tr d an ts e ain ag pl ur m co Co En Fail-safe the Service e at u q s de ion A t a de an i l v o p Pr Ex Service Recovery Strategies Treat Customers Fairly R el Learn from Recovery Experiences st o L m ers o fr n tom r a s Le Cu Act Quickly Figure 8. 7 at Cu C ion ltiv us s at to hip e m s er w s ith

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 Exhibit 8. 5 Unconditional � � 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 Communicate � � – no Meaningful � the guarantee should make its promise unconditionally strings attached 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 Source: Christopher W. L. Hart, “The Power of Unconditional Guarantees, ” Harvard Business Review, July-August, 1988, pp. 54 -62.

Mini Case 1 – pages 515 -516

Exercise 2 – pages 512 -513