SM/U2 Topic 7 Service Recovery
In any given context of business services, service failure is inevitable as all services conforms to characteristic of service; Intangible, heterogeneity, Simultaneous production & consumption and perishablility. No two service encounters are precisely alike, hence increases discrepancy from each service encounters.
A service failure is usually described as service performance that falls below customer’s expectations which will have adverse effects on their satisfaction level for service encounters.
Therefore, a service recovery involves taking proactive and reactive actions by the service organization to get things right for the affected customers following a service failure. In order to conduct an effective service recovery from the perspective of organization, they must understand the implications of service recovery and take specific set of actions to conduct effective service recovery tactics and strategies.
Implications to Service Marketing
The implication for service recovery affects service organization in many folds. We can infer the first two implications from Lovelock et al. equation on customer satisfaction as follows:
Source: Lovelock, CH, Patterson, PG & Walker RH 2007, Services Marketing: An Asia-Pacific and Australian perspective, Pearson, NSW
Firstly, consumer research has shown that resolving a service failure effectively has strong impact on customer satisfaction level, loyalty, positive word-of-mouth and organization performance. Customers who have experienced initial service failures and then experienced high level of excellent service recovery will lead to more satisfaction and loyalty towards the service organization, labeling as a service recovery paradox effect. (Zeithaml, Bitner, and Gremler 2009)
Secondly, a well-designed, well-documented service recovery strategy will aid in the improvement effort for service output, which correlates to ‘Doing the job right the first time’ that contributes to the increased customer satisfaction and loyalty towards the organization. (Zeithaml, Bitner, and Gremler 2009)
Thirdly, should the service failure not be handled effectively or ignored, customers would be enraged as they are not served their due justice and become ‘irates’. These customers are more likely than others to engage in negative word-of-mouth and switch provider. They believe that complaining to the provider can provide social benefits and go through troubles to create blogs and stuffs on internet to share their frustrations with others. Research has found that customers who are dissatisfied will talk to about 18.5 people about it, damaging reputation in the process. The role of Justice in complaint-handling procedure is also not served as shown in the model adopted from S. Tax and S.W.Brown as follow:
Source: Tax, S and Brown, SW 2000, Handbook of Services Marketing and Management,, Sage Publication Inc
Lastly, service employees will also be affected and demoralized should the service failure keeps repeating themselves.
Service Recovery Strategies
When a service failure occurs, service recovery strategies will be needed to be implemented by service organizations. This long-term strategy will be embedded as part of organization’s overall service strategy. Service recovery is about the combination of a variety of strategies to solve the specific context of the problem. The proposed eight strategies by Zeithaml et al. are:
The first strategy is to make the service fail-safe by doing it right the first time. It avoids negativities of failures and it is the most important dimension of service quality. In order to achieve that, there must be a top management commitment and a positive firm culture of ‘zero defection’ and appreciate ‘relationship value of customers’ to uphold the standards of service without blindly adopting the Total Quality Management from the product perspective.
The second strategy is to encourage and track complaints. According to research, almost 50% of customers encountered problems by do not complain. This segment will have a higher chance of switching to competitor as organization has no control over it. Encouraging complaint is healthy and it will allow organization to learn. Tracking complaints will ensure no complaints are left out. Technology can be used to aid in handling of complaints.
The third strategy is to act quickly. Complaining customers want quick responses and do not want to be ping-pong around different employees, which will seem to be shirking responsibilities. Even when full resolution is likely to take longer, fast acknowledgement is required to appease them. There is positive correlation between fast service recovery with satisfaction and loyalty.
The fourth strategy is to provide adequate explanations. This allows customers to understand why the failure occurred. According to attribution theory, customer will understand and appreciate what is going on and they will be more forgiving. The content and the style of the delivery must be suitable to the affected customers subjectively
The fifth strategy is to treat customers fairly. They want justice in their complaint-handling process, which involves procedure (speed, convenience, follow-up etc), interaction (behavior of service representatives) and outcome. Therefore it is important that the process be handled properly to return them the justice they seek. Recent research indicates that justice considerations have a large impact on how customers evaluate firm’s recovery effort. Therefore, if they do not perceive themselves being just, they will rate the recovery badly even when it is perfectly done. (Tax and Brown 2000)
The sixth strategy is to cultivate relationship with customers. Long term relationship will allow customers to be more forgiving and open to the recovery process. Cultivation of strong relationship can provide an important buffer to service firms when failures occur. The biggest challenge would be to restore their confidence and trust again.
The seventh strategy is to learn from recovery experience. Organizations can learn through using tools to help evaluate experiences. They can use blueprinting, control charts, fishbone diagram (cause and effect diagram) to use those acquired knowledge in their recovery effort. The last strategy is to learn from lost customers through market research and get into the root cause analysis of why they left.