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Chapter 13
Achieving Service
Recovery and
Obtaining Customer
Feedback
Copyright © 2008 Pearson Education Canada
Services Marketing, Canadian Edition
Chapter 13- 1
Learning Objectives - Chapter 13
 Uncover customer complaining behaviour
 Design effective service recovery strategies
 Determine the usefulness of service guarantees
 Outline front line staff response to abusive and/or
opportunistic customer behaviour
 Create institutionalized systematic learning from feedback
Copyright © 2008 Pearson Education Canada
Services Marketing, Canadian Edition
Chapter 13- 2
Customer Complaining Behaviour
Copyright © 2008 Pearson Education Canada
Services Marketing, Canadian Edition
Chapter 13- 3
Customer Response Categories to
Service Failures (Fig 13.1)
Complain to the
service firm
Service Encounter
is Dissatisfactory
Take some form
of Public Action
Complain to a
third party
Take some form
of Private
Action
Take legal action
to seek redress
Defect (switch
provider)
Take No Action
Negative word-ofmouth
Any one or a combination of
these responses is possible
Copyright © 2008 Pearson Education Canada
Services Marketing, Canadian Edition
Chapter 13- 4
Understanding Customer Responses to
Service Failure
 Why do customers complain?
 What proportion of unhappy customers complain?
 Why don’t unhappy customers complain?
 Who is most likely to complain?
 Where do customers complain?
 What do customers expect once they have made a complaint?
Copyright © 2008 Pearson Education Canada
Services Marketing, Canadian Edition
Chapter 13- 5
Customers Often View Complaining as
Difficult and Unpleasant (Fig 13.2)
Source: Courtesy of Images.com.
Copyright © 2008 Pearson Education Canada
Services Marketing, Canadian Edition
Chapter 13- 6
Three Dimensions of Perceived Fairness in
Service Recovery Process (Fig 13.3)
Complaint Handling and Service
Recovery Process
Justice Dimensions of the Service Recovery Process
Procedural
Justice
Interactive
Outcome
Justice
Justice
Customer Satisfaction with
Service Recovery
Source: Tax and Brown
Copyright © 2008 Pearson Education Canada
Services Marketing, Canadian Edition
Chapter 13- 7
Customer Responses to Effective
Service Recovery
Copyright © 2008 Pearson Education Canada
Services Marketing, Canadian Edition
Chapter 13- 8
Importance of Service Recovery
 Plays a crucial role in achieving customer satisfaction
 Tests a firm’s commitment to satisfaction and service
quality
 Employee training and motivation is highly important
 Impacts customer loyalty and future profitability
 Complaint handling should be seen as a profit centre,
not a cost centre
Copyright © 2008 Pearson Education Canada
Services Marketing, Canadian Edition
Chapter 13- 9
The Service Recovery Paradox
 Customers who experience a service failure that is
satisfactorily resolved more likely to make future purchases
than customers without problems (Note: not all research
supports this paradox)
 If second service failure occurs, the paradox disappears—
customers’ expectations have been raised and they become
disillusioned
 Severity and “recoverability” of failure (e.g., spoiled
wedding photos) may limit firm’s ability to delight customer
with recovery efforts
 Best strategy: Do it right the first time
Copyright © 2008 Pearson Education Canada
Services Marketing, Canadian Edition
Chapter 13- 10
Principles of Effective Service
Recovery Systems
Copyright © 2008 Pearson Education Canada
Services Marketing, Canadian Edition
Chapter 13- 11
Components of an Effective
Service Recovery System (Fig 13.4)
Do the job right the
first time
+
Effective Complaint
Handling
Increased
Satisfaction and
Loyalty
=
Conduct research
Monitor complaints
Identify Service
Complaints
Resolve Complaints
Effectively
Develop effective system
and training in
complaints handling
Learn from the
Recovery Experience
Conduct root cause analysis
Close the loop via feedback
Copyright © 2008 Pearson Education Canada
Develop “Complaints as
opportunity” culture
Source: For full source information, see Services
Marketing textbook, page 386.
Services Marketing, Canadian Edition
Chapter 13- 12
Strategies to Reduce Customer
Complaint Barriers (Table 13.1)
Complaint Barriers for
Dissatisfied Customers
Strategies to Reduce These Barriers
Inconvenience
 Put customer service hotline
numbers,
e-mail and postal
addresses on all customer
communications materials
 Hard to find right complaint
procedure
 Effort involved in complaining
Doubtful Pay Off
 Uncertain if action will be taken
by firm to address problem
 Have service recovery procedures in
place, communicate this to
customers
 Feature service improvements that
resulted from customer feedback
Unpleasantness
 Thank customers for their feedback
 Fear of being treated rudely
 Train frontline employees
 Hassle, embarrassment
 Allow for anonymous feedback
Copyright © 2008 Pearson Education Canada
Services Marketing, Canadian Edition
Chapter 13- 13
How to Enable
Effective Service Recovery
 Be proactive—on the spot, before customers complain
 Plan recovery procedures
 Teach recovery skills to relevant personnel
 Empower personnel to use judgment and skills to develop
recovery solutions
Copyright © 2008 Pearson Education Canada
Services Marketing, Canadian Edition
Chapter 13- 14
How Generous
Should Compensation Be?
 Rules of thumb for managers to consider:
 What is positioning of our firm?
 How severe was the service failure?
 Who is the affected customer?
Copyright © 2008 Pearson Education Canada
Services Marketing, Canadian Edition
Chapter 13- 15
Service Guarantees
Copyright © 2008 Pearson Education Canada
Services Marketing, Canadian Edition
Chapter 13- 16
Service Guarantees Help Promote and
Achieve Service Loyalty
 Force firms to focus on what
customers want
 Set clear standards
 Highlight cost of service
failures
 Require systems to get and
act on customer feedback
 Reduce risks of purchase
and build loyalty
Copyright © 2008 Pearson Education Canada
Services Marketing, Canadian Edition
Chapter 13- 17
How to Design Service Guarantees
 Unconditional
 Easy to understand and communicate
 Meaningful to the customer
 Easy to invoke
 Easy to collect
 Credible
Copyright © 2008 Pearson Education Canada
Services Marketing, Canadian Edition
Chapter 13- 18
Types of Service Guarantees
Table 13.2
 Single attribute-specific guarantee
 One key service attribute is covered
 Multiattribute-specific guarantee
 A few important service attributes are covered
 Full-satisfaction guarantee
 All service aspects covered with no exceptions
 Combined guarantee
 All service aspects are covered
 Explicit minimum performance standards
on important attributes
Source: For full source information, see Services
Marketing textbook, page 394.
Copyright © 2008 Pearson Education Canada
Services Marketing, Canadian Edition
Chapter 13- 19
The Hampton Inn
100% Satisfaction Guarantee
(Fig 13.5)
 What are benefits of such a
guarantee?
 Are there any downsides?
Copyright © 2008 Pearson Education Canada
Services Marketing, Canadian Edition
Chapter 13- 20
Discouraging Abuse and
Opportunistic Behaviour
Copyright © 2008 Pearson Education Canada
Services Marketing, Canadian Edition
Chapter 13- 21
Dealing with Customer Fraud
 Treating all customers with suspicion is likely to alienate them
 TARP found only 1 to 2 percent of customer base engages in premeditated
fraud—so why treat remaining 98 percent of honest customers as potential
crooks?
 Insights from research on guarantee cheating
 Amount of a guarantee payout had no effect on customer cheating
 Repeat-purchase intention reduced cheating intent
 Customers are reluctant to cheat if service quality is high (rather than
just satisfactory)
 Managerial implication
 Firms can benefit from offering 100 percent money-back guarantees
 Guarantees should be offered to regular customers as part of
membership program
 Excellent service firms have less to worry about than average providers
Copyright © 2008 Pearson Education Canada
Services Marketing, Canadian Edition
Chapter 13- 22
Learning from Customer Feedback
Copyright © 2008 Pearson Education Canada
Services Marketing, Canadian Edition
Chapter 13- 23
Key Objectives of
Effective Customer Feedback Systems
 Assessment and benchmarking of service quality and
performance
 Customer-driven learning and improvements
 Creating a customer-oriented service culture
Copyright © 2008 Pearson Education Canada
Services Marketing, Canadian Edition
Chapter 13- 24
Customer Feedback Collection Tools
 Total market surveys
 Post-transaction surveys
 Ongoing customer surveys
 Customer advisory panels
 Employee surveys/panels
 Focus groups
 Mystery shopping
 Complaint analysis
 Capture service operating data
Copyright © 2008 Pearson Education Canada
Services Marketing, Canadian Edition
Chapter 13- 25
Key Customer Feedback Collection Tools:
Strengths and Weaknesses (Table 13.3)
LEVEL OF MEASUREMENT
POTENTIAL
FOR
COLLECTION TOOLS
FIRM
SERVICE
REPRESENTATIVE
TRANSACTION
ACTIONABLE
RELIABLE
RECOVERY
SPECIFIC
PROCESS
FIRST
HAND
COST
LEARNING
EFFECTIVENESS
TOTAL MARKET SURVEY
(INCLU. COMPETITORS)
ANNUAL SURVEY ON
OVERALL SATISFACTION
TRANSACTIONAL SURVEY
SERVICE FEEDBACK
CARDS
MYSTERY SHOPPING
UNSOLICITED FEEDBACK
(e.g., COMPLAINTS)
FOCUS GROUP
DISCUSSIONS
SERVICE REVIEWS
Source: Adapted from Jochen Wirtz and Monica Tomlin, “Institutionalizing Customer-Driven Learning Through Fully Integrated Customer Feedback
Systems.” Managing Service Quality,10, no.4 (2000): p. 210.
Copyright © 2008 Pearson Education Canada
Services Marketing, Canadian Edition
Chapter 13- 26
Entry Points for Unsolicited Feedback
 Frontline employees
 Intermediaries acting for original supplier
 Managers contacted by customers at head/regional office
 Complaint cards deposited in special box or mailed
 Telephone or e-mail
 Complaints passed to company by third-party recipients
•Disseminate the information to
relevant parties to take action
Immediately
•Track over time
Copyright © 2008 Pearson Education Canada
Services Marketing, Canadian Edition
Chapter 13- 27
Summary – Chapter 13
 Customer can complain by taking public action, private action or no
action at all
 Components of an effective recovery system include:





Doing it right the first time
Effective complaint handling
Identifying service complaints
Resolving complaints effectively
Learning from the recovery experience
 Service guarantees should be unconditional, easy for customers to
understand and invoke
 Dealing with abusive and/or opportunistic customer behaviours is
dealing with customer fraud, most customers are honest, but
guarantees should be monitored
 Institutionalized systematic learning from feedback delivers valuable
feedback to management
Copyright © 2008 Pearson Education Canada
Services Marketing, Canadian Edition
Chapter 13- 28