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Chapter 6

Chapter 6. Customer Feedback and Service Recovery. American Customer Satisfaction Index: Selected Industry Scores, 2002. Score . 100. (Max = 100). 90. 85. 80. 79. 79. 76. 80. 74. 71. 71. 70. 66. 70. 65. 62. 60. 50. 40. 30. 20. 10. 0. % Change . 3.7%. 1.3%. 0.0%.

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Chapter 6

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  1. Chapter 6 Customer Feedback and Service Recovery

  2. American Customer Satisfaction Index:Selected Industry Scores, 2002 Score 100 (Max = 100) 90 85 80 79 79 76 80 74 71 71 70 66 70 65 62 60 50 40 30 20 10 0 % Change 3.7% 1.3% 0.0% 1.3% 2.8% 0.0% 0.0% 8.2% 2.9% -2.6% 4.8% 3.3% 2002 vs 2001 Hotels Airlines IRS (tax) Personal computers Hospitals Soft drinks Fast food Restaurants Express mail, parcels Industry: Broadcasting (natl. news) Life insurance Comm. banks Cars, vans, etc.

  3. Key Questions for Managers to Ask about Customer Complaining Behavior • 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?

  4. Courses of Action Open to a Dissatisfied Customer (Figure 13.1) Complain to the service firm Take some form of public action Complain to a third party Take legal action to seek redress Take some form of private action Service Encounter is Dissatisfactory Defect (switch provider) Take no action Negative word-of-mouth Any one or a combination of these responses is possible

  5. Dimensions of Perceived Fairness in Service Recovery Process (Figure 13.2) Complaint Handling & Service Recovery Process Justice Dimensions of the Service Recovery Process Procedural Justice Interactive Justice Outcome Justice Customer Satisfaction with the Service Recovery Source: Tax and Brown

  6. Proportion of Unhappy Customers Who Buy Again Depending on the Complaint Process 95% 100 82% 90 80 70% 70 54% 60 46% 50 37% 40 30 19% 20 9% 10 0 Customer did not Complaint was Complaint Complaint was complain not resolved was resolved resolved quickly Problem cost > $100 Problem cost $1 - 5 Source: TARP study

  7. Impact of Effective Service Recovery on Retention 84% 92% 46% 0% 60% 10% 20% 30% 40% 50% 70% 80% 90% 100% No Problem Problem, but effectively resolved Problem Unresolved Customer Retention Source: IBM-Rochester study

  8. Components of an Effective Service Recovery System (Figure 13.3)

  9. Strategies to Reduce Customer Complaint Barriers (Table 13.1)

  10. 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

  11. Act fast Admit mistakes but don’t be defensive Understand problem from customer’s viewpoint Don’t argue Acknowledge customer’s feelings Give benefit of doubt Clarify steps to solve problem Keep customers informed of progress Consider compensation Persevere to regain goodwill Guidelines for Effective Problem Resolution (Management Memo 13.1)

  12. Force firms to focus on what customers want Set clear standards Highlights cost of service failures Require systems to get & act on, customer feedback Reduce risks of purchase and build loyalty Service Guarantees Help Promote and Achieve Service Loyalty

  13. Types of Service Guarantees • 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 – like the full-satisfaction, adding explicit minimum performance standards on important attributes

  14. What are the benefits of such a guarantee? Are there any downsides? The Hampton Inn 100% Satisfaction Guarantee (Figure 13.4)

  15. 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

  16. Building a Customer Feedback System • Total market surveys • Post-transaction surveys • Ongoing customer surveys • Customer advisory panels • Employee surveys/panels • Focus groups • Mystery shopping • Complaint analysis • Capture of service operating data

  17. Strengths and Weakness of Key Customer Feedback Collection Tools (Table 13.3) Collection Tools Multi-level Measurement Action-able Represen-tative, Reliable Potential for Service Recovery FirstHandLearning Cost Effective Service Satisfaction Process Satisfaction Specific Feedback Total Market Survey (inclu. competitors) Annual Survey on overall satisfaction Transactional Survey (process specific) Service Feedback Cards (process specific) Mystery Shopping (service testers) Unsolicited Feedback Recd (Online feedback system) Focus Group Discussions Service Reviews Meets Requirements: Fully Moderate Little/Not at all Selection of a cocktail of effective customer feedback collection tools.

  18. Entry Points for Unsolicited Feedback • Employees serving customers face-to-face or by phone • Intermediaries acting for original supplier • Managers contacted by customers at head/regional office • Complaint cards mailed or placed in special box • Complaints passed to company by third-party recipients • consumer advocates • trade organizations • legislative agencies • other customers

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