Service Failures and Recovery in Tourism and Hospitality: A Practical Manual

1. Service Failures and Recovery in Tourism and Hospitality: A Practical Manual ErdoganKoc

2. Chapter 5 Memorable Service Experiences: A Service Failure and Recovery Perspective

3. Learning Objectives Understand the memorable nature of service failure. Understand the influence of memory on consumer behaviour. Identify factors contributing to memorability of service failure. Understand the importance of provision of service recovery. Understand memory bias: fading affect bias.

4. Introduction • In the hospitality and tourism industry, service failures often occur due to (Kim & Jang, 2016): • inconsistent nature of the service products • inevitability of human errors Service failures lead to undesirable future consumer behaviour such as exit (i.e. never return), complaints and negative word-of-mouth (WOM)  (Kim & Chen, 2010). This chapter will discuss the memorable nature of service failures that mediates consumer behaviour.

5. Memorable Nature of Service Failure A service failure, which refers to service delivery performance that falls below customers’ expectations (Oliver, 1997; Zeithamlet al., 1993), gives rise to negative emotions and customer dissatisfaction. Individuals are likely to remember emotional information vividly (Kensingeret al., 2007). Emotional events are more often associated with field memories in which the individual ‘sees’ the event from his or her point of view.

6. Memorable Nature of Service Failure (cont.) Researchers have suggested that a negative valence leads to a stronger memory than a positive valence (Levine & Bluck, 2004; Kensigneret al., 2007). Individuals who had a negative experience of an event remember it with more detail and accuracy than those who had a positive experience. As a result, service failures, which induce an individual’s negative emotions, are likely to leave lasting impressions and affect the individual’s consequent behaviour.

7. Significant Influence of Memory on Consumer Behaviour Marketing researchers have noted that autobiographical memories mediate consumer behaviour as (e.g. Ratnayakeet al., 2010): • Individuals’ level of motivation to purchase a product and their involvement with a product are high when information is drawn from their experiences; • Individuals perceive their recalled experiences as highly credible. Thus, individuals are likely to rely on their experiences during choice processing and decision-making about future consumer behaviours (Kerstetter & Cho, 2004). Numerous empirical studies have supported this notion (Adongoet al., 2015; Kim & Jang, 2014; Kozak, 2001; Wirtzet al., 2003).

8. Factors Contributing to Memorability of Service Failure 1) Intensity of negative emotion High levels of arousal facilitate memory formation and lead to long-term retention (e.g., Bradley, 1994; Dewhurst & Parry, 2000; Kensinger & Corkin, 2003). Emotionally arousing material is recalled more accurately than neutral material (Bradley, 1994; Christiansen, 1992; Heuer & Reisberg, 1990). Memory researchers have explained these results by focusing on the attention-grabbing nature of emotional stimuli at the encoding stage (Dolan & Vuilleumier, 2003; Wang et al., 2005).

9. Factors Contributing to Memorability of Service Failure (cont.) 1) Intensity of negative emotion (cont.) Intensely emotional events come to mind more often and are therefore rehearsed (Bohaneket al., 2005; Cahill & McGaugh, 1998). In hospitality settings, different types of service failures would result in different levels of negative affect as well as perceived loss (e.g., Weunet al., 2004; Krishna et al., 2011). Customers who experience a service failure are likely to be in emotional states ranging from neutral to extremely negative.

10. Factors Contributing to Memorability of Service Failure (cont.) 1) Intensity of negative emotion (cont.) The severity of a service failure can be determined by the magnitude of the resulting loss, damage or inconvenience (Blodgett et al., 1993; Krishna et al., 2011).

11. Factors Contributing to Memorability of Service Failure (cont.) 1) Intensity of negative emotion (cont.) Krishna et al. (2011) suggested that the magnitude of a service failure in a restaurant can be calculated based on the magnitude of eight different losses: • Health loss • Emotional loss • Respect loss • Relationship loss • Time loss • Money loss • Comfort loss • Mental/physical energy loss

12. Factors Contributing to Memorability of Service Failure (cont.) 1) Intensity of negative emotion (cont.) Krishna et al. (2011) further noted that the magnitude of a service failure decreases from loss 1 to loss 8. Thus, a severe service failure that is accompanied by a greater magnitude of loss would result in a stronger arousal of negative affect and therefore lead to a stronger memory.

13. Factors Contributing to Memorability of Service Failure (cont.) 2) Frequency of occurrence The effects of familiarity and frequency on memory consistently lead to strong memorability. Thus, individuals’ recall and attitude are generally favourableunder familiar conditions. Kim and Jang (2016) tested the influence of frequency on memory in situations of restaurant service failure. They found that a more frequently occurring service failure (i.e. slow service) was remembered better than a less frequently occurring one (i.e. delivery disorder).

14. Factors Contributing to Memorability of Service Failure (cont.) 2) Frequency of occurrence (cont.) Most frequent failure cases in the hotel industry (Lewis & McCann, 2004): Slow restaurant service Slow check-in/out process Inefficient staff Unfriendly and unhelpful receptionists Low-quality food and beverage products Room not ready on time Having to keep waiting for a table at breakfast Items in the room not working (e.g. television and phone) Limited food variety offered Staff not willing to offer help

15. Factors Contributing to Memorability of Service Failure (cont.) 2) Frequency of occurrence (cont.) Most frequent failure cases in the restaurant industry (Silber et al., 2009): Defects in food (e.g. foreign objects in food) Slow service Out-of-stock menu items Food/beverage served at incorrect temperature Wrong cooking method Servers’ inappropriate behaviour Wrong order Billing error and food/beverage spillage

16. Importance of Provision of Service Recovery Service recovery is defined as actions taken by the service firm in an attempt to remedy a service failure (Andreassen, 2000). The benefits of recovery efforts have been well documented in the literature: • Service recoveries can either reinforce customer relationships or compound the failure (Hoffman et al., 1995; Smith et al., 1999). • Effective recovery efforts increase customer satisfaction as well as future behaviouralintentions such as repurchase intentions and positive WOM (e.g. Bitneret al., 1990; Ha & Jang, 2009; Kim et al., 2009; Kwon & Jang, 2012; Susskind, 2005). • Mack et al. (2000) noted that through successful recovery efforts, a business can regain a dissatisfied customer, gain referrals, and save the costs associated with recruiting and retaining a new customer.

17. Importance of Provision of Service Recovery (cont.) On the other hand, poor service recovery efforts are viewed as a ‘double deviation’ or second failure. ‘Double deviation’ can further aggravate the negative perceptions that the customer already has and can lead to considerably higher levels of switching and negative WOM (Hoffman & Kelley, 2000).

18. Service Recovery Paradox Researchers have explained this paradoxical increase in satisfaction using different theories: Expectancy-disconfirmation paradigm: If a customer receives an excellent service recovery that exceeds his or her expectations, positive disconfirmation will occur, resulting in a heightened state of post-satisfaction (McColloughet al., 2000; Oliver, 1997). Script theory: Satisfaction with recovery efforts is more important than satisfaction with the initial sequence of service events in influencing the overall level of contentment (Bitneret al., 1990; Magniniet al., 2007). Commitment-trust theory: Providing a satisfying recovery to customers who experienced a service failure can enhance customers’ trust because they will have confidence in a business that shows enough honesty and integrity to correct a problem (Magniniet al., 2007; Moormanet al., 1992).

19. Memory Bias: Fading Affect Bias The remembered affect resulting from an autobiographical event typically decreases in intensity as the time from the original event increases. However, the extent to which the intensity fades is not the same for positive and negative events. The fading affect bias (FAB) refers to the way in which the affect associated with a negative event fades faster than that associated with a positive event (Walker et al., 2003).

20. Memory Bias: Fading Affect Bias (cont.) If service firms utilize FAB in service failure situations, then they will understand that the customer’s negative feelings associated with the service failure will fade faster than the positive ones related to the satisfactory service recovery. Therefore, in the long run, customers who experienced service failures and received satisfying remedies may have a stronger recollection of their positive rather than negative feelings. Ultimately, the positive memories may overwrite the negative ones.

21. Memory Bias: Fading Affect Bias (cont.) Kim and Jang (2014) empirically supported FAB in their experimental study. • They found that when individuals re-evaluate service failure experiences in the recollection stage, satisfactory feelings following the service recovery overwrite the negative feelings. • They also found that service recoveries were effective in decreasing the resulting negative behaviouralintentions such as switching behavioursand negative WOM publicity.

22. Summary In the hospitality industry, service failures often occur due to the inconsistent nature of hospitality and restaurant services, coupled with the inevitability of human errors. Given that it is difficult to prevent service failures in the hospitality business, researchers and practitioners have been interested in effective ways of reacting to these failures. Appropriate levels of service recovery would result in positive affect toward the recovery efforts and may balance negative affect in response to the service failures.

23. Summary (cont.) Service firms should exert particular efforts to avoid those failures that would lead to a strong memory. Furthermore, appropriate service recoveries should be employed when service failures occur. Researchers have identified a list of recovery strategies including apology, correction, empathy, compensation, follow-up, acknowledgment, explanation, exceptional treatment and managerial intervention (Lewis & McCann, 2004). However, the success of these strategies varies based on the type of service, the type of failure and the speed of response (Boshoff, 1997; Mattila, 2001; McDougall & Levesque, 1999).