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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 Complain. 19%. Complaints Not Resolved. 54%.
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Service Recovery Chapter 8
Unhappy Customers’ Repurchase Intentions Unhappy Customers Who Don’t Complain 9% Unhappy Customers Who Do Complain 19% Complaints Not Resolved 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.
Customer Complaint Actions Following Service Failure Figure 8.3
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?
Act Quickly Encourage and Track Complaints Provide Adequate Explanations Service Recovery Strategies Fail-safe the Service Treat Customers Fairly Cultivate Relationships with Customers Learn from Lost Customers Learn from Recovery Experiences Service Recovery Strategies Figure 8.7
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 EffectiveService Guarantee Exhibit 8.5 • Unconditional • the guarantee should make its promise unconditionally – no strings attached • Meaningful • 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 and Communicate • 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.
