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MKT 346: Marketing of Services Dr. Houston

MKT 346: Marketing of Services Dr. Houston. Chapter 13: Complaint Handling and Service Recovery. Why Do Customers Complain?. To obtain compensation To release their anger To help to improve the service Because of concern for others.

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MKT 346: Marketing of Services Dr. Houston

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  1. MKT 346: Marketing of ServicesDr. Houston Chapter 13: Complaint Handling and Service Recovery

  2. Why Do Customers Complain? • To obtain compensation • To release their anger • To help to improve the service • Because of concern for others

  3. Customer Response Categories to Service Failures (Fig. 13.3)

  4. Customer Response Categories to Service Failure

  5. Three Dimensions of Perceived Fairness in Service Recovery Process (Fig. 13.7)

  6. Three Dimensions of Perceived Fairness in Service Recovery Process • Procedural justice • Interactional justice • Outcome justice

  7. Dealing with Complaining Customers and Recovering from Service Failure • Take complaints professionally and not personally • Be prepared to deal with angry customers • See customer complaints as opportunities • Correct problems • Restore relationships • Improve future satisfaction for all • Develop effective service recovery procedures

  8. Impact of Effective Service Recovery on Customer Loyalty 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 % of Unhappy Customers Retained Source: Claes Fornell, Birger Wernerfelt, “A Model for Customer Complaint Management,” Marketing Science, Vol. 7, No. 3 (Summer, 1988), pp. 287-298

  9. 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 important • Impacts customer loyalty and future profitability • Complaint handling is a profit center

  10. The Service Recovery Paradox • Customers who experience a service failure that is satisfactorily resolved may be more likely to make future purchases than customers without problems • Paradox disappears with a second service failure • 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

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

  12. How to Enable Effective Service Recovery • Be proactive and resolve failures on the spot • Plan recovery procedures for most common failures • Teach recovery skills to relevant personnel • Empower personnel to resolve service failure

  13. The Power of Service Guarantees Force firms to focus on what customers want Set clear standards Require systems to get & act on customer feedback Force organizations to understand why they fail and to overcome potential fail points Reduce risks of purchase and build loyalty

  14. How to Design Service Guarantees • Unconditional • Easy to understand and communicate • Meaningful to the customer • Easy to invoke • Easy to collect • Credible

  15. Types of Service Guarantees (Table 13.2) • Single attribute-specific guarantee • Multiattribute-specific guarantee • Full-satisfaction guarantee • Combined guarantee

  16. Is it Always Suitable to Introduce a Guarantee? • It is not appropriate to introduce guarantees when: • Companies have a strong reputation for service excellence • Company does not have good quality level • Quality cannot be controlled because of external forces • Consumers see little financial, personal or physiological risk associated with the purchase

  17. What is a Jaycustomer? • A customer who behaves in a thoughtless or abusive fashion, causing problems for the firm, its employees, and other customers

  18. Seven Types of Jaycustomers • Cheat • Thief • Rulebreaker • Belligerent • Family Feuders • Vandals • Deadbeat

  19. Seven Types of Jaycustomers: The Cheat and Thief

  20. Seven Types of Jaycustomers: The Rulebreaker and the Belligerent

  21. Seven Types of Jaycustomers: Family Feuders and Vandals

  22. Seven Types of Jaycustomers: Deadbeats

  23. Dealing with Customer Fraud • If in doubt, believe the customer • Track customers with a database: • How often customers invoke service guarantees • Payments made for service failure • Customers rarely cheat if service quality is high • Regular customers are less likely to cheat

  24. MKT 346 Key Concepts: Chapter 13 • Customer response categories to service failures • Three dimensions of perceived fairness in service recovery process • Importance of service recovery • The service recovery paradox • Strategies to reduce customer complaint barriers • The power of service guarantees • Types of service guarantees • Seven types of jaycustomers

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