Customer as

Stakeholder in
Service Crisis
 Group Members
• Chhaya Fulsunge
C-12
• Anu Pillai
C-28
• Simi Samkutty C-
41
• Shweta Dedhia C-
10
• AnanditaSingh C-34
• Akanksha Thanekar
C-37
 Flow of Presentation
• Case Study Overview
• Aurora Crisis 1
• Aurora Crisis 2
• Live cases- Taj & Trident Hotel
• Service recovery strategies
•
 Services

implying an exchange of value between selle

Service
Includes
Characteristics of Service
• Intangibility
•
• Heterogeneity
•
• Perishability
•
• Inseparability
•
•
 Characteristi
changed according to the fluctuations in Demand and

cs seen as
neity – Difficulty to Standardized
Increase risk for the purchasing consumer

Negative
Service failure and Recovery

National Health Services (NHS)



•
• Notions
- Service failure may or may not lead
to service recovery
- Service recovery results in outcomes
- Outcomes result in consequences for a
service organization
Service Failure
§ Inevitable
§ Dissatisfied customers
§ Categories of service
failures
 1) Failure in advice,
process, interactions,
documents, information,
conditions, systems and
third parties.
-
 2) Service provider
error, customer error,
and associated
organization error.
 Service Recovery
§ Discussed in
terms of
organization
al
philosophy
or strategy §Process approa

§

§Identify the
contingencies
 Outcomes of
Service Recovery
(
Distributive Justice

Procedural Justice

Interactional Justice
Consequences for a
service organization
•
• Negative
Consequences
 - Lost Customers
 - Negative word of
mouth
 - Employee
Dissatisfaction
 - Lack of loyalty
 - Complaints
 - Exit from the
organization
crisis
 Critical event or point of decision, if not handled in an

appropriate manner Crisis

may turn into a disaster.

e n on
m m
ts
e le o m
3c

vThreat to the
organization

vElement of surprise

vShort decision time

 Crisis Management
•Process to deal with major unpredictable event that
threatens to harm the organization, its stakeholders or the
general public.

•Includes :

Ødevelopment of plans to reduce risk of crisis

occurring and to deal with any crises that do arise.

Øimplementation of plans to minimize impact of

crises.

Øassist the organization to recover.

• UK-based cruise line
• First cruise line in the world
• Peninsular & Oriental Steam
Navigation Company until
2003

• Part of Carnival Corporation

 Azura Oceana
Arcadia

Ventura

Aurora

Artemis

Adonia

Oriana
 Aurora
Entered service in April 2000.
Built by Meyer Werft in Germany.
Gross Registered Tonnage of 76,152 tonnes, 270 metres
long, with a beam of 32.20 metres.
Draught of 7.9 metres enables easy entry and exit to
most commercial ports.
1,950 passengers in 939 cabins with around 850 crew.

 The Beginning………
•The Jinxed Ship

•27th April, 2000 : Champagne bottle did not break.

•Engine problems during her maiden voyage.

•

•March 2001: Ship capsized and sank in South China Sea

•July 2003 : Crank case explosion in engine while at anchor
in Mediterranean.
Crisis-- 1

Threat of Virus
 Virus Outbreak
• November 2003 : 600 passengers suffered
stomach infections caused by Noro virus.
• highly infectious and spreads through food,
water and close contact with infected people
• Sick passengers to remain in their cabins.
• Denied the right to land at Greece.
• Spanish government closed border between
Gibraltar and Spain.
• Led to an international row with Britain.
• Border reopened 13 hours later, when ship departed Gibraltar
waters.

• Political and media- induced crisis difficult to manage.

• Passengers criticizing the company for slow response.
• Holiday from Hell
•
Precautions taken
• Unaffected passengers allowed to leave the
ship.
• Received emergency medicine and supplies.
• British doctors ferried the aid to sick
passengers aboard.
• Warning notices in all public restrooms.
• Paper towel dispensers for door opening and
special bin outside for disposal.
• Contact surfaces are sanitized with
accelerated peroxide.
 Crisis --2

Delayed to set sail

from Southampton
Over 1700 passengers paid huge price for once in a
lifetime holiday cruise
Departure date was delayed from Southampton.
Problems arised one after another.



Headlines-12-01-05
Problems attracted media's attention.
“Jinxed cruise ship Aurora still stuck in
Recognized Passengers as stakeholder


Continuance of problems resulted cancelling the cruise
Maintained customer confidence in this luxury market

 Service Recovery
on ’ t go through this again . As far as I ‘ m concerned

Efforts
Dissatisfied customers in crisis-1
holiday in a five star hotel , all free - you can ’ t ask
v/s Positive response in crisis-2
Research focus on customer “satisfaction”
as outcome of service recovery.
6 dimensions of service recovery
(“Boshoff’s model)
Results in to satisfaction & Customer
Loyalty.
Six Dimensions of
Service Recovery

Boshoff ’ s
Model
 Outcome
Positive word of mouth in C-2
of

Service efforts
Research states 5 features of organizational crisis:-
Wide range of stakeholder
Time pressures
Surprise to organization
Ambiguity
A threat to organization

Crisis -1 was more subject to above features than Crisis-2

 Consumers participation
Identification of “Social Service
cape” in services
Research findings :
vConsumers must utilize their

resources properly.
vOrganizations need to know their

consumers.
vDysfunctional /jay consumers &
Crisis-1 customer
functional consumer.
vJay consumers exhibits different
“I believe someone came on board with it(virus)who didn't have a good per
forms of behaviour.
vVindictive consumers.

Ø
 Consumer- to-
Consumer
interaction
Opportunity to consumers to interact with each
other.
Mutual help.
Research findings:
vHigher the level of dissatisfaction, a stabilizing
impact on consumer expectations .
vIn relation to c-2-c interactions,2 differences in C-
1& C-2
vC-1:Blaming other fellow passengers
vC-2:Consumers repeatedly engaged with each
other
 Hotel Industry
• Nearly 40% of annual income lost – Financial
Crisis.
• 2007 – 16% Growth
• 2008 – 1.8% growth compared to 2007.
• Went down due to terrorism.
 Entry in India
• Attackers travelled by sea from Karachi,
Pakistan across the Arabian Sea.
• 10 Urdu-speaking men arrived.
• The first events were detailed around 20:00
Indian Standard Time(IST) on 26 November.
• 156 people lost their lives, 400 injured, 250
walked free
CRISIS AT

Trid
ent
• The Trident, Nariman Point Mumbai is an
ultra-modern high-rise hotel.
• Owned and managed by Oberoi Hotels &
Resorts.
• This 22-floor hotel features 550
guestrooms.
 The Siege At Trident
Two attackers at the Trident entered one of the hotel restaurants
looking for U.S. and British nationals.
They fire at policemen and army commandos
At 5 pm, one of the security personnel came under fire.
The intensity of fire was very high.
The commandos have taken positions at the NCPA
The30 persons at the hotel were killed during the terror attack.
316 guests from the Trident and 135 guests from the Oberoi were
evacuated following the attack since the 60-hour terror strike
began the Nov 26 night.
But four resident guests, another 18 visitors dining in the
restaurants and 10 staff members lost their lives.
 Service Failure of Trident
• The damages amounted to nearly Rs 45 lakh.
• There has been a significant reduction in the number
of events held at Trident
• lesser number of press conferences.
• Sharp drop in visitors to Mumbai, especially
foreigners.
•
•
•
•
•
•
 Trident Reopened
• On 21 December 2008.
• The Trident Hotel was the least damaged.
• The Oberoi opened only one of its towers.
 Service
recovery
• Opened with all its services, guestrooms,
restaurants and banquet halls.
• Oberoi Care Fund.
• Offering discounts on room tariffs.
• Enhanced security.
• Retrieved the garments
• 100 rooms at the Trident were booked on the
first night itself.
•
•
• Compulsory identification cards, bag checks,
X-ray scanners to screen luggage, metal
detectors, car checks and sniffer dogs greeted
guests along with burly doormen.
• Unobtrusive armed guards in the hotel, as well
as background checks on the employees.
The Oberoi Group has already received Rs 25
Crore from New India Assurance for assistance
in the rebuilding efforts.
CRISIS AT

TAJ
 THE CHRONOLOGY
Reasons behind 26/11 terror attacks.
Flaws in the services.
Disaster Recovery Planning.

 The Taj Mahal Palace & Tower

Founder: Jamshetji Nusserwanji

Tata.
December 16, 1903.
Iconic 105-year old heritage
building.
The flagship property of the group
and contains 565 rooms.
Hosted a long list of notable
guests.
Pride of India.
Ratan Tata – TATA Group Chairman.
 Reasons behind the 26/11
terror attacks
Filled with people -
foreigners and the local
elite.
International media
coverage.
The message to India.
The selection of targets—
Americans, Britons, and
Jews, as well as Indians.
•
•
The Siege At Taj Heritage
At least seven gunmen enter the lobby of the
Taj Mahal Palace hotel, where about 450
people were staying, and begin firing.
60 hours of siege.
Left 195 people dead and hundreds injured.
Large fire reported.
Took Indian security forces nearly three
days to eliminate the last of the attackers.
 SERVICE FLAWS
Intelligence Failures.
Gaps in Coastal Surveillance.
Incomplete Execution of Response
Protocols.
Response Timing Problems.
Inadequate Counterterrorism Training
and Equipment for the Local Police.
•
Limitations of Municipal Fire and
Emergency Services.
Flawed Hostage-Rescue Plan.
Poor Strategic Communications and
Information Management by the Govt.
Employees of taj during
THE SERVICE crisis
Staff- Waiters, Executives, Chefs.
Providing food and other necessary
things to the guests as needed by
them.
Established a helpline in Wellington
Mews in the midst of the crisis.
Security staff.
•
The telephone operators.
Karamveer Singh Kang,
Taj's general manager.
Hotel management.
Ratan tata - Chairman of
the Tata group.
•
Service recovery
 Immeditely created the
Taj Public Welfare Trust.
Assisting people affected
by the attack.
Not laid off a single
employee.
Promised to rebuild and
restore every inch of the
hotel to its original
glory.
•
Ratan Tata, surveyed the heritage
building.
The Indian National Trust for Art and
Cultural Heritage (INTACH).
Planned to reopen the Hotel in phases.
Opening the Hotel as soon as possible.
•
•
•
•
 reopening
Re-opened the doors of its 268-room Tower
Wing on Sunday 21 December 2008.
Guest services have been upgraded.
Use of the Taj Club, with free breakfast and
tea, coffee and cocktails.
Free use the hotel's personal butler service.


 SECURITY
Investment of large sums of money on
security systems and procedures.
Created a security team headed by a retired
Major General from the army.
Retained the services of a top international
security service company.
Around 75 people have been trained
overseas.
Equipped them to be the first line of defence
in the event of an attack.
•
Trained security people in plain
clothes at the lobby and other key
points.
Security ring outside the hotel.
Mock attacks to assess the
preparedness of our people, system
and procedures.
 Maitaining hotel image
The hotel’s biggest loss was the death
of 10 staff members and 21 guests.
November - spent in quiet reflection
and remembrance.
Private multi-faith prayers.
•
 Nov. 26, 2009
Mr Tata unveiled the new permanent
memorial at the lobby.
The memorial has the names of the thirty
one victims.
Gathering of private staff and employees
which was also attended by family
members of the martyrs.
“ A good recovery can turn angry ,
frustrated customers into loyal
ones . .. can , in fact , create more
goodwill than if things had gone
smoothly in the first place .”
Complaining Customers :
The Tip of the Iceberg
 Service
Recovery
Strategy
 FAIL-SAFE YOUR SERVICE –
Recovery is Unnecessary; because -
ü Customers get what they expect.
“DO IT RIGHT THE FIRST TIME”
ü Cost of Redoing can be avoided.
ü Compensating for errors can be avoided.
ü
TQM – Zero Defects

Poka Yokes (Japanese Term): Fail safing or Mistake proofing.

ü To ensure essential procedures are followed.
ü To ensure service steps carried out in proper order and in timely manner.

E.g.: Trays for Surgical Instruments

Everyone understands “Zero Defection” Culture

Understand and Appreciate “ Lifetime Value of Customers”

 WELCOME AND ENCOURAGE
Critical Component of Service Recovery.
COMPLAINTS
Can be done through:
Satisfaction Survey, Critical Incident Studies, Lost Customer Research , etc.

E.g.: At Ritz-Carlton Hotel – “Instant Action Forms”

Teaching Customers – “HOW TO COMPLAIN………???”

Simple Process – Through Technology {Toll free call centers, Emails, Free SMS}

E.g.: British Airways

 Complaining Customers want QUICK RESPONSE.
 ACT QUICKLY
1. Take Care of Problems on Frontline:


ü Customers want the person to her them

ü Speedy Way: Call Customers
ü E.g.: Smith and Hawken, a Garden Supply Mail Order Company
(California)
ü
2. Empower Employees:


ü Training and Empowerment to solve problems

ü E.g.: Advance PCS, a large pharmacy
ü Advantage: Employees can anticipate problems before they arise
[Situation]
ü
3. Allow Customers To Solve Their Own Problems:


ü Done through Advanced Technology

ü Customers can directly interface with Company’s Technology
ü E.g.: FedEx and Cisco.
 TREAT CUSTOMERS
FAIRLY
ü Customers expect to be treated FAIRLY.

ü
ü Outcomes, Process by which recovery takes place, Interpersonal treatment.
 LEARN FROM RECOVERY
EXPERIENCES
Problem and It’s Solution – Customer Database.

Previous Cases Handled.

Ensure that it will not happen again for particular customer.

 LEARN FROM LOST
CUSTOMERS
To learn from Customers who decide to leave.

For preventing mistakes and loosing more customers in future.

Can be done through In depth Interview.

 SERVICE RECOVERY :
CONCLUSION
Service recovery shifts the emphasis from the COST of pleasing a customer to
the VALUE of doing so, and it entrusts frontline employees with sing their
judgment.

Recovery is fundamental to SERVICE EXCELLENCE and therefore should

be regarded as AN INTEGRAL PART of a service company’s strategy.