Customer satisfaction, failure

& Recovery
Pravat S Kar

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 What do Customers Want
• Customer expectations are the customer-
defined attributes of your product or
service you must meet or exceed to
achieve customer satisfaction.1
• Customer Expectations are of two types -
Expressed and Implied.

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 Customer Satisfaction

• A satisfied customer is key to any

business.
• Customer is the ultimate judge of
quality

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 http://www.indiacar.com/jd_power/csi2006.htm

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Compiled by PSkar For RIMS Rourkela
 One more India centric example

• The following table gives the overall Customer

Satisfaction Index (CSI) of AAI from 1995-96 ;
• table reveals that, Customer Satisfaction Level of
AAI airports is continuously improving. However,
AAI has to go a long way to achieve the over all
customer satisfaction level of 85 to 90%.

95- 96- 97- 98- 99- 00- 01- 02- 03- 04-
YEAR
96 97 98 99 00 01 02 03 04 05
CSI
(%) 55 63 68 66 70 71 73 73 74 75

http://www.airportsindia.org.in/righttoinformation/Public_Customersatisfaction.jsp
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 Marriott was named the top hotel chain

• The American Customer Satisfaction Index measures

customer satisfaction with the quality of products and
services in a variety of categories, including hotels,
airlines, energy utilities, express delivery, U.S. Postal
Service, hospitals, fast food restaurants, cable and
satellite television, and telecommunications services.
• Marriott hotels scored a 79 out of 100. The survey
compared four of the largest hotel chains and Marriott
hotels were two points higher than their nearest
competitor.
…… a customer satisfaction survey by the University of
Michigan's Ross School of Business.

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 Yahoo beats Google in customer satisfaction

• According to the latest news Yahoo tops the

customer satisfaction ranking .The report has
been published by The University of Michigan’s
American Customer Satisfaction Index. It has
rated yahoo to be better than Google.
• The score of different search engines were like
Google getting 78, Ask gets 75, MSN gets 75
and AOL gets 67 and yahoo gets 79 out of 100.
http://seo4india.net/news/44/customer-satisfaction-level-is-higher-with-
yahoo-than-google/

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Compiled by PSkar For RIMS Rourkela
 What constitutes Satisfaction?

Major attributes of customer satisfaction can be

summarized as:
• Product Quality
• Product Packaging
• Keeping delivery commitments
• Price
• Responsiveness and ability to resolve
complaints and reject reports
• Overall communication, accessibility and attitude
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 What are the Tools?
Customer expectations can be identified using various methods
such as
– Periodic Contract Reviews
– Market research
– Telephonic Interviews
– Personal visits
– Warranty records
– Informal discussions
– Satisfaction Surveys

Depending upon the customer base and available resources, we can

choose a method that is most effective in measuring the customers'
perceptions.

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 Courses of Action Open to
a Dissatisfied Customer
Complain
Complainto tothe
the
service firm
service firm
Take
Takesome
someform Complain
form Complainto toaa
of public action third
of public action thirdparty
party
Take
Takelegal
legalaction
action
Service Take
Takesome
someform
ServiceEncounter
Encounter of private
form
action
to seek redress
to seek redress
isisDissatisfactory
Dissatisfactory of private action
Defect
Defect(switch
(switch
provider)
provider)
Take
Takeno
noaction
action
Negative
Negativeword-of-
word-of-
mouth
mouth

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Any
Anyone
oneororaacombination
combinationof
of
these responses is possible
these responses is possible
For RIMS Rourkela
 Proportion of Unhappy Customers Who Buy
Again Depending on the Complaint Process
100 95%
90 82%
80 70%
70
60 54%
50 46%
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
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 Source: Sue Keaveney
Causes Behind Service Switching
Inconvenience
• Location/Hours
• Wait for Appointment
• Wait for Service
Core Service Failure
• Service Mistakes
• Billing Errors
• Service Catastrophe
Service Encounter Failures
• Uncaring
• Impolite
• Unresponsive
• Unknowledgeable
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Pricing
• High Price
• Price Increases
• Unfair Pricing
• Deceptive Pricing
Involuntary Switching
• Customer Moved
• Provider Closed
Response to Service Failure
• Negative Response
• No Response
• Reluctant Response Ethical Problems
• Cheat
• Hard Sell
Competition • Unsafe
• Found Better Service • Conflict of Interest
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 Words of wisdom
You can either take action or you can hang back and
hope for a miracle. Miracles are great, but they are
so unpredictable.
Peter Drucker
Some people make things happen, Some watch
things happen, while others wonder what
happened.
Successories
There are no secrets to success. It is the result of
preparation, hard work, and learning from failure.
Colin Powell
You can have anything in life you want if you will just
help
enough other people get what they want.
Zig Ziglar
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 Service recovery

• Definition: Turning potentially negative situations

into positive ones.
• Resources:
RELATE model of service recovery
Manager's Tips 'n' Tools Issue 5

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 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

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Compiled by PSkar For RIMS Rourkela
Compiled by PSkar For RIMS Rourkela
 Components of an Effective Service
Recovery System

Do
Dothe
theJob
JobRight
Rightthe Effective
EffectiveComplaint Increased
IncreasedSatisfaction
First
FirstTime
Time
the
+ Complaint
Handling
Handling = and
Satisfaction
andLoyalty
Loyalty

Conduct
ConductResearch
Research
Identify Monitor Complaints
IdentifyService
Service Monitor Complaints
Complaints Develop
Complaints Develop“Complaints
“Complaints
as
asOpportunity”
Opportunity”
Culture
Culture

Resolve
ResolveComplaints Develop
Complaints
Effectively DevelopEffective
Effective
Effectively System
Systemand
andTraining
Traininginin
Complaints
ComplaintsHandling
Handling

Learn
Learnfrom
fromthe
the Conduct
ConductRoot
RootCause
Cause
Recovery Experience
Recovery Experience Analysis
Analysis

Close the Loop via Feedback

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 Dimensions of Perceived Fairness in Service
Recovery Process
Complaint
ComplaintHandling
Handling&&Service
Service
Recovery
RecoveryProcess
Process

Justice Dimensions of the Service Recovery Process

Procedural
Procedural Interactive
Interactive Outcome
Outcome
Justice
Justice Justice
Justice Justice
Justice

Customer
CustomerSatisfaction
Satisfactionwith
withthe
the
Service
ServiceRecovery
Recovery
Source: Tax and Brown
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 Strategies to Reduce
Customer Complaint Barriers
Complaint Barriers for Dissatisfied
Customers
Inconvenience
Ø Difficult to find the right complaint
procedure.
Ø Effort, e.g., writing a letter.
Doubtful Pay Off
Ø Uncertain whether any action, and
what action will be taken by the
firm to address the issue the
customer is unhappy with.
Unpleasantness
Ø Complaining customers fear that
they may be treated rudely,
Ø may have to hassle, or
Ø may feel embarrassed to complain.
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Strategies to Reduce These Barriers
Make feedback easy and convenient by:
Ø Printing Customer Service Hotline
numbers, e-mail and postal addresses on
all customer communications materials.
Reassure customers that their feedback will
be taken seriously and will pay off by:
Ø Having service recovery procedures in
place, and communicating this to
customers.
Ø Featuring service improvements that
resulted from customer feedback.
Make providing feedback a positive
experience:
Ø Thank customers for their feedback.
Ø Train the frontline not to hassle and make
customers feel comfortable.
Ø Allow for anonymous feedback.
 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

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 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
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 Strengths and Weakness of Key Customer
Feedback Collection Tools
Selection of a cocktail of effective customer feedback
collection tools.
Multi-level Measurement Represen Potential First
Action- Cost
Cost
Collection Tools -tative, for Service Hand
Service Process Specific able Effective
Effective
Satisfaction Satisfaction Feedback Reliable Recovery Learning

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
Service Reviews
Reviews

Meets Requirements: Fully Moderate Little/Not at all

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

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 Service Guarantees
•
fulfillment of a condition (Webster’s
Dictionary)
• for products, guarantee 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?)
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 Characteristics of an
Effective Service Guarantee
Unconditional
• The guarantee should make its promise unconditionally -
no strings attached.
Meaningful
• It 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
• For customers - they need to understand what to expect.
• For employees - they need to understand what to do.
Easy to Invoke and Collect
• There should not be a lot of 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.

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 Why a Good Guarantee Works

• forces company to focus on customers

• sets clear standards

• generates feedback

• forces company to understand why it failed

• builds “marketing muscle”

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 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

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 Service Guarantees
• service guarantees work for companies who are
already customer-focused
• effective guarantees can be BIG deals - they put
the company at risk in the eyes of the customer
• customers should be involved in the design of
service guarantees
• the guarantee should be so stunning that it comes
as a surprise -- a WOW!! factor
• “it’s the icing on the cake, not the cake”

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