Service Marketing

Service
Recovery

Service Recovery

Service failure - generally described as service
performance that falls below a customers
expectations that leads to customer
dissatisfaction
Service recovery refers to the actions taken by
the organization in response to a service failure
Service Recovery

Complaining Customers: The Tip of the Iceberg
1%-5% complain to management
or company headquarters
45% complain to frontliners
50% encounter a problem but
never complain
Service Recovery

Service Recovery Paradox it happens when
customers who are initially dissatisfied with a
service experience and then experience a high
level of excellent service recovery, seemingly
leading them to be even more satisfied and
more likely to repurchase than if no problem
has occurred at all.
Service Recovery

Service Recovery Paradox

Service Recovery

Why people do or do not complain

Do complain Do not complain
Social obligation Waste of time and effort
Complaining personalities Do not believe that anything
positive will occur
Will be provided with
compensation
Dont know how to complain
Good service and fair treatment
are their due
Dont understand the process
Feels it must be their fault; they
do not deserve redress
Service Recovery

Type of Complainers:
1. Passives - least likely to take any action;
least likely to say anything to the provider, less
likely to spread negative word-of-mouth.
They often doubt the effectiveness of
complaining. Sometimes, their personal
norms and values argue against complaining

Service Recovery

Type of Complainers:
2. Voicers - they actively complain to the
service provider, but they are less likely to
spread negative word-of-mouth, switch
patronage, or go to third parties with their
complaints
Service Recovery

Type of Complainers:
3. Irates - More likely than others to engage
in negative word-of-mouth communication
with friends and relatives and to switch
providers. They are about average in their
propensity to complain to the provider. They
are less likely to give a second chance to the
provider.
Service Recovery

Type of Complainers:
4. Activists characterized by above-average
propensity to complain on all dimensions: they
will complain to the provider, they will tell
others, and they are more likely than any other
group to complain to third parties
Service Recovery

Customers Recovery Expectations:
1. Understanding and accountability
2. Fair treatment
2.1 Outcome fairness the results that
customers receive from complaints
2.2 Procedural fairness the policies,
rules, timeliness of the complaint process
2.3 Interactional fairness the
interpersonal treatment received during
the complaint process
Service Recovery

Pricing
High price
Price increases
Unfair pricing
Deceptive pricing

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

Response to Service Failure
Negative response
No response
Reluctant response

Competition
Found better services


Ethical Problems
Cheat
Hard sell
Unsafe
Conflict of interest

Involuntary switching
Customer moved
Provider closed

Service
Switching
Behavior
Service Recovery

Service Recovery

Guarantee is a particular type of recovery tool.
In a business context, a guarantee is a pledge or
assurance that a product offered by a firm will
perform as promised.
Characteristics:
Meaningful
Easy to understand
Easy to invoke
Service Recovery

Benefits of a Service Guarantees to the company:
Forces the company to focus on its customers
Sets clear standards for the organization
Generates immediate and relevant feedback
from the customers
When guarantee is invoked, there is an instant
opportunity to recover
Can be tracked and integrated into continuous
improvement efforts

Service Recovery

Benefits of a Service Guarantees for customers:
Reduces their sense of risks and builds
confidence in the organization

Service Recovery

When to Use or Not Use Guarantees:
Existing service quality in the company is poor
A guarantee does not fit the companys image
Service quality is uncontrollable
Potential exists for customer abuse of the
guarantee
Cost of the guarantee outweigh the benefits
Customers perceive little risks in the service
Customers perceive little variability in service
quality among competitors