Positive Impact of Service recovery
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Transcript of Positive Impact of Service recovery
Santhanaram Jayaram
Positive Impact of Service Recovery
How to turn negative situations into positive ones effectively
Service recovery techniques to keep customers happy at minimum expense
How to recognize and take steps to handle difficult customers and unexpected situations
The practical steps to service recovery
How to deliver the real deal and provide a win-win value proposition
Participants will learn
www.2be3consultancy.com
“Service recovery builds customer loyalty that brings a customer back from the brink of defection,” says John Tschohi
Why- significance of Service Recovery
Service recovery is a procedure for dealing with customers’ problems and complaints. An effective & timely recovery procedure will turn a complaining customer into a satisfied, loyal customer most of the time.
It is trying to do something Right from a situation that went wrong. “Customers value reliability over all other dimensions.” Parasuraman, Berry &
Zeithaml. (1991)
What is Service Recovery
Solving customer’s problem quickly & fairly
Giving the customer something of value as compensation
Keep your promise & follow up
What does Service Recovery
involve
What a customer feels about their
complaints
Don’t know who to complain to Don’t think it will do any good May accept part of the blame May want to avoid confrontationSource: Thomason Learning, Inc. South-Western
Because of the above, organization may miss the opportunity to learn instead of repeating the same mistakes again and again
Why Don’t Customers give their FEEDBACK?
Correct the problemEmotional release from frustrationGain some measure of compensationSolicit sympathy Test for consensus
Why Do Customers Complain?
Source: Thomason Learning, Inc. South-Western
What happens after they express their dissatisfaction
Dissatisfactionoccurs
Action
No Action
Public Action
Private Action
Seek redress directly from the firm
Take legal action
Complaint to business, private,or governmental agencies
Stop buying the product or boycott the seller
Warn friends about the productand /or seller
From your Database find out the Recency, Frequency, Monetary (RFM) Calculate the customers (CLV)- Average $ amount per transaction- Average number of transactions per year- Average number of years a customer remains in a business’s primary target groupCalculate the Ripple Effect
WIIFM - Potential Cost of a Lost Customer Due to Service Failure – (Shaun Belding)
Customer Lifetime Value
Type of Customers that I serveEg. (Regular Customer) in a Toy Store
Average TransactionAmount – (per)
$20
Frequency of transaction in that year
20 times
Customer Value that year
$20 X 20 = $400
How many year they might support you – (estimate)
If a customer was to support you for 12 years,$400 X 12 = $4800
Ripple Effect
Number of customer they share their experience
If a dissatisfied customer were to share his experience with 10 people,$4800 X 10 = $48,000
Total = $48,000 + $4,800 = $52,800
WIIFM - An example of a customer in a toy store
Internal aspect (Services by Design)
External aspect (Interaction)
What are two areas in Service
Recovery:
80% of customers’ problems are caused by bad systems, not by bad people. – John Goodman (TARP)
Note: Take a closer look at your Services by design
Could service problems be identified?
Could problems be resolved effectively?
Does the organization learn from the recovery experience?
Source: Berry and Parasuraman
What Framework to adopt?
What are the 3 major outcome of an effective service recovery system
Monitor Service ProcessMonitor Service ProcessMonitor Customer ComplaintsMonitor Customer Complaints
Make amend to the hassle FactorMake amend to the hassle FactorNurture the People FactorNurture the People Factor
Set up Problem Tracking SystemSet up Problem Tracking SystemConduct Root Cause AnalysisConduct Root Cause Analysis
Conduct Customer ResearchConduct Customer Research
Identify services problemIdentify services problem
Resolve Problems EffectivelyResolve Problems Effectively
Learn from Recovery experienceLearn from Recovery experience
Modify Service Process MonitoringModify Service Process Monitoring
Source: Adapted from Leonard Berry & A Parasuraman, Marketing Services, Competing thru Quality (New York: The Free Press 1991)
Effective Service Recovery System
Service Recovery Framework (Internal)
How to turn negative situations into positive ones effectively
What we can do? Turn Adversity into Opportunity3 A’ Approach
If: Response time Customer anger
Instead of ….
“Nothing works out for me.”“My customers are all difficult.”“My life is horrible.”“I never get what I want.”“I can’t find happiness.”“I hate myself.”
Use ……
“Everything works out for me!”“My customers are all great!”
“My life is great!”“I get everything I want!”“I have happiness!”“I love myself!”
Got to Feel Good about yourselfTurning Negative into Positive
Turn Adversity into Opportunity
Club Med – Cancun (Mexico resort) Vacationers – Convinced vacation
ruined even before it started What did General Manager of Cancun
resort, Silvio de Bortoli do?
Step 1: Acknowledgment- Acknowledge feelings & give the
problem importance Step 2: Assessment (What gets
Measured gets Managed)-Gather facts & assess the situation
(Asking Questions & Paraphrasing) Step 3: Alternatives (Negotiate a
solution)- Sell alternatives and set boundaries
3 A’ Approach
Service recovery techniques to keep customers happy at minimum expense
-Bite more than you can chew-What are some ways- What compensations
There are internal customers and external customers in every organization
If: Expenses Effort
Should you bite more than you can chew?
Would it be a challengefor organizations to over promise and under deliver?
Preoccupy them – Hotel installed mirrors & front page of the daily newspaper
Using problem tracking system that is real time –How quickly you respond & Rectify?
Minneapolis Marriott – “Sweet Dream” package for delayed check in
Singapore Power (city gas & electricity ) – 24 hr “hot line” –How quickly you respond?
Food delay in restaurant – complimenary dessert or 10% for the next visit
Maine Savings Bank in Porland - $1 every letter suggesting ways to improve service. Result 500 letters
What are some ways:
Note: You get specific information & suggestions to improve your service
If: Expenses Effort
What are some products or
services(SP )↓
Type of Customers that I serve (C)→
Recent (New) Frequent (Old) Monetary (High Net worth)
1.Example complimentary dinner for 2 in Newton Hawker
Centre
√ X X
2.
3.
4.
5.
6.
7.
8.
9.
WIIFM - What are some ways: Minimum Expense to the organization
SP- Service Provider C - Customer
How to recognize and take steps to handle difficult customers and unexpected situations
- What to look out for?- Choice of Words to use - Other steps- C.L.A.P or H.E.A.T
When your customer is the most anxious, you need to be at your best – competent, confident, calm, and in control of yourself - Chip R.Bell (Performance Research Associates)
Note: Any problems, the employees who are closest to the customer (interaction point) can resolve
What to look out for: How do you recognize Customers are dissatisfied?
Non-Verbals :Avoiding your eye contactA look of Anger with a FrownArms on their side oracross their chest Body is turned away from you
Verbals – words they express:“Is there someone who works
here……”“Where is your manager……..”“I demand a refund.”“Do we look transparent to you”
Words to Use
PleaseYesLet’s negotiateWould you like toAppreciateConsider thisChallenge
Words to Avoid
Can’t or Never Not our Policy or Not my job We’ll try I don’t Know Hang on for a second Problem
Choice of Words to use
Emotion Management Observe your body language Proximity Vocal Modulation
Other Steps
Note: Professionalism does help
Feel the HEAT of dissatisfied customers Hearing them out by being calm showing empathy,
apologise & take action
Composure and be Calm and relax (Emotion – Take one Step Back) - H
Listen Empathetically - E
Apologise from the heart and
Acknowledge their concerns -A
Personal Responsibility & Taking
Corrective Action - T
Send “Thank you cards” or “Vouchers” (indicating things have changed – keeping in touch with them
Service recovery Framework What-why-How Can-Can Approach
What are other Practical
steps for Service
Recovery
Interpretations of the Effective Service Recovery System
What are the current processes that your organization adopts in serving the customer?
Customer Complaints looking at the level of urgency, crucial
factor
What are some alternatives or Compensations
Empowerment in decisions
Hiring & Training
Incentives
What Technology of Problem Tracking System does you organization adopt? – Real time? www.qualityinaction.net
Why – Why Analysis
Voice of Customer
Fish bone Diagram (Cause & Effect)
Focus Group
Telephone interview
Feedback (Online –Offline)
Addressing the concerns, issues, needs, values of customer
Were the Problems, concerns, issues, needs & values of customer addressed effectively?
What - (Details)
Why – (Big Picture)
How – (Solutions)
Continuous Improvements
How to deliver the real deal and provide a win-win value proposition
What does this particular customer, staff and organization expect?
What recovery approaches best communicate your organization’s vision, values and style bearing in mind staff & customers’ interest?
Addressing these questions
R.E.A.L = Ready to Enhance All that we have Learnt
Accept - Head Adapt - Heart Alter thru Actions – Hands
How: Another 3A’ Approach. What should they (Management, staff & Customer):
Note: Attention – Attraction – Action – Actualization
Organization – Policies (Flexibility), Compensations
Improving technology (feedback) – real time?
Staff – Training (communication skills)/Hiring/Empowered in decision making
Incentives (awards for handling complaints)
Customer – what do they expect and giving them the necessary compensation, apology or speedy recovery
Win-Win-Win Value Proposition
“ A customer is the most important visitor of our premises. He is not dependent on us, we are dependent on him. He is not an interruption in our work; he is the purpose of it. He is not an outsider in our business, he is part of it. We are not doing him a favor by serving him; he is doing us a favor by giving us an opportunity to do so.”
“If you change your thinking, you will change your actions.”
Mahatma Gandhi