Service Recovery

Mgt 664

Service Recovery

You can please - all of the people some of the time; some of the people all of the time; BUT, you can never please all of the people all the time.

A group of four people go out to dinner on Friday night. Three people’s food is brought to the table, one person’s order was lost. What is an adequate recovery?

What if it happened at lunch on Wednesday?

Services loved and despised

Name a service to which you have committed to never return?

Name a service where you have experienced a great recovery?

“Reworking” customers not easy

Recoveries fix circumstances and attitude 96% of disgruntled customers “walk”

rather than complain. Complaining customers are an asset Demanding customers are an asset

Key to a quick recovery

Shift efforts from recovery to prevention Capture/document the failures Insert counter measures

If 96% of service failures “walk,” service providers may know of failures that are not obvious to management.

How management responds to the providers will determine how much is revealed to them in the future.

Learning vs. Accountability

open reporting Full

investigation

Blame-freeculture

A preliminary model

Process improvement

learning

accountability

Punishment X X X

The Value of Open Reporting

Failures Observed (without voluntary reporting)

All failuresNear Misses

Accountability AND Open Reporting

just culturejust, a. 2. Equitable; impartial; fair; as, a just decision

provides a fair and productive alternative to the two extremes of punitive or blame-free cultures.

balances the need to have a non-punitive learning environment with the need to hold persons accountable for their actions.

David Marx, Just Culture: A Primer for Health Care Executives http://www.mers-tm.net/support/Marx_Primer.pdf

Just Culture at a Glance

Normal

Error

At-Risk

Behavior

Reckless

Conduct

Intended action No Yes Yes

Knew risk

of action

No No Yes

Recommended response

Blame Free

Blame Free

Account-ability

The Problematic Middle Ground

At-risk behavior Did the employee intend to violate

the rule? Yes Did the employee understand the

risk? No

Some deviations from rules may be justified

Sometimes, the written procedure and the actual procedure performed by employees don’t match.

Changing Standards

Normal

Error

At-Risk

Behavior

Reckless

Conduct

Intended action No Yes Yes

Knew risk

of action

No No Yes

Recommended response

Blame Free

Blame Free

Account-ability

Old

Sta

nd

ard

O

ld S

tan

dar

d

New

Sta

nd

ard

New

Sta

nd

ard

Just Culturewithout itwith it

Ignorance is not bliss.

Service Recovery Policies

Bumper to bumper warranty Unconditional Guarantee Replacement or money back Discount on current service Discount coupons for future service

Service Recovery Policies

Effective Unconditional Guarantees Unconditional without exceptions Easy to understand and communicate Meaningful (valued by customer) Easy and painless to invoke Easy to collect

Won’t customer take advantage?

Negative word of mouth (customer tell an average of 9-10 people)

Low propensity to complain. Only 4% complain about actual failures

Actual failure vs. perceived failure: only perceptions matter

May save a lifetime customer

Quitting is an option

There are customers that it would be better for your competitor to have. Perpetually dissatisfied Unprofitable

Short-term customers

Long-term customers

Profitable Butterflies True Friends

Unprofitable Strangers Barnacles