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Week 11:
Service Failures and Recovery Strategies
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Customer Complaint Actions Following
Service Failure
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Figure 8.4
Causes Behind Service Switching
Service
Switching
Behavior
High price Price increases
Unfair pricing Deceptive pricing
Pricing
Location/hours Wait for appointment
Wait for service
Inconvenience
Service mistakes Billing errors
Service catastrophe
Core Service Failure
Uncaring Impolite
Unresponsive Unknowledgeable
Service Encounter Failure
Negative response No response
Reluctant response
Response to Service Failure
Found better service
Competition
Cheat Hard sell
Unsafe Conflict of interest
Ethical Problems
Customer moved Provider closed
Involuntary Switching
Source: Sue Keaveney, Customer Switching Behavior in Service Industries: An Exploratory Study, Journal of Marketing, April, 1995, pp. 71-82.
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Reasons for service failures:-
Marketers assess the marketing climateinadequately.
The wrong group is targeted.
A weak positioning strategy is used.
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A less-than-optimal "configuration" of productor service attributes and benefits is selected.
A questionable pricing strategy isimplemented.
The advertising campaign generates aninsufficient level of new product/new serviceawareness.
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Cannibalization depresses corporate profits.
Over-optimism about the marketing plan
leads to a forecast that cannot be sustained
in the real world.
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The marketing plan for the new product or
service is not well implemented in the real
world.
The marketer believes that the service and
its marketing plan has died and cannot be
revived, when, in fact there is the potential forresurrection.
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Service recovery
Negotiation
Communication
Advertising Incentives
Relationship Marketing approaches
Other motivation techniques
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Customer Complaint Behavior
Why do customers
complain?
Correct the problem
Emotional release fromfrustration
Regain some measure of
control by spreading
negative w-o-m
Solicit sympathy
Why dont customers
complain?
Dont know who to complain
to Dont think it will do any good
May doubt their own
subjective evaluation
M
ay accept part of the blame May want to avoid
confrontation
May lack expertise
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Service Recovery Paradox
Service Recovery Paradox scenario:
states that with a highly effective service
recovery, a service failure offers a
chance to achieve higher satisfactionfrom customers than if the failure had
never happened. This means that a
good recovery can turn angry and
frustrated customers into loyalcustomers.
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Service Recovery Strategies
Figure 8.5
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Service Guarantees
service guarantees work for companies who are
already
effective guarantees can be BIG deals - they
customers should be involved in the of service
guarantees
the guarantee should be so stunning that itcomes as a surprise -- a factor
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Eight Most Common Remedies
Customers Seek with Serious Problems Have the product repaired or service fixed
Be reimbursed for the hassle of having experienceda problem
Receive a free product or service in the future Explanation by the firm as to what happened
Assurance that the problem will not be repeated
A thank you for the customers business
An apology from the firm An opportunity for the customer to vent his or her
frustrations to the firm
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Recovery
Dont
Ignore customer
Blame customer
Leave customer to fendfor himself
Downgrade
Act as if nothing is
wrong pass the buck
Do
Acknowledge problem
Explain causes
Apologise
Compensate/upgrade
Lay out options
Take responsibility
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Adaptability
Dont
Promise and fail tokeep them
Show unwillingness totry
Embarrass thecustomer
Laugh at the customer Avoid responsibility
Do
Recognise the
seriousness
Acknowledge
Anticipate
Accommodate
Adjust Explain rules/policies
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Spontaneity
Dont
Exhibit impatience
Yell/laugh/swear
Steal from customers
Discriminate
Ignore
Do
Take time
Be attentive
Anticipate needs
Listen
Provide information
Show empathy
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Coping
Dont
Take customers
dissatisfaction
personally Let customers
dissatisfaction affect
others
Do
Listen
Try to accommodate
Explain
Let go of the customer
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Types of complainers
Passives
Voicers
Irates Activists
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Customer complaints
It pays to resolve customer complaints
On an average only 5 % dissatisfied customers
complain. Others simply go over to the competitor
A satisfied consumer speaks to an average of 3people on his her experience
A dissatisfied consumer gripes to on an average 11
persons about his/her unpleasant experience
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Companies that focus on resolving
customer complaints Pay attention to quality and training of manpower
recruited
Have clear benchmarks on service quality and
communicate to employees Take remedial steps to improve customer
satisfaction and prevent repeats of customerdissatisfaction
Have a data base on customer complaints that is
periodically analysed and policies adjusted
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Satisfied employees will produce
satisfied customers Morale
Motivation
Mood
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Managing Service Productivity
Giving quality service is an expensive business
Not every consumer is willing to pay extra forservice quality
Service providers would have to find their optimumservice quality/cost ratios
Can technology substitute part of the labourcontent?
Can customers substitute part of the labour content?
Making services obsolete by product innovations
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