Customer Feedback F
Customer Feedback F
Customer Feedback F
Service Recovery
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 1
American Customer Satisfaction Index:
Selected Industry Scores, 2002
Score 100
(Max = 100)
90 85
79 80 79
80 74 76
71 71 70
70 66 65 62
60
50
40
30
20
10
% Change 0 3.7% 1.3% 0.0% 1.3% 2.8% 0.0% 0.0% 8.2% 2.9% -2.6% 4.8% 3.3%
2002 vs 2001
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Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 2
Key Questions for Managers to Ask about
Customer Complaining Behavior
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 3
Customer Response categories to service failures
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
Any
Anyone
oneororaacombination
combinationof
of
these responses is possible
these responses is possible
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 4
Understanding customer responses to service
failures
• To be able to deal effectively with dissatisfied & complaining customers,
managers need to understand key aspects of complaining behavior, starting
with several questions:
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 5
Cont……………..
c. Help to improve the service: When customers are highly involved with a
service, they give feedback to try & contribute toward service improvements.
These customers are motivated by the prospect of getting better service in
the future.
• Some don’t wish to take the time to write a letter, fill out a form, or make a
phone call, especially if they don’t see the service sufficiently important to
merit the effort.
• Many customers see the payoff as uncertain & believe that no one would
be concerned about their problem or willing to resolve it.
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 7
Cont……………
• There better education, higher income, & greater social involvement give
them the confidence, knowledge & motivation to speak up when they
encounter problems.
• Studies show that majority of complaints are made at the place where the
service was received.
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 8
Customer expectations about their complaints
• However, recent studies have shown that many customers feel that they
were not treated fairly & did not receive adequate justice. When this
happens, customer reactions tend to be immediate, emotional & enduring.
1. Procedural justice: It deals with the policies & rules that any customer
will have to go through in order to seek fairness. Here, customers expect the
firm to assume responsibility, which is the key to the start of a fair procedure,
followed by a convenient & responsive recovery process.
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 9
Cont…………..
2. Interactional justice:
• It involves the firm’s employees who provide the service recovery & their
behavior towards the customer.
• Giving an explanation for the failure & making an effort to resolve the
problem are very important.
3. Outcome justice:
Complaint
ComplaintHandling
Handling&&Service
Service
Recovery Process
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
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 11
Customer responses to effective service recovery
• The true test of a firm’s commitment to satisfaction & service quality is not
in the advertising promises but in the way it responds when things go wrong
for the customer.
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 12
Impact of Effective Service Recovery
on Retention
No
Problem
84%
Problem,
but effectively 92%
resolved
Problem
46%
Unresolved
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Customer Retention
Source: IBM-Rochester study
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 13
Principles of effective service recovery systems
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 14
Strategies to Reduce Customer Complaint
Barriers
Complaint Barriers for Strategies to Reduce These Barriers
Dissatisfied Customers
Inconvenience Make feedback easy and convenient by:
Difficult to find the right complaint Printing Customer Service Hotline numbers,
procedure. e-mail and postal addresses on all
Effort, e.g., writing a letter. customer communications materials.
Doubtful Pay Off Reassure customers that their feedback will be
Uncertain whether any action, and taken seriously and will pay off by:
what action will be taken by the Having service recovery procedures in
firm to address the issue the place, and communicating this to
customer is unhappy with. customers.
Featuring service improvements that
resulted from customer feedback.
Unpleasantness Make providing feedback a positive
Complaining customers fear that experience:
they may be treated rudely, Thank customers for their feedback.
may have to hassle, or Train the frontline not to hassle and make
may feel embarrassed to complain. customers feel comfortable.
Allow for anonymous feedback.
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 15
Cont…………..
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 16
Cont…………….
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 17
Cont……………
• How much compensation should a firm offer when there has been a
service failure? Or would an apology be sufficient instead?
•It may raise questions about the soundness of the business & lead
customers to become suspicious.
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 18
Cont……………….
• Both managers & frontline employees must be prepared to deal with angry
customers who are confrontational & sometimes behave in insulting ways
toward service personnel.
Act quickly
Admit mistakes, but don’t be defensive
Show that you understand the problem from each customer’s point of
view
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 20
Components of an Effective Service Recovery
System
Do
Dothe
theJob
JobRight
First
Rightthe
Time
First Time
the
+
Effective
EffectiveComplaint
Complaint
Handling
Handling = Increased
IncreasedSatisfaction
and
Satisfaction
Loyalty
and Loyalty
Conduct
ConductResearch
Research
Identify
IdentifyService
Service Monitor
MonitorComplaints
Complaints
Complaints
Complaints Develop
Develop“Complaints
“Complaints
as Opportunity”
as Opportunity”
Culture
Culture
Resolve
ResolveComplaints
Complaints
Effectively Develop
DevelopEffective
Effective
Effectively System
System andTraining
and Trainingin
in
Complaints Handling
Complaints Handling
Learn
Learnfrom
fromthe
the Conduct
ConductRoot
RootCause
Cause
Recovery Experience
Recovery Experience Analysis
Analysis
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 21
Service Guarantees
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 22
The power of service guarantees
• Guarantees are powerful tools for both promoting & achieving service quality
for the following reasons:
1.Guarantees force firms to focus on what their customers want & expect in
each element of the service.
2.Guarantees set clear standards, telling customers & employees alike what
the company stands for.
5.Guarantees help in reducing the risk of the purchase decision & building
long-term loyalty.
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 23
How to design service guarantees
•Some guarantees are simple & unconditional. Others appear to have been
written by lawyers & contain many restrictions.
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 24
Types of Service Guarantees
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 25
Is it always appropriate to introduce a service
guarantee?
• Managers should think carefully about their firm’s strength & weaknesses
before deciding to introduce a service guarantee.
• Companies that have a strong reputation for high-quality service may not
need a guarantee.
• In contrast, a firm whose service is currently poor must first work to improve
quality to level above that at which the guarantee might be invoked on a regular
basis by most of its customers.
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 26
Key objectives of effective customer feedback
systems
• Many strategists have concluded that in increasingly competitive markets, the
ultimate competitive advantage for a firm is to learn & change more rapidly than
competition.
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 27
Cont………………..
•Overall indices tell how satisfied customers are but not why they are happy
or unhappy.
•There is a limit to the number of questions that can be asked about each
individual process or product.
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 29
Cont……………
• All three types are representative & reliable when designed properly.
Representativeness & reliability are required for:
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 30
Cont……………
• Although these cards are good indicator of process quality & yield specific
feedback on what works well & what doesn’t, the respondents tend not to be
representative & are biased.
3. Mystery shopping
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 31
Strengths and Weakness of Key Customer Feedback
Collection Tools
Service Reviews
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 32
Entry Points for Unsolicited Feedback
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 33
Analysis, reporting & dissemination of customer
feedback
• Choosing the relevant feedback tools & collecting customer feedback is
meaningless if company is unable to disseminate the information to the
relevant parties to take action.
• The feedback loop to the frontline should be immediate for complaints &
complements as is practiced in a number of service businesses where
complaints, compliments & suggestions are discussed with the staff.
• The reports should be short & reader friendly, focusing on key indicators.
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 35
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