Service Recovery
In all service contexts-whether customer service, consumer service, or business to business service-service failure is inevitable. Failure is inevitable even for the best of firms with the best intentions, even for those with world class service system. To fully understand and retain their customers, firms must know what customer expects when service failures occur and must implement effective strategies for service recover.
The goal of service recovery is to identify customers with issues and then to address those issues to the customer’s satisfaction to promote customer retention. Loyal customers will become your best form of marketing and sales. But if a customer gets a negative experience from your firm, it can really shake you up.
Table Of Contents
- JetBlue and the valentine’s day ice storm
- Impact of service failure
- Service Recovery effects
- Service recovery paradox
- Service recovery strategies: fixing the customer
- Service recovery strategies: Fixing the customer
- Service Guarantees
- Summary
1. JetBlue and the valentine’s day ice storm
When JetBlue Airways began flying daily in 2000 from New York city to Florida, New York, Buffalo, it promised fares that would be as much as 65% lower than competitors. The low fare was an immediate success among the passengers. Customers had come to love the airline satisfaction the airlines was always ranked near the top for airline satisfaction by J.D Power and Associates among other.
JetBlue’s reputation for excellent service was challenged on valentines day February 14,2007. The bad weather made most airlines responded by canceling more flights earlier, sending passengers home and resuming their schedules within a day or two. But JetBlue thought the weather would break and it would be able to fly, keeping its revenue flowing and its customers happy. This poor decision made Valentine’s Day from hell for JetBlue employees and more than 130,000 customers. Under bad weather, JetBlue fliers were trapped on the runway at JFK for hours, many ultimately delayed by days. Unfortunately for JetBlue, this happened in the media capital of the world-thus, its service failure received major attention in the press.
2. Impact of service failure
Service failure left unfixed can result in customer leaving, telling other customers about their negative experience, and even challenging the organization through consumer right organizations or legal challenges.
Only 45% of customers who experience a problem with service delivery actually complain to the employee serving them and less than 5% complain to management or the company head quarters. Every complaint that management actually receives represents 20 to 100 other customers who experienced the problem and did not complain, this phenomena is called “tip of the iceberg”
In a challenging and competitive online market, the managers of online stores attempt to offer high quality service to customers. However, it is difficult to avoid occasional service failures such as late delivery, insufficient product/service information, credit card overcharged, and poor customer service support in real business settings. Service failure can occur anytime and anywhere if service delivery falls below customer expectations. Service failure can result in dissatisfied customers and negative word of mouth (NWOM). The more dissatisfied customers become, the more likely they are to spread negative word of mouth regarding their service experiences. Thus, recovery efforts are critically needed in service failure situations.
3.Service Recovery effects
Consumers would directly or indirectly express when the quality of the service process does not conform to the expectation. Service recovery therefore cannot be avoided and neglected in catering industry, and it relates to the service performance and the customer retention. Customer problems effectively has a strong impact on customer satisfaction, loyalty, word-of-mouth communication, and bottom line performance.
A well designed service recover strategy also provides information that can be used to improve service as part of a continuous improvement effort. Unfortunately many firms do not employ effective recovery strategies. Studies show that 60% of the customers who experience serious problems receive no response from the firm. These are tremendous downside to having no service recovery or ineffective service strategies.
4. Service recovery paradox
The service recovery paradox is a situation in which a customer thinks more highly of a company after the company has corrected a problem with their service, compared to how they would regard the company if non-faulty service had been provided. The main reason behind this thinking is that successful recovery of a faulty service increases the assurance and confidence from the customer.
Given the mixed opinions on the extent to which the recovery paradox exists, “doing it right the first time” is still the best and safest strategy in the long run. If the failure can be fully overcome, if the failure critical, or if the recovery effort is clearly superlative, it maybe possible to observe evidence of the recovery paradox.
5. Service recovery strategies: fixing the customer
It is a systematic business process that must be designed properly and implemented in an organization. Perhaps more importantly, the organizational culture must be supportive of the central tenant of service recovery strategies — that customers are important and their voice has value.
- Respond Quickly: Complaining customers want quick responses. Thus, when the company has service failures or receives complaints from customers, it must be prepared to act on them quickly.
- Provide appropriate communication: In many service failure situations, customers are not looking for extreme actions from the firm; however they are looking to understand what happened and for the firm to be accountable for their actions.
- Treat customer fairly: In many service failures, customers try to understand why the failure occurred. Explanations can help to diffuse negative reaction and convey respect to the customer.
- Cultivate relationship with customer: One additional benefit of relationship marketing is that if the firm fails in service delivery, those customers who have strong relationship with the firm are often more forgiving of service failures and more open to service recovery strategies.
6. Service recovery strategies: Fixing the customer
Often the most pressing and immediate need in service recovery is to “fix the customer”. However, in many situations the actual problem created by the poor service delivery also needs to be fixed. This may require reworking, redoing, or re-delivery of service. Some strategies that can help the firm “fix the problem” both in the short term and in the long term are:
- Encourage and track complaints: Even if an organization aims for 100% service quality, failure occur. A critical component of a service recovery strategy is thus to encourage and track complaints.
- Learn from recovery experience: Problem- resolution situation are more than just opportunity to fix flawed service and strengthen ties with customers. They are also a valuable-but frequently ignored or underutilized-source of diagnostic, prescriptive information for improving customer service.
- Learn from lost customers: Another key component of an effective service recovery strategy is to learn from the customer who defect or decide to leave. Formal marketing research to discover the reasons customers have left can assist in preventing failures in the future.
- Make the service fail safe-do it right the first time!: The first rule of service quality, and arguably the best service recovery strategy, is to do it right the first time. In this way recovery is unnecessary, customers get what they expect, and the cost of redoing the service and compensating for errors can be avoided.
7. Service Guarantees
A small but growing number of organizations offer customers an unconditional guarantee of satisfaction, promising that if service delivery fails to meet pre-defined statements, the customer is entitled to one or more forms of compensation — such as an easy-to-claim replacement, refund or credit.
8. Summary
In this chapter you learn the importance of an effective service recovery strategy for retaining customers and increasing positive word-of-mouth communication. Another major benefit of an effective service recovery strategy is that the information it provides can be useful for service improvement.
