CHAPTER 9

MANAGING SERVICE
FAILURE AND SERVICE
RECOVERY IN THE TOURISM
AND HOSPITALITY
INDUSTRY
LEARNING OBJECTIVES:

Discuss what service failure is and service

01
recovery;

Determine categories, causes of service failures

02
and customer’s response to failure;

03 Discuss the psychodynamics of customers;

04 Identify how to handle service failure; and

05 Enumerate service recovery strategy.

Hospitality and tourism industry is a high-risk business for
01
service failures due to the increasing customer-employee
interaction and the service characteristics of inseparability,
heterogeneity, and perish-ability. Due to the fact that
02
service failures result in customer dissatisfaction, they
jeopardize the existence and expansion of hospitality and
tourism firms. For customers, service failures elicit
03
unpleasant feelings and behavioral intentions. Customer
dissatisfaction, bad word-of-mouth, customer switching,
higher expenses, and decreased staff performance and
04
morale are examples of negative emotions and resulting
behavioral purposes. The fierce competition in the service
sector has compelled businesses to put a premium on
05 09
service recovery to maintain their performance. With the
hospitality and tourism industries growing continuously,
they are being pushed to rethink their business tactics to
maintain customer loyalty and profitability.
Service Failure
• Customer service is critical in the hospitality and tourism industry since this the person who is
responsible for attending to the requirements and demands of customers. To ensure that the customer's
requests are addressed in a manner that will reflect negatively or positively on the organization, they
must give prompt, attentive, and cheerful service.

• We are all aware that the main goal in the hospitality and tourism sector is to meet, if not surpass,
customers' expectations. A service failure is defined as a service performance that does not satisfy the
customer's expectations. Failing to plan for failure is unavoidable in business, and as part of its strategic
goals, it must prepare for such failures. Customers often expect to be compensated for the
inconvenience caused by a service failure in the form of any combination of refunds, credits, discounts,
or apologies when this happens.

• Failures can occur even in the most significant service businesses; they may be caused by the service
not being accessible when promised, it being provided late or too slowly, the conclusion being
erroneous or poorly performed, or the staff being impolite or indifferent. All of these different forms of
service failures result in bad customer experiences. If left unaddressed, they may lead to consumers
leaving, alerting others about their poor experiences, or even filing a complaint with the consumer
courts.

• Businesses all around the globe are now using social media to expand and enhance their offerings to
customers. Failures may become viral in a matter of hours, resulting in widespread criticism and an
unfavorable public perception of the firm.
Categories of Service Failure
Customers' involvement in the production process is the main distinguishing feature of the service
business as compared to manufacturing. The service-providing procedure in any hospitality
business does not divide customers. Therefore service failures occur at numerous points throughout
the dining experience. There are two types of service failures:

01 02

Failures to provide tangible products/

Process failures explain a problem with
how the service is offered, whereas
failures in the result show a problem with
the service itself. There are many types of
service delivery failures process failures
are more precise since they pertain to
the flaws in the intangible parts of the
service (such as delayed service or
unpleasant or irresponsible staff). Two
most process failures include waiting a
long time to be served or not being
respected by servers.
services or essential/basic services are
examples of outcome failures (eg,
overbooking, a bug in the food, overcooked
food, or out-of-stock items). They primarily
reflect observable results and pressing
needs. Out-of-stock menu items and poor
food quality are also instances of outcome
failures. Customer service failures occur
whenever clients do not get the goods or
services they paid for, regardless of whether
the payment is outcome-based or based on
both. As a result, it's essential to look into
which sorts of service failures hurt consumers
the most.
Causes of Service Failure

01 Service-Product Delivery Failure

• When a product or service does not fulfill consumer

expectations, it may lead to a product's final failure to reach
profitability since the expected life cycle cannot be achieved
as defined by the business.

Meeting Explicit or Implicit Customer

02 Request Failure

• Customers often make demands, whether implicitly

(indirectly) or explicitly (directly). If the employee fails to
respond to the customer's request, it might lead to a service
failure or a complaint from the customer. The business will
lose customers and revenue if they understand you cannot
satisfy their needs, so they will look for an alternative
business that will satisfy their needs, wants, and demands.
Causes of Service Failure
Failure Caused by Employee Actions
03 and Attitudes

• When this sort of failure occurs, the validity of the training

program will be called into doubt. If an employee's actions or
attitudes throughout their employment result from in-service
failure, it is possible that they will not get the required
training.

Failure Caused by Circumstances

04 Beyond Control

• Inevitably, service failure occurs, yet there are situations in

which it is caused by other customers, random occurrences,
or conditions beyond the organization's control. Preparation
is essential to prevent difficulties or challenges from arising. A
strategy should be in place to prevent problems or
challenges from occurring. This failure might result from an
employee's actions, the scenario itself, or the expectations of
the customer of the firm, business, or restaurant. Sometimes,
a customer has such high expectations of a firm that it will be
considered a failure if the company fails to achieve those
expectations.
Customer Response to Service Failure
01 Never to Return

• When a business fails to meet the expectations of its customers,

some of them will not return as a result of the disappointment they
have experienced. Others will prefer to go to the other firm that
can provide them with a satisfactory experience. If anything like
this happens in your company, it may have a significant effect
since you are not only losing a client, but you are also losing their
trust, and as a result, your firm's profit will fall.

02 Customer Complaints

• A customer complaint is defined as an expression of displeasure

or dissatisfaction with any product or service that has been
acquired and experienced by the customer. In a positive meaning,
it may be regarded as a report from a customer who provides
information concerning an issue with a product or service.
Customers' complaints, according to some contemporary
business gurus, should be seen as a gift. Customer complaints are
often informal concerns sent directly to a firm or any service
provider. Most customers aim to resolve issues with goods and
services, albeit it may take some patience on their part.
Customer Response to Service Failure
03 Sherman Tank

• is someone who speaks and monopolizes the conversation, who

interrupts often, does not know how to listen. This type of customer
wants you to hear just their side of the tale, and no one else's, too.
They are not interested in hearing your side of the story, even
though there is nothing wrong with your service. They want you to
listen to their concerns and complaints without being concerned
about listening to your side of the story, as well.

• There are also complainers that we call the negativists and they
are the sort of a fault finder, always looking for areas to express his
disagreement or disappointment. For example "You cali this '
Hainanese chicken? It's not what I expected" "I don't like your
ambience, it's dull". Even though it was just a little stuff, they will go
to complain and make you feel like everything on your service is
wrong
Customer Response to Service Failure
04 Balloons

• is another pessimist who presents themselves as some type of

expert or professional. They instruct you on what you should do
next. Consider the following example: "I'm a connoisseur, and I
understand how to appraise wines and spirits." And I'm here to
inform you that your whiskey is a forgery. It's made in the area, not
imported. "This is one of the alcoholic drinks that you should not be
selling." They believe they are better than you and correct you
even though there is nothing wrong with your cuisine or the
service that you provide.

05 Chronic Complainers

• who tend to incessantly whine about everything, even the most

little matters. They want to be noticed, and they think it's fantastic
that they are.
Service Recovery
• Service recovery is the settlement of an issue from an unhappy customer by a firm, resulting in the
consumer becoming a loyal customer. It is the activity taken by a service provider in the event of a
service failure to provide the service. Service recovery refers to the efforts taken to fix issues, change the
unfavorable attitudes of unsatisfied customers, and eventually retain these clients after they have
complained. The concept of service recovery is expanded to include customer satisfaction as well.
Service recovery is defined as the process of restoring aggrieved or unhappy customers to a level of
complete contentment with a business or service. Because it focuses on service breakdowns and the
company's quick response, service recovery varies from other complaint management methods.

• Customer attitudes may be changed by providing appropriate service recovery. A successful service
recovery plan will likely boost customer confidence in a restaurant or hotel's ability to recover quickly.

• There are several different methods of service recovery that are employed in hospitality firms,
including offering an apology, recovering quickly, compensating customers, and intervening at the
management level. A customer's repurchase intentions, word-of-mouth (WOM), contentment, and
loyalty may all be influenced by the kind of service recovery they get. Results of a given service recovery
may differ depending on whether the customer chooses the recovery action.
How to Handle Service Failure

01 Acknowledge the Issue.

The first step to solve any issue is by acknowledging that there

is an issue. Belittling it, or denying it exists, is just frustrating for
people facing those issues. Not just the symptoms, but an
honest and possibly painful dig into the roots to analyze the
cause and effect. Start by accepting that belittling or ignoring
the issue does not make it go away.

02 Apologize to the Customer.

Whether or not the service failure was within the organization's

control, when a customer makes contact to complain, the first
thing to do is to apologize to the customer. If any organization
fails to live up to expectation and disappoints its customers,
those customers deserve an apology. By apologizing to the
customer you are equally indicating that you acknowledge the
situation and their disappointment that you value their
relationship, and you're humble enough to say sorry.
How to Handle Service Failure

03 Resolve the Problem.

This process should start even before the customers make

contact. As soon as the occurrence of the service failure is
noticed, proactive steps should be taken immediately to fix or
resolve it. Apologizing to the customers should be secondary,
something done to appease them and keep the relationship
together while the issue is being fixed.

03 Keep the Customer Informed.

While the issue is being fixed, depending on how long it takes

to fix it, the organization should try as much as possible to
keep the customer informed on the status of resolution or
how much longer it is estimated to take. It could be via
periodic updates on the company website or social media
handle.
How to Handle Service Failure
05 Reach out to Customers.

Any hospitality and tourism business must make an extra

effort to renew customer confidence and give them reasons to
continue patronage. This is done by reaching out to the
customers after the issue has been resolved. The aim of
reaching out is to:
a. Apologize again.
b. Thank the customers for their patience and sharing their
experience.
c. Reassure them of unfettered service delivery in future.

Analyze the Issue and Extract Learning

06 Points.

This is the final step and a critical one at that. It's time to go
back to the drawing board and ask these two important
questions: What was the cause of this service failure? What
can we to do prevent it or mitigate its occurrence?
Strategies in Service Recovery

• Customer dissatisfaction is an opportunity for service recovery since it gives you the chance to say the
right things at the right moment. This may manifest as a physical or verbal altercation. Complaints may
be sent by phone, email, social media, or leaving a review on a review website.

• When it comes to customer retention, a bad service recovery might be devastating. Take, for instance,
a customer who claimed their dinner was served cold. They complain loudly to the waiting staff. We are
aware that apologizing to the consumer would be an excellent way to recover from this incident. In
addition, to provide them with a freshly prepared dinner. You may even offer a free drink or a discount as
an incentive. A nice touch would be for the manager to confirm that the problem was handled to their
satisfaction. Doing something extra for your customers that they may not have anticipated. More
importantly, go above and beyond their expectations to demonstrate your sincere appreciation for
them. Instead of focusing on the bad, try to make it a learning opportunity. Furthermore, you may even
want them to return to your business since you value your clients.
The following are some strategies in
service recovery in service failure.
1. Plan and implement policies and processes for obtaining, managing, and reporting positive and
negative customer feedback. Do not forget to include both official and informal feedback such as
spoken remarks, written praises, and complaints, as well as requests made by email, comment cards,
polls, social media, and phone calls.

2. Remember that customers have a lifelong worth and this while thinking about the customer service
journey.

3. Facilitate consumer feedback by making it as simple as possible for them to provide it. Be creative
and look for new approaches, changing them periodically to prevent feedback fatigue. You can also
promote customer and staff feedback by offering rewards.

4. Keep a record of all input, including the date and time, the names of the people involved, the steps
taken to address the situation, and the remedies that were agreed upon. Foster an open and trusting
environment by encouraging staff to disclose near misses and errors, knowing that they will be treated
with respect and utilized to inform changes.
The following are some strategies in
service recovery in service failure.
5. Analyze the input you received. Electronic tools, particularly for trend monitoring, may make this
procedure much more straightforward. Use problem-solving methodologies, such as Ishikawa's fish
bone analysis to discover the underlying cause of any given scenario.

6. Measuring feedback and establishing service recovery and complement objectives are essential
steps in the process.

7. Plan how complaints will be handled. For example, a basic flowchart or acronyms might be helpful:
Believe, Listen, Apology, Sympathize and Thank (BLAST) or LEARN (Listen, Empathize, Apologize, Resolution
and Notify).

8. Make sure you have a feedback loop in place. Inform and educate employees on rules, customer
complaints, service recovery processes, and lessons learned in an organized and systematic manner.
Give staff the authority to deal with issues on their own.
Thank You!
GROUP MEMBERS:
Lezbeth Rabi
Johanna Michaela Regaspi
Monica Reñono
Kaylene Yvone Sabordo
Kyle Sajonia
Jamael Sangkupan
Louisse Maxine Tordilla
Richelle Trinidad
Mary Grace Valencia
Mariel Jean Villareal
John Jeric Broqueza