NCRDS STERLING INSTITUTE OF MANAGEMENT STUDIES SERVICES MANAGEMENT PRESENTATION ON CUSTOMER FEEDBACK AND SERVICE RECOVERY

PRESENTED BY :
ROHAN KORHALE DIVYALOCHAN CHOUDHARY DINESH CHAVAN VIPIN GUPTA C-40 C-47 C-07 C-39

PRESENTED TO, PROF.SEEMA LADDHA

 Chances are that you will not be satisfied with at least

one of the services you receive. How do you respond to your dissatisfaction with this service? Do you complain informally to employee or formally lodge a complaint to the manager or just switch over to other service?

Complain Service Firm

Public Action

Complain Third Party Legal Action to seek redress Defect[Switch Provider]

Service Encounter is Unsatisfactory

Private Action

No Action

Negative Word of mouth

Any one or Combination of these Responses is possible

 Why do customers complain:

Obtain Compensation 2. Vent their anger 3. Help to improve the service 4. Altruistic reasons Why dont Unhappy customers complain? Who is most likely to complain? Where do customers complain?
1.

Customer Expectations About their Complaints

3 Dimensions of Perceived Fairness in Service Recovery Process

1. Procedural Justice:- It has to do with the policies & rules that any customer will have to go through in order to seek fairness. Here the customers expect the firm to assume responsbility, which is the key to the start of a fair procedure,followed by a convenient & responsive recovery process.
2. Interactional Justice:- It involves the firms employees who provide service recovery & their behavior toward the customer.Giving an explanation for the failure and making an effort to resolve the problem are very important. 3. Outcome Justice:- It pertains to the compensation that a customer recieves as a result of the losses and incoveniences incurred because of service failure.This includes compensation for not only the failure but also the time ,effort & energy spent during the process of service recovery.

3 Dimensions of Perceived Fairness in Service Recovery Processes

Complaint Handling & Service Recovery Process

Procedural Justice

Interactive Justice

Outcome Justice

Customer Satisfaction with Service Recovery

Customer Responses to Effective Service Recovery

Service Recovery is an umbrella term for systematic efforts by a firm to correct a problem following a service failure & retain a customers goodwill. Service recovery effort play a crucial role in achieving customer satisfaction. Effective service recovery requires thoughtful procedures for resolving problems & handling disgruntled customers. It is crucial for firms to have effective recovery strategies because under the following conditions, even a single service problem can destroy a customers confidence in a firm. The failure is totally outrageous The problem fits a pattern of failure rather than bieng an isolated incident The recovery efforts are weak,serving to compound the original problem rather than correct it

Impact of Effective Service Recovery on Customer Loyalty

When complaints are satisfactorily resolved the customers involved are much more likely to remain loyal. TARP research found that intentions to repurchase for different types of products ranged from 9 to 37 percent when customers were dissatisfied but did not complain. For a major complaint the retention rate increased from 9 to 19 percent if customers complained and the company offered a sympathetic ear but was unable to resolve the complaint to the satisfaction of the customer .If the complaint could be resolved to the satisfaction of the customer retention rate jumped to 54 percent.The Highest retention rate achieved when problems were fixed quickly,typically on the spot,whereupon it jumped to 82 percent.

Service Recovery Paradox

The service recovery paradox refers to the sometimes observed effect that customers who experience a service failure and then have it resolved to their full satisfaction are more likely to make future purchases than are customers who have no problem in the first place.A study of repeated service failures in a retail banking context should that the service recovery paradox held for the first service failure that was recovered to customers full satisfaction.However when a second service failure occurred the paradox disappeared.It seems that customers may forgive a firm once but get disillusioned if failures recur. Furthermore it is observed that customers expectations were raised after they experienced a very good recovery thus excellent recovery becomes the standard they expect for dealing with future failures.

o Make it easy for customers to give feedback o Enable effective service recovery o Establish appropriate compensation level

 Strategies to reduce Customer Complaint Barriers

Complaint barriers
1. Inconvenience

strategies to reduce barriers

make feedback easy & convenient

Difficult to find the right complaint procedure 2. Unpleasantness

Make providing feedback a positive experience.

fear of being treated rudely Feeling embarrassed

proactive

planned

trained

empowered

 As per firms market position

How severe was the service failure? Who is the affected customers?

 The average business only hears from 4% of their customers who are dissatisfied with their products or services. Of the 96% who do not bother to complain, 25% of them have serious problems. The 4% complainers are more likely to stay with the supplier than are the 96% non-complainers. About 60% of the complainers would stay as customers if their problem was resolved and 95% would stay if the problem was resolved quickly. A dissatisfied customer will tell between 10 and 20 other people about their problem. A customer who has had a problem resolved by a company will tell about 5 people about their situation.

Service recovery
All service providers experience moments of service failure at some point. Important to find out as soon as possible when a service fails to meet customers expectations. The feedback procedure and the recovery process needs to be part of the initial service design process.

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Severity Of Failure Service Failure Occurs

Perceived Service Quality

Psychological -empathy -apology Provider Aware of Failure

Tangible -fair fix -value add

Fair Restitution

Psychological -apology -show interest

Patronage

Service Recovery Expectations

Service Recovery

Follow-up Service Recovery

Loyalty Satisfaction Retention

Customer Loyalty

Service Guarantee

Speed of Recovery

Frontline Discretion

Tangible -small token

Pre-recovery Phase

Immediate Recovery Phase

Follow-up Phase

Service Recovery Framework

Experietial level

Critical incident or complaints

Line of visibility

Handling of problem (incident or compaint)

Pattern level

Frequency and significance of problemtype Procedures e.g. no clear procedures Infrastructures

Structural level

People
e.g. personal causes e.g. not enough people

Service concept level

e.g. incorrect vision about service expectations e.g. profit is main objective

Objective level
Root causes of service problems
Adapted form M. R Testa and L. Sipe (2006).

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Benchmarking and best practices

Benchmarking is mostly defined as comparing oneself with the standards of the best in a particular field. Such analyses result in a picture of how a business compares with its peers and how much it deviates from the standards. Such analyses have the potential to inhibit performance improvement and innovation. An alternative approach of benchmarking compares ones own service-process against the best that can be identified worldwide. (best practices)

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 FedEx initially set 2 ambitious quality goals:

100% customer satisfaction for every interaction and transaction 2. 100% service performance on every package handled The company has a commitment to clear and quality goals, followed up with continuous measurement of progress against those goals.
1.

 Service Quality Index- systematically cataloged customer

complaints which became the foundation for building customer feedback system
quarterly basis- results relayed to senior management

Customer Satisfaction Survey- Telephone survey on

Targeted customer satisfaction survey FedEx Center Comment Cards- results tabulated twice a

year and relayed to managers

Online Customer Feedback Surveys

 The information from these various customer

feedback measures has helped FedEx to maintain a leadership role in its industry and has played an important role in enabling the firm to receive the prestigious Malcolm Baldridge National Quality Award.
Source: Blueprints for service quality: The Federal

Express Approach

 Collecting customer feedback via complaints,

suggestions and compliments provides a means of increasing customer satisfaction. Services firms need to develop effective strategies to recover from service failures so that they can maintain customer goodwill which is vital for long term success. Finally, a service firm and its staff must also learn from their mistakes and try to ensure that problems are being eliminated.

Thank you for your attention!

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