PART1: CUSTOMER SERVICE FAILURE:

A Customer service failure, simply defined, is customer service performance that fails to meet an individuals expectations. Typically, when a service failure occurs, a customer will expect to be compensated for the inconvenience in the form of any combination of refunds, credits, discounts or apologies. The success of such customer service recovery efforts is determined by the individuals expectations and perceptions of the organization. Two key elements impact any effort to restore customer satisfaction: the strength of customer relationships and the severity of service failur

GAP MODEL

to
C so e u t mr Gp a

Service Recovery
The goal of service recovery is to identify customers with issues and then to address those issues to the customers' satisfaction to promote customer retention. However, service recovery doesn't just happen. 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 idea that customers are important and their voice has value. Research has shown that customers who have had a service failure resolved quickly and properly are more loyal to a company than are customers who have never had a service failure -- significantly more loyal. Service Recovery practices are a critical element in a Customer Loyalty Program. Think about your own experiences with service or product problems. Did you get a quick acknowledgement of the problem, speedy resolution of the problem, and -- perhaps -- compensation for your troubles? (Imagine if you got a truly sincere apology and not some phony empathy?) Weren't you more likely to buy from that company again because of the confidence you now had in their business practices? That's the key value to effective service recovery and complaint handling: customer retention.

One way to think about service recovery is that it is a positive approach to complaint handling. Complaint handling has serious negative connotations; whereas, service recovery has positive connotations. Complaint handling is placating people, minimizing a negative. Service recovery practices are a means to achieve the potential, latent value a customer holds for a company by fostering an ongoing positive relationship. Service recovery has a secondary value. It creates positive word-of-mouth about your company and minimizes the bad spin that lack of service recovery practices can create. Next, we'll present how to frame the argument for building Service Recovery Practices, and then we'll examine the stages of maturity an organization may display for this vital feedback process.

THE SERVICE RECOVERY PARADOX The service recovery paradox refers to situations in which the overall satisfaction levels of recovered customers exceed those of customers who did not encounter any problems with the initial service

Video: http://www.youtube.com/watch?v=IvBWnc5nxOE
PART2:

Why Does Service Recovery get No Respect?

So why isn't service recovery part of every organizations' business processes? No easy answer exists. Perhaps it's the contention between operations and marketing. Customer acquisition is sexy. Marketing conducts expensive research, fine tunes the 4Ps that comprise its marketing strategy (Product, Place, Promotion, and Price), and penetrates new customer bases through its sales and marketing programs. Companies spend big bucks on achieving sales growth and expanding market share. Service Recovery isn't sexy. It's an operational task that involves negotiating with angry customers. The budget typically falls in the customer service department -- one of those loathsome cost centers that drain profit. Isn't it easier to just dismiss these upset customers and move on to greener fields?

In some cases, it probably is easier and appropriate. Some customers cannot be recovered, only ameliorated so they don't bad-mouth the organization. This may seem like heresy from a self-proclaimed customer service nut, but customers are not always right. (Great Brook had a person from a Pacific island nation contact us to buy our Customer Survey book. They weren't willing to pay prior to shipment; they wanted to be invoiced. And they wanted an electronic copy of the book. We declined their business.) However, most customers can be recovered through simple application of the Golden Rule. And those recovered and retained customers become profit centers. They buy more and they give positive recommendations to friends and colleagues, which is the most important form of advertising. For a rough calculation on the potential value of a Service Recovery Program in your organization find out the annual sales volume per customer, then apply the operating profit margin to find the profit per customer. Next, find out the annual customer churn, that is, how many customers stopped buying from you -- especially long-standing customers. Multiply, the churn by the profit margin and you have the potential value of the Service Recovery Program's annual budget. You'll probably find that even reducing a small amount of the churn will more than pay for the program. And this doesn't even include the reduced sales from customers who didn't leave but still have issues with the organization!

.
Stages of Service recovery

What are the Stages of Service Recovery Maturity?

Service Recovery in an organization progresses through a series of stages, shown in the nearby diagram. Where do you stand? Stage 1, Moribund. There is no complaint handling. Angry customers are ignored. Drugstore.com is an example of a company with totally moribund service recovery practices. Letters to VPs and even the CEO about a damaged shipment go unanswered. Stage 2: Reactive. Customer complaints are heard, and a response is made. But it's a haphazard process with no defined goals for the response and no one owning this business process. Stage 3: Active Listening. At this stage, the response to issues voiced by customers is structured. Specific people have the responsibility to respond to complaints and guidelines are in place for the response. However, it is still reactive. Stage 4. Solicitous. The critical change from Stage 3 to 4 is the move from reactive to proactive solicitation of customers with issues. The reason this is so important is that most customers don't bother to complain. They just move on to other suppliers of products. Haven't we all done this? It's a lot of work to complain! The solicitous role is accomplished by encouraging customer to voice their complaints. Event surveys (also known as transactional or transaction-driven survey) are a commonly used technique to get issues voiced. The survey design must be such that more than just high level measurement of customer satisfaction is captured. The design must allow for action to be taken. The desire for anonymity complicates the task. (Our Survey Workshops help attendees create such actionable survey instruments.) Stage 5: Infused. The pinnacle of Service Recovery Practices is achieved when the complaint identification merges with business process improvement or six sigma programs to support root cause identification and resolution. The owners of business processes that cause customer issues are notified of the occurrences to prompt reexamination of the process design. In essence, we see two levels of feedback loops. First, feedback from the customer to the organization. Second, feedback from the customer-facing groups to its business partners within the organization. While company culture is clearly critical to implementing this level of feedback management, certain technologies can infuse this information sharing into business practice.

Service recovery Tactics

entify seven tactics for service recovery:

Measure the Costs Considering how much it costs to lose a customer, few recovery efforts are too extreme. Break the Silence Dont attend to just squeaky wheels; make an effort to actively inquire about problems. Anticipate Needs for Recovery Narrow the search for opportunties by identifying and monitoring certain problem-prone areas of an operation. Act Fast Service problems quickly escalate so identifying a problem is only fruitful if the company responds fast. Train Employees Good service companies rely on standard operating procedures for problems that come up from time to time. Empower the Front Line Training can give employees the perspective that service recovery requires, but the company must empower them to act. Close the Loop If a customers complaint leads to corrective measures, the company should tell the customer about the improvement.

Part 3:

Seven Steps to Service Recovery

Almost anyone who's been in a customer service position has had to talk to an irate caller or been in an unpleasant situation. Even though it may not be our fault, we still need to know how to recover the situation. Here are seven steps to service recovery that will help make your day a better one! 1. It is your responsibility: If you have answered the phone on behalf of the client, you have indeed accepted 100% responsibility. At least that's what the caller believes. So get off the "it's not my fault" syndrome and get on with the "what can I do for you?" position. 2. "I'm sorry" does work: Every once in a while, I hear from a CSR who tells me they don't feel they should say "I'm sorry" when it wasn't their fault. Well, as stated above, in the caller's mind, it is your fault. Saying you're sorry won't fix the problem, but it definitely does help to quickly defuse it. Try it; you'll see. 3. Empathize immediately: When someone is angry or frustrated, the one thing they need is someone who agrees with them, or at least makes them feel like they're being understood. Be careful, though: "I know how you feel" is not a good thing to say unless you have been through exactly what they have experienced. Instead try, "That's got to be so frustrating" or "What an unfortunate situation." 4. Immediate action is necessary: Don't make a client wait for good service. Take their calls right away; return calls as soon as possible. Send out materials the same day, if possible. That's recovery. Remember the Telephone Doctor's motto: "It should never take two people to give good customer service." 5. Ask what would make them happy: In a few rare cases, the client can be very difficult. If you have tried what you considered "everything," simply ask the client: "What can I do to make you happy, Mr. Jones?" In most cases, it may be something you're able to do. You just may not have thought of it. So go ahead and ask them. 6. Understand the true meaning of service recovery: Service recovery is not just fixing the problem. It's making sure it won't happen again. It's listening to the client and taking the extra steps needed . It's going above and beyond. 7. Follow Up: After you feel the problem has been fixed, follow up. Once you've made the client happy, make an additional phone call a day or so later. Be sure to ask them: "Have we fixed everything for you?" "What else can we do for you?" Be sure they're satisfied. When you hear "Thanks, you've done a great job; I appreciate it," you'll know you've achieved service recovery!

Service Recovery Process

Part4;

Example of Service Recovery My wife and I take our children to Walt Disney World every other year. We usually spend about ten days on the premises and have a wonderful time. One year, we booked a plan including admission tickets and hotel accommodations. We arrived late afternoon and wanted t see the last performance of the Electrical Parade before the parade went to Europe. Much to our dismay, no one had our tickets and the ticket offices were closed for the day. We were told to go to the park and explain our situation and see what could be worked out. We went to the park, explained our situation to the Customer Service person and he offered us 4 free passes for that night! Needless to say, we were very happy. Good customer service so far, right? When we returned home I wrote a letter stating how pleased we were with the way the incident was handled. I also stated that keeping ticket counters open in the hotel would have

eliminated the frustration that we felt when we arrived. I did thank them again and mailed the letter. A couple of weeks later a letter arrived from the company. It contained a letter of apology and 4 seven day admission tickets worth approx. $750.00!! The note of explanation stated that they did not want any visitor to experience frustration when they came to their parks. The hoped we would use these tickets and come back to give them another chance! Needless to say, we were thrilled. A couple of weeks later we received another letter containing a check for the tickets that we purchased for our trip. I thought that there must have been a mistake and called their offices. I was told that there was no mistake. They had made an error that resulted in us having less than a wonderful experience and they wanted to refund our money! Needless to say, we were extremely impressed with the treatment we were given. It far exceeded anything we expected! We were so impressed that we went again the next year instead of waiting the extra year! This is a perfect example of excellent service recovery. For those of you that think this cost the company a lot of money, let's look at it from the company point of view: The largest expense was the cash refund. That came to about $750.00. That's a bottom line figure. The actual cost of the 4 free tickets? Since the parks would be open anyway and all the rides operating, the only actual cost of the tickets was the few pennies it cost to print them! Add a couple of dollars for postage and that's about it! With that in mind, let's take a look at what the company gained from their actions: We used the free tickets and went the next year. We probably spent $2,000.00 during our time there! That's income to the company they would not have had if we did not get the free tickets. I figure that we are about even now. Here's where the company really gets the benefit of their actions. Over the course of the last few years I have told countless family and friends about this story. I have used this example in seminars and printed material such as this publication. All this free publicity has been achieved by a simple, yet presented in an extremely effective manner, gesture of good faith by the company. It is impossible to figure the value of that kind of word of mouth advertising! The unique thing about the above example is that the service recovery was presented in such a way that we were drawn to return and give them a second chance. Not because we really deserved all we were given, but rather because we were made to feel that we really were appreciated by the company involved. We were being asked to give them another chance to let them shine. The best part of it all was that it was all wrapped up in a package that generated some revenue for the company at the same time! As you will learn later, this was a perfect example of a win-win situation!

No matter what method of service recovery you choose, it is critical that you present in such a way that it is not obvious to the customer that you are doing this just to retain them as customers. While some will see through your methods, most will be happy to be treated with respect and dignity!

Example 2:

Recently Toyota announced two safety recalls that cover some of its models. Both recall campaigns address conditions related to the accelerator pedal. Now Toyota is taking actions to recover and reassure its customers in companys future service quality. Though Toyota is a car manufacture, not technically service company, I think it is reasonable to assume that it not only makes car, but also provides services that result in safe driving experience. In the commercial below Toyota reassures customers that their safety is still a top priority, it admits the mistakes, and promises to learn from them.

Video: http://www.youtube.com/watch? v=XZoBfpm1zHg&feature=player_embedded#!