Service Failure and Recovery

Deborah Coleman Shannon Smith Holly McDonald Kira Codner

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Service Failure and Recovery

Service Recovery refers to the actions taken by an organization in response to a service failure. Service Failures bring about negative feelings and responses from customers. Left unfixed, service failures can result in customers leaving, telling other customers about their negative experiences, and challenging the organization through consumer rights organizations or legal channels. Customers who are satisfied tell an average of 7 people about their great service whereas an unsatisfied customer will tell an average of 25 people about the poor service they received.

THE 80s

Service Failure and Recovery: The 80s

(Chip, Zemke, 1987) Service Recovery: To return to a normal state; to make whole again. Two levels of Service Breakdown: 1) Annoyance 2) Victimization How to Recover: 1) Apology 2) Urgent Reinstatement 3) Empathy 4) Symbolic Atonement 5) Follow up

Recovery is a part of an overall orientation toward identifying and responding to a customer needs and expectations.
The

most memorable recoveries are those that exceed customer expectations.

Service Failure and Recovery: The 80s

Gilly, Gelb (1982) Study Post purchase consumer processes and the complaining consumer
The

decision to complain is based on the expectations about what the complaint will achieve
The

degree of satisfaction/dissatisfaction will be influenced by the response to a complaint

The

degree of satisfaction/dissatisfaction with the complaint response combines with pervious experience concerning the product to produce some final consumer degree of satisfaction/dissatisfaction with the total purchase outcome.

Service Failure and Recovery: The 80s

Gilly, Gelb (1982) Study Post purchase consumer processes and the complaining consumer

Results 1) Responses to complaints that do not involve monetary loss will bring about lower levels of satisfaction that responses to complaints which do not involve monetary loss. 2) The higher the percentage of monetary loss reimbursed, the greater the degree of satisfaction with complaint response. 3) The more quickly a complaint is resolved, the greater the satisfaction 4) The higher the degree of satisfaction with organization complaint response, the greater the likelihood of brand repurchase. 5) The higher the degree of satisfaction with complaint response, the greater the increase (or the smaller the decrease) in level of brand repurchase.

THE 90s

Service Failure and Recovery: The 90s

Bitner (1990)- Model of Service Encounter Evaluation which assesses the effects of physical surroundings and employee responses on attributions and satisfaction in a service failure context.

Providing customers with logical explanations for service failures and compensating them in some way can mitigate dissatisfaction. Customer attributions influence levels of satisfaction. When a service experience is not what a customer expects, there may be an opportunity to turn the encounter into a more satisfying one through understanding the customer's attribution processes. Nonverbal cues such as the firm's physical appearance can influence customer attributions and satisfaction in a service failure context. Therefore, attention to the symbolic meaning of nonverbal messages may also be a key to enhancing service encounter evaluations.

Service Failure and Recovery: The 90s

Smith, Bolton and Wagner (1998)- Model of customer satisfaction for service failure/recovery encounters.

Customer evaluations of service failure/recovery encounters are influenced by two factors: 1) Service failure context (type and magnitude of failure) 2) Service recovery attributes (compensation, response speed, apology, recovery initiation)

In order to understand customer satisfaction, businesses must survey customers about both disconfirmation of expectations and perceptions of justice.

THE 2000s

Service Failure and Recovery: The 2000s

Bitner, Brown and Meuter (2000) Improving service encounters through the use of technology and the increased ability of technology to effectively recover from service failure. Effectively managed technology infusion can lead to beneficial service encounter outcomes such as customization, improved service recovery, and spontaneous delight.

New technologies are resulting in increased customer accessibility to sales and customer service representatives via e-mail, cell phones etc. The increasing use of the Internet is also increasing customer-to-firm and customer-to customer complaining. Technology can reduce several of the problems limiting customer complaining rates and can often provide frontline employees with the means to recover on behalf of customers quicker and with fewer people involved. Software applications and database accessibility are equipping employees with sufficient information to interact with customers quickly, knowledgeably ,and in a more conclusive way.,

Service Failure and Recovery: The 2000s

Sousa and Voss (2009) Despite the challenging nature of online service failures and reduced human interaction, it
is possible to achieve effective service recovery in e-services.

Key differences between traditional services and e-services (in service recovery) include the reduced degree of human interaction and the role that technology plays in mediating customer interaction. The quality of e-services comprises dimensions which are different from those associated with the quality of traditional services.

Key Findings:
1) E-service delivery systems should be designed with a strong failure-prevention mindset. 2) E-service recovery systems should have the ability to detect and adjust to different Service Failure and Recovery contexts. 3) E-service recovery systems should focus on delighting the most profitable customers. 4) E-service recovery systems should take advantage of the potential of internet technologies.

Service Recovery and Our Text

Service Recovery Strategies: 1) Do it right the first time 2) Encourage and Track Complaints 3) Act Quickly 4) Adequate Explanations 5) Treat Customers Fairly 6) Relationships with Customers 7) Learn from Recovery Experiences 8) Learn from Lost Customers The Recovery Paradox suggests some customers who are initially dissatisfied with a service and then experience excellent service recovery, leads them to be more satisfied after they experience a service failure than they otherwise would have been.

Fairness themes in service recovery: Outcome fairness, Procedural fairness, and Interactional fairness. Dimensions customers use to judge e-recovery: Responsiveness, Compensation, Contact Service Guarantees: services are harder to put a guarantee on because you cannot undo the work that has already been done. However, more and more companies are putting guarantees on their services. When guarantees are invoked, there is an instant opportunity to recover.

References

Amy K. Smith, Ruth N.Bolten, Janet. Wagner A model of Customer Satisfaction with Service Encounters Involving Failure and Recovery. Journal of Marketing Research;Vol. 36, No. 3(1999), pg. 356-372 Chip R. Bell, Ron E. Zemke. Service Breakdown: The Road To Recovery. Management Review, Vol. 76, No. 10 (1987), pg.32-36 Gilly, Mary C.; Gelb, Betsy D. Post-Purchase Consumer Processes and the Complaining. Customer Journal of Consumer Research, Vol. 9, No. 3 (1982), p323-328

Mary Jo Bitner. Evaluating Service Encounters:The Effects of Physical Surroundings and Employee Responses. The Journal of Marketing,Vol. 54, No. 2 (1990), pg. 69-82
Mary Jo Bitner , Stephen W. Brown, Matthew L. Meuter. Technology Infusion in Service Encounters Journal of the Academy of Marketing Science.Vol. 28, No. 1(2000), pg.138-149 Rui Sousa, Christopher A.Voss The effects of service failures and recovery on customer loyalty in e-services: An empirical investigation. International Journal of Operations & Production Management,Vol. 29. No. 8 (2009), pg. 834 864 Zeithaml,V. A., Bitner, M. J., Gremler, D., Mahaffey, T., & Hiltz, B. (2007). Services Marketing: Integrating Customer Focus Across the Firm. McGraw-Hill Ryerson.

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