Customer Feedback and

Service Recovery
Customer Response Categories To A
Service Failure
Service Encounter
is Dissatisfactory
Take some form
of public action
Take some form
of private action
Take no action
Complain to the
service firm
Complain to a
third party
Take legal action
to seek redress
Defect (switch
provider)
Negative word-of-
mouth
Any one or a combination of
these responses is possible
Understanding Customer response
to a service failure
Why do customers complain? (obtain restitution or
compensation; vent their anger; help to improve the
service; altruistic reasons)

What proportion of unhappy customers complain?
(5 to 10% or still lower)

Why dont unhappy customers complain? (no time
to waste; useless activity as no one is concerned &
willing to resolve it; afraid of the confrontation)

Service paradox
Customers who experience a service failure,
which has then been resolved to their full
satisfaction are more likely to make future
purchases than customers who have no
problem in the first place

Only good for one service failure
Service Guarantees
Its a PROMISE that if a service delivery fails to
meet predefined standards, the customer is
entitled to compensation,
Replacement, refund or credit

Primary function --to lower the perceived risks
associated with purchase
Also make it easier for the customer to complaint
Types of Service Guarantees
Single attribute-specific guarantee one key
service attribute is covered (Eg: any of 3 specified
pizzas to be served in 10 mins of ordering on working
days between 10 am to 2pm. If delivery is late, the
pizza is free)

Multiattribute-specific guarantee a few important
service attributes are covered (Eg: A friendly
efficient check in ; A clean & comfortable room where
everything works)

Types of Service Guarantees
Full-satisfaction guarantee all service
aspects covered with no exceptions (Eg: If
you are not completely satisfied with any item
you buy from us , return it & we will refund the
full purchase price)

The Hampton Inn 100% Satisfaction
Guarantee
What are the benefits of
such a guarantee?

Are there any downsides?

Building A Customer Feedback
System Through Customer Feedback
Tools
A. Total Market Surveys
Measures satisfaction with all major consumer
service processes & products
Objectiveattaining indicator of satisfaction of entire
firm

B. Transactional Surveys
Conducted after customers have completed a specific
transaction
Feedback can tell firm why customers are happy or
unhappy with the process
Building A Customer Feedback
System Through Customer Feedback
Tools
C. Service Feedback Cards
Process involves giving customers a feed
back card after completion of process &
inviting them to return it by mail
Not an exact method due to mood swings of the
customer
Building a Customer Feedback
System through customer feedback
tools
D. Mystery Shopping
Method often used to determine the whether
frontline staff is displaying desired behavior
Eg: Mystery caller survey to assess whether
courteousness is followed, up-selling & cross-
selling is done, friendly greetings made to the
caller & phone lifted up in certain no. of rings


Balancing Demand
and Capacity
Relating Demand to Capacity:
Four Key Concepts

Excess demand: too much demand relative to capacity
at a given time
Excess capacity: too much capacity relative to demand
at a given time
Maximum capacity: upper limit to a firms ability to
meet demand at a given time
Optimum capacity: point beyond which service quality
declines as more customers are serviced
Variations in Demand Relative to
Capacity

VOLUME DEMANDED
TIME CYCLE 1 TIME CYCLE 2
Maximum Available
Capacity
Optimum Capacity
(Demand and Supply
Well Balanced
Low Utilization
(May Send Bad Signals)
Demand exceeds capacity
(business is lost)
Demand exceeds
optimum capacity
(quality declines)
Excess capacity
(wasted resources)
CAPACITY UTILIZED
Alternative Demand Management
Strategies

Take no action
let customers sort it out
Reduce demand
higher prices
Increase demand
lower prices
communication, including promotional incentives
vary product features to increase desirability
more convenient delivery times and places
Alternative Demand Management
Strategies .
Developing off peak pricing & promotion
scheme


Creation of reservation system
Managing Capacity or Controlling
Supply
Using part
time
employees
Increasing
efficiency
of existing
personnel
Sharing
capacity
with others
Investing
in
expansion
plans
Alternative Queuing Configurations
Single line, single server, single stage
Single line, single servers at sequential stages
Parallel lines to multiple servers
Designated lines to designated servers
Single line to multiple servers (snake)
Take a number (single or multiple servers)
28
29
21
20
24
23
30
25
31
26
27
32
Setting Capacity Allocation Sales
Targets for a Hotel by Segment and
Time Period
Out of commission for renovation
Executive service
guests
Transient guests
Weekend
package
Groups and conventions
Airline contracts
100%
50%
Week 7
(Low Season)


M Nights: Tu
Time
W Th F S Sn
Executive service guests
Transient guests
W/E
package
Groups (no conventions)
Airline contracts
Week 36
(High Season)
M Tu W Th F S Sn
Capacity (% rooms)
Types of Demand
Rising demand
Falling demand
Zero demand
Full demand
Overfull demand
Negative demand
Latent demand
Seasonal demand
Rising Demand
Service offer in growth stage of PLC
Customers are aware of service category &
service brand
More buyers making repeat purchases
Eg: rising demand of cell phones across all
sections
Falling Demand
Due to direct competition, substitute competition,
unattractive pricing, poor service delivery
Marketer should analyze the causes & take
corrective measures
Eg: declining popularity of pool parlors, across
Mumbai

Zero Demand
Market may not be having need for a particular
service offer
Various demographic, socio-economic factors
Eg: 1.There may not be any demand for English
language in rural parts of Jharkhand
2. Western Union Money transfer in an area where
there is not much migration & people do not
transfer money

Full Demand
Demand is equal to the supply
Ideal situation for the marketer
Problem arises when a competitor comes out with
an offer
Firms fight for the same pie
Firms then engage into price war with margins
falling
Overfull Demand
Demand outstrips the supply
Marketer is not able to cater to the demand
Implies either there are very few capable players
or large entry barriers
Eg: 1. There is a great demand for LPG supply
2. Till the advent of mobile phones, there was a
huge demand for telephone which the Telecom
dept. was unable to cater
3. Berths in Indian railways especially during
summers & any other holiday seasons
Negative Demand
Kind of an anti-demand
Customers would do anything to avoid the service
With increasing media reports about harmful
effects of cosmetic surgery or beauty treatment
surgery, there might be negative demand about
the same
Latent Demand
Demand deep inside the customer
Unquenched as no service satisfies it
Consumer may not be able to articulate his
demand
Eg: good day care centers & crche; FM radio
service
Seasonal or Irregular Demand
Demand for certain services fluctuates with
seasons
Peak demand in some seasons, lesser in others
Eg: 1. hotel accommodation in Lonavala during the
weekends
2. easy availability of movie tickets for the
matinee or afternoon show as compared to the
night or evening show
THANK YOU