mgmt 471 - service quality, failure and recovery

service failure

occurs when service performance falls below a customer’s expectations in such a way that leads to customer dissatisfaction

service recovery

refers to the actions taken by a firm in response to service failure.

Complaining Customers: The Tip of the Iceberg

• 1-5% complain to management or company headquarters

• 45% complain to a frontline employee

• 5% encounter a problem but do not complain

The Consequences of Poor Quality & Service Failure?

“It only takes one REALLY mad customer to do a lot of damage to the company in the era of social media"

Why Is Service Recovery Important? - Service Recovery Paradox

A good recovery can turn angry, frustrated customers into loyal ones…...can, in

fact, create more goodwill than if things had gone smoothly in the first place.”

(Hart et al.

Service Recovery Paradox Challenges

• Only a small percent of customers complain

• Service recovery must be EXCELLENT

• Service recovery can be expensive

Service Recovery Paradox

The service recovery paradox is more likely to occur when:

• the failure is not considered by the customer to be severe.

• the customer has not experienced prior failures with the firm.

• the customer perceives that the company had little control over the cause of the failure.

Service Guarantee

Guarantee:

• An assurance of the fulfillment of a condition (Webster’s Dictionary).

• In a business context, a guarantee is a pledge or assurance that a product offered by a firm will perform as promised and, if not, then some form of reparation will be undertaken by the firm

Service Guarantee - tangible products

For tangible products, a guarantee is often done in the form of a warranty.

• Services are often not guaranteed.

• Perishability —> cannot return the service.

• service experience is intangible. —> So what do they guarantee?

Characteristics of an Effective Service Guarantee

Unconditional, Meaningful, Easy to Understand and Communicate

Unconditional

The guarantee should make its promise unconditionally – no strings attached.

Meaningful

The firm should guarantee elements of the service that are important to the customer.

Easy to Understand and Communicate

• Customers need to understand what to expect.

• Employees need to understand what to do to satisfy customers. .

Reasons companies might NOT want to offer a service guarantee…

• Existing service quality is poor.

• Guarantee does not fit the company’s image.

  • E.g., taco trucks

• Too many uncontrollable external variables. (e.g., airlines)

• Fears of cheating or abuse by customers.

• Costs of the guarantee outweigh the benefits.

• Customers perceive little risk in the service.

  • E.g., low price

• Customers perceive little variability in service quality among

competitors.

• E.g., fast food restaurants

Servicescape

a concept that emphasizes the impact of the physical environment in which a service process takes place

Servicescape exterior and interior elements

• Exterior elements: landscape, exterior design, signage, parking, surrounding environment

• Interior elements: interior design and decor, equipment, signage, layout, air quality, temperature and ambiance)

Purpose of Servicescape

to create distinctive image and unique positioning.

Service environment affects buyer behavior in 3 ways

• Message-creating medium

• Attention-creating medium:

• Effect-creating medium

Message-creating medium

Symbolic cues to communicate the distinctive nature and quality of the service experience

Attention-creating medium

Make servicescape stand out from competition and attract customers from target segments

Effect-creating medium:

Use colors, textures, sounds, scents and spatial design to enhance desired service experience

Example 1 MUSIC

• In service settings, music can have powerful effect on perceptions and behaviors, even if played at barely audible levels

• Structural characteristics of music ― such as tempo, volume, and harmony ― are perceived holistically.

• Fast tempo music and high volume music increase arousal levels.

• People tend to adjust their pace, either voluntarily or involuntarily, to match

  tempo of music.

• Careful selection of music can deter wrong type of customers.

Example 2 SCENT

Example 3 SCENT

Example 4: Impact of Signs, Symbols, and Artifacts