Summary Lecture 9 Notes

Page 3: Today's Session Topics

• Service Failure:

  • Definition and Types

  • Impact on customers

• Customer Complaints

• Service Recovery:

  • Strategies for effective recovery

Page 4: Understanding Service Failure

• Definition: When service performance does not meet customer expectations, resulting in dissatisfaction.

• Consequences: Leads to customer dissatisfaction, anger, negative word of mouth, and increased switching behavior.

• Key Insight: Organizations can't completely avoid failures but can develop strategies for recovery.

Page 6: Reasons for Service Failures

• Failures occur due to:

  • Inseparability: Services are produced and consumed simultaneously.

  • Perishability: Services cannot be stored.

  • Intangibility: Services cannot be physically possessed.

• Subjectivity: Customer perceptions of service vary.

• Failures often arise during direct interactions with service providers.

Page 7: Types of Service Failures

• Service Delivery Failures: Unavailable service, slow service, core service failures.

• Customer Needs and Requests: Inadequate attention to special needs or preferences.

• Unprompted Employee Actions: Unexpected behavior from staff.

• Customer Behavior: Issues caused by problematic customers may include abusive behavior and rule-breaking.

Page 9: Motivations for Customer Complaints

• Economic Loss: Seeking refunds or compensation.

• Emotional Reasons: Venting anger or frustration.

• Service Improvement: Providing feedback for better future service.

• Altruism: Helping other customers avoid similar issues.

Page 10: Types of Complainers

• Passives: Do not take action or complain.

• Voicers: Actively complain to providers but do not spread negative word of mouth.

• Irates: Likely to spread negative feedback; moderate in complaints to the provider.

• Activists: Highly likely to complain across all platforms, including third parties.

Page 11: Jaycustomer Behaviors

A jaycustomer causes disruptions or dissatisfaction through:

• Types include: The Cheat, The Thief, The Rulebreaker, The Belligerent, The Family Fueders, The Vandal, The Deadbeat.

Page 12: Service Switching Causes

Customer switching is a cumulative process influenced by ongoing decisions and service interactions rather than a single event.

Page 14: Service Recovery Defined

Service Recovery: Actions taken by a business to rectify service failures and regain customer satisfaction.

Page 15: Strategies for Service Recovery (Fixing the Customer)

• Act swiftly to address issues.

• Build relationships with customers.

• Provide clear communication and explanations.

Page 16: Fairness in Service Recovery

• Outcome Fairness: Compensation should reflect the customer's dissatisfaction.

• Procedural Fairness: Timely and clear processes for resolving complaints.

• Interactional Fairness: Politeness and care in employee interactions.

Page 17: Addressing the Root Problem

After recovery, it’s vital to:

• Track and encourage customer complaints.

• Learn from recovery and lost customer experiences.

• Implement fail-safe processes to prevent future issues.

Page 18: The Service Recovery Paradox

A proper recovery can enhance customer loyalty, potentially leading to greater goodwill than if no failure had occurred initially.

Page 21: Service Guarantees

• Characteristics of Effective Guarantees: Ease of invocation and understanding.

• Benefits: Improves company focus on customer standards and generates constructive feedback.

• Cautions Against Guarantees: May not fit the company image or could be abused.

Page 22: Summary of Key Points

• Customers dissatisfied with service may act publicly or privately.

• Firms must understand the motivations behind customer complaints for effective resolution.

• Effective recovery strategies can enhance loyalty through the recovery paradox.

• Failures can result from organizational issues, employee motivation, or customer behavior.