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Complaint Handling and Service Recovery

Complaint Handling and Service Recovery. Think of a time when, as a customer, you had a particularly satisfying (or dissatisfying) interaction with service provider. When did the incident happen? What specific circumstances led up to this situation?

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Complaint Handling and Service Recovery

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  1. Complaint Handling and Service Recovery

  2. Think of a time when, as a customer, you had a particularly satisfying (or dissatisfying) interaction with service provider. • When did the incident happen? • What specific circumstances led up to this situation? • Exactly what did the employee (or firm) say or do? • What resulted that made you feel the interaction was satisfying or (or dissatisfying)? • What could or should have been done differently?

  3. Complaints Customers have a low propensity to complain. Only about 4 % of customers with problems report those problems as complaints. It is not important whether or not a service failure actually occurred, but rather, if it was perceived by the customer to have occurred.

  4. Impact of Service Failure The average customer who experiences a service failure tells nine or ten others about the failure.

  5. Customer Response Following Service Failure Service Failure Take Action Do Nothing Stay with Provider Switch Providers Complain to Provider Complain to Family & Friends Complain to Third Party Switch Providers Stay with Provider

  6. Entry Points for Complaints • Employees serving customers face-to-face or by phone • Intermediaries acting for original supplier • Managers contacted by customers at head/regional office • Complaint cards mailed or placed in special box • Complaints passed to company by third-party recipients • consumer advocates • trade organizations • legislative agencies • other customers

  7. Components of an Effective Service Recovery System Do the Job Right Effective Complaint Increased Satisfaction the First Time Handling and Loyalty -Conduct Research Identify Service -Monitor Complaints Complaints -Develop Complaints as Opportunity Culture Develop Effective Resolve Complaints Systems and Training Effectively in Complaints Handling Learn from Conduct Root Cause Recovery Analysis Feedback

  8. Act Quickly Encourage and Track Complaints Provide Adequate Explanations Service Recovery Strategies Fail-safe the Service Learn from Lost Customers Cultivate Relationships with Customers Learn from Recovery Experiences Service Recovery Strategies Treat Customers Fairly

  9. Pricing • High Price • Price Increases • Unfair Pricing • Deceptive Pricing Causes Behind Service Switching Inconvenience • Location/Hours • Wait for Appointment • Wait for Service Core Service Failure • Service Mistakes • Billing Errors • Service Catastrophe Service Encounter Failures Service Switching Behavior • Uncaring • Impolite • Unresponsive • Unknowledgeable Response to Service Failure • Negative Response • No Response • Reluctant Response Competition • Found Better Service Ethical Problems • Cheat • Hard Sell • Unsafe • Conflict of Interest Involuntary Switching Source: Sue Keaveney • Customer Moved • Provider Closed

  10. Unhappy Customers’ Repurchase Intentions Unhappy Customers Who Don’t Complain 9% Unhappy Customers Who Do Complain 19% Complaints Not Resolved 54% Complaints Resolved 82% Complaints Resolved Quickly Percent of customers who will buy again after a major complaint (over $100 in losses) Source: Adapted from data reported by the Technical Assistance Research Program.

  11. Service Guarantees • guarantee = an assurance of the fulfillment of a condition (Webster’s Dictionary) • for products, guarantee often done in the form of a warranty • services are often not guaranteed • cannot return the service • service experience is intangible • (so what do you guarantee?)

  12. Service Guarantees Help Promote and Achieve Service Loyalty • Force firms to focus on what customers want • Set clear standards • Compensation highlights cost of service failures • Require systems to get, act on, customer feedback • Reduce risks of purchase and build loyalty • Builds “marketing muscle”

  13. Characteristics of an Effective Service Guarantee

  14. Reasons companies do NOT offer guarantees: Reasons companies do NOT offer guarantees: • too many uncontrollable external variables • fears of cheating by customers • costs of the guarantee are too high

  15. Over-compensating concerns? • Service providers should probably be more concerned about under-compensating complaining customers than over-compensating them. • Track the customers who are given compensation for reported complaints.

  16. Service Guarantees • service guarantees work for companies who are already customer-focused • effective guarantees can be BIG deals - they put the company at risk in the eyes of the customer • customers should be involved in the design of service guarantees • the guarantee should be so stunning that it comes as a surprise -- a WOW!! factor • “it’s the icing on the cake, not the cake”

  17. Recovery • Service providers need to decide on policy for service recovery. • Will all customers with a particular type of problem be given the same service recovery?

  18. Acknowledge problem Apologize Take responsibility Explain causes Lay out options Compensate/ upgrade Ignore customer Blame customer Leave customer to “fend for him/herself” Downgrade Act as if nothing is wrong Pass the buck RecoveryDoDon’t

  19. Early Communication Early Recovery • The service company must decide when and how to appropriately open communication with customers in the service process. • Communication with the customer throughout the service delivery process can decrease the magnitude and expense of service failures • Failure to communicate early in the service process can allow small customer concerns to grow into large problems. • If complaints are resolved in a timely manner, 95% of the time the customer will return.

  20. Ways to Increase Customer Communication • Actively solicit feedback. • Offer a channel of communication that is open to customers through the service process.

  21. Retaining CustomersWhen Things Go Wrong • Track and anticipate recovery opportunities- The customer who complains is your friend? • Take care of customer problems on the front line. • Solve problems quickly. • Empower the front line to solve problems. • Learn from service recovery.

  22. Effective Recovery Skills • Hear the customer’s problems. • Improvise • Bend the rules from time-to-time • Employees must have the authority, usually within certain defined limits, to solve the customer’s immediate problem.

  23. When service customers have been disappointed on the first try, doing it right the second time is essential to maintaining customer loyalty

  24. OOPS! Service Recovery

  25. Discussion Develop guidelines for an effective complaint handling policy for a service organization in the industry you selected to study this session.

  26. Act fast Admit mistakes but don’t be defensive Understand problem from customer’s viewpoint Don’t argue Acknowledge customer’s feelings Give benefit of doubt Clarify steps to solve problem Keep customers informed of progress Consider compensation Persevere to regain goodwill Summary of Guidelines for Effective Problem Resolution

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