Repeat customers are vital in any business.Customer retention is extremely crucial.This presentation shares with us the positive impact of service recovery

1. Santhanaram Jayaram

2.  How to turn negative situations
into positive ones effectively
 Service recovery techniques to
keep customers happy at minimum
expense
 How to recognize and take steps to Participants will
handle difficult customers and
unexpected situations learn
 The practical steps to service
recovery
 How to deliver the real deal and
provide a win-win value
proposition
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3.  “Service recovery builds customer
loyalty that brings a customer back Why- significance
from the brink of defection,” says of Service
John Tschohi
Recovery

4. What is Service Recovery
 Service recovery is a procedure for dealing with customers’ problems and
complaints. An effective &timely recovery procedure will turn a complaining
customer into a satisfied, loyal customer most of the time.
 It is trying to do something Right from a situation that went wrong.
 “Customers value reliability over all other dimensions.” Parasuraman, Berry
&Zeithaml. (1991)

5. Solving customer’s problem quickly
& fairly What does
Giving the customer something of Service Recovery
value as compensation
Keep your promise & follow up
involve

6. What a customer
feels about their
complaints

7. Why Don’t Customers give their FEEDBACK?
 Don’t know who to complain to
 Don’t think it will do any good
 May accept part of the blame
 May want to avoid confrontation
Source: Thomason Learning, Inc. South-Western
Because of the above, organization may miss the opportunity to learn
instead of repeating the same mistakes again and again

8. WhyDo Customers Complain?
Correct the problem
Emotional release from frustration
Gain some measure of compensation
Solicit sympathy
Test for consensus
Source: Thomason Learning, Inc. South-
Western

9. What happens after they express their dissatisfaction
Public Action
Seek redress directly from
Action the firm
Take legal action
Dissatisfaction Complaint to business, private,
occurs or governmental agencies
Private Action
Stop buying the product or
boycott the seller
No Action Warn friends about the product
and /or seller

10. WIIFM - Potential Cost of a Lost Customer Due to
Service Failure – (Shaun Belding)
From your Database find out the Recency, Frequency, Monetary (RFM)
Calculate the customers (CLV)
- Average $ amount per transaction
- Average number of transactions per year
- Average number of years a customer remains in a business’s primary target group
Calculate the Ripple Effect

11. Customer Lifetime Type of Customers that I serve
Value Eg. (Regular Customer) in a Toy Store
Average Transaction $20
Amount – (per)
Frequency of 20 times
transaction in that
year
Customer Value that $20 X 20 = $400
year
How many year they If a customer was to support you for 12 years,
might support you – $400 X 12 = $4800
(estimate)
Ripple Effect
Number of customer If a dissatisfied customer were to share his experience with 10 people,
they share their $4800 X 10 = $48,000
experience Total = $48,000 + $4,800 = $52,800

12.  Internal aspect (Services by What are two
Design)
 External aspect (Interaction) areas in Service
Recovery:

13.  80% of customers’ problems are
caused by bad systems, not by bad
people. – John Goodman (TARP)
Note: Take a closer look at your Services by design

14. What are the 3 major outcome of an effective service
recovery system
 Could service problems be
identified?
 Could problems be resolved
effectively?
 Does the organization learn from
the recovery experience?
 Source: Berry and Parasuraman
What Framework to adopt?

15. Effective Service Recovery System
Conduct Customer Research
Service Recovery
Framework (Internal)
Monitor Customer Complaints Identify services problem Monitor Service Process
Nurture the People Factor Resolve Problems Effectively Make amend to the hassle Factor
Conduct Root Cause Analysis Learn from Recovery experience Set up Problem Tracking System
Modify Service Process Monitoring
Source: Adapted from Leonard Berry & A Parasuraman, Marketing Services, Competing thru
Quality (New York: The Free Press 1991)

16. How to turn negative situations into positive ones
effectively
If: Response time  Customer anger 
What we can do?
Turn Adversity into Opportunity
3 A’ Approach

17. Got to Feel Good about yourself
Turning Negative into Positive
Instead of ….
“Nothing works out for me.”
“My customers are all
difficult.”
“My life is horrible.”
“I never get what I want.”
“I can’t find happiness.” Use ……
“I hate myself.”
“Everything works out for me!”
“My customers are all great!”
“My life is great!”
“I get everything I want!”
“I have happiness!”
“I love myself!”

18. Turn Adversity into Opportunity
 Club Med – Cancun (Mexico resort)
 Vacationers – Convinced vacation
ruined even before it started
 What did General Manager of Cancun
resort, Silvio de Bortoli do?

19.  Step 1: Acknowledgment
- Acknowledge feelings & give the
problem importance
 Step 2: Assessment (What gets
Measured gets Managed)
-Gather facts & assess the situation
3 A’ Approach
(Asking Questions & Paraphrasing)
 Step 3: Alternatives (Negotiate a
solution)
- Sell alternatives and set boundaries

20. Service recovery techniques to keep customers happy at
minimum expense
If: Expenses Effort 
-Bite more than you can chew
-What are some ways
- What compensations
There are internal customers and external customers in every organization

21. Should you bite more than you can chew?
Would it be a challenge
for organizations to over
promise and under
deliver?

22.  Preoccupy them – Hotel installed
mirrors & front page of the daily
newspaper
 Using problem tracking system that
is real time –How quickly you
respond & Rectify?
 Minneapolis Marriott – “Sweet If: Expenses Effort 
Dream” package for delayed check
in
 Singapore Power (city gas &
What are some
electricity ) – 24 hr “hot line” – ways:
How quickly you respond?
 Food delay in restaurant –
complimenary dessert or 10% for
the next visit
 Maine Savings Bank in Porland - $1
every letter suggesting ways to
improve service. Result 500 letters
Note: You get specific information & suggestions to improve your service

23. WIIFM - What are some ways: Minimum Expense to
the organization
What are some Type of Customers that I serve (C)→
products or Recent (New) Frequent (Old) Monetary (High
services Net worth)
(SP )↓
1.Example complimentary √ X X
dinner for 2 in Newton Hawker
Centre
2.
3.
4.
5.
6.
7.
8.
9.
SP- Service Provider C - Customer

24. How to recognize and take steps to handle difficult
customers and unexpected situations
- What to look out for?
- Choice of Words to use
- Other steps
- C.L.A.P or H.E.A.T

25.  When your customer is the most
anxious, you need to be at your
best – competent, confident, calm,
and in control of yourself - Chip
R.Bell (Performance Research
Associates)
Note: Any problems, the employees who are closest to the customer (interaction
point) can resolve

26. What to look out for: How do you recognize
Customers are dissatisfied?
 Non-Verbals :  Verbals – words they express:
Avoiding your eye contact “Is there someone who works
A look of Anger with a Frown here……”
Arms on their side or “Where is your manager……..”
across their chest “I demand a refund.”
Body is turned away from you “Do we look transparent to you”

27. Choice of Words to use
Words to Avoid Words to Use


Can’t or Never
Not our Policy or Not my job
Please
 We’ll try Yes
 I don’t Know
 Hang on for a second Let’s negotiate
 Problem
Would you like to
Appreciate
Consider this
Challenge

28. Other Steps
 Emotion Management
 Observe your body language
 Proximity
 Vocal Modulation
Note: Professionalism does help

29. Feel the HEAT of dissatisfied customers
Hearing them out by being calm showing empathy,
apologise &take action
Composure and be Calm and relax
(Emotion – Take one Step Back) - H
Listen Empathetically - E
Apologise from the heart and
Acknowledge their concerns -A
Personal Responsibility & Taking
Corrective Action - T

30.  Send “Thank you cards” or
“Vouchers” (indicating things have
What are other
changed – keeping in touch with Practical steps
them
 Service recovery Framework
for Service
 What-why-How Recovery
 Can-Can Approach

31. Interpretations of the Effective Service Recovery System
Focus Group
Telephone interview
Feedback (Online –Offline)
Customer Complaints looking Addressing the concerns, issues, What are the current processes
at the level of urgency, crucial needs, values of customer that your organization adopts in
factor serving the customer?
Empowerment in decisions Were the Problems, concerns, issues, What are some alternatives or
needs & values of customer addressed Compensations
Hiring & Training effectively?
Incentives
Why – Why Analysis What - (Details) What Technology of Problem
Tracking System does you
Voice of Customer Why – (Big Picture) organization adopt? – Real
Fish bone Diagram (Cause & Effect) time? www.qualityinaction.net
How – (Solutions)
Continuous Improvements

32. How to deliver the real deal and provide a win-win value
proposition

33.  What does this particular
customer, staff and organization
expect?
 What recovery approaches best Addressing these
communicate your organization’s
vision, values and style bearing in
questions
mind staff & customers’ interest?
R.E.A.L = Ready to Enhance All that we have Learnt

34. How: Another 3A’ Approach. What should they
(Management, staff & Customer):
 Accept - Head
 Adapt - Heart
 Alter thru Actions – Hands
Note: Attention – Attraction – Action – Actualization

35. Organization – Policies (Flexibility),
Compensations
Improving technology (feedback) –
real time?
Staff – Training (communication
skills)/Hiring/Empowered in
decision making Win-Win-Win
Incentives (awards for handling Value Proposition
complaints)
Customer – what do they expect and
giving them the necessary
compensation, apology or speedy
recovery

36. “If you change your thinking, you will change your
actions.”
“ A customer is the most important visitor of our premises. He is not
dependent on us, we are dependent on him. He is not an interruption in
our work; he is the purpose of it. He is not an outsider in our business, he
is part of it. We are not doing him a favor by serving him; he is doing us a
favor by giving us an opportunity to do so.”
Mahatma Gandhi