Key Questions for Managers to Askabout Customer Complaining Behavior• Why do customers complain?• What proportion of unhappy customers complain?• Why don’t unhappy customers complain?• Who is most likely to complain?• Where do customers complain?
Courses of Action Open to a Dissatisfied Customer (Figure 13.1) Complain to the service firm Take some form of Complain to a third public action party Take legal action toService Encounter is Take some form of seek redress Dissatisfactory private action Defect (switch provider) Take no action Negative word-of- mouth Any one or a combination of these responses is possible
Dimensions of Perceived Fairness in Service Recovery Process (Figure 13.2) Complaint Handling & Service Recovery ProcessJustice Dimensions of the Service Recovery Process Interactive Outcome Procedural Justice Justice Justice Customer Satisfaction with the Service Recovery Source: Tax and Brown
Proportion of Unhappy Customers Who Buy Again Depending on the Complaint Process100 95% 90 82% 80 70% 70 60 54% 46% 50 37% 40 30 19% 20 9% 10 0 Customer did not Complaint was Complaint Complaint was complain not resolved was resolved resolved quickly Problem cost > $100 Problem cost $1 - 5 Source: TARP study
Impact of Effective Service Recovery on Retention No 84% Problem Problem,but effectively 92% resolved Problem 46% Unresolved 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Customer RetentionSource: IBM-Rochester study
Components of an Effective Service Recovery System (Figure 13.3)Do the Job Right the Effective Complaint Increased Satisfaction Do the Job Right the First Time First Time + Effective Complaint Handling Handling = Increased Satisfaction and Loyalty and Loyalty Conduct Research Conduct Research Identify Service Monitor Complaints Monitor Complaints Identify Service Complaints Complaints Develop “Complaints Develop “Complaints as Opportunity” as Opportunity” Culture Culture Resolve Complaints Resolve Complaints Develop Effective Effectively Develop Effective Effectively System and Training in System and Training in Complaints Handling Complaints Handling Learn from the Learn from the Conduct Root Cause Conduct Root Cause Recovery Experience Recovery Experience Analysis Analysis Close the Loop via Feedback
Strategies to Reduce Customer Complaint Barriers (Table 13.1)Complaint Barriers for Strategies to Reduce These BarriersDissatisfied CustomersInconvenience Make feedback easy and convenient by: Difficult to find the right complaint Printing Customer Service Hotline procedure. numbers, e-mail and postal addresses on Effort, e.g., writing a letter. all customer communications materials.Doubtful Pay Off Reassure customers that their feedback will Uncertain whether any action, and be taken seriously and will pay off by: what action will be taken by the Having service recovery procedures in firm to address the issue the place, and communicating this to customer is unhappy with. customers. Featuring service improvements that resulted from customer feedback.Unpleasantness Make providing feedback a positive Complaining customers fear that experience: they may be treated rudely, Thank customers for their feedback. may have to hassle, or Train the frontline not to hassle and make may feel embarrassed to complain. customers feel comfortable. Allow for anonymous feedback.
How to Enable Effective Service Recovery• Be proactive—on the spot, before customers complain• Plan recovery procedures• Teach recovery skills to relevant personnel• Empower personnel to use judgment and skills to develop recovery solutions
Guidelines for Effective Problem Resolution (Management Memo 13.1) Act fast Give benefit of doubt Admit mistakes but don’t be Clarify steps to solve problem defensive Keep customers informed of Understand problem from progress customer’s viewpoint Consider compensation Don’t argue Persevere to regain goodwill Acknowledge customer’s feelings
Service Guarantees Help Promote and Achieve Service Loyalty Force firms to focus on what customers want Set clear standards Highlights cost of service failures Require systems to get & act on, customer feedback Reduce risks of purchase and build loyalty
Types of Service Guarantees• Single attribute-specific guarantee – one key service attribute is covered• Multiattribute-specific guarantee – a few important service attributes are covered• Full-satisfaction guarantee – all service aspects covered with no exceptions• Combined guarantee – like the full- satisfaction, adding explicit minimum performance standards on important attributes
The Hampton Inn 100%Satisfaction Guarantee (Figure 13.4) • What are the benefits of such a guarantee? • Are there any downsides?
Key Objectives of Effective Customer Feedback Systems• Assessment and benchmarking of service quality and performance• Customer-driven learning and improvements• Creating a customer-oriented service culture
Building a Customer Feedback System • Total market surveys • Post-transaction surveys • Ongoing customer surveys • Customer advisory panels • Employee surveys/panels
Strengths and Weakness of Key Customer Feedback Collection Tools (Table 13.3)Selection of a cocktail of effective customer feedback collection tools. Multi-level Measurement Represen- Potential for Action- First Hand Cost Collection Tools Service Process Specific able tative, Reli Service Learning Effective Satisfaction Satisfaction Feedback able Recovery Total Market Survey (inclu. competitors) Annual Survey on overall satisfaction Transactional Survey (process specific) Service Feedback Cards (process specific) Mystery Shopping (service testers) Unsolicited Feedback Recd (Online feedback system) Focus Group Discussions Service Reviews Meets Requirements: Fully Moderate Little/Not at all
Entry Points for Unsolicited Feedback• 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