Service Failure, Complaint and Recovery

1. Service Failure,
Customer Complaint Behavior,
and
Service Recovery
Dr. Amitabh Mishra 1

2. SERVICE FAILURE
Dr. Amitabh Mishra 2

3. Service Failure
“Service failure is instances where a service is
either not performed or is performed
poorly.”
 Failures continue to occur, some times the
reasons outside the organizations control.
 Service failure brings about negative
feeling & responses from customers.
Dr. Amitabh Mishra 3

4.  Service provider’s inability to perform services
properly is known as service failure.
Dr. Amitabh Mishra 4

5. Customer’s Response to Service
Failure
SERVICE FAILURE
CUSTOMER COMPLAIN
PROVIDER RESPONSE
CUSTOMER POSTRESPONSE BEHAVIOR
FUTURE POST RESPONSE BEHAVIOR
Dr. Amitabh Mishra 5

6. 1. After failure dissatisfied customer may engage in complain
behavior.
2. If customer find that his complain will result in compensation
and/or in any other forms of recovery, he may either complain to
provider or to third party.
3. Customers complain provide company a chance to correct its
mistake and satisfy its angry customers. Service provider’s response
to service failure decides customer’s future purchase with the
company.
4. In the absence of positive response to customers complain
probability of customer switch over increases. It is found that mere
compensation can not retain customers for a long time hence
service provider should have mechanism to minimize failure
incidences.
Dr. Amitabh Mishra 6

7. CUSTOMER’S COMPLAINT
Dr. Amitabh Mishra, 7

8. CUSTOMER’S COMPLAINT
 It is important to encourage customer to
complaint.
 Those at the dissatisfied or irritated stage usually
may not complain.
 The top reasons for not complaining are-
◦ Lack of time
◦ Too much trouble
◦ Why bother, the organization will not do anything
Dr. Amitabh Mishra 8

9. Type of Customer’s Complaint
Behavior
 Researchers suggest that people can be
grouped in to four categories based on how
they respond to service failure. These are-
1. Passives
2. Voicers
3. Irates
4. Activists
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10. Passives
 Passives are-
◦ Least likely to take any action after service failure.
◦ Unlikely to complain neither to provider nor to third
party and less likely to spread negative WoM (word
of mouth).
◦ Often doubt the effectiveness of complaining,
thinking the consequence will not merit the time &
effort they will expend.
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11. Voicvers
 Voicvers –
◦ Actively complain to the service provider.
◦ But they are less likely to spread negative WoM
(word of mouth), to switch patronage, or to go to
the third party.
◦ They believe that consequence of complaining to
provider can be very positive & they believe less in
other type of complaining such as spreading
negative word of mouth & talking third parties.
Dr. Amitabh Mishra, 11

12. Irates
 Irates are-
 More likely to engage in negative WoM words of
mouth to friends & relatives & to switch providers
than are others.
 Unlikely to complain to third parties.
 Less likely to give service provider a second
chance & instead will switch to competitors
spreading the words to friends, family and relative
along the way.
Dr. Amitabh Mishra, 12

13. Activists
 Activists consumers are characterized by above
average propensity to complain on all dimensions:
◦ They will complain to provider,
◦ they will tell others,
◦ they are more likely than other group to complain to
third parties.
 Complaining fits with their personal norms. In
extreme cases these consumers can become
“terrorist”.
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14. COMPLAINT
MANAGEMENT SYSTEM
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15. COMPLAINT MANAGEMENT SYSTEM
 Data shows that today customers are more
frequently complaining about failure than ever
before.
 The service provider need to develop such a
system as customers could file their complaint
easily and complaint could be processed
quickly.
Dr. Amitabh Mishra, 15

16.  Experts suggest that any worthwhile
complaints management system has to have
following basic features:
◦ Visibility: Customer should know where to complain
(Postal addresses/E-mail IDs, telephone/fax numbers etc.)
◦ Accessibility (Customer should know how to complain)
◦ Responsiveness (Complaints need to be dealt quickly)
◦ Customer-focused approach
◦ Accountability (Someone in the organization has to
take responsibility for complaint handling)
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17.  Persevere to regain customers’ goodwill (One of the
biggest challenges is to restore the confidence of dissatisfied
customer and preserve the relationship for future).
 Show that you understand the problem from each
customer’s point of view (Empathy: the ability of a person to
identify with the feelings and thought of other persons)
 Don’t argue with customers & Acknowledge customers
feelings.
 Give customer benefit of doubt & Consider
compensation (Not all customers are truthful, and not all
complaints are justified).
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18.  Clarify steps needed to solve the problem & Keep
customers informed of progress:
 Admit mistake & apologizes
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19. SERVICE RECOVERY
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20. SERVICE RECOVERY
“Service recovery refers to action taken by an
organization in response to a service failure”
“Service recovery is the process of putting things
right after something goes wrong in the service
delivery”.
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21.  Smith, Bolton & Wagner (1999) has treated
service recovery as
“a ‘bundle of resources’ that an organization
can employ in a response to a failure”.
 Service recovery can occur at two different
stages of purchase process:-
1. During the service encounter
2. After the customer leaves the service station or after
consumption of service
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22. PRINCIPLES OF EFFECTIVE SERVICE
RECOVERY SYSTEM
 Break customer silence and Make it easy &
convenient for customers to complain.
 Service recovery should be proactive and fast
 Recovery procedure needs to be planned
 Recovery skill must be taught to employees
 Recovery requires empowered employees
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23. SERVICE RECOVERY STRATEGIES
1. Do it right the first time or Reliability
2. Welcome & encourage complaints
3. Act quickly
4. Treat customers fairly and ensure flaw-free
service in future
5. Learn from recovery experience
6. Learn from lost customers
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