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Positive Impact of Service recovery


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Experts say that getting a new customer is five times more costly compared to maintaining an existing customer. The main reason is that they know and they trust you.They know your products and services.They trust and value the relationship they have with you through their actions of buy-ins and transactions.Therefore if the promise is compromised, organizations have to work harder to recover the service.

Service recovery is a positive approach to complaint handling.The heart of the service recovery framework will be identifying and addressing the problem or concern early, crafting out a suitable solution or alternative recommendation empathetically and taking the necessary action measures promptly.

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Positive Impact of Service recovery

  1. 1. Santhanaram Jayaram
  2. 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
  3. 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. 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. 5. Solving customer’s problem quickly & fairly What doesGiving the customer something of Service Recovery value as compensationKeep your promise & follow up involve
  6. 6. What a customerfeels about their complaints
  7. 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. 8. WhyDo Customers Complain? Correct the problem Emotional release from frustration Gain some measure of compensation Solicit sympathy Test for consensusSource: Thomason Learning, Inc. South-Western
  9. 9. What happens after they express their dissatisfaction Public Action Seek redress directly from Action the firm Take legal actionDissatisfaction 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. 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 groupCalculate the Ripple Effect
  11. 11. Customer Lifetime Type of Customers that I serveValue Eg. (Regular Customer) in a Toy StoreAverage Transaction $20Amount – (per)Frequency of 20 timestransaction in thatyearCustomer Value that $20 X 20 = $400yearHow many year they If a customer was to support you for 12 years,might support you – $400 X 12 = $4800(estimate)Ripple EffectNumber of customer If a dissatisfied customer were to share his experience with 10 people,they share their $4800 X 10 = $48,000experience Total = $48,000 + $4,800 = $52,800
  12. 12.  Internal aspect (Services by What are two Design) External aspect (Interaction) areas in Service Recovery:
  13. 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. 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 ParasuramanWhat Framework to adopt?
  15. 15. Effective Service Recovery System Conduct Customer Research Service RecoveryFramework (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. 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. 17. Got to Feel Good about yourself Turning Negative into Positive Instead of ….“Nothing works out for me.”“My customers are alldifficult.”“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. 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. 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. 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 compensationsThere are internal customers and external customers in every organization
  21. 21. Should you bite more than you can chew? Would it be a challenge for organizations to over promise and under deliver?
  22. 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. 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 Xdinner for 2 in Newton Hawker Centre2. SP- Service Provider C - Customer
  24. 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. 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. 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. 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. 28. Other Steps  Emotion Management  Observe your body language  Proximity  Vocal ModulationNote: Professionalism does help
  29. 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. 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. 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 processesat 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? How – (Solutions) Continuous Improvements
  32. 32. How to deliver the real deal and provide a win-win value proposition
  33. 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. 34. How: Another 3A’ Approach. What should they (Management, staff & Customer): Accept - Head Adapt - Heart Alter thru Actions – HandsNote: Attention – Attraction – Action – Actualization
  35. 35. Organization – Policies (Flexibility), CompensationsImproving technology (feedback) – real time?Staff – Training (communication skills)/Hiring/Empowered in decision making Win-Win-WinIncentives (awards for handling Value Proposition complaints)Customer – what do they expect and giving them the necessary compensation, apology or speedy recovery
  36. 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