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Ch 7 service marketing2819


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Ch 7 service marketing2819

  1. 1. Contact: +923006641921 Usman Waheed 1 SM BELTEI INTERNATIONALBELTEI INTERNATIONAL UNIVERSITYUNIVERSITY Faculty of BusinessFaculty of Business AdministrationAdministration Bachelor’s ProgramBachelor’s Program Moeung Phanny Master of Business Administration (MBA) / ( MJM ) Tel: 011 78 78 80 E-mail:
  2. 2. 2 SMSM Chapter 7 SERVICE RECOVERY
  3. 3. 3 SM Objectives for Chapter 7: Service Recovery • Illustrate the importance of recovery from service failures in building loyalty • Discuss the nature of consumer complaints and why people do and do not complain • Provide evidence of what customers expect and the kind of responses they want when they complain • Provide strategies for effective service recovery • Discuss service guarantees
  4. 4. 4 SM Figure 7-1Figure 7-1 Unhappy Customers’ Repurchase Intentions 95% 70% 46% 37% 82% 54% 19% 9% Complaints Resolved Quickly Complaints Resolved Complaints Not Resolved Minor complaints ($1-$5 losses) Major complaints (over $100 losses) Unhappy Customers Who Don’t Complain Unhappy Customers Who Do Complain Percent of Customers Who Will Buy Again Source: Adapted from data reported by the Technical Assistance Research Program.
  5. 5. 5 SM 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)
  6. 6. 6 SM Figure 7-3Figure 7-3 Customer Response Following Service Failure Service Failure Do NothingTake Action Stay with ProviderSwitch Providers Complain to Provider Complain to Family & Friends Complain to Third Party Stay with ProviderSwitch Providers
  7. 7. Contact: +923006641921 Usman Waheed 7 SM What does Service Recovery involve Solving customer’s problem quickly & fairly Giving the customer something of value as compensation Keep your promise & follow up What a customer feels about their complaints
  8. 8. Contact: +923006641921 Usman Waheed 8 SM 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 Why Don’t Customers give their FEEDBACK?
  9. 9. Contact: +923006641921 Usman Waheed 9 SM Why Do Customers Complain? Correct the problem Emotional release from frustration Gain some measure of compensation Solicit sympathy Test for consensus
  10. 10. Contact: +923006641921 Usman Waheed 10 SM Action No Action Public Action Private Action Seek redress directly from the firm Take legal action Complaint to business, private, or governmental agencies Stop buying the product or boycott the seller Warn friends about the product and /or seller Dissatisfaction occurs What happens afterthey express theirdissatisfaction
  11. 11. Contact: +923006641921 Usman Waheed 11 SM What are the current processes that your organization adopts in serving the customer? Customer Complaints looking at the level of urgency, crucial factor What are some alternatives or Compensations Empowerment in decisions Hiring & Training Incentives What Technology of Problem Tracking System does you organization adopt? – Real time? Why – Why Analysis Voice of Customer Fish bone Diagram (Cause & Effect) Focus Group Telephone interview Feedback (Online –Offline) Addressing the concerns, issues, needs, values of customer Were the Problems, concerns, issues, needs & values of customer addressed effectively? What - (Details) Why – (Big Picture) How – (Solutions) Continuous Improvements Interpretations of the Effective Service Recovery System
  12. 12. 12 SM Figure 7-5Figure 7-5 Service Recovery Strategies Learn from Recovery Experiences Treat Custom ers Fairly Learnfrom LostCustomers Welcome and Encourage Complaints Fail Safe the Service ActQuickly Service Recovery Strategies
  13. 13. 13 SM Figure 7-6Figure 7-6 Causes Behind Service Switching Service Switching Behavior • High Price • Price Increases • Unfair Pricing • Deceptive Pricing Pricing • Location/Hours • Wait for Appointment • Wait for Service Inconvenience • Service Mistakes • Billing Errors • Service Catastrophe Core Service Failure • Uncaring • Impolite • Unresponsive • Unknowledgeable Service Encounter Failures • Negative Response • No Response • Reluctant Response Response to Service Failure • Found Better Service Competition • Cheat • Hard Sell • Unsafe • Conflict of Interest Ethical Problems • Customer Moved • Provider Closed Involuntary Switching Source: Sue Keaveney Why do we always have to wait ?
  14. 14. 14 SM 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?)
  15. 15. 15 SM Table 7-7Table 7-7 Characteristics of an Effective Service Guarantee Unconditional • The guarantee should make its promise unconditionally - no strings attached. Meaningful • It should guarantee elements of the service that are important to the customer. • The payout should cover fully the customer's dissatisfaction. Easy to Understand and Communicate • For customers - they need to understand what to expect. • For employees - they need to understand what to do. Easy to Invoke and Collect • There should not be a lot of hoops or red tape in the way of accessing or collecting on the guarantee. Source: Christopher W.L. Hart, “The Power of Unconditional Guarantees,” Harvard Business Review, July-August, 1988, pp. 54-62.
  16. 16. 16 SM Why a Good Guarantee Works • forces company to focus on customers • sets clear standards • generates feedback • forces company to understand why it failed • builds “marketing muscle”
  17. 17. 17 SM Service Guarantees • Does everyone need a guarantee? • Reasons companies do NOT offer guarantees: – guarantee would be at odds with company’s image – too many uncontrollable external variables – fears of cheating by customers – costs of the guarantee are too high
  18. 18. 18 SM 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”
  19. 19. Contact: +923006641921 Usman Waheed 19 SM 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
  20. 20. Contact: +923006641921 Usman Waheed 20 SM THANK YOU FOR YOUR ATTENTION ! Any question?