The Profitable Art Of Service Recovery

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This presentation is the summary of a HBR article by the same name, about turning complaining customers into loyal ones

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The Profitable Art Of Service Recovery

  1. 1. The Profitable Art of Service RecoveryBy Christopher W.L. Hart,James L. Heskett, and W. Earl Sasser, Jr.<br />Summarized By:<br />Group 5<br />Anubhav Vanmali<br />Sharadkumar R Bhatt<br />Siddharth Anand<br />Symbiosis Institute of Business Management, Bangalore<br />
  2. 2. Introduction<br />Mistakes are a critical part of every service<br />Errors are inevitable but dissatisfied customers are not<br />A good recovery can<br /><ul><li>turn angry/frustrated customers into loyal ones
  3. 3. create more goodwill than if things had gone smoothly </li></li></ul><li>Example: Club Med - Cancun<br />Recovered from a service nightmare and won the loyalty of a group of vacationers<br />A horrendous flight<br />Antidote –<br /> Personal greetings, help with baggage, a sympathetic ear, a chauffeured ride to the resort, lavish banquet<br />
  4. 4. Where lies the opportunity?<br />Any problem that employees who are close to the customer can discover and resolve is a chance to go beyond the call of duty and win a customer for life<br /> - mistaken billings, late deliveries, etc.<br />It costs much more to replace a customer than it does to retain one<br />
  5. 5. The Road to Service Recovery<br /> Focus on the goal of customer satisfaction, adopting a customer-focused attitude, and cultivating the special skills necessary to recovery<br />
  6. 6. The Road to Service Recovery<br />In services, no matter how rigorous the procedures and employee training or how advanced the technology, zero defects is an unattainable goal<br /> - The best airline reservation system can’t prevent the airport from fogging over<br />
  7. 7. The Road to Service Recovery<br />The surest way to recover from service mishaps is for workers on the front line to identify and solve the customer’s problem<br />Requires decision making and rule breaking<br />
  8. 8. The Road to Service Recovery<br />Measure the costs of effective service recovery<br />Break customer silence<br />Listen closely for complaints<br />Anticipate needs for recovery<br />Act fast<br />Train employees<br />Empower the front line<br />Close the customer feedback loop<br />
  9. 9. Measure the Costs<br />Measurement precedes management<br />Do not underestimate the profit lost when a customer departs unhappy<br />What gets measured is truly what gets managed here<br />Do not overlook the hidden costs that customers get stuck with – money spent for phone calls, time spent in making the cases, the aggravation endured throughout the process<br />
  10. 10. Break the Silence<br />Every customer’s problem is an opportunity for the company to prove its commitment to service – even if the company is not to blame<br />Some customers make a point of being heard – listening to them is important<br />Most unhappy people don’t speak up<br />
  11. 11. Break the Silence<br />Make it easy for customers to complain<br />Dedicated toll free numbers <br />Questions like, “How was everything?”<br />British Airways – Video Point Booths<br />Maine Savings Bank – $1 for every suggestion<br />Looking for trouble in the making – listening for offhand comments <br />Marriott Hotel<br />Solve the customer’s problem - even if it isn’t the company’s fault<br />Domino’s Pizza <br />
  12. 12. Anticipate Needs for Recovery<br />Companies can narrow the search for problems (opportunities) by monitoring certain areas of the organization and addressing them in their service-recovery strategies<br />Complex scheduling<br /> New services & products (Signs at a new facility)<br />Areas where turnover is high and workers are inexperienced (Security Gate, Operator)<br />
  13. 13. Act Fast<br />Identifying a problem quickly is fruitful only if the company responds fast<br />As service problems escalate quickly, so the opportunity to prove one’s commitment to the customer is fleeting, especially if the company is at fault<br />Priority 1 : Complete the service promptly<br />
  14. 14. Act Fast<br />The urgent resumption of service and an apology are often sufficient to make amends. But not always.<br />Some situations call for a gesture which says, “ We realize there’s been a mistake, and we want to make it up to you”<br />Free dessert if the wait for table is long <br />Flowers to inconvenienced customers by Bank<br />
  15. 15. Train Employees<br />Developing the communication skills & creative thinking needed to deal with irate customers<br />Making decisions on their feet and developing an awareness of customers’ concerns<br />Simulated real-life situations & role playing<br />Discussing and planning for possible contingencies<br />Games<br />A sense of the whole organization (Job Rotation)<br />
  16. 16. Empower the Front Line<br />Authority to act <br />Responsibility <br />obligation to act, not just to accept blame<br />Incentives<br />Bending the rules, taking initiative<br />SOPs for problems that come often<br />McDonald’s<br />Minneapolis Marriott ($10 + Sweet Dreams)<br />
  17. 17. Close the Loop<br />If a customer’s complaint leads to corrective measures, the company should tell the customer about the improvement<br />It it’s something that can’t be fixed, the company should explain why<br />Timely telephone responses<br />Asking for even more feedback<br />These efforts tend to give customers a positive impression<br />
  18. 18. Conclusion<br /> Service Recovery shifts the emphasis from the costof pleasing a customer to the value of doing so, and it entrusts frontline employees with using their judgment <br /> Recovery is fundamental to service excellence and therefore should be regarded as an integral part of a service company’s strategy<br />
  19. 19. “To err is human;<br /> to recover, divine”<br /> Thank You<br />

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