Handling Customer Complaints & Service Recovery

Handling Customer
Complaints (After sales service)
and Managing Service
Recovery (Retaining customers)

Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia 2
Chapter 5 Objectives
 To outline the courses of action open to
a dissatisfied customer
 Explain the factors influencing complaint
behaviour
 Identify the principles of an effective
service-recovery system
 Explain the techniques for identifying
the root cause of service failures

Customer Satisfaction
 Customer satisfaction is linked not only to
fault free service, but also to what transpires
when something does go wrong. (Telco Service:
notice on daily news papers)
 First law of quality might be:
 “Do it right the first time”;
 What about stolen credit card?/Insurance claim for property damage.
 Brain storming !!!!
 First impression is the best impression.

+ =
Doing the
job Right
the first
time
Effective
complaint
handling
Increased
customer
satisfaction &
loyalty (It helps for
retaining the current
customers and get
new)
Figure 5.1:
Customer Satisfaction Formula??!!

Seek redress directly
from business firms
Take legal action to
obtain redress
Complain to business,
private, or govt.
agencies
Decide to stop buying
product or brand or
boycott seller
Warn friends about the
product and/or seller
Take some form
of private action
Easy to deal
with
Take some
form of
public action
House
Building
lone/ Dhaka
medical
college)
Take
some
action
Take no
action
Dissatisfaction
occurs
Figure 5.2 How Customers Handle
Dissatisfaction

Customer Response to
Service Failure
 Do nothing, but the service provider’s
reputation is diminished (Current situation of
Teletalk)
 Complain to the service firm (Research data for
positive firm)
 Take action with a third party (CAB/….)
 Defect and do not use the provider
again

Complaints as Research Data
Responsive organisations look at
complaints in two ways:
 As a stream of market research
information highlighting where
improvements are needed (Example: waiting
time over the phone)
 Series of individual customer problems
which need to be solved (Medical/Health
service provider)

Capturing Complaints (How
Service providers hear about complaints?)
Complaints may be made through:
 the service provider’s own employees (Part of
feedback from Internal marketing)
 intermediary organisations acting on behalf of
the original supplier (Chain businesses for hospital and
fast food)
 managers who normally work backstage but
are contacted by a customer seeking higher
authority (Head Cook/Master tailor)
 suggestions or complaint cards mailed or
placed in a special box
 complaints to third parties (Employment/Property
Agencies)

Complaining Behaviour in
South-East Asia
 Asian consumers may be less willing to
send written complaints than others
 Asian consumers are less likely to
complain about poor service
 Service failures are more likely to be
tolerated
 (What about: Not taking class/attending
office regularly)

Factors Influencing Complaining
Behaviour
 Level of dissatisfaction i.e. does it seem
worth it?
 Cost of complaining e.g. time and effort
(HTC for Nokia/3 plan)
 Benefits of complaining i.e. value of the
outcome?
 Likelihood of resolution i.e. belief that the
problem will/can be solved satisfactorily.
 Mr. Pithagoras mentioned “It is better not to
address your poverty and complaint to others”

Factors Influencing
Complaining Behaviour
 Available resources for making a complaint
 Access to a means of registering a complaint
 Knowing who is to blame for the problem
 Demographics e.g. younger and better
educated people are more likely to complain

Standards for Complaint
Handling
“ The overriding aim of any complaints
handling process is to turn
dissatisfied consumers into satisfied
consumers. This is best done by
speedy and effective remedies at the
first point of contact.” (Any experiences in
your life as customer/service provider??!!)

% Exceeded/satisfied expectations with action taken
70
60
50
40
30
20
10
0
56%
39% 35%
34% 33%
25% 21%
Immedi-
ately
18%
Under
24 hrs
8%
Within
48 hrs
8%
3 -14
days
29%
15-28
days
8%
Over
28
days
29%
All
respondents
Perceived response time
Figure 5.4 Impact of response time on
satisfaction with action taken on most serious
problems

70
60
50
40
30
20
10
0
55%
37% 34%
27%
18%
1
All respon-
dents
Number of contracts (Average: 3.4)
2 3-4 5+
24%
27% 19% 30%
Figure 5.5
Impact of number of contacts made to get
problem resolved on satisfaction

70
60
50
40
30
20
10
0
95
%
83
%
46
%
23
%
10
%
23
%
No Exceeded
expectations
Satisfied
complainants
Dissatisfied Non-
80
90
100
problem
Mollified
complainant
Figure 5.6
Impact of problem experience/complaining
on Customer loyalty for all products/services

Do the job right
the first time
Effective complaint
handling
Identify service
complaints
Resolve complaints
effectively
Learn from the
recovery experience
Increased satisfaction
& loyalty
Conduct root cause
analysis
Develop effective
systems & training in
complaints handling
Conduct research
Monitor complaints
Develop ‘complaints as
opportunity’ culture
+ =
Figure 5.7 Components of an
effective service-recovery system
Feedback

Service Recovery
 A crucial element in achieving a
satisfied customer
 A true test of the organisation’s
commitment to the customer
 Justice considerations have a large
impact on how customers evaluate a
provider’s recovery efforts

Figure 5.8 The role of justice in the
complaint handling procedure
Source: S.Tax and S.W. Brown, Handbook of Services Marketing and Management, © 2000, Reprinted by permission of
Sage Publications Inc.
Justice Considerations
Procedure Interaction Outcome
Complaint handling process

The Role of Justice in the
Complaint Handling Procedure
 Procedural justice concerns the policies
and rules that comprise the complaining
process
 Interactional justice concerns the
behaviour of the firm’s representatives
during the complaint resolution process
 Outcome or distributive justice relates to
how fairly consumer’s are compensated
for their complaints

Principles of Effective
Service Recovery
 Top management commitment
 ‘Complaints as opportunity’ culture
 Training and empowerment
 Ownership of complaint

Guidelines for Effective
Complaint Resolution
 Act fast: time is of the essence to
achieve full recovery
 Apologise but do not be defensive: it is
important to impress on the consumer
that the problem is an infrequent
occurrence
 Show understanding for the customer’s
viewpoint

 Do not argue with customers: gather
facts to reach a mutually acceptable
solution
 Acknowledge the customer’s feelings to
help build rapport
 Give customers the benefit of the doubt
 Clarify the steps needed to solve the
problem

 Keep customers informed of progress:
uncertainty breeds anxiety
 Consider compensation: this may
reduce further complaints and legal
action
 continue to regain customer goodwill:
outstanding recovery efforts can build
loyalty and referrals

Learning From Experience
 Blueprinting: understand the
processes behind service delivery to
identify potentially weak links
 Control charts: displaying performance
as measured by specific criteria over a
period of time

Learning From Experience
 Fishbone diagram: a
cause and effect analysis
 Pareto analysis: 80/20 rule

Handling Customer Complaints & Service Recovery

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