The Satisfaction-Loyalty Curvefaculty.lahoreschool.edu.pk/Academics/Le… · PPT file · Web...
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Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 13 - 1 Chapter 13: Achieving Service Recovery and Obtaining Customer Feedback
Transcript of The Satisfaction-Loyalty Curvefaculty.lahoreschool.edu.pk/Academics/Le… · PPT file · Web...
The Satisfaction-Loyalty Curve
Chapter 13:
Achieving Service
Recovery and Obtaining
Customer Feedback
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 13 - #
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Overview of Chapter 13
Customer Complaining Behavior
Customer Responses to Effective Service Recovery
Principles of Effective Service Recovery Systems
Service Guarantees
Discouraging Abuse and Opportunistic Behavior
Learning from Customer Feedback
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 13 - #
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Customer Complaining Behavior
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 13 - #
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Customer Response Categories to Service Failures (Fig 13.1)
Service Encounter is Dissatisfactory
Take some form of Public Action
Take some form of Private Action
Take No Action
Complain to the service firm
Complain to a third party
Take legal action to seek redress
Defect (switch provider)
Negative word-of-mouth
Any one or a combination of these responses is possible
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 13 - #
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Customers Often View Complaining as Difficult and Unpleasant (Fig 13.2)
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 13 - #
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Three Dimensions of Perceived Fairness in Service Recovery Process (Fig 13.3)
Procedural Justice
Interactive
Justice
Outcome
Justice
Complaint Handling and Service Recovery Process
Justice Dimensions of the Service Recovery Process
Customer Satisfaction with
Service Recovery
Source: Tax and Brown
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 13 - #
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Customer Responses to Effective Service Recovery
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 13 - #
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Importance of Service Recovery
Plays a crucial role in achieving customer satisfaction
Tests a firms commitment to satisfaction and service quality
Employee training and motivation is highly important
Impacts customer loyalty and future profitability
Complaint handling should be seen as a profit center, not a cost center
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 13 - #
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The Service Recovery Paradox
Customers who experience a service failure that is satisfactorily resolved may be more likely to make future purchases than customers without problems
If second service failure occurs, the paradox disappearscustomers expectations have been raised and they become disillusioned
Severity and recoverability of failure (e.g., spoiled wedding photos) may limit firms ability to delight customer with recovery efforts
Best strategy: Do it right the first time
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 13 - #
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Principles of Effective Service Recovery Systems
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 13 - #
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Strategies to Reduce Customer Complaint Barriers (Table 13.1)
Complaint Barriers for Dissatisfied CustomersStrategies to Reduce These BarriersInconvenienceHard to find right complaint procedureEffort involved in complainingPut customer service hotline numbers, e-mail and postal addresses on all customer communications materialsDoubtful Pay OffUncertain if action will be taken by firm to address problemHave service recovery procedures in place, communicate this to customersFeature service improvements that resulted from customer feedbackUnpleasantnessFear of being treated rudelyHassle, embarrassmentThank customers for their feedback Train frontline employeesAllow for anonymous feedback
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 13 - #
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How to Enable Effective Service Recovery
Be proactiveon the spot, before customers complain
Plan recovery procedures
Teach recovery skills to relevant personnel
Empower personnel to use judgment and skills to develop recovery solutions
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 13 - #
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How Generous Should Compensation Be?
Rules of thumb for managers to consider:
What is positioning of our firm?
How severe was the service failure?
Who is the affected customer?
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 13 - #
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Service Guarantees
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 13 - #
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Service Guarantees Help Promote and Achieve Service Loyalty
Force firms to focus on what customers want
Set clear standards
Highlight cost of service failures
Require systems to get and act on customer feedback
Reduce risks of purchase and build loyalty
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 13 - #
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How to Design Service Guarantees
Unconditional
Easy to understand and communicate
Meaningful to the customer
Easy to invoke
Easy to collect
Credible
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 13 - #
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The Hampton Inn 100% Satisfaction Guarantee (Fig 13.5)
What are benefits of such a guarantee?
Are there any downsides?
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 13 - #
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Discouraging Abuse and Opportunistic Behavior
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 13 - #
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Dealing with Customer Fraud
Treating all customers with suspicion is likely to alienate them
TARP found only 1 to 2 percent of customer base engages in premeditated fraudso why treat remaining 98 percent of honest customers as potential crooks?
Insights from research on guarantee cheating
Amount of a guarantee payout had no effect on customer cheating
Repeat-purchase intention reduced cheating intent
Customers are reluctant to cheat if service quality is high (rather than just satisfactory)
Managerial implication
Firms can benefit from offering 100 percent money-back guarantees
Guarantees should be offered to regular customers as part of membership program
Excellent service firms have less to worry about than average providers
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 13 - #
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Learning from Customer Feedback
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 13 - #
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Key Objectives of Effective Customer Feedback Systems
Assessment and benchmarking of service quality and performance
Customer-driven learning and improvements
Creating a customer-oriented service culture
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 13 - #
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Customer Feedback Collection Tools
Total market surveys
Post-transaction surveys
Ongoing customer surveys
Customer advisory panels
Employee surveys/panels
Focus groups
Mystery shopping
Complaint analysis
Capture service operating data
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 13 - #
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Entry Points for Unsolicited Feedback
Frontline employees
Intermediaries acting for original supplier
Managers contacted by customers at head/regional office
Complaint cards deposited in special box or mailed
Telephone or e-mail
Complaints passed to company by third-party recipients
Consumer advocates
Trade organizations
Legislative agencies
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 13 - #
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Summary of Chapter 13: Service Recovery and Customer Feedback (1)
When customers are dissatisfied, they can
Take some form of public action
Take some form of private action
Take no action
To understand customer responses to service failures, some questions to ask are:
Why do customers complain?
What proportion of unhappy customers complain?
Why dont unhappy customer complain?
Who is most likely to complain?
Where do customers complain?
What do customers expect once they have made a complaint?
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 13 - #
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Summary of Chapter 13: Service Recovery and Customer Feedback (2)
Effective service recovery can lead to customer loyalty
The service recovery paradox does not always hold truebetter to get it right the first time
Components of an effective recovery system include:
Doing it right the first time
Effective complaint handling
Identifying service complaints
Resolving complaints effectively
Learning from the recovery experience
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 13 - #
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Summary of Chapter 13: Service Recovery and Customer Feedback (3)
Guiding principles for effective service recovery include:
Make it easy for customers to give feedback
Enable effective service recovery
Focusing on how generous compensation should be
Dealing with complaining customer
Issues to consider in having services guarantees are:
Power of service guarantees
How to design service guarantees
Is full satisfaction the best a firm can guarantee?
Is it always appropriate to introduce a service guarantee?
To discourage abuse and opportunistic behavior, we need to deal with customer fraud
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 13 - #
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Summary of Chapter 13: Service Recovery and Customer Feedback (4)
We can learn from customer feedbackkey objectives:
Assessment and benchmarking of service quality and performance
Customer-driven learning and improvements
Creating a customer-oriented service culture
A mix of customer feedback collection tools can help to deliver needed information to firms
Total market surveys, annual survey, and transactional surveys
Service feedback cards
Mystery shopping
Unsolicited customer feedback
Focus group discussions and service reviews
Capture unsolicited feedback
Feedback must be analyzed, reported, disseminated, and used
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 13 - #
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