Service Failure and Recovery: Marketing Speciaization
1. 8-1
Service Recovery
The Impact of Service Failure and Recovery
How Customers Respond to Service Failures
Customers’ Recovery Expectations
Switching versus Staying Following Service
Recovery
Service Recovery Strategies
Service Guarantees
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2. 8-2
Reliability is Critical in Service
but…
In all service contexts, service failure is
inevitable.
Service failure occurs when service
performance that falls below a customer’s
expectations in such a way that leads to
customer dissatisfaction.
Service recovery refers to the actions
taken by a firm in response to service
failure.
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5. 8-5
Types of Complainer
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Passives : least
likely to take any
action
Voicers: service
provider’s best friends
as they complaint
directly to service
provider.
Irates: less likely to
give second chance
to the existing service
provider and engage
in spreading negative
word of
communication and
prefer to switch to
competitor
Activists: Are above
average propensity on
all dimensions and
having a very optimistic
sense of the potential
positive consequences
of all types of
complaining.
8. 8-8
Service Recovery Paradox
“A good recovery can turn angry, frustrated
customers into loyal ones. ..can, in fact,
create more goodwill than if things had
gone smoothly in the first place.” (Hart et
al.)
HOWEVER:
◦ only a small percent of customers complain
◦ service recovery must be SUPERLATIVE
only with responsiveness, redress, and
empathy/courtesy
only with tangible rewards
◦ even though service recovery can improve
satisfaction, it has not been found to increase
purchase intentions or perceptions of the brand
◦ service recovery is expensive
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9. 8-9
Service Recovery Paradox
The service recovery paradox is more likely
to occur when:
◦ the failure is not considered by the customer to
be severe
◦ the customer has not experienced prior failures
with the firm
◦ the cause of the failure is viewed as unstable by
the customer
◦ the customer perceives that the company had
little control over the cause of the failure
Conditions must be just right in order for the
recovery paradox to be present!
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11. 8-11
Service Recovery Strategies
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Make the Service fail- Safe
Encourage and track complaints
Act Quickly: Take care of Problems on the Front Line, Empower
Employees, Allow Customers to Solve Their Own problems
Provide Adequate Explanations
Treat Customers Fairly
Cultivate relationships with
customers
Learn from Recovery Experiences
Learn from Lost Customers
12. 8-12
Eight Most Common Remedies
Customers Seek with Serious
Problems
Have the product repaired or service fixed
Be reimbursed for the hassle of having
experienced a problem
Receive a free product or service in the
future
Explanation by the firm as to what
happened
Assurance that the problem will not be
repeated
A thank you for the customer’s business
An apology from the firm
An opportunity for the customer to vent his
or her frustrations to the firm
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13. 8-13
Service Guarantees
guarantee = an assurance of the fulfillment of a
condition (Webster’s Dictionary)
in a business context, a guarantee is a pledge or
assurance that a product offered by a firm will
perform as promised and, if not, then some form of
reparation will be undertaken by the firm
for tangible products, a guarantee is 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?)
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15. 8-15
Characteristics of an Effective
Service Guarantee
Unconditional
◦ the guarantee should make its promise unconditionally – no
strings attached
Meaningful
◦ the firm 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
◦ customers need to understand what to expect
◦ employees need to understand what to do
Easy to Invoke and Collect
◦ the firm should eliminate hoops or red tape in the way of
accessing or collecting on the guarantee
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16. 8-16
Benefits of Service
Guarantees
A good guarantee forces the company to focus on
its customers.
An effective guarantee sets clear standards for the
organization.
A good guarantee generates immediate and
relevant feedback from customers.
When the guarantee is invoked there is an instant
opportunity to recover, thus satisfying the customer
and helping retain loyalty.
Information generated through the guarantee can
be tracked and integrated into continuous
improvement efforts.
Employee morale and loyalty can be enhanced as
a result of having a service guarantee in place.
A service guarantee reduces customers’ sense of
risk and builds confidence in the organization.8/4/2020 16
17. 8-17
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”
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18. 8-18
Does everyone need a service
guarantee?
Reasons companies might NOT want
to offer a service guarantee:
◦ existing service quality is poor
◦ guarantee does not fit the company’s
image
◦ too many uncontrollable external
variables
◦ fears of cheating or abuse by customers
◦ costs of the guarantee outweigh the
benefits
◦ customers perceive little risk in the service
◦ customers perceive little variability in8/4/2020 18
19. 8-19
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”
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