Presentation on theme: "TYPES OF SERVICE FAILURES"— Presentation transcript:
1 TYPES OF SERVICE FAILURES Group 1 FailuresCore service failuresslow serviceunavailable serviceother core service failures
2 TYPES OF SERVICE FAILURES Group 2 FailuresResponses to implicit/explicit requestsspecial needscustomer preferencescustomer errordisruptive others
3 TYPES OF SERVICE FAILURES Group 3 FailuresUnprompted/Unsolicited employee actionslevel of attentionunusual actioncultural normsgestaltadverse conditions
4 TYPES OF SERVICE FAILURES (new category) Group 4 Failures (Employee-reported incidents)Problematic customer behaviordrunkennessverbal and physical abusebreaking company policies or lawsuncooperative customers
5 Service Recovery The Impact of Service Failure and Recovery How Customers Respond to Service FailuresCustomers’ Recovery ExpectationsSwitching versus Staying Following Service RecoveryService Recovery StrategiesService Guarantees
6 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.
9 Customer Complaint Actions Following Service Failure
10 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, 1998)HOWEVER:only a small percent of customers complainonly with responsiveness, redress, and empathy/courtesyonly with tangible rewardseven though service recovery can improve satisfaction, it has not been found to increase purchase intentions or perceptions of the brandservice recovery is expensive
11 Service Recovery Paradox The service recovery paradox is more likely to occur when:the failure is not considered by the customer to be severethe customer has not experienced prior failures with the firmthe cause of the failure is viewed as unstable by the customerthe customer perceives that the company had little control over the cause of the failureConditions must be just right in order for the recovery paradox to be present!
14 Eight Most Common Remedies Customers Seek with Serious Problems Have the product repaired or service fixedBe reimbursed for the hassle of having experienced a problemReceive a free product or service in the futureExplanation by the firm as to what happenedAssurance that the problem will not be repeatedA thank you for the customer’s businessAn apology from the firmAn opportunity for the customer to vent his or her frustrations to the firm
15 Customer Satisfaction with Timeliness of Firm Responses to Service Failures
16 SERVICE FAILURES & RECOVERY STRATEGIES: THE RESTAURANT INDUSTRY
17 SERVICE FAILURES: THE RESTAURANT INDUSTRY Group 1 failure categories (44.4%)Product defects (20.9%)food was described as cold, soggy, raw, burnt, spoiled, or containing inanimate objects such as hair, glass, bandages, bag ties, and cardboard.Slow/unavailable service (17.9%)waiting excessively, not being able to find assistance
18 SERVICE FAILURES: THE RESTAURANT INDUSTRY Facility problems (3.2%)cleanliness issues such as bad smells, dirty utensils, and animate objects (e.g., insects) found on the table or in the foodUnclear policies (1.6%)policies that were perceived as unfair by the customer, such as coupon redemption, or forms of paymentOut-of-stock conditions (.8%)inadequate supply of menu items
19 SERVICE FAILURES: THE RESTAURANT INDUSTRY Group 2 failure categories (18.4%)food not cooked to order (15.0%)requested food be prepared in a particular manner and restaurant failed to meet requestseating problems (3.4%)seating nonsmokers in smoking section and vice versalost or disregarded reservationsrequests for special tables that were deniedseating among unruly and disruptive customers
20 SERVICE FAILURES: THE RESTAURANT INDUSTRY Group 3 failure categories (37.2%)inappropriate employee behavior (15.2%)rudeness, inappropriate verbal exchanges, and poor attitudeswrong Orders (12.6%)delivery of the incorrect food item, either to the table, or in the case of fast food, in packaging so that the mistake was not discovered until the customer had left the premises
21 SERVICE FAILURES: THE RESTAURANT INDUSTRY Group 3 failure categories (37.2%)lost orders (7.5%)situations in which the customer’s order was lost and never fulfilledmischarged (1.9%)being charged for items that were never sent, being charged incorrect prices for items that were ordered, and providing incorrect change
22 SERVICE FAILURES: THE RESTAURANT INDUSTRY Recovery Strategies (frequency, retention)Replacement (33.4%, 80.2%)Free Food (23.5%, 89.0%)Nothing (21.3%, 51.3%)Apology (7.8%, 71.4%)Correction (5.7%, 80.0%)Discount (4.3%, 87.5%)Manager Intervention (2.7%, 88.8%)Coupon (1.3%, 80.0)%
23 Characteristics of an Effective Service Recovery Unconditionalthe guarantee should make its promise unconditionally – no strings attachedMeaningfulthe firm should guarantee elements of the service that are important to the customerthe payout should cover fully the customer’s dissatisfactionEasy to Understand and Communicatecustomers need to understand what to expectemployees need to understand what to doEasy to Invoke and Collectthe firm should eliminate hoops or red tape in the way of accessing or collecting on the guarantee
24 Benefits of Service Recovery 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.
25 Why a Good recovery Works forces company to focus on customerssets clear standardsgenerates feedbackforces company to understand why it failedbuilds “marketing muscle”
26 Does everyone need a service guarantee? Reasons companies might NOT want to offer a service guarantee:existing service quality is poorguarantee does not fit the company’s imagetoo many uncontrollable external variablesfears of cheating or abuse by customerscosts of the guarantee outweigh the benefitscustomers perceive little risk in the servicecustomers perceive little variability in service quality among competitors