The importance of service recoveryChapter 10

© Hudson & Hudson. Customer Service for Hospitality & Tourism

Topics Coveredo Definition of service recovery and recent

studieso Service recovery paradoxo The recovery processo Consequences of an effective recovery

processo Recovery via social mediao Guidelines for soliciting, tracking and

handling complaintso Reasons and criteria for service

guaranteeso Service guarantee impacts

‘At Your Service’ Spotlight: Solving problems for travelers

Fix it, plus one. o No ‘passing the buck’

• Positive feedback and word of moutho Anticipating service problemso Service recovery training

• Case studies, role plays, letters of complaintso Solve immediate problem and ‘a bit extra’ o Encourage guest feedback

• Determine what the customer values • Determine future prevention strategies

 

Service recoveryThe process by which a company attempts to rectify

a service delivery failure.

o Studies inconclusive, findings contradictoryo Tour operating sector

(Schoefer & Ennew, 2004; Smith & Bolton, 1998) o  Hotel industry and service recovery

• Recovery, satisfaction and repeat patronage (Leong, Kim & Ham, 2002; Lewis & McCann, 2004; O’Neill & Mattila, 2004; Yavas et al., 2004)

o  Restaurant and fast-food sector • Customer expectations and loyalty, perceptions of

significance(Hoffman, Kelley & Rotalsky, 1995; Leong & Kim, 2002; Sundaram, Jurowski & Webster, 1997)

The service recovery paradox

Figure 10.1 (Source: Adapted from Schindlholzer, 2008)

Customer loyalty

Time

Customers who experience service failure and successful recovery

Customers who do not experience service failure

Customer loyalty difference

Service recovery Service failure

Service recovery processo Apology

• Frames customer’s perceptions and paves the way to recovery

o Urgent reinstatement• Quick action to correct or remove problem

o Empathy• Employee understanding and responsiveness

o Symbolic atonement• Tangible evidence of organization’s willingness to

take responsibility o Follow-up

• Evaluate recovery plan

The consequences of an effective recovery process 

o Service failures• ‘Customer Complaint Iceberg’ • Damage to employee morale

o Effective service recovery • Impacts customer satisfaction• Impacts perceptions of quality • Impacts bottom-line performance• Enhances customer loyalty • Stimulates positive word of mouth

The Customer Complaint Iceberg

Figure 10.2 (Source: based on TARP, 1979)

Service Snapshot: Recovery via social media

It’s enabling us to accelerate that conversation and make those connection points in ways that weren’t before possible.

o Efficient means by which customers can be heard o Effective and timely problem solving

• Enhancing transparency of service culture• Improves speed of resolution and recovery

o Companies are ‘part of the conversation’• Public relations becomes personal relations

Soliciting, tracking and handling complaints

o Make it easy for customers to complain• Solicit complaints through multiple channels

o Respond quickly to complaints o Employee education and empowerment

• Strategic and financial value of complaints• Appropriate coping and problem-solving skills

o Complaints viewed as operational problems, strategic opportunities

o Make complaints and complainers visible o Align quality measures, performance reviews,

compensation o Reward complainers o Stop calling them ‘complainers’!

Reasons and criteria for service guarantees

Table 10.1 (Source: based on Hart, 1990; Zeithaml et al, 2007)

Reasons for service guarantees Criteria for designing guarantees

A good guarantee forces the company to focus on its customers

The guarantee should be totally unconditional

An effective guarantee sets clear standards for the organization

It must be easy to understand and communicate to the customer

A good guarantee generates immediate and relevant feedback from customers

It must be meaningful to the customer and compensation more than adequate

Information generated from the guarantee program can be used for continuous improvement

The guarantee must be easy to invoke

When the guarantee is invoked there is an immediate opportunity to recover It should be easy to collect

Guarantees build ‘marketing muscle’ by reducing the risk of purchase decision

The guarantee should be credible

Employee morale and loyalty can be enhanced as a result of a good guarantee program

Service guarantee impacts on marketing and operations

Figure 10.3 (Kandampully and Duddy, 2001, pp. 36) 

Internal & external marketing

Internal & external operating standards

Enhance operational competency

Enhance market awareness

Experience Quality

Service Guarantee

Expected Quality

Case Study:Climbing the curve of customer service

o Remote and ‘exotic’ location• Rich historical background, distinct culture and customs• Lush scenery, hot springs, volcanic gardens

o Award winning service• Private butlers• ‘Romanceologists’

o Minimizing service failure • Intensive training, cultural nuances• Researching clients’ needs• ‘Lineup’ tradition

o Maximize service recovery• Water rescues • Lost items• $2,000 in discretionary spending

Ritz-Carlton, Hainan China: Our whole philosophy… our service and our gold standard is the same here as our other hotels.