Complaint handling and service recovery free essay sample

Why do customers complain? In general, studies of consumer complaining behavior have identified four main purposes for complaining. 1. Obtain restitution or compensation. Often, consumers complain to recover some economic loss by seeking a refund, compensation, and/or have the service performed again. 2. Vent their anger. Some customers complain to rebuild self-esteem and/or to vent their anger and frustration. When service processes are bureaucratic and unreasonable, or when employees are rude, deliberately intimidating, or apparently uncaring, customers self-esteem, self-worth, or sense of fairness can be negatively affected. They may become angry and emotional. 3. Help to improve the service. When customers are highly involved with a service , they give feedback to try and contribute toward service improvements. 4. For altruistic reasons. Finally, some customers are motivated by altruism. They want to spare other customers from experiencing the same shortcomings, and they may feel bad if they fail to draw attention to a problem that will cause difficulties for others if it remains uncorrected. We will write a custom essay sample on Complaint handling and service recovery or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Why don’t unhappy customers complain? In some situations, people simply dont know where to go or what to do. Also, many people feel that complaining is unpleasant . Customers may not want to take the time to write a letter, send an email, fill out a form, or make a phone call, particularly if they dont see the service as being important enough to be worth the effort. Many customers see the payoff as uncertain and believe that no one will care about their problem or be willing to resolve it. They may be afraid of confrontation, especially if the complaint involves someone whom the customer knows and may have to deal with again. Customers are less likely to voice complaints in service situations in which they perceive they have low power (ability to influence or control the transaction). This is particularly true when the problem involves professional service providers, such as doctors, lawyers, or architects. Social norms tend to discourage customer criticism of such individuals, because of their perceived expertise. Who is most likely to complain? Research findings consistently show that people in higher socioeconomic circumstances are more likely to complain than those in lower levels. Their better education, higher income, and greater social involvement give them the confidence, knowledge, and motivation to speak up when they encounter problems. Further, those who complain also tend to be more knowledgeable about the service products in question. Where do customers complain? Studies show that the majority of complaints are made at the place where the service was received. One of the authors found that an astoundingly 99 percent-plus of customer feedback was given face to face or over the phone to customer service representatives. Less than 1 percent of all complaints were submitted via email, letters, faxes, or customer feedback cards. Also, customers tend to use non interactive channels to complain (e. g. , email or letters) when they mainly want to vent their anger and frustration, but resort to interactive channels such as face to face or the telephone when they want a problem to be fixed or redressed. Where do customers complain? Studies show that the majority of complaints are made at the place where the service was received. One of the authors found that an astoundingly 99 percent-plus of customer feedback was given face to face or over the phone to customer service representatives. Less than 1 percent of all complaints were submitted via email, letters, faxes, or customer feedback cards. Also, customers tend to use non interactive channels to complain (e. g. , email or letters) when they mainly want to vent their anger and frustration, but resort to interactive channels such as face to face or the telephone when they want a problem to be fixed or redressed. IMPACT OF EFFECTIVE SERVICE RECOVERY ON RETENTION When complaints are resolved satisfactorily, there is a much higher chance that the customers involved will remain loyal. Research has found that intentions to repurchase for different types of products ranged from 9 percent to 37 percent when customers were dissatisfied but did not complain. For a major complaint, the retention rate increased from 9 percent to 19 percent if the customer complained and the company offered a sympathetic ear but was unable to resolve the complaint to the satisfaction of the customer. If the complaint could be resolved to the satisfaction of the customer, the retention rate jumped to 54 percent. The highest retention rate, 82 percent, was achieved when problems were fixed quickly—typically, on the spot. The conclusion to be drawn is that complaint handling should be seen as a profit center and not a cost center. Service recovery paradox The service recovery paradox refers to the effect that customers who experience a service failure and then have it resolved to their full satisfaction are sometimes more likely to make future purchases than are customers who have no problem in the first place. A study of repeated service failures in a retail banking context showed that the service recovery paradox held for the first service failure that was recovered to a customers full satisfaction. However, if a second service failure occurred, the paradox disappeared. It seems that customers may forgive a firm once, but become disillusioned if failures recur. Furthermore, the study also showed that customers expectations were raised after they experienced a very good recovery; thus, excellent recovery becomes the standard they expect for dealing with future failures. Whether a customer is delighted by service recovery may also depend on the severity and recoverability of the failure no one can replace spoiled wedding photos or a ruined holiday, or eliminate the consequences of a debilitating injury caused by service equipment. In such situations, its hard to imagine anyone being truly delighted even when a most professional service recovery is conducted. Contrast these examples with a lost hotel reservation, for which the recovery is often an upgrade to a suite. When poor service is recovered by delivery of a superior product, youre usually delighted and probably hope for another lost reservation in the future. HOW TO ENABLE EFFECTIVE SERVICE RECOVERY Be proactive—on 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 Be proactive—on the spot, before customers complain For example, the waiter may ask a guest who has eaten only half of his dinner, Is everything all right, sir? The guest might say, Yes, thank you, Im not very hungry, or The steak is well done but I asked for medium-rare; plus its very salty. The latter response gives the waiter a chance to recover the service, rather than have an unhappy diner leave the restaurant and potentially not return. Plan recovery procedures Contingency plans have to be developed for service failures, especially for those that can occur regularly and cannot be designed out of the system. Revenue management practices in the travel and hospitality industries often result in overbooking, and travelers are denied boarding or hotel guests are walked even though they had confirmed seats or reservations. To simplify the task of front-line staff, firms should identify the most common service problems such as overbooking and develop predetermined solution sets for employees to follow. Teach recovery skills to relevant personnel As a customer, you may quickly feel insecure at the point of service failure because things are not turning out as anticipated. So you look to an employee for assistance. But are they willing and able to help you? Effective training builds confidence and competence among front-line staff, enabling them to turn distress into delight. Empower personnel to use judgment and skills to develop recovery solutions Service recovery efforts should be flexible and employees should be empowered to use their judgment and communication skills to develop solutions that will satisfy complaining customers. This is especially true for out-of-the-ordinary failures for which a firm may not have developed and trained potential solution sets. Employees need to have the authority to make decisions and spend money in order to resolve service problems promptly and recover customer goodwill. GUIDELINES FOR THE FRONT LINE: HOW TO HANDLE COMPLAINT Act fast Admit mistakes but don’t be defensive Understand problem from customer’s viewpoint Don’t argue Acknowledge customer’s feelings Give benefit of doubt Clarify steps to solve problem Keep customers informed of progress Consider compensation Persevere to regain goodwill SERVICE GUARANTEES Guarantee = an assurance of the fulfillment of a condition (Webster’s Dictionary) In 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 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 CUSTOMER SATISFACTION AND SERVICE QUALITY Dimension Tangibles Definition Appearance of physical facilities, equipment, personnel, and communication materials Examples of customers questions 1) Are the hotels facilities attractive? 2) Is my accountant dressed appropriately? 3) Is my bank statement easy to understand? Dentist Dimension Reliability Definition Ability to perform the promised service dependably and accurately Examples of customers questions 1) Does my lawyer call me back when promised? 2) Is my telephone bill free of errors? Punctuality of air service Dimension Responsiveness Definition Willingness to help customers and provide prompt service Examples of customers questions 1) When theres a problem, does the firm resolve it quickly? 2) Is my stockbroker willing to answer my questions? 3) Is the cable TV company willing to give me a specific time when the installer will show up? My internet service, Samsung example Dimension Competence Definition Possession of the skills and knowledge required to perform the service Examples of customers questions 1) Can the bank teller process my transaction without fumbling around? 2) Is my travel agent able to obtain the information I need when I call? 3) Does the dentist appear to be competent? Degree of Doctors Samsung monitor Dimension Courtesy Definition Politeness, respect, consideration, and friendliness of contact personnel Examples of customers questions 1) Are the telephone operators consistently polite when answering my calls? 2) Does the plumber take off muddy shoes before stepping on my carpet? Dimension Credibility Definition Trustworthiness, believability, honesty of the service provider Examples of customers questions 1) Does the hospital have a good reputation? 2) Does my stockbroker refrain from pressuring me to buy? 3) Does the repair firm guarantee its work? Lawyer , or wom,Claim settlement Dimension Security Definition Freedom from danger, risk, or doubt Examples of customers questions 1) Is it safe for me to use the banks ATMs at night? 2) Is my credit card protected against unauthorized use? Dimension Access Definition Approachability and ease of contact Examples of customers questions 1) How easy is it for me to talk to a supervisor when I have a problem? 2) Does the airline have a 24-hour toll-free phone number? 3) Is the hotel conveniently located? My internet service Dimension Communication Definition Listening to customers and keeping them informed in language they can understand Examples of customers questions 1) When I have a complaint, is the manager willing to listen to me? 2) Does my doctor avoid using technical jargon? 3) Does the electrician call when he or she is unable to keep a scheduled appointment? Dimension Understanding the customer Definition Making the effort to know customers and their needs Examples of customers questions 1) Does someone in the hotel recognize me as a regular customer? 2) Does my stockbroker try to determine my specific financial objectives? Insurance consultants 1) The knowledge gap is the difference between what service providers believe customers expect and customers actual needs and expectations. 2) The standards gap is the difference between managements perceptions of customer expectations and the quality standards established for service delivery. 3) The delivery gap is the difference between specified delivery standards and the service providers actual performance on these standards. 4) The internal communications gap is the difference between what the companys advertising and sales personnel think are the products features, performance, and service quality level and what the company is actually able to deliver. 5) The perceptions gap is the difference between what is, in fact, delivered and what customers perceive they received (because they are unable to evaluate service quality accurately). 6) The interpretation gap is the difference between what a service providers communication efforts (in advance of service delivery) actually promise and what a customer thinks was promised by these communications. 7) The service gap is the difference between what customers expect to receive and their perceptions of the service that is actually delivered. 8) Gaps 1,5,6, and 7 represent external gaps between the customer and the organization. Gaps 2, 3, and 4 are internal gaps that occur between various functions and departments within the organization. Prescriptions for Closing Service Quality Gaps Knowledge: Learn what customers expectconduct research, dialogue, feedback Standards: Specify SQ standards that reflect expectations Delivery: Ensure service performance matches specsconsider roles of employees, equipment, customers Internal communications: Ensure performance levels match marketing promises Perceptions: Educate customers to see reality of service delivery Interpretation: Pretest communications to make sure message is clear and unambiguous. Hard and Soft Measures of Service Quality Hard measures refer to standards and measures that can be counted, timed or measured through audits typically operational processes or outcomes e. g. how many trains arrived late? Soft measures refer to standards and measures that cannot easily be observed and must be collected by talking to customers, employees or others e. g. SERVQUAL, surveys, and customer advisory panels. Control charts are useful for displaying performance on hard measures over time against specific quality standards. Tools to Address Service Quality Problems Fishbone diagrams: A cause-and-effect diagram to identify potential causes of problems. Pareto charts: Separating the trivial from the important. Often, a majority of problems is caused by a minority of causes i. e. the 80/20 rule. Blueprinting: A visualization of service delivery. It allows one to identify fail points in both the front stage and backstage. Pareto analysis seeks to identify the principal causes of observed outcomes. This type of analysis underlies the so-called 80/20 rule, because it often reveals that around 80 percent of the value of one variable (in this instance, the number of service failures) is accounted for by only 20 percent of the causal variable (i. e. , the number of possible causes). In an airline example, analysis showed that 88 percent of the companys late-departing flights from the airports it served were caused by only four (5 percent) of all the possible factors. In fact, more than half the delays were caused by a single factor: acceptance of late passengers (when the staff held a flight for one more passenger who was checking in after the official cutoff time). Generic Productivity Improvement Strategies The task of improving service productivity has traditionally been assigned to operations managers, whose approach has typically centered on such actions as 1) Careful control of costs at every step in the process 2) Efforts to reduce wasteful use of materials or labor 3) Matching productive capacity to average levels of demand rather than peak levels, so that workers and equipment are not underemployed for extended periods 4) Replacing workers by automated machines 5) Providing employees with equipment and databases that enable them to work faster and/or to a higher level of quality 6) Teaching employees how to work more productively (faster is not necessarily better if it leads to mistakes or unsatisfactory work that has to be redone) 7) Broadening the array of tasks that a service worker can perform (which may require revised labor agreements) eliminates bottlenecks and wasteful downtime by allowing managers to deploy workers wherever they are most needed 8) Installing expert systems that allow paraprofessionals to take on work previously performed by professionals who earn higher salaries Although improving productivity can be approached incrementally, major gains often require redesigning entire processes.