Chapter 10
The importance of service recovery
© Hudson & Hudson. Customer Service for Hospitality & Tourism
Topics Covered
o Definition of service recovery and recent studies
o Service recovery paradox
o The recovery process
o Consequences of an effective recovery process
o Recovery via social media
o Guidelines for soliciting, tracking and handling
complaints
o Reasons and criteria for service guarantees
o 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 mouth
o Anticipating service problems
o Service recovery training
• Case studies, role plays, letters of complaints
o Solve immediate problem and ‘a bit extra’
o Encourage guest feedback
• Determine what the customer values
• Determine future prevention strategies
Service recovery
The process by which a company attempts to rectify
a service delivery failure.
o Studies inconclusive, findings contradictory
o 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
Customers who
experience service failure
and successful recovery
Customer loyalty
Customer loyalty
difference
Customers who do not
experience service
failure
Service recovery
Service
failure
Time
Figure 10.1 (Source: Adapted from Schindlholzer, 2008)
Service recovery process
o 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
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
Table 10.1 (Source: based on Hart, 1990; Zeithaml et al, 2007)
Service guarantee impacts on
marketing and operations
Expected
Quality
Internal & external
marketing
Enhance
operational
competency
Service
Guarantee
Enhance
market awareness
Internal & external
operating standards
Experience
Quality
Figure 10.3 (Kandampully and Duddy, 2001, pp. 36)
Case Study:
Climbing the curve of customer service
Ritz-Carlton, Hainan China: Our whole philosophy… our service and our
gold standard is the same here as our other hotels.
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