Chapter 13
Customer Feedback and
Service Recovery
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 1
American Customer Satisfaction Index:
Selected Industry Scores, 2002
Score 100
(Max = 100)
90 85
79 80 79
80 74 76
71 71 70
70 66 65 62
60
50
40
30
20
10
% Change 0 3.7% 1.3% 0.0% 1.3% 2.8% 0.0% 0.0% 8.2% 2.9% -2.6% 4.8% 3.3%
2002 vs 2001
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Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 2
Key Questions for Managers to Ask about
Customer Complaining Behavior
Why do customers complain?
What proportion of unhappy customers complain?
Why don’t unhappy customers complain?
Who is most likely to complain?
Where do customers complain?
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 3
Courses of Action Open to a Dissatisfied
Customer (Figure 13.1)
Complain
Complainto tothe
the
service firm
service firm
Take
Takesome
someform Complain
form Complainto toaa
of public action third
of public action thirdparty
party
Take
Takelegal
legalaction
action
Service Take
Takesome
someform
ServiceEncounter
Encounter of private
form
action
to seek redress
to seek redress
isisDissatisfactory
Dissatisfactory of private action
Defect
Defect(switch
(switch
provider)
provider)
Take
Takeno
noaction
action
Negative
Negativeword-of-
word-of-
mouth
mouth
Any
Anyone
oneororaacombination
combinationof
of
these responses is possible
these responses is possible
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 4
Dimensions of Perceived Fairness in Service
Recovery Process (Figure 13.2)
Complaint
ComplaintHandling
Handling&&Service
Service
Recovery Process
Recovery Process
Justice Dimensions of the Service Recovery Process
Procedural
Procedural Interactive
Interactive Outcome
Outcome
Justice
Justice Justice
Justice Justice
Justice
Customer
CustomerSatisfaction
Satisfactionwith
withthe
the
Service
ServiceRecovery
Recovery
Source: Tax and Brown
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 5
Proportion of Unhappy Customers Who Buy
Again Depending on the Complaint Process
100 95%
90 82%
80 70%
70
60 54%
46%
50
37%
40
30 19%
20 9%
10
0
Customer did not Complaint was Complaint Complaint was
complain not resolved was resolved resolved quickly
Problem cost > $100 Problem cost $1 - 5
Source: TARP study
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 6
Impact of Effective Service Recovery
on Retention
No
Problem
84%
Problem,
but effectively 92%
resolved
Problem
46%
Unresolved
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Customer Retention
Source: IBM-Rochester study
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 7
Components of an Effective Service Recovery
System (Figure 13.3)
Do
Dothe
theJob
JobRight
First
Rightthe
Time
First Time
the
+
Effective
EffectiveComplaint
Complaint
Handling
Handling = Increased
IncreasedSatisfaction
and
Satisfaction
Loyalty
and Loyalty
Conduct
ConductResearch
Research
Identify
IdentifyService
Service Monitor
MonitorComplaints
Complaints
Complaints
Complaints Develop
Develop“Complaints
“Complaints
as Opportunity”
as Opportunity”
Culture
Culture
Resolve
ResolveComplaints
Complaints
Effectively Develop
DevelopEffective
Effective
Effectively System
System andTraining
and Trainingin
in
Complaints Handling
Complaints Handling
Learn
Learnfrom
fromthe
the Conduct
ConductRoot
RootCause
Cause
Recovery Experience
Recovery Experience Analysis
Analysis
Close the Loop via Feedback
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 8
Strategies to Reduce Customer Complaint
Barriers (Table 13.1)
Complaint Barriers for Strategies to Reduce These Barriers
Dissatisfied Customers
Inconvenience Make feedback easy and convenient by:
Difficult to find the right complaint Printing Customer Service Hotline numbers,
procedure. e-mail and postal addresses on all
Effort, e.g., writing a letter. customer communications materials.
Doubtful Pay Off Reassure customers that their feedback will be
Uncertain whether any action, and taken seriously and will pay off by:
what action will be taken by the Having service recovery procedures in
firm to address the issue the place, and communicating this to
customer is unhappy with. customers.
Featuring service improvements that
resulted from customer feedback.
Unpleasantness Make providing feedback a positive
Complaining customers fear that experience:
they may be treated rudely, Thank customers for their feedback.
may have to hassle, or Train the frontline not to hassle and make
may feel embarrassed to complain. customers feel comfortable.
Allow for anonymous feedback.
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 9
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
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 10
Guidelines for Effective
Problem Resolution (Management Memo 13.1)
Act fast Give benefit of doubt
Admit mistakes but don’t Clarify steps to solve
be defensive problem
Understand problem from Keep customers informed
customer’s viewpoint of progress
Don’t argue Consider compensation
Acknowledge customer’s Persevere to regain
feelings goodwill
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 11
Service Guarantees Help Promote and Achieve
Service Loyalty
Force firms to focus on
what customers want
Set clear standards
Highlights cost of service
failures
Require systems to get &
act on, customer feedback
Reduce risks of purchase
and build loyalty
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 12
Types of Service Guarantees
Single attribute-specific guarantee – one key service
attribute is covered
Multiattribute-specific guarantee – a few important service
attributes are covered
Full-satisfaction guarantee – all service aspects covered
with no exceptions
Combined guarantee – like the full-satisfaction, adding
explicit minimum performance standards on important
attributes
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 13
The Hampton Inn 100% Satisfaction Guarantee
(Figure 13.4)
What are the benefits of
such a guarantee?
Are there any downsides?
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 14
Key Objectives of Effective Customer Feedback
Systems
Assessment and benchmarking of service quality
and performance
Customer-driven learning and improvements
Creating a customer-oriented service culture
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 15
Building a Customer Feedback System
Total market surveys
Post-transaction surveys
Ongoing customer surveys
Customer advisory panels
Employee surveys/panels
Focus groups
Mystery shopping
Complaint analysis
Capture of service
operating data
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 16
Strengths and Weakness of Key Customer Feedback
Collection Tools (Table 13.3)
Selection of a cocktail of effective customer feedback
collection tools.
Multi-level Measurement Represen Potential First
Action- Cost
Collection Tools -tative, for Service Hand
Service Process Specific able Effective
Satisfaction Satisfaction Feedback Reliable Recovery Learning
Total Market Survey (inclu.
competitors)
Annual Survey on overall
satisfaction
Transactional Survey
(process specific)
Service Feedback Cards
(process specific)
Mystery Shopping
(service testers)
Unsolicited Feedback Recd
(Online feedback system)
Focus Group Discussions
Service Reviews
Meets Requirements: Fully Moderate Little/Not at all
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 17
Entry Points for Unsolicited Feedback
Employees serving customers face-to-face or by phone
Intermediaries acting for original supplier
Managers contacted by customers at head/regional office
Complaint cards mailed or placed in special box
Complaints passed to company by third-party recipients
consumer advocates
trade organizations
legislative agencies
other customers
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 13 - 18
