Transcript The Satisfaction-Loyalty Curve - UL2011-2012

Chapter 6
Customer Feedback and
Service Recovery
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
6- 1
American Customer Satisfaction Index:
Selected Industry Scores, 2002
Score
100
(Max = 100)
90
85
80
79
80
79
74
71
71
70
76
66
70
65
62
60
50
40
30
20
10
% Change 0 3.7%
2002 vs 2001
1.3% 0.0% 1.3% 2.8% 0.0% 0.0% 8.2% 2.9% -2.6%
4.8% 3.3%
Industry:
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
6- 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
6- 3
Courses of Action Open to a Dissatisfied
Customer (Figure 13.1)
Complain to the
service firm
Take some form
of public action
Service Encounter
is Dissatisfactory
Take some form
of private action
Take no action
Complain to a
third party
Take legal action
to seek redress
Defect (switch
provider)
Negative word-ofmouth
Any one or a combination of
these responses is possible
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
6- 4
Dimensions of Perceived Fairness in Service
Recovery Process (Figure 13.2)
Complaint Handling & Service
Recovery Process
Justice Dimensions of the Service Recovery Process
Procedural
Justice
Interactive
Justice
Outcome
Justice
Customer Satisfaction with the
Service Recovery
Source: Tax and Brown
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
6- 5
Proportion of Unhappy Customers Who Buy
Again Depending on the Complaint Process
100
90
80
70
60
50
40
30
20
10
0
95%
82%
70%
54%
46%
37%
19%
9%
Customer did not
complain
Complaint was
not resolved
Problem cost > $100
Complaint
was resolved
Complaint was
resolved quickly
Problem cost $1 - 5
Source: TARP study
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
6- 6
Impact of Effective Service Recovery
on Retention
No
Problem
84%
Problem,
but effectively
resolved
92%
Problem
Unresolved
46%
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
6- 7
Components of an Effective Service Recovery
System (Figure 13.3)
Do
Dothe
theJob
JobRight
Rightthe
the
First
Time
First Time
+
Effective
EffectiveComplaint
Complaint
Handling
Handling
Identify
IdentifyService
Service
Complaints
Complaints
=
Increased
IncreasedSatisfaction
Satisfaction
and
Loyalty
and Loyalty

Conduct
ConductResearch
Research

Monitor
MonitorComplaints
Complaints

Develop
Develop“Complaints
“Complaints
as
Opportunity”
as Opportunity”
Culture
Culture
Resolve
ResolveComplaints
Complaints
Effectively
Effectively

Develop
DevelopEffective
Effective
System
and
System andTraining
Traininginin
Complaints
Handling
Complaints Handling
Learn
Learnfrom
fromthe
the
Recovery
Experience
Recovery Experience

Conduct
ConductRoot
RootCause
Cause
Analysis
Analysis
Close the Loop via Feedback
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
6- 8
Strategies to Reduce Customer Complaint
Barriers (Table 13.1)
Complaint Barriers for
Dissatisfied Customers
Strategies to Reduce These Barriers
Inconvenience
 Difficult to find the right complaint
procedure.
 Effort, e.g., writing a letter.
Make feedback easy and convenient by:
 Printing Customer Service Hotline
numbers, e-mail and postal addresses on
all customer communications materials.
Doubtful Pay Off
 Uncertain whether any action, and
what action will be taken by the
firm to address the issue the
customer is unhappy with.
Reassure customers that their feedback will
be taken seriously and will pay off by:
 Having service recovery procedures in
place, and communicating this to
customers.
 Featuring service improvements that
resulted from customer feedback.
Unpleasantness
 Complaining customers fear that
they may be treated rudely,
 may have to hassle, or
 may feel embarrassed to complain.
Make providing feedback a positive
experience:
 Thank customers for their feedback.
 Train the frontline not to hassle and make
customers feel comfortable.
 Allow for anonymous feedback.
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
6- 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
6 - 10
Guidelines for Effective
Problem Resolution (Management Memo 13.1)
 Act fast
 Give benefit of doubt
 Admit mistakes but don’t
be defensive
 Clarify steps to solve
problem
 Understand problem from
customer’s viewpoint
 Keep customers informed
of progress
 Don’t argue
 Consider compensation
 Acknowledge customer’s
feelings
 Persevere to regain
goodwill
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
6 - 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
6 - 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
6 - 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
6 - 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
6 - 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
6 - 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
Collection Tools
Service
Process
Satisfaction Satisfaction
Specific
Feedback
Actionable
Represen Potential
-tative, for Service
Reliable Recovery
First
Hand
Learning
Cost
Effective
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
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Little/Not at all
Services Marketing 5/E
6 - 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
6 - 18