1. Achieving Service Recovery and
Obtaining Customer Feedback

2. Learning Objectives
• Uncover customer complaining behaviour
• Design effective service recovery strategies
• Determine the usefulness of service guarantees
• Outline front line staff response to abusive and/or
opportunistic customer behaviour
• Create institutionalized systematic learning from
feedback

3. Customer Complaining Behaviour

4. Customer Response Categories to
Service Failures
Service
Encounter is
Dissatisfactory
Take some
form of Public
Action
Take some
form of
Private Action
Take No
Action
Complain to the
service firm
Complain to a
third party
Take legal action
to seek redress
Defect (switch
provider)
Negative word-
of-mouth
Any one or a combination
of these responses is
possible

5. Understanding Customer Responses to
Service Failure
• 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?
• What do customers expect once they have made a complaint?

6. Customers Often View Complaining as
Difficult and Unpleasant (Fig 13.2)

7. Three Dimensions of Perceived Fairness in Service
Recovery Process
Procedural
Justice
Interactive
Justice
Outcome
Justice
Complaint Handling and Service
Recovery Process
Justice Dimensions of the Service Recovery
Process
Customer Satisfaction with
Service Recovery

8. Customer Responses to Effective
Service Recovery

9. Importance of Service Recovery
• Plays a crucial role in achieving customer
satisfaction
• Tests a firm’s commitment to satisfaction and
service quality
▫ Employee training and motivation is highly
important
• Impacts customer loyalty and future profitability
▫ Complaint handling should be seen as a profit
centre, not a cost centre

10. The Service Recovery Paradox
• Customers who experience a service failure that is
satisfactorily resolved more likely to make future purchases
than customers without problems (Note: not all research
supports this paradox)
• If second service failure occurs, the paradox disappears—
customers’ expectations have been raised and they become
disillusioned
• Severity and “recoverability” of failure (e.g., spoiled wedding
photos) may limit firm’s ability to delight customer with
recovery efforts
• Best strategy: Do it right the first time

11. Principles of Effective Service
Recovery Systems

12. Components of an Effective
Service Recovery System
Do the job right the
first time
Effective Complaint
Handling
Identify Service
Complaints
Resolve Complaints
Effectively
Learn from the
Recovery Experience
Increased
Satisfaction and
Loyalty
Conduct research
Monitor complaints
Develop “Complaints as
opportunity” culture
Develop effective system
and training in
complaints handling
Conduct root cause analysis
=+
Close the loop via feedback

13. Strategies to Reduce Customer
Complaint Barriers
Complaint Barriers for
Dissatisfied Customers
Strategies to Reduce These Barriers
Inconvenience
 Hard to find right complaint
procedure
 Effort involved in complaining
 Put customer service hotline
numbers, e-mail and postal
addresses on all customer
communications materials
Doubtful Pay Off
 Uncertain if action will be taken
by firm to address problem
 Have service recovery procedures in
place, communicate this to
customers
 Feature service improvements that
resulted from customer feedback
Unpleasantness
 Fear of being treated rudely
 Hassle, embarrassment
 Thank customers for their feedback
 Train frontline employees
 Allow for anonymous feedback

14. 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

15. How Generous
Should Compensation Be?
• Rules of thumb for managers to consider:
▫ What is positioning of our firm?
▫ How severe was the service failure?
▫ Who is the affected customer?

16. Service Guarantees

17. Service Guarantees Help Promote and
Achieve Service Loyalty
• Force firms to focus on what customers want
• Set clear standards
• Highlight cost of service failures
• Require systems to get and act on customer feedback
• Reduce risks of purchase and build loyalty

18. How to Design Service Guarantees
• Unconditional
• Easy to understand and communicate
• Meaningful to the customer
• Easy to invoke
• Easy to collect
• Credible

19. 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
▫ All service aspects are covered
▫ Explicit minimum performance standards
on important attributes

20. Discouraging Abuse and
Opportunistic Behaviour

21. Dealing with Customer Fraud
• Treating all customers with suspicion is likely to alienate them
▫ TARP found only 1 to 2 percent of customer base engages in premeditated
fraud—so why treat remaining 98 percent of honest customers as potential
crooks?
• Insights from research on guarantee cheating
▫ Amount of a guarantee payout had no effect on customer cheating
▫ Repeat-purchase intention reduced cheating intent
▫ Customers are reluctant to cheat if service quality is high (rather than
just satisfactory)
• Managerial implication
▫ Firms can benefit from offering 100 percent money-back guarantees
▫ Guarantees should be offered to regular customers as part of
membership program
▫ Excellent service firms have less to worry about than average providers

22. Learning from Customer Feedback

23. 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

24. Customer Feedback Collection Tools
• Total market surveys
• Post-transaction surveys
• Ongoing customer surveys
• Customer advisory panels
• Employee surveys/panels
• Focus groups
• Mystery shopping
• Complaint analysis
• Capture service operating data

25. Key Customer Feedback Collection Tools:
Strengths and Weaknesses (Table 13.3)
COLLECTION TOOLS FIRM PROCESS
TRANSACTION
SPECIFIC ACTIONABLE
REPRESENTATIVE
RELIABLE
POTENTIAL
FOR
SERVICE
RECOVERY
FIRST
HAND
LEARNING
COST
EFFECTIVENESS
LEVEL OF MEASUREMENT
TOTAL MARKET SURVEY
(INCLU. COMPETITORS)
ANNUAL SURVEY ON
OVERALL
SATISFACTION
TRANSACTIONAL
SURVEY
SERVICE FEEDBACK
CARDS
MYSTERY SHOPPING
UNSOLICITED
FEEDBACK (e.g.,
COMPLAINTS)
FOCUS GROUP
DISCUSSIONS
SERVICE REVIEWS
Source: Adapted from Jochen Wirtz and Monica Tomlin, “Institutionalizing Customer-Driven Learning Through Fully Integrated Customer Feedback
Systems.” Managing Service Quality,10, no.4 (2000): p. 210.

26. Entry Points for Unsolicited Feedback
• Frontline employees
• Intermediaries acting for original supplier
• Managers contacted by customers at
head/regional office
• Complaint cards deposited in special box or
mailed
• Telephone or e-mail
• Complaints passed to company by third-party
recipients
•Disseminate the information to
relevant parties to take action
Immediately
•Track over time

27. Summary
• Customer can complain by taking public action, private action or no action at all
• Components of an effective recovery system include:
▫ Doing it right the first time
▫ Effective complaint handling
▫ Identifying service complaints
▫ Resolving complaints effectively
▫ Learning from the recovery experience
• Service guarantees should be unconditional, easy for customers to understand and
invoke
• Dealing with abusive and/or opportunistic customer behaviours is dealing with
customer fraud, most customers are honest, but guarantees should be monitored
• Institutionalized systematic learning from feedback delivers valuable feedback to
management