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MKT 346: Marketing of Services Dr. Houston. Chapter 13: Complaint Handling and Service Recovery . Why Do Customers Complain?. To obtain compensation To release their anger To help to improve the service Because of concern for others.

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mkt 346 marketing of services dr houston

MKT 346: Marketing of ServicesDr. Houston

Chapter 13:

Complaint Handling

and Service Recovery

why do customers complain
Why Do Customers Complain?
  • To obtain compensation
  • To release their anger
  • To help to improve the service
  • Because of concern for others
three dimensions of perceived fairness in service recovery process
Three Dimensions of Perceived Fairness in Service Recovery Process
  • Procedural justice
  • Interactional justice
  • Outcome justice
dealing with complaining customers and recovering from service failure
Dealing with Complaining Customers and Recovering from Service Failure
  • Take complaints professionally and not personally
  • Be prepared to deal with angry customers
  • See customer complaints as opportunities
    • Correct problems
    • Restore relationships
    • Improve future satisfaction for all
  • Develop effective service recovery procedures
impact of effective service recovery on customer loyalty
Impact of Effective Service Recovery on Customer Loyalty




















Customer did not

Complaint was


Complaint was


not resolved

was resolved

resolved quickly

Problem cost > $100

Problem cost $1 - 5

% of Unhappy

Customers Retained

Source: Claes Fornell, Birger Wernerfelt, “A Model for Customer Complaint Management,” Marketing Science, Vol. 7, No. 3 (Summer, 1988), pp. 287-298

importance of service recovery
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 important
  • Impacts customer loyalty and future profitability
    • Complaint handling is a profit center
the service recovery paradox
The Service Recovery Paradox
  • Customers who experience a service failure that is satisfactorily resolved may be more likely to make future purchases than customers without problems
  • Paradox disappears with a second service failure
  • 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
how to enable effective service recovery
How to Enable Effective Service Recovery
  • Be proactive and resolve failures on the spot
  • Plan recovery procedures for most common failures
  • Teach recovery skills to relevant personnel
  • Empower personnel to resolve service failure
the power of service guarantees
The Power of Service Guarantees

Force firms to focus on what customers want

Set clear standards

Require systems to get & act on customer feedback

Force organizations to understand why they fail and to overcome potential fail points

Reduce risks of purchase and build loyalty

how to design service guarantees
How to Design Service Guarantees
  • Unconditional
  • Easy to understand and communicate
  • Meaningful to the customer
  • Easy to invoke
  • Easy to collect
  • Credible
types of service guarantees table 13 2
Types of Service Guarantees (Table 13.2)
  • Single attribute-specific guarantee
  • Multiattribute-specific guarantee
  • Full-satisfaction guarantee
  • Combined guarantee
is it always suitable to introduce a guarantee
Is it Always Suitable to Introduce a Guarantee?
  • It is not appropriate to introduce guarantees when:
    • Companies have a strong reputation for service excellence
    • Company does not have good quality level
    • Quality cannot be controlled because of external forces
    • Consumers see little financial, personal or physiological risk associated with the purchase
what is a jaycustomer
What is a Jaycustomer?
  • A customer who behaves in a thoughtless or abusive fashion, causing problems for the firm, its employees, and other customers
seven types of jaycustomers
Seven Types of Jaycustomers
  • Cheat
  • Thief
  • Rulebreaker
  • Belligerent
  • Family Feuders
  • Vandals
  • Deadbeat
dealing with customer fraud
Dealing with Customer Fraud
  • If in doubt, believe the customer
  • Track customers with a database:
    • How often customers invoke service guarantees
    • Payments made for service failure
  • Customers rarely cheat if service quality is high
  • Regular customers are less likely to cheat
mkt 346 key concepts chapter 13
MKT 346 Key Concepts: Chapter 13
  • Customer response categories to service failures
  • Three dimensions of perceived fairness in service recovery process
  • Importance of service recovery
  • The service recovery paradox
  • Strategies to reduce customer complaint barriers
  • The power of service guarantees
  • Types of service guarantees
  • Seven types of jaycustomers