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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


Customer response categories to service failures fig 13 3

Customer Response Categories to Service Failures (Fig. 13.3)


Customer response categories to service failure

Customer Response Categories to Service Failure


Three dimensions of perceived fairness in service recovery process fig 13 7

Three Dimensions of Perceived Fairness in Service Recovery Process (Fig. 13.7)


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

95%

100

82%

90

80

70%

70

54%

60

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

% 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


Strategies to reduce customer complaint barriers table 13 1

Strategies to Reduce Customer Complaint Barriers (Table 13.1)


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


Seven types of jaycustomers the cheat and thief

Seven Types of Jaycustomers: The Cheat and Thief


Seven types of jaycustomers the rulebreaker and the belligerent

Seven Types of Jaycustomers: The Rulebreaker and the Belligerent


Seven types of jaycustomers family feuders and vandals

Seven Types of Jaycustomers: Family Feuders and Vandals


Seven types of jaycustomers deadbeats

Seven Types of Jaycustomers: Deadbeats


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


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