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Service failure
A core service failure occurs when a
customer is not able to use the product or
service they have purchased.
A service encounter failure occurs when
customer interaction with employees of a
firm leave the customer feeling negative
about the firm.
Reasons for service failures
-Reasons beyond control of marketer
-Controllable factors---
communication failure
service delivery not matching
expectations
system failure
laxity on the part of provider
Service recovery
Service recovery is the action
initiated by the service provider in
response to a service failure, like
unavailability of service, a delayed
or slow service, an incorrect or
poorly executed service or
unempathetic or rude behavior by
service provider.
Customer complaints
On an average only 5 % dissatisfied
customers complaint. Others simply go
over to the competitor
A satisfied consumer speaks to an average
of 3 people on his her experience
A dissatisfied consumer gripes to on an
average 11 persons about his/her
unpleasant experience
Unhappy Customers’ Repurchase Intentions
TYPES OF COMPLAINERS
PASSIVE-least likely to take action
VOICERS- -ve word of mouth to service
provider but not to others
IRATES- -ve word of mouth, brand switching,
complain to third party
ACTIVISTS- complain to all sections
Customer Complaint Actions Following Service Failure
Customer recovery
expectations
Understanding and accountability
Fair treatment
◦ Outcome fairness
◦ Procedural fairness
◦ Interactional fairness
Causes Behind Service Switching
Pricing
•High price
•Price increases Response to Service Failure
•Unfair pricing •Negative response
•Deceptive pricing •No response
•Reluctant response
Inconvenience
•Location/hours Competition
•Wait for appointment •Found better service
•Wait for service
Service Switching Behavior Ethical Problems
Core Service Failure •Cheat
•Service mistakes •Hard sell
•Billing errors •Unsafe
•Service catastrophe •Conflict of interest
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Fail-safe Recovery Treat Customers
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Strategies
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Experiences
Learn from Recovery
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Service Guarantees
guarantee = an assurance of the fulfillment of a condition
(Webster’s Dictionary)
in a business context, a guarantee is a pledge or assurance that a
product offered by a firm will perform as promised and, if not,
then some form of reparation will be undertaken by the firm
for tangible products, a guarantee is often done in the form of a
warranty
services are often not guaranteed
◦ cannot return the service
◦ service experience is intangible
(so what do you guarantee?)
Characteristics of an Effective
Service Guarantee
Unconditional
◦ the guarantee should make its promise unconditionally – no
strings attached
Meaningful
◦ the firm should guarantee elements of the service that are
important to the customer
◦ the payout should cover fully the customer’s dissatisfaction
Easy to Understand and Communicate
◦ customers need to understand what to expect
◦ employees need to understand what to do
Easy to Invoke and Collect
◦ the firm should eliminate hoops or red tape in the way of
accessing or collecting on the guarantee
◦
Benefits of Service
Guarantees
A good guarantee forces the company to focus on its customers.
An effective guarantee sets clear standards for the organization.
A good guarantee generates immediate and relevant feedback
from customers.
When the guarantee is invoked there is an instant opportunity to
recover, thus satisfying the customer and helping retain loyalty.
Information generated through the guarantee can be tracked and
integrated into continuous improvement efforts.
Employee morale and loyalty can be enhanced as a result of
having a service guarantee in place.
A service guarantee reduces customers’ sense of risk and builds
confidence in the organization.
Why a Good Guarantee
Works
forces company to focus on customers
sets clear standards
generates feedback
forces company to understand why it failed
builds “marketing muscle”
Service Guarantees
Does everyone need a guarantee?
Reasons companies might NOT want to offer
a service guarantee:
◦ existing service quality is poor
◦ guarantee does not fit the company’s image
◦ too many uncontrollable external variables
◦ fears of cheating or abuse by customers
◦ costs of the guarantee outweigh the benefits
◦ customers perceive little risk in the service
◦ customers perceive little variability in service
quality among competitors
Service Guarantees
service guarantees work for companies who
are already customer-focused
effective guarantees can be BIG deals – they
put the company at risk in the eyes of the
customer
customers should be involved in the design
of service guarantees
the guarantee should be so stunning that it
comes as a surprise – a WOW!! factor
“it’s the icing on the cake, not the cake”