Services Marketing: Chapter 8

Service Failure
occurs when service performance that falls below a customer’s expectations in such a way that leads to customer dissatisfaction
Service Recovery
refers to the actions taken by a firm in response to service failure
Core Service Failure
cause of switching for 25 %
Fair Treatment
acknowledging a problem has occurred, apologizing for the inconvenience, and putting effort into resolving the issue
Strategies for Service Recovery 1-4
doing it right the first time; encouraging and tracking complaints; acting quickly; and providing accurate explanations
Strategies for Service Recovery 5-8
treating customer’s fairly; cultivating relationships with customers; learning from recovery experiences; and learning from lost customers
How to Elicit Complaints
develop the mindset that complaints are good; make complaining easy; be an active listener; ask customers about specific service issues; and conduct short, trailer surveys
Decisions to Defect
caused by pricing, inconvenience, core service failure, service encounter failures, response to service failure, competition, ethical problems, and involuntary switching
The Service Recovery Paradox is More Likely to occur when
the failure is not considered by the customer to be severe;
the customer has not experienced prior failures with the firm;
the cause of the failure is viewed as unstable by the customer; and the customer perceives that the company had little control over the cause of the failure
Characteristics of an Effective Service Guarantee
unconditional, meaningful, easy to understand and communicate, and easy to invoke and collect
Unconditional
the guarantee should make its promise with 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
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”
Reasons Companies Might NOT Want to Offer a 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