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MKT 723 (71)
Chapter 8

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MKT 723
Armand Gervais

Chapter 08 – Service Recovery The Impact of Service Failure and Recovery Service recovery is actions taken by an organization in response to a service failure. Failures occur because of unreliability, late delivery, incorrect outcome, rude employees, and more. Unfixed failures can result in customers leaving, negative word-of-mouth, and legal issues. Service Recovery Effects Resolving customer problems has a strong impact on customer satisfaction, loyalty, word-of- mouth, and performance. Customers who never complain are least likely to repurchase. 50% of customers who experience problems received no response from the firm. Extremely dissatisfied customers can become “terrorists” and seek ways to publically criticize. How Customers Respond to Service Failures Customers who experience failures can respond in numerous ways. Negative emotions follow failure and impact how customers evaluate the service recovery and their decision to return. Why People Do (and Do Not) Complain Customers who complain believe positive consequences may occur and that they would be compensated for the failure. Non-complainers believe the opposite. Services that were seen a more expensive would warrant time for a complaint (air line travel), than those who were cheaper (cab ride). Types of Customer Complaint Actions A dissatisfied customer may choose to complain on the spot, via phone, writing or Internet. This gives the company a chance to recover. Some customers will spread negative word of mouth, giving the company no chance to recover. Finally, some customers may choose to complain to third parties, or even take legal action. Types of Complainers  Passives – Least likely to take action. They doubt the effectiveness of complaining.  Voicers – Actively complain to the provider, but are less likely to spread negative WOM, to switch, or go to third parties. These are the provider’s best friends. Constantly giving companies’ second chances. They believe complaining has social benefits, and has positive benefits. Less likely to spread negative WOM.  Irates – Most likely to spread negative WOM and switch.  Activists – Most likely to complain to all. Customer Recovery Expectations When customers complain, they have high expectations. Understanding and Accountability Customers are not looking for extreme action, but want to understand and for the firms to be accountable. Remedies requested by customers include: Fixed service, refund, apology, explanation, assurance, and ability to vent. Fair Treatment Three types of justice customers are looking for following complaints:  Outcome fairness – Customers expect outcomes that match their levels of dissatisfaction. Monetary, apology, free services, discounts, or repairs/replacements.  Procedural fairness – Fairness in terms of policie
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