service recovery jet blue & lion air

FGD TEAM PS121 FERRY|FRISCA|GITA| DWI

Marketing Services Magister Manajemen, Universitas Indonesia

JetBlue SERVICE RECOVERY

THIS IS PCL TIME !

A Service Failure Is generally describe as service performance that falls below a customer

expectation in such a way that leads to customer dissatisfaction.

• Please describe Service Failure, Service Recovery and the connection both of them 1#

Service Recovery refers to the action taken by an organization in response to a service failure And both of them give big impact on customer satisfaction, loyalty, word of mouth

communication and bottom line performance

• How customer react and how many types of complainer? 2#

Service Failure

Dissatisfaction/ negative emotions

No Complaint Action

Exit/Switch Stay

Complaint Action

Complain to Provider

Negative word of mouth

Third –Party Action

Exit/Switch Stay

VOICERS

PASSIVE IRATES

ACTIVIST

least likely to take any action

actively complaint to the service provider,

But less likely to spread word of mouth,

switch patronage or go to third parties

“Service Provider’s best friend)

less likely to give second chance to service

Provider and instead will switch to a competitor

above-average propensity to

complain on all dimensions

Make the Service Fail-Safe

Respond Quickly

Provide Appropriate Communication

Treat Customers Fairly

Cultivate Relationship with Customers

Encourage and Track Complaints

Learn from Recovery Experience

Learn from Lost Customers

Guarantee the Service Offering

Excellent Service Recovery

• Please explain Service Recovery Strategies 3#

A guarantee does not fit with the company’s image

Service Quality is truly uncontrollable

Potential exist for customer abuse of the guarantee

Costs of the guarantee outweigh the benefits

Customers perceive little risk in the service

Existing service quality in the company is poor

• When to use Service Guarantee 4#

“High Flying Airlines Melts Down in Ice Storm”

JetBlue

JetBlue was founded by David Neeleman 1998

“bringing humanity back to air travel and making the experience of flying happier & easire for everyone”

1999 Offer low-cost, high quality service to & from NY city “NY’s hometown airline”

Amenities reserved for pricier carriers, wider seats, more legrooms & storage space, 24 channels of inflight T, touch screen check-in

2000 Non-stop service between NY & Fort Lauderale, Florida

2001 The travelling public responded favorably to Neel’s offer of excellent customer service, upscale amenities & low fares

2002 JetBlue go public (IPO)

2004 Flying high. The revenues had quadrupled. 11st place in revenue passenger miles.

History of JetBlue

2005 Diamond Certificate Excellence Award

Second lowest rate of customer complaints among 10 largest US airlines Conde Nast Traveler + Travel + Leisure : the best domestic airlines OAG : the best low cost / no frills airlines

2006

2007 Fortune : 3 most admired airlines Market Metrix : best customer satisfaction

History of JetBlue

JetBlue’s Experience

BLISS SPA FOR KIDS

VALUE

SERVICE

STYLE

Black Valentine Day

14 Feb 2007 Winter Storm

in JFK Airlines delay

Cancelled flights

11 hours trapped on

plane

No support/ No food

Customer was damaged

Nightmare! Dissatisfied

$16,85 $15,60

$9,98

$7,20

$6,39 $6,75

$0,00

$2,00

$4,00

$6,00

$8,00

$10,00

$12,00

$14,00

$16,00

$18,00

2005 2006 2007 2008 2009 2010

JetBlue Stock Price

560

580

600

620

640

660

Jan-07 Jan-08 Jan-09 Jan-10 Jan-11

Jan-07 Jan-08 Jan-09 Jan-10 Jan-11

holders 600 600 645 644 655

Stock Ownership

$9.012

$11.783

$14.729

$18.565

$21.387 $21.920 $22.450 $24.254

$0

$5.000

$10.000

$15.000

$20.000

$25.000

$30.000

2003 2004 2005 2006 2007 2008 2009 2010

2003 2004 2005 2006 2007 2008 2009 2010

REVENUE PASSENGERS

JetBlue’s

Report Source :

JetBlue Failure

1. Late/Slow Response

• JetBlue’s initial responses to the weather disruption were not quick and immediate.

• JetBlue failed to cancel flights on time, leaving some passengers stranded on the tarmac for as long as 10 hours.

• The policy of initially postponing, but not cancelling flights, resulted in snowballing cancellation for nearly a week.

• JetBlue’s managers always followed a “Wait and See” approach with the weather.

Jet Blue Failure

2. Unavailability of the Service Quality that was Promised

• JetBlue failure to provide the quality of service that was promised “Bring humanity back to air travel”

• JetBlue had not the proper service standard for any kind of weather emergency which drive the company to many other service failures.

JetBlue Failure

3. Employees Communication and Responsiveness:

• A basic problem JetBlue’s internal communication system which led to lower quality in employee responsiveness.

The ice storm had left a large portion of the airline’s while 11,000 pilots and flight attendants far from where they needed to be to operate the planes.

And JetBlue lacked the trained staff that was needed to find them and tell them where to go. It was the first time in the company’s history that they had so many people out of position.

• Undependable the reservation system.

The system was so overwhelmed that customers were unable to get through to human agents to check on a flight.

JetBlue Failure (Reca

1. Late/Slow Response

2. Unavailability of the

Service Quality that

was Promised

3.Employees Communication

and Responsiveness:

The Tragedy

Questions

How did JetBlue ultimately respond to this service failure?

How JetBlue Customers Respond to Service Failures?

Service Recovery Strategy

Service Failure

Dissatisfaction/ negative emotions

No Complaint Action

Exit/Switch Stay

Complaint Action

Complain to Provider

Negative word of mouth

Third –Party Action

Exit/Switch Stay

VOICERS

PASSIVE IRATES

ACTIVIST

Figure 7.3 Customer Complaint Action Following Services Failure

Jet Blue Customer Respons

IRATES

Respond Quickly

Provide Appropriate Communication

Treat Customers Fairly

Cultivate Relationship with Customers

Encourage and Track Complaints

Learn from Recovery Experience

Learn from Lost Customers

Make the Service Fail-Safe

Guarantee the Service Offering

Excellent Service Recovery

SERVICE RECOVERY STRATEGY

Fix the Customer

Fix the Problem

JetBlue Response: Fixing The

Customer

1. Issuing public apology

2. Announcing full refund

Respond Quickly

JetBlue Response: Fixing The

Customer

Provide Appropriate Communication

1. Give a free round trip ticket 2. Relaxed the policies of rebooking

Treat Customers Fairly

JetBlue Response: Fixing The

Customer

Cultivate Relationship with Customers

JetBlue Response: Fixing The

Customer

Regular Live show from T5 (Taylor Swift, Pink, Jamie Blunt)

Recommendation for Future Better

Service

Solve Customer: 1. Establish service recovery plan 2. Provide Customer’s Guidance (twitter, blog,

social media)

Solve Problem: 1. Build IT system for faster rebooking activity 2. Build Dashboard system (weather pre detect / Airlines Applicarion) 3. Training Employee to handle complain

Service Recovery Plan for

JetBlue

make customer easy to contact you

Lion Air case study

“We make people fly (and die...)”

Lion Air Failure - Bali Crash

Lion Air Failure

1. Much of customer don’t know how to complain. There’s no media for complain.

2. Management did not pay much attention to customer complaints.

1. Lion plane’s system monitoring and checking are not running well.

2. There’s no system or database for record ing complain

3. The Employee are not trained well.

Lion Air Customer Response

Indonesia Airlines

Overview Departemen Perhubungan 2013 Q.I

0%

44% 26%

15% 11% 4%

Market Share

Lioan Air

Garuda

Sriwijaya

Batavia

Merpati 70%

72%

74%

80%

81%

85%

Merpati

Batavia

Lion

Sriwijaya

Wings

Garuda

On Time Performance

00,05

0,10,15

0,20,25

0,30,35

0,40,45

Lion Air Response

1. Explanation to media

2. Give compensations to the victims

3. Adding more planes to fulfill customer needs

Recommendation

1. Explanation to media

2. Give compensations to the victims

3. Adding more planes to fulfill customer needs

Respond Quickly

Provide Appropriate Communication

Treat Customers Fairly

Cultivate Relationship with Customers

Contact Airport Team, ground Team, SARS

Press Release Kit, Press Conference with media, VP of Service in charge

Compensate with money according airlines rules.

Take care of the customer to Crisis Center

SERVICE RECOVERY STRATEGY

Encourage and Track Complaints

Learn from Recovery Experience

• Build CRM • If there’s a complain it can be easy to track it. - Type of complain (onboard/non-onboard) - Urgency and Majority Complain - How long the problem solved - The solutions , alternatives or compensation given - Who’s in charge

• Build a Knowledge Management for the employee. • Collect data of complain/problem solved. • Divide into categories : Urgent, Mandatory,

Miscellaneous. • Save it into database. • Employee use it as a tool kit for problem solving

guidance. • If necessary, it can be use as a material to define a

new SOP.

SERVICE RECOVERY STRATEGY

Learn from Lost Customers

Make the Service Fail-Safe

• Build a team/division who in charge of Customer Recovery Intelligence:

- Analyze why customer left. Who they are? Are they frequent flyer? - Research the problem caused? Is it majority? - Consider they into the pyramid of service recovery

progression. If they are worth, What can we do to take them back?

* Offer some special programs, i.e: holiday packet, family discount, hotel experience. * Discount for specific destination

• “Happy Complain Culture”. • Company should not consider complain as a poser, instead

manage it properly as service recovery. • Train employees intense and gradually. Benchmark from

others airlines. • Employees medical checkup gradually. • Management conduct plane inspection. • Empowering employees. Gives them authority to solve

problem on the spot in order to take care customer satisfaction.

SERVICE RECOVERY STRATEGY

Summary

• Service Recovery is a process to analyzing what happened and changing the routines in order to recover and fix failure.

• It is important, since a company spend five times as much to attract a new customer as to keep a dissatisfied one.

• Failure resolutions and Customer satisfaction after recovery has a positive on loyalty intentions.

• Service recovery is indirectly related with profit. About 65% of an average company’s income comes from loyalty intentions of repeat customers .

FAIL SAFE YOUR SERVICE

Do the job right the first time

Effectove complaint handling

Increased satisfaction and loyalty

Identify service complaint

Resolve complaintrs effectively

Learn from the recovery experience

Conduct research Monitor complaints Develops “complaint as opportunity culture”

Develop effectove syste, and training in complaints handling

Conduct root couse analysis

Sumber : Lovelock. Wirtz. 2007. Service Marketing : People, technology. Strtagey. Prentice Hall

Close the loop via feedback

The Pyramid of Service Recovery Progression

• Stage 1, Moribund. There is no complaint handling. Angry customers are ignored.

• Stage 2: Reactive. Customer complaints are heard, and a response is made. But it's a haphazard process with no defined goals for the response and no one owning this business process.

• Stage 3: Active Listening. At this stage, the response to issues voiced by customers is structured. Specific people have the responsibility to respond to complaints and guidelines are in place for the response. However, it is still reactive.

• Stage 4. Solicitous. The critical change from Stage 3 to 4 is the move from reactive to proactive solicitation of customers with issues. The reason this is so important is that most customers don't bother to complain. The solicitous role is accomplished by encouraging customer to voice their complaints

• Stage 5: Infused. The pinnacle of Service Recovery Practices is achieved when the complaint identification merges with business process improvement or six sigma programs to support root cause identification and resolution.

THANK YOU