Discussion on enterprises implementing the service recovery strategy

LIU Zhicheng College of Economics & Management

Heilongjiang Bayi Agricultural University Daqing, China

lzc2980@126.com

HAO Wenyi College of Economics & Management

Heilongjiang Bayi Agricultural University Daqing, China

haowenyi2000@tom.com

Abstract—Along with the economic development, the role of the service industry in China's economic development has become increasingly prominent. Although the management’s level of China’s service enterprises has been greatly improved, the enterprises in the course of management will still encounter various problems. In this paper we based on analyzing the service failure of the objective necessity and the specific reasons, put forward some strategies of implementing the service recovery such as building up the service concept of “winning the client’s satisfaction”, making the first service right, setting up the service recovery early warning system, making sure the service recovery’s procedure, treating customer complaints fair, authorizing front-line workers and summing up the service recovery experiences.

Keywords-service; service failure; service recovery

I. THE CONNOTATION OF THE SERVICE RECOVERY The characteristics of the service’s intangibility,

heterogeneity, indivisibility and non-storage has determined the service failure inevitable. When the enterprise’s service hasn’t met the lowest request of the customers and the customers accordingly feel unsatisfactory, we think the service failure has happened. In view of this, the service should aiming at the service failure, adopt the response and action i.e. service recovery. The service recovery means through the recovery and correction on the service failure, eliminating the adverse effects of service failure, getting the customer’s forgiveness and trust, further getting the customer’s loyalty.

When the service failure happens, if the customers attribute the service failure to enterprises, they will unsatisfactory to them[1], the unsatisfactory moods include angry, dissatisfaction, disappointment, self-pity and anxiety etc.. Under these negative emotions, the customers may make a variety of responses as shown in Figure 1. Normally, most customers will change the suppliers, rather than maintain the original behavior.

Service recovery and service process quality are closely related, which will affect the customer’s perceptions to service quality. The effective service recovery is an important factor to improve the customer’s perception to service quality, which can save the service failure’s adverse effects to the customers, and minimize the loss of the customers and the enteprises [2].

Data resource: to draw it according to Jagdip

Singh,Consumer complaint intentions and behavior:definitional and taxonomical issues,Journal of

Marketing,1988,52(1),p.93

To the enterprises, the cost of losing a customer for service failure is too high: the enterprise must pay the high cost to find a new customer to replace the lost customer. Moreover, the new customer unlike the loyal customer, are sensitive to the price, and normally need the enterprise’s extra service to be familiar with the environment. More important, the negative evaluation from the lost customers may be fatal to the enterprise. According to the investigation, when the customers are satisfactory, they will tell 5 persons on average. When the customers are unsatisfactory, they will complain to 9 to 16 persons, and these 9 to 16 persons will transmit the negative information to other 9 to 16 persons, therefore, the negative information will transmit at geometrical speed. However, the customers who has experienced the service failure, if the enterprise try to recover and finally make the them satisfactory, they will be more loyal then the customers who hasn’t experienced the service failure, and bring the enterprise the

service failure

unsatisfactory emotion or others

action silence

complaining To the

suppliers

complaining to the people

around them

complaining to the 3rd

party

change the suppliers

maintain

Figure 1. Customer response to service failure

978-1-4244-5326-9/10/$26.00 ©2010 IEEE

benefit. According to Philip Kotler’s research, if the customer’s complaints are properly handled, 54%-70% of the customers will buy the enterprise’s product and service once again, if the complaints are handled rapidly, the number will increase to 97%. Therefore, the successful service recovery’s impact on corporate revenue and profit growth is huge. To enterprise, it is worth to use the service recovery to actively save the lost customers because of the service failure.

II. THE OBJECTIVE NECESSITY AND CAUSES ANALYSIS OF THE SERVICE FAILURE

A. The objective necessity of the service failure 1) The service intangibility causes the service failure

The service essentially is to give customers an experience, and whether the customer are satisfactory or not is often subject to its own education level, subjective preference, and mood and mentality, rather than service provider. Once the customers feel satisfied, out of question it is just reflected as service failure. [3]

2) The service heterogeneity leads to the service failure The services provided by the same server to different the

customers at different time and place are different, which means the server itself can not guarantee the stability of the quality of service.

3) The service indivisibility causes the service failure The customers are involved in the service processes, as far

as the service provider is concerned, the simultaneous nature of the service means that the consumers are difficult to test the quality of service in advance. In addition, because of the customer's non-cooperation, the service failure is hard to avoid.

4) The service perishability leads to the service failure As the service has non-storage and perishable

characteristics, resulting in the fact that the provision of the service is difficult to adapt to changes in demand for services; the supply and demand are difficult to balance; the tangible products’ supply and demand can be regulated through storing, while the service can’t, a small number of services meeting the supply of a large number of demand for services will inevitably lead to service failure.

B. Analysis of the specific reasons for service failure 1) The response failure of the provided core service’s

failure The failure of the core service mainly includes no usable

service, unreasonably slow service and other core services. The response failure of the provided core service’s failure means the customers’ dissatisfaction caused by the staff’s inappropriate reflection on the core service failure. Whether it be a problem for the provision of core services is a key point to determine whether the customers is satisfactory, and the service staff’s resolution and response ability directly determines whether the core service’s failure will finally lead to the customer’s dissatisfaction.

2) The response failure of the customers’ needs The customers’ necessity is probably a kind of need

expressed explicitly or impliedly. For example, there are sick

passengers on flights, their needs for medicines and nursing are a kind of typical implied need, even if they don’t ask for attendance, the flight attendants should also take the initiative to provide assistance. The explicit needs mainly include special needs, the customer’s preference, the customer’s fault and other damaging events. In the face of these needs, if the service staff’s inappropriate response will lead to the customer’s dissatisfaction and lead to the failed service.

3) The service staff’s unpredictable behaviors In services, there is a kind of service staff’s behavior which

is neither caused by the customers, nor the planned part of service transmission. It is called the service staff’s unpredictable behaviors, specifically the service staff chillily treating the customers, negative unusual behavior, unrecognized behavior by social culture, negative behavior under pressure all could be the resource of the service failure.

4) The customers’ misconduct Many enterprises’ service concept are “consumers first”,

they think the customer first are always right. This concept of customer first is good to enterprise being concerned about customers and improving service level. However, in real management work, we should make it clear: In fact, the customer is not always right. Miss Bitner’s research shows[4]: the customer’s dissatisfaction and service failure are often caused by the customers themselves who are too difficult, not because the employee don’t work hard. For example, the customers drunk, speech and behavior’s attack, breaking the company's rules and non-cooperation etc.. Under this situation, if the employees are short of the experiences to deal with these customers, the problems will be intensified and ultimately lead to service failure.

III. THE IMPLEMENTATION STRATEGY OF THE SERVICE RECOVERY

A. Setting up the service concept of “winning the customer’s satisfaction” The enterprise should educate the employees to build up the

service concept of “winning the customer’s satisfaction”, and make it its own responsibility and duty. The service staff with this idea and duty will make their own work always at a conscious and active state, form a kind of insight to the customers’ wishes, be able to stand on the position of the customer to consider issues and make positive response, not only know how to provide active service to remedy, but also know what to adopt to remedy service.

B. Doing the 1st service right Doing the 1st service right is the 1st rule of the service

quality, is the most important rule on service quality[5]. The service enterprise normally adopts TQM(total quality management) to elevate the service quality, directed by the whole, comprehensive, and the whole process of idea, make the quality problem an integrated organism to comprehensively analyze and research. Advocating “zero defect” and “doing the 1st service right” is a kind of service recovery tool.

C. Building up the early warning system of service recovery By scientific ways and means, the service industry should

follow and detect the customers’ satisfaction level to the industry service, actively look for the latent service fault, re-identify and foresee the following problems, therefore adopt the measures to avoid, recover some links in service system in time, rapidly feedback to the enterprise management, continuously improve the service work.

D. Making sure the process of the service remedy Determining the service’s recovery process in advance is

the important linkage to implement service recovery. According to service recovery process put forward by Tax an Brown, the service recovery includes 4 steps: making sure service fault, solving the customers’ problem, Collating information and finding out the reasons and improving the quality of services, concrete steps shown in Figure 2.[6]

As shown in figure 2, to confirm service failure, the

enterprise should encourage unsatisfactory customers to actively complain in order to accurately identify the inadequacies of services to remedy in time; to the customers’ complaint, the enterprise should provide convenient and efficient response service and solve the customers’ problems. The enterprise should carefully collect, record the customers’ feedback and classify them; according to the customers’ customers’ complaint, the enterprises should targeted provide the remedy, adopt all kinds of measures to improving service quality to elevate all of the customers’ satisfaction level.

E. Treating the customers’ complaint fair Steve Brown and Steve Tax, professional of service remedy

point out, Fairness which the customers are looking for mainly include process fairness, interaction fairness and result fairness. From the process perspective, customers hope to repair the process’s policies, regulations and time limits fairness, they hope a easy access to the complaint process, And hope that things are rapidly processed. From the interactive perspective, customers expect to be treated fair, the service staff should

show reverence, courtesy and compassion, and actively solve the relevant problems. From the result perspective, the customers hope the result or the compensation could match with his unsatisfactory level, at the same time they can get as much as what they get from other client managers’ same failure, and hope the service enterprise can provide some compensation choice. Therefore, the enterprise should simplify the complaint procedures and timely handle the complaints and treat the customers fair at many aspects, from procedural fairness, interactive fairness and result fairness.

F. Authorizing front-line employees The service ability of the front-line employees who provide

the customers with services directly will affect the customers’ satisfaction level and the service remedy’s effect. Therefore, the key to carry out the effective service recovery for the front-line employees, for improving the remedy ability of the front-line employees, the appropriate authorization could be the important conditions for effective recovery. If the managers grant the customers the right to solve the customer problems independently, it will improve the customers’ attitude, elevate the remediation rate and procedural convenience, increase their control sense when recovering service, decreasing helplessness, enhance participation sense, hence reinforce employee satisfaction. In addition, authorization could increase the staff’s sense of responsibility, elevate the work’s initiative, enthusiasm and creativity, and solve the customer’s problem rapidly and timely

G. summing up the service recovery experiences Service enterprises after carrying out the service recovery

strategy, should sum up experiences in time, should design a customer-complaint procedures and channels, guide, encourage and even reward complaints from dissatisfied customers to the enterprise; should instill the concept of " learning in the service recovery" to all staff, put this concept into the corporate culture, make employees be willing to accept customer complaints, and get the important information in dealing with the customer complaints. Using this information, the enterprise could find the causes of the latent fault, crisis and problems in time, improve the service job, elevate management level, continuously perfect the job, transcend itself and sustainably develop.

REFERENCES

[1] Thomas O.Jones,Jr.W.Earl Sasser,Why satisfied customers defect,Harvard Business Review,1995(Nov-Dec),pp.88-99.

[2] Huang Lin. Research on Service Recovery Strategy and the Principles [J]. Jiangsu Commercial Forum，2007，（4）：44~46.

[3] Wang Yonggui. Service Marketing [M].Beijing：Beijing Normal University Press，2007.

[4] M.J.Bitner,B.H.Booms,L.A.Mohr,Critical service encounters:the employee’s viewpoint,Journal of Marketing,1994,58(4),pp.95-106.

[5] A.Parasuraman,V.A.Zeithaml,Leonard L.Berry,AERVQUAL:a multiple-item scale for mensuring cosumer perceptions of service quality,Journal of Retailing,1988,64(1),pp.64-79.

[6] Zheng Wenqing. Research on Service Recovery Strategy Based on Equity Theory [J].Commercial Times，2009,(15):19-20.

confirming service failure

solving the customers’

problem

improving the quality of services

collating information

and finding out the reasons

resolving individual customer problems and allowing a single

customer satisfaction

improving service system and satisfying

the customers

maintaining the loyalty of the single customer

cultivating numerouscustomers’ loyalty

profit

Figure 2. service recovery process