Santhanaram Jayaram

Positive Impact of Service Recovery

How to turn negative situations into positive ones effectively

Service recovery techniques to keep customers happy at minimum expense

How to recognize and take steps to handle difficult customers and unexpected situations

The practical steps to service recovery

How to deliver the real deal and provide a win-win value proposition

Participants will learn

www.2be3consultancy.com

“Service recovery builds customer loyalty that brings a customer back from the brink of defection,” says John Tschohi

Why- significance of Service Recovery

Service recovery is a procedure for dealing with customers’ problems and complaints. An effective & timely recovery procedure will turn a complaining customer into a satisfied, loyal customer most of the time.

It is trying to do something Right from a situation that went wrong. “Customers value reliability over all other dimensions.” Parasuraman, Berry &

Zeithaml. (1991)

What is Service Recovery

Solving customer’s problem quickly & fairly

Giving the customer something of value as compensation

Keep your promise & follow up

What does Service Recovery

involve

What a customer feels about their

complaints

Don’t know who to complain to Don’t think it will do any good May accept part of the blame May want to avoid confrontationSource: Thomason Learning, Inc. South-Western

Because of the above, organization may miss the opportunity to learn instead of repeating the same mistakes again and again

Why Don’t Customers give their FEEDBACK?

Correct the problemEmotional release from frustrationGain some measure of compensationSolicit sympathy Test for consensus

Why Do Customers Complain?

Source: Thomason Learning, Inc. South-Western

What happens after they express their dissatisfaction

Dissatisfactionoccurs

Action

No Action

Public Action

Private Action

Seek redress directly from the firm

Take legal action

Complaint to business, private,or governmental agencies

Stop buying the product or boycott the seller

Warn friends about the productand /or seller

From your Database find out the Recency, Frequency, Monetary (RFM) Calculate the customers (CLV)- Average $ amount per transaction- Average number of transactions per year- Average number of years a customer remains in a business’s primary target groupCalculate the Ripple Effect

WIIFM - Potential Cost of a Lost Customer Due to Service Failure – (Shaun Belding)

Customer Lifetime Value

Type of Customers that I serveEg. (Regular Customer) in a Toy Store

Average TransactionAmount – (per)

$20

Frequency of transaction in that year

20 times

Customer Value that year

$20 X 20 = $400

How many year they might support you – (estimate)

If a customer was to support you for 12 years,$400 X 12 = $4800

Ripple Effect

Number of customer they share their experience

If a dissatisfied customer were to share his experience with 10 people,$4800 X 10 = $48,000

Total = $48,000 + $4,800 = $52,800

WIIFM - An example of a customer in a toy store

Internal aspect (Services by Design)

External aspect (Interaction)

What are two areas in Service

Recovery:

80% of customers’ problems are caused by bad systems, not by bad people. – John Goodman (TARP)

Note: Take a closer look at your Services by design

Could service problems be identified?

Could problems be resolved effectively?

Does the organization learn from the recovery experience?

Source: Berry and Parasuraman

What Framework to adopt?

What are the 3 major outcome of an effective service recovery system

Monitor Service ProcessMonitor Service ProcessMonitor Customer ComplaintsMonitor Customer Complaints

Make amend to the hassle FactorMake amend to the hassle FactorNurture the People FactorNurture the People Factor

Set up Problem Tracking SystemSet up Problem Tracking SystemConduct Root Cause AnalysisConduct Root Cause Analysis

Conduct Customer ResearchConduct Customer Research

Identify services problemIdentify services problem

Resolve Problems EffectivelyResolve Problems Effectively

Learn from Recovery experienceLearn from Recovery experience

Modify Service Process MonitoringModify Service Process Monitoring

Source: Adapted from Leonard Berry & A Parasuraman, Marketing Services, Competing thru Quality (New York: The Free Press 1991)

Effective Service Recovery System

Service Recovery Framework (Internal)

How to turn negative situations into positive ones effectively

What we can do? Turn Adversity into Opportunity3 A’ Approach

If: Response time Customer anger

Instead of ….

“Nothing works out for me.”“My customers are all difficult.”“My life is horrible.”“I never get what I want.”“I can’t find happiness.”“I hate myself.”

Use ……

“Everything works out for me!”“My customers are all great!”

“My life is great!”“I get everything I want!”“I have happiness!”“I love myself!”

Got to Feel Good about yourselfTurning Negative into Positive

Turn Adversity into Opportunity

Club Med – Cancun (Mexico resort) Vacationers – Convinced vacation

ruined even before it started What did General Manager of Cancun

resort, Silvio de Bortoli do?

Step 1: Acknowledgment- Acknowledge feelings & give the

problem importance Step 2: Assessment (What gets

Measured gets Managed)-Gather facts & assess the situation

(Asking Questions & Paraphrasing) Step 3: Alternatives (Negotiate a

solution)- Sell alternatives and set boundaries

3 A’ Approach

Service recovery techniques to keep customers happy at minimum expense

-Bite more than you can chew-What are some ways- What compensations

There are internal customers and external customers in every organization

If: Expenses Effort

Should you bite more than you can chew?

Would it be a challengefor organizations to over promise and under deliver?

Preoccupy them – Hotel installed mirrors & front page of the daily newspaper

Using problem tracking system that is real time –How quickly you respond & Rectify?

Minneapolis Marriott – “Sweet Dream” package for delayed check in

Singapore Power (city gas & electricity ) – 24 hr “hot line” –How quickly you respond?

Food delay in restaurant – complimenary dessert or 10% for the next visit

Maine Savings Bank in Porland - $1 every letter suggesting ways to improve service. Result 500 letters

What are some ways:

Note: You get specific information & suggestions to improve your service

If: Expenses Effort

What are some products or

services(SP )↓

Type of Customers that I serve (C)→

Recent (New) Frequent (Old) Monetary (High Net worth)

1.Example complimentary dinner for 2 in Newton Hawker

Centre

√ X X

2.

3.

4.

5.

6.

7.

8.

9.

WIIFM - What are some ways: Minimum Expense to the organization

SP- Service Provider C - Customer

How to recognize and take steps to handle difficult customers and unexpected situations

- What to look out for?- Choice of Words to use - Other steps- C.L.A.P or H.E.A.T

When your customer is the most anxious, you need to be at your best – competent, confident, calm, and in control of yourself - Chip R.Bell (Performance Research Associates)

Note: Any problems, the employees who are closest to the customer (interaction point) can resolve

What to look out for: How do you recognize Customers are dissatisfied?

Non-Verbals :Avoiding your eye contactA look of Anger with a FrownArms on their side oracross their chest Body is turned away from you

Verbals – words they express:“Is there someone who works

here……”“Where is your manager……..”“I demand a refund.”“Do we look transparent to you”

Words to Use

PleaseYesLet’s negotiateWould you like toAppreciateConsider thisChallenge

Words to Avoid

Can’t or Never Not our Policy or Not my job We’ll try I don’t Know Hang on for a second Problem

Choice of Words to use

Emotion Management Observe your body language Proximity Vocal Modulation

Other Steps

Note: Professionalism does help

Feel the HEAT of dissatisfied customers Hearing them out by being calm showing empathy,

apologise & take action

Composure and be Calm and relax (Emotion – Take one Step Back) - H

Listen Empathetically - E

Apologise from the heart and

Acknowledge their concerns -A

Personal Responsibility & Taking

Corrective Action - T

Send “Thank you cards” or “Vouchers” (indicating things have changed – keeping in touch with them

Service recovery Framework What-why-How Can-Can Approach

What are other Practical

steps for Service

Recovery

Interpretations of the Effective Service Recovery System

What are the current processes that your organization adopts in serving the customer?

Customer Complaints looking at the level of urgency, crucial

factor

What are some alternatives or Compensations

Empowerment in decisions

Hiring & Training

Incentives

What Technology of Problem Tracking System does you organization adopt? – Real time? www.qualityinaction.net

Why – Why Analysis

Voice of Customer

Fish bone Diagram (Cause & Effect)

Focus Group

Telephone interview

Feedback (Online –Offline)

Addressing the concerns, issues, needs, values of customer

Were the Problems, concerns, issues, needs & values of customer addressed effectively?

What - (Details)

Why – (Big Picture)

How – (Solutions)

Continuous Improvements

How to deliver the real deal and provide a win-win value proposition

What does this particular customer, staff and organization expect?

What recovery approaches best communicate your organization’s vision, values and style bearing in mind staff & customers’ interest?

Addressing these questions

R.E.A.L = Ready to Enhance All that we have Learnt

Accept - Head Adapt - Heart Alter thru Actions – Hands

How: Another 3A’ Approach. What should they (Management, staff & Customer):

Note: Attention – Attraction – Action – Actualization

Organization – Policies (Flexibility), Compensations

Improving technology (feedback) – real time?

Staff – Training (communication skills)/Hiring/Empowered in decision making

Incentives (awards for handling complaints)

Customer – what do they expect and giving them the necessary compensation, apology or speedy recovery

Win-Win-Win Value Proposition

“ A customer is the most important visitor of our premises. He is not dependent on us, we are dependent on him. He is not an interruption in our work; he is the purpose of it. He is not an outsider in our business, he is part of it. We are not doing him a favor by serving him; he is doing us a favor by giving us an opportunity to do so.”

“If you change your thinking, you will change your actions.”

Mahatma Gandhi