SERVICE RECOVERY

Service Recovery

Table of Contents

Introduction3

Service recovery5

Customer satisfaction/dissatisfaction and the disconfirmation paradigm7

Complaint behaviour responses9

Service recovery options: the technology of service11

The outcomes of service recovery17

The methodology20

The empirical results25

Summary of empirical findings31

Managerial implications34

Limitations37

References41

Service Recovery

Introduction

Customer satisfaction has been described as both the ultimate goal of the market economy (Pfaff, 1976) and the key outcome of the marketing process (Bateson, 1995, p. 25) while reliability is regarded as the core of service quality (Berry and Parasuraman, 1992). Yet, mistakes are an unavoidable feature of all human endeavour and thus also of service delivery. Although poor service delivery may initially appear to be a disaster, opportunities abound for service companies to resolve problems, go beyond the call of duty and win a customer for life. In other words, effective customer complaint handling, or service recovery, can turn angry and frustrated customers into loyal ones.

Customer loyalty has definite financial benefits since the cost to attract a new customer is significantly higher than retaining an existing one (Fornell and Wernerfelt, 1987). Canadian Airlines, for instance, have calculated the value of a satisfied business travel customer to be $915,000 over a ten-year period (Jenkins, 1992). Repeatedly disappointing customers could thus be a costly affair.

Kloppenborg and Gourdin (1992) have produced evidence that recovery-related dimensions feature prominently in service quality/customer satisfaction evaluations, at least for the airline industry. Responses from a sample of airline passengers suggested that, of the ten most important dimensions listed, five related to service recovery: the airline is responsible for lost baggage (the most important); timely information should be available on delayed flights (second); the airline is responsible for delayed passengers (fourth); on-board comforts during delays (eighth); and, airlines should take care of delayed passengers (tenth).

The dominant influence of service failure-related dimensions can be attributed to the fact that services, because of their largely intangible nature, are perceived as more risky to buy than, for instance, physical products (Murray, 1991). Much of this risk can be attributed to “how the service will perform”, that is, a reliability failure risk or quality risk (Turley and LeBlanc, 1993). Effective service recovery can go a long way towards projecting a “our service is guaranteed” image, providing a safety net and, in this way, reduce perceived risk.

Service recovery is of particular importance if one considers that in many (according to some studies, the majority of) instances dissatisfied customers simply do not complain to the seller or service provider. The few who do complain provide valuable information in terms of what can be done to improve customer satisfaction. The unwillingness to air complaints results in ignorance among service firm decision makers and has a number of serious consequences including a declining market share, more expensive defensive marketing strategies (Fornell and Wernerfelt, 1987, p. 338), the inability to correct faulty systems and the undermining of the validity of customer complaint data as input to decision making (Bearden and Teel, 1983, p. 22). To avoid these negative outcomes customers ought to be encouraged to complain while employees should be willing and able to respond (Fornell ...