THANK HEAVENS FOR COMPLAINERS

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THANK HEAVENS FOR COMPLAINERS !

• SHAILAJA MANOCHA

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A THOUGHT

• One of the surest signs of a bad or declining
  relationship is the absence of complaints from
  the customer. Nobody is ever that satisfied,
  especially not over an extended period of time.
• Theodore Levitt

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ISSUES

• The job of any organization is to create and
  maintain its customers.
• It is very easy to lose customers but very
  difficult and expensive to get new customers.

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ISSUES

• Distinctive service characteristics like real
  time performance, customer involvement, and
  people as part of the process greatly increase
  the chance of service failures.

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ISSUES

• How well a firm handles complaints and resolves
  problems may determine whether it builds customer
  loyalty or watches former customers take their
  business elsewhere.

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CUSTOMER RESPONSE TO SERVICE FAILURES

• Take some form of public action
• Take some form of private action
• Take no action

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UNDERSTANDING CUSTOMER RESPONSE TO SERVICE
FAILURES

• To be able to deal effectively with complaining
  customers, one needs to answer some questions
• Why do customers complain?
• What proportion of unhappy customers complain?
• Why dont unhappy customers complain?
• Who is most likely to complain?
• Where do customers complain?

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UNDERSTANDING CUSTOMER RESPONSE TO SERVICE
FAILURES

• Why do customers complain?
• Obtain restitution or compensation
• Vent their anger.
• Help to improve service especially in an highly
  involved service.
• For altruistic reasons.

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UNDERSTANDING CUSTOMER RESPONSE TO SERVICE
FAILURES

• What proportion of unhappy customers complain?
• Only 5-10 of customers who have been unhappy
  with a service complain.
• Sometimes its even lower!!
• There is evidence that consumers the world over
  are becoming better informed, and more assertive
  about seeking satisfactory outcomes for their
  complaints.

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UNDERSTANDING CUSTOMER RESPONSE TO SERVICE
FAILURES

• Why dont unhappy customers complain?
• Some dont wish to take the time to write a
  letter or fill out a form especially if its a
  low involvement service.
• Many see the payoff as uncertain.
• Many dont know where to go or what to do.
• Many people feel that complaining is unpleasant.
• Complaining behavior can be influenced by role
  perceptions and social norms.
• In services where customers have low power they
  are unable to complain.

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UNDERSTANDING CUSTOMER RESPONSE TO SERVICE
FAILURES

• Who is most likely to complain?
• Research shows that people in the higher
  socioeconomic levels are more likely to complain.
• Those who complain tend to be more knowledgeable
  about the services in question.

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UNDERSTANDING CUSTOMER RESPONSE TO SERVICE
FAILURES

• Where do customers complain?
• Majority of the complaints are made at the place
  the service was received.
• Even when customers complain managers often do
  not hear about the complaints made to the front
  line staff. Less than 5 of the complaints
  reached the corporate headquarters.

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CUSTOMER EXPECTATIONS ABOUT THEIR COMPLAINTS

• Whenever a service failure occurs, people expect
  to be compensated in an adequate manner.
• If the customer feels that they have been
  unfairly treated, their reactions are immediate,
  emotional and enduring.

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CUSTOMER RESPONSES TO EFFECTIVE SERVICE RECOVERY

• Customers who do complain give a firm the chance
  to correct problems (including some the firm may
  not even know it has), restore relationships with
  the complainer, and improve future satisfaction
  for all.

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CUSTOMER RESPONSES TO EFFECTIVE SERVICE RECOVERY

• Service recovery is an umbrella term for
  systematic efforts by a firm to correct a problem
  following a service failure and retain customers
  goodwill.

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CUSTOMER RESPONSES TO EFFECTIVE SERVICE RECOVERY

• Service recovery efforts play a crucial role in
  achieving and restoring customer satisfaction.
• The true test of a firms commitment to
  satisfaction and service quality isnt in
  advertising promises but in the way it responds
  when things go wrong for the customer.

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CUSTOMER RESPONSES TO EFFECTIVE SERVICE RECOVERY

• The risk of defection is high, especially when a
  variety of competing alternatives are available.

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CUSTOMER RESPONSES TO EFFECTIVE SERVICE RECOVERY

• One study of customer switching behavior in
  service industry found that 60 of all
  respondents who reported changing suppliers did
  so because of a service failure
• 25 cited failure in the core service
• 19 reported an unsatisfactory encounter with the
  service employee.
• 10 reported an unsatisfactory response to a
  prior service failure
• 4 described unethical behavior on the part of
  the provider.

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IMPACT OF EFFECTIVE SERVICE RECOVERY ON CUSTOMER
LOYALTY

• When complaints are satisfactorily resolved, the
  customers involved are much more likely to remain
  loyal.

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IMPACT OF EFFECTIVE SERVICE RECOVERY ON CUSTOMER
LOYALTY

• Research found that intentions to repurchase
  ranged from 9-37 when customers were
  dissatisfied but did not complain.

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IMPACT OF EFFECTIVE SERVICE RECOVERY ON CUSTOMER
LOYALTY

• For a major complaint the retention rate
  increased from 9-19 if customers complained and
  the company offered a sympathetic ear but was
  unable to resolve the complaint.

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IMPACT OF EFFECTIVE SERVICE RECOVERY ON CUSTOMER
LOYALTY

• If the complaint could be resolved to the
  satisfaction of the customer the retention rate
  jumped to 54.

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IMPACT OF EFFECTIVE SERVICE RECOVERY ON CUSTOMER
LOYALTY

• The highest retention rate was achieved when
  problems were fixed quickly, typically on the
  spot, whereupon it jumped to 82.

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IMPACT OF EFFECTIVE SERVICE RECOVERY ON CUSTOMER
LOYALTY

• The conclusion to be drawn is that complaint
  handling should be seen as a profit center and
  not as a cost center.

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IMPACT OF EFFECTIVE SERVICE RECOVERY ON CUSTOMER
LOYALTY

• When a dissatisfied customer defects the firm
  loses more than the value of the next
  transaction.
• It may also lose a long term stream of profits
  from that customer and from anyone else who
  switches suppliers or is deterred from doing
  business with that firm because of negative word
  of mouth.

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THE SERVICE RECOVERY PARADOX

• The service recovery paradox refers to the
  sometimes observed effect that customers who
  experience a service failure and then have it
  resolved to their full satisfaction are more
  likely to make future purchases than are
  customers who have no problem in the first place.

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THE SERVICE RECOVERY PARADOX

• The service recovery paradox generally holds true
  for the first service failure.
• A customer may forgive a firm once but get
  disillusioned if failures recur.
• Some studies challenge the service recovery
  paradox.

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CONCLUSION

• When the service is recovered in a way that
  allows the delivery of a superior product, the
  customer is of course delighted!!
• But all service failures are not recoverable.
• The best strategy is to do it right the first
  time.

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CONCLUSION

• Service recovery is turning a failure into an
  opportunity you wish you never had.
• Michael Hargrove.