D.G.

VAISHNAV COLLEGE

YEAR AND COURSE: I M.A. HUMAN RESOURCE MANAGEMENT

PAPER: HR IN SERVICE SECTOR

PRESENTER: S.R.BARGAVI

PROFESSOR: PROF.C.THILAGA

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SERVICE FAILURE AND CUSTOMER RECOVERY

Service failure

Introduction

The basic principle is to satisfy the customer in order to enhance the organizational performance. In practice, not
all customers are satisfied and even marketing- oriented organizations cannot guarantee zero defects service every
time. Therefore, some service dissatisfaction is inevitable. Even in the face of these service failures some
organizations are able to retain their customers.

Service failure

Service failure arises when a customer experiences dissatisfaction because the service was not delivered as
originally as promised or expected. In effect, then, service failures arises from the customer’s perception of a
service experience and not from what the organization believes it has provided.

Service failures can be classified as

1. Service delivery failures

This occurs in core service which is inclusive of product defects (food is cold, soggy, contains hair etc.)
slow or unavailable service, facility problem (cleanliness issues like dirty silverware, insect or rodent
problems etc.) unclear, guest unfriendly policies (like not accepting cheques or credit cards) and out of
stock conditions like inadequate supply of menu items).

2. Failure to respond to customers’ needs and requests

This occurs chiefly when employees are unable to comply with the customer’s individual needs like – food
not cooked to order; or seating problems like – seating smokers in non-smoking section or lost
reservations etc.

3. Unprompted and unsolicited employee action

This includes behavior of employees that is unacceptable to guests like – rudeness; poor attitude; wrong
order delivered; order misplaced or never filled; and incorrect charges like charging customers for items
not ordered or give incorrect change.
Customer Recovery
Customer recovery is referred to as the action undertaken by an organization to face the eventualities
of a service failure. Keeping und developing relationships with current customers is a key business
strategy.' Yet problems and complaints are bound to occur over the lifetime of customer relationships.
Handling it effectively is vital to maintaining customer satisfaction and loyalty.

Customer recovery process

A four-stage approach to customer recovery based on findings from a study conducted to understand
how customers evaluate service recovery efforts. The approach includes the implications of a successful
service recovery strategy on customer loyalty, employee satisfaction, and, ultimately firm profitability.

Stage – 1 -Identifying Service failures

The greatest barrier to effective service recovery and organizational teaming is the fact that only 5
percent to 10 percent of dissatisfied customers choose to complain following a service failure. Instead,
most silently switch providers or attempt to get even with the firm by making negative comments to
others." Why are customers reluctant to complain? Research and other studies have uncovered four key
reasons: customers believe that the organization will not be responsive. They do not wish to confront the
individual responsible for the failure; they are uncertain about their rights and the firm’s obligations; and
they are concerned about the high cost in time and effort of complaining." In addition, some customers
anticipate negative ramifications.

Stage 2- Resolving customer problems

A study found that most complaints are lodged when customers experience what they perceive to be a
serious problem. Thus, since customers voiced their complaints, they expect action. Customers form
perceptions of fairness by assessing three aspects of service recovery: outcome, procedural features, and
interactional treatment. Outcome fairness concerns the results customers receive from complaints.
Procedural fairness refers to the policies, rules, and timeliness of the complaint process. Interactional
fairness focuses on the interpersonal treatment received during the complaint process.

Stage 3 - Communicating and Classifying Service Failures

Most firms fail to document and categorize complaints adequately, making learning more difficult. Four
explanations for this failure was found out. First, in several cases employees showed little interest in
hearing the customer describe the details of the problem. They treated the complaint as an isolated
incident needing resolution but not requiring a report to management. Second, many employees and
managers devoted their energies to avoiding responsibility for the problem, instead blaming the customer
for the failure. Third, numerous complaints were never resolved. Customers left telephone messages,
complained to several employees, and wrote letters — and still no action was taken. Fourth, firms
appeared to have no systematic way to collect and distribute complaint information to the individuals
responsible for the process that failed. What can firms do to ensure that complaints are properly
recorded, disseminated, and classified? Many of the practices identified in Stages I and 2 can also be used
during Stage 3- For example, call centers record the details of each complaint and ensure that the
information is made accessible or is distributed to all appropriate managers and employees.
Stage 4- Interpreting Data and Improving Overall Service
Since customers complain about problems that they find important, complaints represent a valuable
form of market information. However, because customers rarely complain when a service fails, companies
seeking to improve service quality need to locate additional sources of information. The goal of data
management is to ensure that the organization gathers relevant, credible, timely information and
disseminates it to everyone involved in decisions on investments in service quality.