Service Recovery

Write an academic essay for question:

Service recovery is an umbrella term for systematic efforts by a firm to correct a problem following a service failure and retain a customer's goodwill. What is the true impact of a customer defection for a business? 

Discuss the four common service recovery mistakes made by organizations. 

While, on one hand organizations are working on securing more customers, they often lose attention on their existing customers and the impact of losing them as well as the benefits of winning them back. It has been seen across many instances in histories of organizations across the world that losing customers has impacted in severe economic losses as well as the damaging the morale of the workforce. Customer defection has resulted in downsizing as well as closure of operations (Lowenstein, 2012).

Errors are an inevitable part of any service. Even the best service companies can’t prevent the occasional mishap, especially if the service is delivered in front of the customer. Service companies might not be able to prevent problems at all times (Lovelock, Wirtz, & Chatterjee, 2007). However, good recoveries can switch displeased clients into loyal ones. This also improves the reputation of the organization further than if everything had happened smoothly in the first place (Zeithaml, Bitner, & Gremler, 2013).

In order to achieve good reputation through service recovery, organizations should first understand the most common service recovery mistakes.

The first mistake is when the management of the company fails to recognize the evidence that shows how service recovery yields significant financial returns (Lovelock, Wirtz, & Chatterjee, 2007). In the current economic condition, most companies have shifted their focus to cutting operational costs. This has resulted in lesser dedication towards their loyal and more profitable customer base. Measurement is a precedent to management ("The Profitable Art of Service Recovery", 1990). Companies underestimate the profit loss due to a customer’s unhappy departure; therefore undermanage the methods of cutting these losses.

The second service recovery mistake is when organizations do not work on providing preventive measures to customers (Lovelock, Wirtz, & Chatterjee, 2007). Investing in processes to avoid service failures doesn’t remove the requirement for good service but reduces the risk of failure of the system, as a whole, and the burden on the persons working with the client.

Having the right attitude while serving customers is one of the most important attribute of a successful service recovery; this is more often than not overlooked. This is the third most common service recovery mistake. The best planned recovery systems will fail to get desired results if attitude to serve is lacking (Zemke & Bell, 2000). For example, a customer of over three decades of a bank in Washington having parked his car in the bank’s parking lot was told his parking would be validated if he did business at the branch. The customer, having cashed a cheque, was refused the validation as it was only for those who made deposits. He unwearyingly spoke to the receptionist and bank manager yielding no results.

Now, the agitated customer, having paid for the parking, drove to his home branch and narrated the situation to his customer relationship manager. He mentioned that being a long-standing customer of the bank, if this issue wasn’t resolved by the bank, he would close his business with it. When the bank didn’t respond, he withdrew the first part of his money and got the incident reported on the evening news ensuring his story got heard across the country. Now, that it had become a matter of saving the brand image, the bank was left red-faced and tried hard to win back the customer’s loyalty ("The Profitable Art of Service Recovery", 1990).

The fourth most common service recovery mistake is when organizations fail to make proper channels for customers to provide feedback (Lovelock, Wirtz, & Chatterjee, 2007). Although systems are improving these days, research shows that most customers are largely unaware of feedback mechanisms or don’t really consider the existing feedback systems effective (Cook, 2012). The Marriott Group of hotels has an all day “hot line”, which allows its guests to give feedback more easily. It must be mentioned that such hot lines should have sufficient trained staff to prevent a common pain point of having too few incoming lines. Busy signals will not help in improving customers’ attitude ("The Profitable Art of Service Recovery", 1990).

In conclusion, recovery is one of the fundamentals to achieving excellence in service making it a part of the integral strategy. Customers remember experiences of service. With regard to service businesses, the age old saying should be revised as To err is human; to recover, divine ("The Profitable Art of Service Recovery", 1990).

References 

Cook, S. (2012). Complaint Management Excellence. London: Kogan Page.

Harvard Business Review. (1990). The Profitable Art of Service Recovery. 

Lovelock, C., Wirtz, J. and Chatterjee, J. (2016). Services Marketing. 6th ed. Pearson.

Lowenstein, M. (2012). What Happens When Companies Lose Customers? | CustomerThink. [online] Customerthink.com.

Zeithaml, V., Bitner, M. and Gremler, D. (2013). Services marketing. New York: McGraw-Hill Irwin.

Zemke, R. and Bell, C. (2000). Knock your socks off service recovery. New York: AMACOM.

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