Service Failure and Recovery

Table of contents Introduction------------------------------------------------------------------------3

Main Content What is service--------------------------------------------------------------------4 Characteristics of Service--------------------------------------------------------5 Why service goes wrong?--------------------------------------------------------8 What is service failure?----------------------------------------------------------8 Types of service failures---------------------------------------------------------8 Service recovery-----------------------------------------------------------------10 The key of service recovery---------------------------------------------------10 Service recovery strategies----------------------------------------------------12 Relationship marketing in service--------------------------------------------14 Brand Equity in service--------------------------------------------------------17

Conclusion-----------------------------------------------------------------------20 References------------------------------------------------------------------------21

Introduction Building strong brands is of indispensable for high-tech and service areas. The worlds overall service exports increased by 12.0% between 2000 and 2008 (Ref: World Trade Organization 2009). At the same time, the three major exporters experienced an export growth of commercial services of 22.8% (US), 38.2% (Germany), and even 77.9% (UK) higher than the export growth of manufactured goods (World Trade Organization 2009). Many people start to know service is important, but do they know the real service? And how to serve customers. This is not a simply smile.

What is service? Services cannot be called minor or unimportant part of western economies, but go to the major view of value creation. The service sector is not novel, as proved by biblical references to innkeepers and financial helpers among others. Today nearly all of the goods we buy have an element of service somewhere. We can readily increase activities such as accountancy, banking as being service based. Also a swath of goods relies on service-based actions to give them usage worth, and a marketing advantage over other competitors. Many sophisticated goods such as television sets and washing machines pertain to service offers relying on delivery, financing, insurance and maintenance benefits. (Palmer, 2008)

Characteristics of Service Service has various unique characteristics that separates them from goods and have implications how they need to be are marketed. These characteristics very often are mentioned as intangibility, variability, non-perennial nature and the inability to own a service. These are referred herewith: (Palmer, 2008)

Intangibilit

Inseparability The production and consumption of a tangible good are very different from each other. Production of goods takes place by companies in one central location and then they are transported to places where there is greatest probability of customers purchasing them. Thus, the large scale manufacturing firms can acquire economies of scale through a centralized producing unit and can maintain centralized measures for quality control. Perish ability Services differ from goods in terms of tangibility: the former cannot be stored. A car manufacturing company can easily bring forward its excess stocks if it is unable to sell all of its output in the current period. It is a mojor advantage for goods manufacturing company; apart from the storage costs, financing costs and the possibility of loss through some sort of catastrophy.

Ownership Service to a large extent depends upon the characteristics of intangibility and perishability. Buyers have the right to thoroughly evaluate the required item while purchasing; the final decision to purchase lies in the hands of the buyer as they are free to what they want and can even in turn sell the product to a third party. But when a service is provided to the customer, the ownership still remains with the seller. The buyer/ customer is simply purchasing the right to benefit from a service process such as the use of a public park or a solicitor's time.

Why service goes wrong: The requirement of each person is different, therefore it is impossible for one product to satisfy all customers. Very often services provided to the customers are not in accordance to their requirements or the way they anticipated them to be; leaving customers dissatisfied.

What is service failure: Service failures can be referred to a state of sheer customer dissatisfaction mainly due to any service related mishaps or infelicitous conditions (real or perceived) that has serious repercussions on the customer's experience with a firm (Maxham, 2001).

Types of service failures The consequences of service failures are not similar in each case since the outcome failure consequences are way different from those in a process failure. Smith et al (2009) has mentioned this on the basis of mental accounting principles and prospect theory. As feelings and contentment are outcomes to specific circumstances (Zeelenberg and Pieters, 2004 ), it can be suggested that each type of service failure

will have a distinct impact on customers feelings and contentment.

Outcome failures are in fact the right plans and procedure that due to chance or negligence result in unpleasant consequences. Thus, the customer will rate it negatively but there is no negative emotion associated with it. On the other hand, a process failure is in fact a wrong plan or strategy which very often appears intentional with a favourable result. This results in the customer developing a sense of treachery and negative thoughts towards the service provider. (Neira et al, 2010)

Service recovery Service failure cannot be avoided every time; so it is important to think of plans for service recovery. Service recovery incorporates actions aimed to resolve problems, diminish negative emotions of discontented customers and eventually retain these customers" (Miller et al., 2000), and it encompasses conditions where a service failure occurs but customers show no negativity towards it (Smith et al., 1999).

The key of service recovery Successful service recovery has significant benefits. It increases customers'
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anticipation of the efficiency of the service and the company; result in positive and healthy communication; increase customers-satisfaction; and develop customer bonding, loyalty and eventually effect the companys profits (Bitner et al, 1990; Hart et al., 1990; Spreng et al, 1995; Michel, 2001).

However, the extent of success is based on: A, the kind of service provided (Mattila, 2001) B, the kind of service failure (McDougall and Levesque, 1990) C, the swiftness in responding (Boshoff, 1997)

Service recovery strategies Service recovery strategies involve the actions taken by the service providers in response to the service failures; these involve an amalgamation of psychological recoveries and tangible efforts, and are a topic of consideration for several researchers in this area. Bitner et al. (1990) has referred to the critical incident technique or open-ended survey which gives respondents the liberty to emphasize any service problem they have faced in order to identify and develop service recovery strategies.

Compensation strategy After the customer calmed down, how to make up the fault is need to be consider about. For the redevelopment of equity in the exchange process, it is importantthat the the service providershould pay for the losses suffered by the customer due to service failure on the organizations part. (Walster et al, 1973). A wide range of studies on the topic reveal that customers anticipate compensation after a service failure. (Blodgett, et al, 1997).Specifically, Lewis and Spyrakopoulos (2001) reveal that retail banking customers on a service failure anticipate to get what was to be provided to them in the first place to make things smooth and normal between the two parties. Correction After the apology and compensation, it is not mean all things already finished. It is more important to find out the reasons why lead to the service failure. Even a small
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service failure event could destroy a brand. And the compensation also leads to a lost of interest more or less. So the following work is avoid the same thing to happen again.

Conclusion Customer service is the most crucial part of the marketing mix that was defined for products and services industry. Customer service always creates value for the product which is very important. In the world of consumerism, the customers are very much concerned about the after sales service apart from buying the products only. The basic character of service is of being intangible and there are instances where things go wrong so there should be extra care regarding the issue. The apology and compensation strategy should be used as soon as possible when the service failure occurs.

References Andreassen, T. W., & Lindestad, B. (1998). Customer loyalty and complex services: the impact of corporate image on quality, customer satisfaction and loyalty for customers with varying degrees of service expertise. International Journal of Service Industry Management, Vol.9(1), p7- 23.

Bell, C. R. & Ridge, K. ( 1992 ) Service recovery for trainers. Training and Development, Vol. 46 (5), p. 58 63 .

Bitner, M. J., et al. (1990) The service encounter: Diagnosing favorable and unfavorable incidents . Journal of Marketing Vol.54 (8), p71 85.

Blodgett, J. G., et al. ( 1997 ) The effects of distributive, procedural, and interactional justice on postcomplaint behavior . Journal of Retailing, Vol.73 (2), p. 185 210 .

Boshoff, C. (1997), "An experimental study of service recovery options", International Journal of Service Industry Management, Vol.8(2), p.110-130.

Boshoff, C. and Leong, J. ( 1998 ) Empowerment, attribution and apologising as dimensions of service recovery: An experimental study . International Journal of Service Industry Management, Vol.9 (1), p.24 47.

Casado, A . B . and M s, F . J . ( 2002 ) The consumers reaction to delays in service. International Journal of Service Industry Management, Vol.13 (2), p,118 140 .

Calik , N . and Balta , B . ( 2006 ) Consumer satisfaction and loyalty derived from the perceived quality of individual banking services: A field study in Turkey, Journal of Financial Services Marketing, Vol. 10 (4), p. 135 149 .