Service Recovery

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Service Recovery

• Mgt 664

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Service Recovery

• You can please - all of the people some of the
  time some of the people all of the time BUT,
  you can never please all of the people all the
  time.
• A group of four people go out to dinner on Friday
  night. Three peoples food is brought to the
  table, one persons order was lost. What is an
  adequate recovery?
• What if it happened at lunch on Wednesday?

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Services loved and despised

• Name a service to which you have committed to
  never return?
• Name a service where you have experienced a great
  recovery?

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Reworking customers not easy

• Recoveries fix circumstances and attitude
• 96 of disgruntled customers walk rather than
  complain.
• Complaining customers are an asset
• Demanding customers are an asset

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Key to a quick recovery

• Shift efforts from recovery to prevention
• Capture/document the failures
• Insert counter measures
• If 96 of service failures walk, service
  providers may know of failures that are not
  obvious to management.
• How management responds to the providers will
  determine how much is revealed to them in the
  future.

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Learning vs. Accountability
A preliminary model
? X X X
Process improvement
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The Value of Open Reporting
Failures Observed (without voluntary reporting)
All failures
Near Misses
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Accountability AND Open Reporting

• just culturejust, a. 2. Equitable impartial
  fair as, a just decision
• provides a fair and productive alternative to the
  two extremes of punitive or blame-free cultures.
• balances the need to have a non-punitive learning
  environment with the need to hold persons
  accountable for their actions.

David Marx, Just Culture A Primer for Health
Care Executives http//www.mers-tm.net/support/Ma
rx_Primer.pdf
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Just Culture at a Glance
Normal Error At-Risk Behavior Reckless Conduct
Intended action No Yes Yes
Knew risk of action No No Yes
Recommended response Blame Free Blame Free Account-ability
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The Problematic Middle Ground

• At-risk behavior
• Did the employee intend to violate the rule? Yes
• Did the employee understand the risk? No
• Some deviations from rules may be justified
• Sometimes, the written procedure and the actual
  procedure performed by employees dont match.

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Changing Standards
Normal Error At-Risk Behavior Reckless Conduct
Intended action No Yes Yes
Knew risk of action No No Yes
Recommended response Blame Free Blame Free Account-ability
Old Standard Old Standard
New Standard New Standard
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Just Culture
without it
with it
Ignorance is not bliss.
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Service Recovery Policies

• Bumper to bumper warranty
• Unconditional Guarantee
• Replacement or money back
• Discount on current service
• Discount coupons for future service

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Service Recovery Policies

• Effective Unconditional Guarantees
• Unconditional without exceptions
• Easy to understand and communicate
• Meaningful (valued by customer)
• Easy and painless to invoke
• Easy to collect

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Wont customer take advantage?

• Negative word of mouth (customer tell an average
  of 9-10 people)
• Low propensity to complain. Only 4 complain
  about actual failures
• Actual failure vs. perceived failure only
  perceptions matter
• May save a lifetime customer

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Quitting is an option

• There are customers that it would be better for
  your competitor to have.
• Perpetually dissatisfied
• Unprofitable

Short-term customers Long-term customers
Profitable Butterflies True Friends
Unprofitable Strangers Barnacles