Service Recovery & Empowerment

It refers to the actions by an organization in response to a service failure.

Deviations in Services

Quality can be engineered with a very high precision in goods. Great strides have been achieved in this regard with automation and mechanization. ‘

A major difference between product marketing and service marketing is that we can't control the quality of our products as well as P&G control engineer on a production line can control quality of his product. When you buy a box of Tide,you can be reasonably sure that it will work to get your clothes clean. When you buy a Holiday Inn room, you are sure to some lesser percentage that it will work to give you a good night's sleep without any hassle, or people banging on the walls and all the bad things that can happen to you in a hotel. This observation very profoundly highlights inconsistent nature of services. Things can go wrong to upset the service delivery. A 100 per cent consistency in service delivery is not possible. Causes within the firm or outside can create positions of departure.

Service Failures

Service firms must reconcile with one reality: things can go wrong. Uncertainty shrouds the services. Due to a variety of reasons, service experience can vary inequality. When things go wrong, what should be the response of the firm? The response to the situations of failures can take two forms: ignore failure and do nothing or recognize failure and be prepared to recover from it. The process of getting back into shape or regaining the balance is called recovery. In the context of service businesses when service delivery is not right the first time, firms can choose to try second time. Though initial failure has happened yet the second try can be made to minimize the negative impact on the customer. For instance, Dominos promises pizza delivery within 30 minutes. But when promise is not kept and delivery is delayed due to unforeseen event, the pizzas are given free to compensate for the disappointment. Many good airlines have policy of making comfortable stay arrangements when flights get delayed.

Types of Service Encounters

Service encounter is an event when customer interacts with the service provider. It is the moment when customer expectations meet with service delivery and quality perceptions are formed. Encounters can be brief involving one employee and few seconds to long running into hours and multiple employees. Customer forms perceptions about the service quality at these moments of truths.

A clear hierarchy of outcomes from service encounters can be established. An interaction of customer with the service system can yield customer experience ranging from the best outcome to the worst outcome with different shades in between: Best encounter: The best service encounter is the one where the service is performed as expected without any problem. The service is delivered in an anticipated fashion. It is this situation when customer expectations are met. For instance, a packet sent thorough FedEx is delivered before 10 AM the next morning as promised.

Effective Recovery

First strategy for a service firm is to make sure that failures do not happen. The system planning and implementation must make sure that things should not go wrong in the first place. But when they do, then efforts must be made to recover from the slide in the best possible manner.

Ingredients of Recovery

An effective recovery requires as many as five ingredients.

 The first two are a must for annoyed customers, whereas all of these ingredients are necessary for working with victimized customers.

Apology

Whenever things go wrong, the service personnel must acknowledge the error as soon as possible. Once the admission of the failure has been made that firm is wrong, an apology must be tendered. An apology, when made in person, is more appropriate from the customers’ perspective. Standardized signboards or banners must be avoided to convey repentance. It makes a lot of difference when one tenders a personal apology than when a cut-out is raised in front of grumbling people. Though signboards do fulfill the formal purpose yet when it comes to their impact they are impersonal and san emotions.

Recovery Capability

Failures can damage the customer base of a firm. Dissatisfaction can cause customers to look for alternate sources of supply. Customer defection can be a risky proposition. Defection can be minimized if the firm develops the capability to recover from occasional failures. Effective recovery can minimize damage to bottom line by winning customers when service slips. Hart, He skett and Sasser propose how companies can develop recovery capability by paying attention to the following:

Measure the cost of lost customer

Often customer attraction takes big share of top management attention and resource. Little attention and resources are committed in keeping current customers happy. Managers underestimate the value of defecting customers. Perpetually attracting customers to fill the void created by defecting customers can be an unprofitable proposition. Maintaining existing customer economically may be more desirable. Measurement is essential before jumping onto any strategy. The cost and losses associated with defections and cost and profit potential associated with customer attraction must be calculated.

Failure Types

Service encounter is the focal point in services. It is the moment when the service firm and customer interact to co-create service experience. All resources assembled in the service firm come together at the moment of service encounter to create the desired service experience. Individually anything that has potential to satisfy also would have the potential to offend or dissatisfy. In a typical service creation process, customer comes in contact with people atmospherics, processes, technology, equipment and other customers. All these capabilities and resources require pre-engineered performance to deliver desired satisfactions. Any deviation in their movement could cause failures, as the system would also deviate from the determined path.

Recovery Service

When service firms’ stumbles doing the service the first time, it can try to restore customer confidence by doing it right the second time. Firms must have the capability to spring into action with a sense of urgency to correct the problems. Service recovery strategy must aim at first problem resolution and second improving the system so that problem reoccurrence is minimized. A four-step approach for designing recovery service strategy is proposed by Berry

: teaching importance of recovery service, identifying service problems, problem resolution and system improvement.

Teaching importance

In services, many things are attitudinal. Quality is a matter of attitude. Like quality, service recovery is also an attitude. The importance of customer to the business must be taught across the system especially to the employees who come in contact with customers. Employees must be educated on the virtues of customer retention. A frustrated customer on account of failure can spread negative word of mouth and block future business. In this context, the virtues of service recovery should beshared and transmitted.

Learning from Failures

Failures are inevitable. These cannot be completely done away with. It is highly unlikely that a system could be fail proof. Even in goods marketing where the systems have become highly evolved and reached a great level of sophistication even the top companies like Toyota, Nokia and Sony had to announce large-scale product recalls. The largest car maker Toyota Motor Corporation has recalled 2.3million vehicles in the US which were fitted with faulty accelerator pedals. These fault in these paddles caused them to stick. Earlier Nokia had to recall phone chargers which posed shock hazard to its customers. The company promised to replace these chargers for free. Other well-regarded brands such as Apple, Cadbury, Lenovo and Mattel made product recalls when their products failed to perform in the expected way, exposing customers to different types of risks.

Service Guarantee

Most of the manufactured goods come with some kind of warranty or guarantee. These words are often used interchangeably, but legally these may imply different meanings. A warranty or guarantee is an assurance provided to the customer of a good that it would perform in a certain manner or meet specification provided in the contract. These are often assumed in a contract of sale of goods and are also stated expressly. For instance, it is implied that a camera is not a camera if does not click the pictures, it is implied. However its defect-free operation may be guaranteed expressly for a period of one year. Car companies give warranty against any manufacturing defect on its engine for a certain number of kilometers or a given time.

Empowerment

Service firms should wake up to the shortcomings associated with traditional centralized decision-making structures. The assembly line top-down approach did pay off in achieving efficiency gains for manufacturing firms. The efficiency gains and familiarity associated with top-down model subtly influenced the choice of service firms and they also modeled their organizations along the manufacturing lines. The discretion and decision making is concentrated at the top and people at the bottom represented ‘hands’ with no discretion and influence over what they did. The old hierarchical structure symbolized concentration power at the top and people at the bottom carried execution. This division continued as a dominant framework in manufacturing.

Meaning

Empowerment means committing to employees and the customers. Stated plainly, it is the removal of obstacles and barriers that prevent employees from doing their jobs in order to create satisfied customers. This involves pushing down and distributing the decision making to the lowest levels of the organization. The front line personnel are invested with authority and resources necessary to carry out their jobs. Employees are liberated from the highly standardized and mechanized processes and are given leeway in evolving their own roles as dictated by the situation.

How Companies Use Empowerment

There are numerous examples of actions by empowered employees which have fabled stories. Empowered employees when they give high ratings to the statement indicating ‘feel empowered’ lead to improved performance with a corresponding effect on customer rating high on ‘feel served well’. Kressaty cite examples of empowered action and their results. One such action by an empowered employee relates to an episode of a burn victim. In Hawaii, customer service department of ask in care firm received a call from a hospital. The case involved a 9-year-old who suffered from burns but local suppliers had run out of stock of a crème needed to reduce the discomfort of the patient. They could not find the needed crème anywhere. The customer service representative of the skin care firm promised to make available the crème the next day despite the fact it was a Saturday. The representative also knew that minimum required quantity for any shipment should be at least 50 cases and hospital in question was also not set up as a direct customer.

Benefits and Costs of Empowerment

Bowen and Lawler provide a framework for answering some of the critical questions associated with empowerment. The benefits associated with empowerment must be weighed against the costs.

Benefits

A company can gain in more than one ways by empowering its employees. The important benefits associated with empowering people are: faster response to customer needs, faster recovery, employee happiness, warmth and enthusiastic performance, employee loyalty and commitment and suggestions for improvement from employees.

Quicker response to customer needs during delivery: The rule book model does not permit employees to bend rules in any condition. Strict regimentation does not allow any deviation even when there is a potential to delight customer without involving any cost.

For instance, a customer placing an order with the waiter asks for a change, the typical response in this case would be ‘sorry sir, we can't do that, our rules do not allow’. But any empowered employee would turn this situation into an opportunity to earn goodwill and enhance customer satisfaction. Empowerment is particularly beneficial when customer wants quicker response in a situation when paucity of time does not allow the matter to be taken to somebody ‘up in the hierarchy’.