Service Recovery - Research Paper Example

Service Recovery Introduction Service recovery is the actions undertaken by companies or institutions when they discover their inefficiency in effective provision of expected quality of customer service. This makes service recovery quite essential for business managers regardless of the industry or institution. Service recovery is especially pertinent in institutions and industries that involve immense contact with customers, either external or internal customers (Maxham and Netemeyer 63). While the merits of service recovery on satisfaction, recommendation and loyalty, are vastly documented empirically, there is abundant evidence to prove that the practices of service recovery have not necessarily improved. In order to conduct effective service recovery, it is paramount that management institutes a cross-functional approach, which acquires a marketing perspective, management perspective and an operations perspective. This essentially entails customer recovery, employee recovery and process recovery respectively. This paper will examine the three elements of service recovery, discussing the best practice of service recovery through the extensive examination of the literature. Through the examination of the three main service recovery approaches in a number of industries, this paper will offer eight key hurdles that institutions have to overcome to bridge the gap between best service recovery practices and the actual recovery practices and suggest how to do so. Importance of Service Recovery Service recovery entails actions that a service provider institutes in response to a failure in terms of service delivery. Such a failure occurs when the perceptions of customers of the service provided do not match their expectations. As per this definition, it is evident that service recovery is not limited to service industries. Empirical research demonstrates that managing problems effectively entails the most vital component of a company’s reputation for excellent service delivery in institutions and industries. This means that a company that serves either internal or external customers should accept that failures are bound to happen; thus the essential thing is to institute systems and procedures that counter such failures. In recent years, a number of empirical studies have dealt with service recovery in numerous industries globally (Maxham and Netemeyer 61). Concern in service recovery has developed because companies and industries appreciate that poor service experiences are the main reason for customer switching, which also results in loss, in customer lifetime value. However, a viable service recovery system is noteworthy as it has immense, positive impacts on customer satisfaction, customer loyalty, word-of-mouth behaviour and subsequently, customer profitability. While certain studies show that great initial service is better than excellent service recovery, other empirical studies suggest that an excellent service recovery can result in even greater customer loyalty and satisfaction than if a company did nothing wrong in the initial place. This paradox is referred to as the service recovery paradox and holds true in most instances (McCollough 56). Literature on interdisciplinary services provides a rich source of insight and research on effective service recovery (Bell. and Zemke 33). Customer Recovery Fairness is the key Literature on service recovery shows that perceived justice is a vital element in the evaluations of service recovery. Reports on service failure show that perceived unfairness in customer treatment results, in lower customer satisfaction and loyalty. Service recovery must re-establish justice from the customer’s perspective. Justice entails three distinct dimensions, i.e. procedural, distributive and interactional. Distributive justice centres on the allotment of costs and benefits. This element asserts that customers weigh the benefits they gain from services with regard to costs associated with the service. This means that when customers do not receive their expected outcomes of services, they become quite dissatisfied; thus service recovery will be necessary. Nonetheless, the outcome of services is not all that matters as customers are often involved in the production and consumption processes of services. Here, procedural justice becomes key, especially when something goes wrong in either process (Maxham and Netemeyer 124). Procedural justice requires that company employees fix the customer before fixing the problem. Procedural justice requires the critical evaluation of systems used in determining customer outcomes like speed of recovery. In service intensive institutions such as restaurants, another vital factor in service recovery is the communication of information regarding the recovery process, or the lack of communication. In restaurants, the firm has to decide what it is doing to resolve the problem to ensure that the customer understands the mitigating conditions, thus do not incorrectly blame the restaurant when the latter is not responsible. Interactional justice concerns interpersonal fairness (Berry 23). Customers and people in general are quite sensitive to the value of interpersonal treatment they gain. In addition, because emotions are apparently more influential than cognitions within service recovery situations, service managers should manage customers’ emotional experiences in the course of service failure, as well as after service recovery. When leading customers through negative experiences, restaurant employees should act rather quickly, remain pleasant and attentive and show empathy and concern. Customers should essentially be treated as individuals whose exclusive requirements are appreciated as token responses by a company result in extremely negative responses. All three elements of justice play a part in customer evaluations of service recovery. Furthermore, substantial interactions among the dimensions of fairness mean that poor performance on any element limit customers’ complete satisfaction with the recovery process. Another vital point to note in service recovery is ensuring that once customers pardon previous mistakes, they are not repeated. Literature on recovery proves that service recovery is likely to succeed after one service failure, but not if the company fails its customers twice (Maxham, J. G. I. and Netemeyer 63). Evidence also asserts that customers such as in restaurants evaluate services with tolerance, which dictates how much variance they are willing to accept between their service expectations and what they receive in reality. Customers’ zones of tolerance narrow from the first size after they assess a company’s service delivery to the time they evaluate the company’s attempts at service recovery after a failure. Consequently, no recovery strategy can satisfy a customer if the initial failure turns into a recovery failure. The recovery paradox shows that customers are more satisfied after an effectual service recovery than when service was not marred by failure in the first instant. In the event of similar failures, especially when such failures are in proximity, service recovery becomes rather challenging or even impossible. Only Customers Comprehend the Full Extent of Failures The process of service recovery can also be enhanced by the acknowledgement that only the customer has the capacity to assess the extent of service failure. Best practices in service recovery show the importance of assessing the magnitude of failure, its criticality and severity, but, not from the company’s perspective but rather from the customer’s perspective, (Webster, C. and Sundaram 154; Michel 389). This is because the customer, say a restaurant customer is able to determine the consequences of the service failure on him or her. A fascinating example is the best explanation for this, in a restaurant scenario, if food is not ready at the promised time, customers’ perceived criticality. In low criticality, customers are bound to prefer an apology, whereas in high criticality failures are effectively recovered by re-performance. These results are indicative that objective service failures should not be confused with subjective valuations of harm on customers (Goodman and Malech 11). Process Recovery While recovering individual customers is paramount in service recovery, learning through past failures is perhaps more prominent as process improvements result in shifts, in customer satisfaction, which is the essence of the entire process of recovery (Hart, Heskett and Sasser 151). According to Johnston and Clark (241), customers are more angered if they believe that the system remains unchanged than their dissatisfaction after failed service recovery. This is primarily because a customer is aware that the likelihood of failure recurrence is relatively high. One of the most appropriate acid tests, which many institutions fail, is the capacity to take problem information from customers or staff and transform it into tangible improvements (Reichheld and Sasser 106). In essence, service failures are meant to help in the recognition of hitches and deeds to ensure that such failures do not recur (Johnston, R. and Mehra 148). In addition, learning from failures further shifts service recovery from a mere transactional activity, which is only concerned with the recovery and the satisfaction of individual customers, and towards management activities that involve the improvement of systems, as well as processes to ascertain that future customers are satisfied and the costs of services remain minimal. Therefore, gaining knowledge from service failures means the improvement of service processes by using conventional techniques for the improvement of operations management. This entails the use of techniques such as drawing fishbone diagrams, quality circles and cause-and-effect diagrams among others (Miche 26). Employee Recovery Despite most organisations being aware of external service recovery, they are weak at internal service recovery. Internal service recovery entails supporting company employees in tough tasks such as dealing with complaining customers on restaurants (Bowen and Johnston 120). Service failure usually occur because of elements over which employees have minimal control, but customers still hold the same employees responsible for these failures. In addition, studies indicate that the strongest link of frontier service employees’ job satisfaction lies in their perception that they are capable of producing results according to customer expectations (Heskett, Sasser and Schlesinge 149). Lack of or inadequate internal service recovery results in not only dissatisfaction and disillusionment, in customers, but stress-filled and quite negatively disposed employees. According to Reichheld and Sasser (108) such employees, especially in service-oriented fields such as restaurant businesses, often feel powerless to assist or resolve the problems that plague the company. This feeling of helplessness in employees is referred to as learned helplessness and results in employees’ display of passive and maladaptive tendencies such as withdrawal, uncooperativeness, or acting in ways that can be considered uncreative. Creativity, insertion, helpfulness and active behaviours are essential in the restaurant industry as they not only guarantee customer satisfaction, but their loyalty, as well (Schlesinger and Heskett 23). Alienation in employees that result from such helplessness is compounded when employees think that the firm’s management is not attentive to the problem and does not make an effort to recover the employees from such helpless state. Training employees to cope with failures entails the creation of a service recovery culture that equips the employees with sufficient, relevant competencies, as well as resources. In addition, an effective service recovery culture entails a firm’s organisation of the flow of communication and the development of positive attitudes towards customer complaints. Furthermore, for a company to ensure its success with regard to meeting customer expectations, it has to institute appropriate measurements systems to check services and its recovery protocols and market the recovery process to its customers. Application of Service Recovery to Healthcare Healthcare is not different from any other service-oriented industry. This is primarily because healthcare institutions also involve the provision of services to customers (patients) whose satisfaction, or lack of, affects their loyalty and perception of the institution as a whole (Javetz and Stern 115). Because service recovery involves providers taking active action to recover dissatisfied customers, change their negative views and turn them into satisfied customers who maintain business relationships with the institution, healthcare institutions also undertake such endeavours to ensure patient satisfaction (Oxler 18). Healthcare institutions can become increasingly customer-oriented by using information from customer complaints and increasing patient satisfaction and retention. Understanding patients’ dissatisfactions helps healthcare professionals to identify and resolve organisational deficiencies before the latter prove costly. When administrators and professionals are devoted to prevention and problem solving, assets devoted to identifying, understanding and solving patient complaints are bound to be cost-effective (Reichheld and Sasser 105). Traditionally, healthcare patients are treated as persons with needs, as opposed to customers with options. While managed care has limited patient choices, choices have not been eradicated (Lyon and Powers 283). Patients are healthcare customers, and a service recovery program in healthcare institutions can assist the organisation improve its culture, which will lead to greater customer retention levels, as well as increased revenues. Programs aimed at customer retention through excellent service empower healthcare employees to offer excellent care, which ultimately leads to greater market shares for healthcare institutions attempting to survive this era of extreme competition (Hart, Heskett and Sasser 126). The essence of service recovery in healthcare lies in the financial consequences of poor customer retention. Customer retention is a immensely desirable outcome than suffering the loss of customers and trying to obtain others. The benefit of retaining customers amplifies over time. Therefore, the cost of losing customers poses a substantial lost potential. According to Oxler (10), patients require to be active participants and partners with healthcare professionals to design their care routine. Patients have specific expectations and perceptions and use them to assess service quality and satisfaction. In case of customer dissatisfaction and complaints, healthcare staff must be skilful to respond and initiate service recovery. Service recovery conducted with style and confidence retains customer loyalty and restores satisfaction. Because generational differences can result in service failures, it is paramount that healthcare administrators institute a culture that requires providers to listen to patient needs. Conclusion Service recovery is quite essential in service-oriented industries; service providers must ensure that they maintain high levels of efficacy. Service failures are bound to occur, so mangers have to learn ways of recovering the failures. This paper has examines service recovery protocols for the restaurant industry, as well as the healthcare industry. It is evident that service recovery cannot be confined to a single function within institutions such as marketing, operations, customer service or human resources, but rather requires a combined approach, which combines customer recovery, employee and process recovery. This is of paramount importance to ensure that institutions close the disparity between best practices and definite practices in service recovery. Because healthcare entails service provision, it is essential to ensure that healthcare professionals and administrators establish appropriate service recovery programs to recover mistakes (Gutbezahl and Haan 167). Work Cited Bell, C. R. and Zemke, R. E. “Service Breakdown: The Road to Recovery”. Management Review,76.10.(1987.): 32-35. Print. Berry, L. Discovering the Soul of Service: The Nine Drivers of Sustainable Business Success. New York: Free Press, 1999. 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