Service Recovery - Research Paper Example

Abstract Consumers purchase goods from time to time expecting that their desires will be satisfied. However, not all goods are up to customers expectations as needs are diverse depending on customers hence they are bound to complain. Organizations on the other hand try as much as possible to reduce such incidences as they may result in business failure especially when affected consumers bad mouth the company (Hoyer & Macinnis, 2009). However, researchers have found out that consumer complaints are a source of business strength as aggrieved customers who have their grievances resolved amicably tend to repurchase products and become loyal as opposed to those who have never experienced product failure (Denham, 1998). Proper handling of complaints can therefore act as a key to service recovery and hence the need to research and evaluate literature associated with service recovery as well as the potential outcome of the process. Understanding buyers’ behaviour is the key to unlocking the reasons for dissatisfaction and finding possible solutions. Introduction Companies produce goods and services for consumption and then market them to attract customers hence customer acquisition. Customer preferences change with time and therefore continuous assessment of the market is needed. The aim of research is to make sure customers derive satisfaction after consuming the goods hence buy more. Buyers’ behaviour is determined by various factors such as attitudes, personality, motivation, gender and the environment in general among others (Folkes, 1984). On the other hand, Blackwell et al (2006) argues that buyer’s behaviour is prompted by need or problem recognition. They make purchases but not all goods are up to expected standards hence customers are bound to make complaints. Consumer dissatisfaction poses a great risk to organizations as they risk losing market share due to bad mouthing by the affected customers (Singh, 1988). On the other hand, service recovery after service failure is strength to the company as it enhances positive word of mouth and retention (Barlow & Moller, 2008). This can be achieved by handling the grievances amicably and ensuring customers are convinced and satisfied. The paper will evaluate consumers’ complaints and complaints handling for service recovery and benefits that are expected from the process. Buyer Behaviour Consumer behaviour involves making decisions on buying products or services by individuals or organizations. The decision to buy or not to buy may be impromptu or planned where consumers make budget for goods they want to buy. Some consumers buy goods anywhere provided the goods are available while others make informed choices based on information search before buying. For some, purchase of a particular good is habitual and hence they buy even if they don’t need it and thus they aren’t influenced by any factors. Blackwell et al (2006) establishes three phases of consumer decision making process which includes; need recognition, information search and alternative evaluation and selection. Need recognition involves the realization that a need exists based on desire to acquire an item or service or may be prompted by a stimulus in the environment such as advertisements which create awareness. The marketers play a great role in influencing buying behaviour depending on their convincing degree. A buyer may not be aware of a product but through marketing, he is made aware that such thing exists and hence he/she develops a desire to purchase or he may not be interested in the product based on age, attitude, emotions, and perceptions of the product, culture where taboos prohibit use of certain products. When a buyer recognizes the need for a product, he/she may buy instantly without further research or may inquire from friends and relatives about the product while others carry out extensive research to find out the suitability of the product. This process is what Blackwell et al (2006) recognizes as information search. It is geared towards finding out if there are available alternatives, their attributes or characteristics where some marketers give sample products for testing to determine which one is appropriate. The buyer may also find out information from friends regarding their attitude towards the product or the products that they use so that he/she can buy an equivalent product. The buyer may like the product by its not acceptable by his/her class or life-style may not allow as it may be viewed badly by peers. Some buyers buy long lasting products so they don’t have to buy often while others buy any product. After evaluating alternatives, a choice has to be made. A buyer can decide to buy or not to buy depending on information gathered and its interpretation. The buyer can decide to buy based on attitude or comparison of brands and choosing the most appropriate. After purchase, the buyers evaluate the goods effectiveness and if they are satisfactory they continue buying and if not they discontinue and look for other alternatives or seller is forced to modify products (Blythe, 2008). This Blackwell model has been criticized by researchers as it assumes the buying behaviour is prompted by need or problem recognition. It thus fails to acknowledge other factors that influence buying behaviour such as social status, income, peer pressure, beliefs, values, attitudes and emotions among others. East et al (2008) observes that buyers buy because it is a habit and a need does not have to arise for purchase to take place. Problem awareness may not lead to purchase due to other constraints and some purchases are impromptu. Post-purchase Evaluation This is evaluation carried out by buyers after purchasing products to test their suitability or level of satisfaction. This stage therefore determines whether consumers are satisfied or dissatisfied with products based on the complaints they make or approval of product (Singh, 1988). Consumer satisfaction is reflected in behaviour of habitual or repeat buying of the same product. Consumers develop brand loyalty for the product and can’t be convinced otherwise despite the amount of marketing. Consumers also praise the goods and encourage others to use them if they are satisfied. Customer satisfaction is therefore an advantage to organizations as it assists in marketing of products hence reduction of marketing costs such as advertising. Sellers should therefore ensure customer satisfaction always if they want to increase sales. However, it is not easy to determine whether they are satisfied as others do not voice complains. Consumer dissatisfaction is reflected in the way they complain about products. They have high expectations about the product before purchasing and if not fulfilled, dissatisfaction sets in (Sachdev & Verma, 2002). Customers expect products or services to fulfil their needs and desires and expect nothing less. If the product purchased therefore does not meet requirements, a customer is bound to complain. However, these expectations may be unrealistic or unreasonable hence cannot be achievable (Hayes, 2008). It may be of bad quality, not durable, taste differs and such other complaints. In other words the customer’s expectations are disconfirmed. However, it is not easy to measure expectations of consumers especially service delivery. Expectations are also diverse hence it’s not easy to satisfy all customers. According to Day et al (1981), the customers complaint is a result of not complying with standards as indicated on service guarantee. Firms give service guarantee to customers to reduce their anxiety and market their services by promising excellent service. Customers take advantage of service guarantees to complain and get compensation as there is no physical evidence of harm by the service hence their complaints are not genuine but have hidden agenda. Customer Satisfaction It is important to satisfy customers because they are essential for business continuity. Without customers, businesses will run down and close hence satisfaction should be a priority. By satisfying customers, an organization gains competitive advantage over others and is able to retain customers hence operate at reduced costs and high profitability (Kotelnikov, 2001). The customers help to enlarge the business by encouraging others to buy products from that particular firm hence act as advertisers. The firm is able to maintain a good relationship with customers hence an avenue for solving future problems and customers develop loyalty to firm’s brands. This process of satisfying customers is as a result of service recovery after complaints. Consumer Complaining Behaviour Consumers complain mainly due to dissatisfaction. Many researchers have been trying to come up with various reasons for complaints since 1980s. Cross-cultural factors are viewed as great influences on consumer complaining behaviour. Most customers do not complain directly but their actions lead to loss of market share of a firm and reduced profits hence companies and higher management were scared of the idea of complaints (crie, 2003). Firms risked not having customers interested in their products due to complaints. Market research was focussed on ways of acquiring customers so as to increase market share and profits or sales revenue. Recently, research has shifted focus to how companies can retain customers and develop brand loyalty to ensure sustainable profit growth through relationship problem solving although the research is still in its infancy (Boote, 1998). The studies try to analyse effect of relationship marketing on retention through use of consumer complaint behaviour. Technology has been incorporated to assist in solving relationship problems as provision of services entails high dissatisfaction and also to reduce barriers associated with voiced complaining behaviour. This enhances customer retention instead of focusing on acquisition and not retaining the existing customers who can act as agents of advertising by positive word of mouth about the company. Complaint Methods Customers air their complaints in various ways. Some complain through word of mouth or talk ill of the product or boycott the product all together instead of confronting the retailer (Hoyer & Macinnis, 2009). Some change their attitudes towards the product and don’t buy anymore or they may forgive the seller and continue buying. Some people prefer honesty and confronting problems head on hence they visit buyer premises and make complaints or call the premises to make their stand known (Singh, 1988). He argues that this helps the organization to make amendments and to apologise so as to maintain a good relationship. Others plan retaliatory acts due to aggressive attitude while others go as far as informing the media houses if it is a product well known or harmful product and even take legal action against the provider of the good or service hence damaging the business. Proprietors should encourage customers to inform them of any defects so as to rectify and do damage controls by establishing complain forums. Determinants of How Customers Complain The way customers complain is dependent of various factors. The product cost is great determinant. People budget for goods and if one is damaged especially if it is expensive, they may want to retaliate or ask for replacement. The use of the product is also important. If it is just a mere item, chances of complaining are minimal. The blame may be on the customer thus he/she has no reason to complain but a good seller would still listen to any complaint and find solution (Folkes, 1984). Demographic factors such as age and education play a major role. An uneducated person may result to retaliation or boycott while educated person may seek court redress. Culture either individual or corporate which encompasses beliefs and attitudes is vital. The national culture also has effects on complaint behaviour and is stipulated as either collectivism or individualism by Hofstede (1980).Collectivism culture which emphasizes sharing and close knit groups is likely to complain by negative word of mouth due to emotional integration (Watkins & Liu, 1996) but on the other hand, it can help to rebuild trust by distributing positive information faster. An individual acting alone is likely to complain directly to the concerned person rather than negative word of mouth but may also result to media or legal action which is not good for company image and service recovery. Richins & Verhage (2004) argue that complaints due to specific situations are stronger than due to general attitudes. Stages of Service Recovery Service recovery which is a set of actions taken by employees to solve customer problems is done in stages (Greatbrook, 2007). In the first stage, companies are unaware or are ignorant of the importance of consumer complaint handling hence no complaint handling takes place. Consumers thus shift to other companies where their voices can be heard (Stauss & Seidal, 2005). Company then discovers importance of customers and hence starts listening to them and offering solutions without any plan. As complaints keep piling due to lack of recording and taking remedial measures, the company realises the need for structuring responses. It therefore appoints representatives to listen and offer solutions to customer complaints while at the same time recording and analysing data. This ensures similar problems are handled effectively. It then engages in campaigns to lure customers to voice their complaints instead of solving them privately hence improved customer retention. The last level is achieved when business processes incorporate complaint handling in normal business activities. The company establishes the root cause of complaints and informs the suppliers concerned so that they can redesign products or modify any defects as detected by customers. The whole process is dependent on company culture which determines how systems and processes work. Complaint Handling Mistakes are bound to happen in every business but how companies handle consumer complaints may affect the future of the business. Encouraging consumers to complain ensures that all grievances are taken care of and informs the firm of its weaknesses and the need for improvement or strategy change. Zemke & Bell (2000) advocate for firms to hire people to listen to complaints and make records for analysing areas that need rectifying as well as giving feedback to management. However, some of these customer affairs departments have little success on reducing complaints. Fornell & Westbrook (1984) argue that the departments lack resources to modify organizational practices to eliminate complaints hence suppression of the problem leading to further dissatisfaction. For them to work, the management should be supportive. Quick response should be given as delays could result in dire consequences since some customers are impatient. The response should be fair. If it is a replaceable product, the company should replace and offer apology for inconveniencing customer although Zemke and Bell (2000) in their research found out that some customers do not accept replacements as they may be just like the original product. Follow-up is essential as it gives retailers a chance to redeem themselves by showing that they care. Empathy is also required instead of letting emotions take control (Boden, 2001). Effective communication skills are essential in solving disputes, harshness is not recommended. Baer & Hill (1994) observes that firms try to make excuses to justify actions by denying, shifting blame and offering explanations. Valence excuses acknowledge harm but aims at showing the harm was minimal hence portray consumer complaint as overstated. The excuses and explanatitions enhance customer loyalty but also hinder a firm from making improvements thus they should be avoided. Zemke & Bell (2000) emphasize the need for keeping promises and ensure they give realistic promises instead of giving excuses and also ask for customer advice on how to handle the complaint. This can help them in solving future problems of same nature. Importance of Consumer Complaints Service recovery programmes which include changing policies, processes and technology are as a result of consumer complaints and the need for problem resolution (Zemke & Bell, 2000). The company thus benefits in improving its efficiency and productivity hence employee satisfaction and motivation and quality services provision hence consumer retention. Studies carried out by Nyer (2001) showed that complaints can cause increased consumer satisfaction but only if handled well. Complaints enable companies to engage in rigorous marketing to find out tastes and preferences and customer behaviour so as to avoid future conflicts. Companies thus engage in market intelligence and target marketing to improve quality of goods and services. Promotional services are enhanced to acquire and retain customers. Trade relations also improve as sellers unite and try to suppress complaints. The customers also act as source of constructive ideas for improving products and upgrading services according to their requirements (Boote, 1998). Product information is also improved so that it is understandable by consumers. Warranties, labels and user manuals are improved to enable users to get maximum satisfaction of products and minimise complaints. Proper handling of complaints makes consumers to gain confidence and loyalty to the company hence it should be emphasized. Conclusion Consumer needs are diverse especially with current means of creating awareness on availability of products. It therefore becomes difficult to satisfy all customers hence complaints are inevitable as stated by Fornell and Westbrook (1984). Complaints may result due to dissatisfaction with products or services or unfulfilment of expectations as provided for in service guarantees where the customer is satisfied but the guarantee fails to cover all stated information. However, it is not easy to measure complaints levels and so its difficult to handle some of them. Customers respond differently to dissatisfaction as a result of factors such as culture, value of goods, emotions and attitudes but they have various options available for airing their views. They can contact the firm directly or through phone, some prefer to boycott and use negative word of mouth to others. All in all complaints help the companies to carry out service recovery hence improved business performance and service delivery. Without complaints, companies cannot know where their weakness lies or strengths hence they should be treated positively and customers encouraged complaining directly to the firm. References Baer, R., Hill, D. (1994). “Excuse making: A Prevalent Company Response to Complaints”. Journal of Consumer satisfaction, Dissatisfaction and Complaining Behaviour. Vol. 7 p 143-151. Barlow, J., Moller, C. (2008). A Complaint Is A Gift: Recovering Customer Royalty When Things Go Wrong. California: Berrett-Koehler. Blackwell, D., Miniard, W., & Engel, F. (2006). Consumer Behaviour (10 ed). US: Thomson South-Western. Blythe, J. (2008). Consumer Behaviour. London: Thomson Learning. Boden, A. (2001).The Handling Complaints Pocketbook. UK:Management Pocketbooks. Boote, J. (1998). “Towards a Comprehensive Taxonomy and Model of Consumer Complaining Behaviour”. Journal of Consumer Satisfaction, Dissatisfaction and Complaining Behaviour.Vol.1 pp 140-151. Crie, D. (2003). “Consumers’ Complaining Behaviour. Taxonomy, Typology and Determinants: Towards a Unified Ontology”. Journal of Database Marketing and Customer Strategy Management. Vol. 11, 1 pp 60-79. Day, R., Grabicke, K., Schaetzle, T., Staubach, F. (1981). “The Hidden Agenda of Consumer Complaining”. Journal of Retailing. Vol. 57, 3 pp 86-106 East, R., Vanhuele, M., Wright, M. (2008). Consumer Behaviour: Applications in Marketing. London: Sage. Folkes, V. S. (1984). “Consumer Reactions to Product Failure: An Attributional Approach”. Journal of Consumer Research. Vol. 103 pp 398-409. Fornell, C & Westbrook, R. (1984). “The Vicious Circle of Consumer Complaints”. Journal of Marketing. Vol. 48 (summer) pp. 68-78. Great Brook. (2007). Service Recovery Practices: Making the Case for Service Recovery. Great Brook Consulting. 28 Apr 2010. http://www.greatbrook.com/service-recovery.htm Hayes, Bob. (2008). Measuring Customer Satisfaction: Survey Design, Use and Statistical Analysis Methods (3 ed). Winsconsin: AQL. Hofstede, G. (1980). Culture’s Consequences: International Differences in Work Related Values. Beverly Hills: Sage. Hoyer, W & Macinnis, D. (2009). Consumer Behaviour (5 ed). US: Cengage. Kotelnikov, V. (2001). “Customer Satisfaction: A Critical Component of Profitability”. 28 Apr 2010. http://www.100ventures.com/business-guide/crosscuttings/customer-satisfaction.htm Nyer, P. (2000). “An Investigation into Whether Complaining Can Cause Increased Consumer Satisfaction’. Journal of Consumer Marketing. Vol. 17,1 pp 9-19. Richins, M. & Verhage, B. (2004) Seeking Redress for Consumer Dissatisfaction: The Role of Attitudes and Situational Factors. Journal of Consumer Policy. 8, 1 pp 29-44. Sachdev, S.B. & Verma, V.H. (2002). “Customer Expectations and Service Quality Dimension Consistency”. Journal of Management Research. Vol. 2, 1 pp 43-52. Singh, J. (1988). “Consumer Complaint Intensions and Behaviour: Definitional and Taxonomical Issues”. Journal of Marketing. Vol. 52, 1 pp 93-107. Stauss, B. & Seidal, W. (2005). Complaint Management: The Heart of CRM. US: Cengage learning. Watkins, H. & Liu, R. (1996). “Collectivism, Individualism and In-group Membership: Implications for Consumer Complaining Behaviours in Multicultural Contexts”. Journal of International Consumer Marketing. Vol. 8, ¾ pp 69-96. Zemke, R. & Bell, R. (2000). Knock Your Socks Off Service Recovery. New York: AMACOM. Read More