Business Letter And Literature Summary - Essay Example

?Mr. Bill Bryce CC: Mr. Richard Branson Re: Mumbai to Heathrow 7th December 2008 Dear Mr. Bryce: First of all, thank you very much for your continuedpatronage. Secondly, in behalf of the management of Virgin Airways, I would like to extend my sincere apology for the difficulties you have encountered on board the Mumbai-Heathrow flight on the 7th of December 2008. I would also like to thank you for providing us with the feedback with respect to the food and in-flight entertainment services that we provide on board our aircraft. Truly, the letter that you have sent us gave us a clearer picture of what is wrong with our in-flight menu as well as our in-flight entertainment system. Our minds were certainly opened as the low quality of food choices that we provide on our aircraft. We sincerely recognise our inability to serve our food in a more presentable way. Further, we have likewise recognised the need to revamp our in-flight entertainment system in view of the failure thereof to yield clear images. Without a doubt, it was through your letter that Virgin Atlantic was able to point out our shortcomings with respect to providing the best service possible to our loyal clientele. I know that no amount of money could compensate the damages that you have incurred following hellish journey on board our flight from Mumbai to Heathrow. In view of this, we would like to extend several benefits to you and your family to somehow pay off the damages you suffered from our corporation and to also reward you for helping us pinpoint the problems of our aircraft. First, we would like to invite you to help us in selecting the revised menu and wine selections for our next flights. We would like to meet you at your most convenient time here at our headquarters so that you could help us with this important task. We will be sending a car over the place where you are staying to facilitate your travel to and from our headquarters. Aside from helping us in the selection of our menu and wine selections for the future flights of Virgin Atlantic, the company would also like to extend travel benefits to you and the immediate members of your family for one year, as a thank you gift for helping us in the betterment of our services. Through these travel benefits, you can go anywhere in the world on board Virgin Atlantic, on us! Finally, on all your future travels with us, kindly expect the best kind of service that only Virgin Atlantic could offer. Once again, we sincerely apologize for the inconveniences that we have caused you on board our flight from Mumbai to Heathrow. Also, we would like to thank you once again for your continued patronage to Virgin Atlantic and for helping us point out the problems with respect to our services so that we can ensure the betterment thereof, to provide only the best service to our loyal customers like you. Thank you very much and Good Day! Sincerely Yours, _________________________ Marketing Manager Virgin Atlantic Introduction Studies conducted with respect to customer retention have focused on the manner by which the customers respond once the issue of service failures has become an important aspect thereof (Zemke 1995). Parenthetically, researches that have been conducted in relation to this topic have highlighted the importance of the so-called “mutual exchange and fulfillment of promises (Yockel 1997; Zemke 1995).” Evidently, the latter is considered as the primary basis that underscores service relationships. Service recovery is thus deemed necessary most especially when the manner by which a corporation delivers a particular service tends to go wrong (Nguyen 2006). In a nutshell, service recovery has been referred to as that effort of the company aimed towards providing the customers and the clients with the outcome they desire even though the latter has already experienced a failure in the previous delivery (Young and Burgess 2010; Yockel 1997). Service recovery is also concerned with the adoption of pertinent steps and measures to prevent the commission of the same mistake (Nguyen 2006; Osborne 2004; Tschohl 2005). It is then because of this that the importance of service recovery has been underscored in the field of service management and service marketing. Without a doubt, service recovery strategies are deemed of paramount importance in view of its ability to positively affect customer loyalty as the former somehow prevents the turnover of those who have been previously dissatisfied with the service provided (Osborne 2006; Tschohl 2005; Yockel 1997). It is thus the primary aim of this essay to provide an in-depth examination of service failure, service recovery strategies as well as its effects on customer retention and loyalty (Nguyen 2006). Service Recovery: A Definition Service recovery has been the subject of a number of researches taking its importance into consideration (Nguyen 2006; Zemke 1995). In view of this, the term has been defined in various ways by scholars who have written with respect to the said issue. Because of this, various definitions of service recovery exist. Basically, service recovery pertains to the manner by which a company addresses the complaints that they receive from their customers in view of the failed service that the latter, in turn, receives from the company in question (Osborne 2004; Tschohl 2005; Yockel 1997; Zemke 1995). Based on this fact, service recovery is generally referred to as those actions rendered by a particular service provide in response to the failed service encountered by their customers. More often than not, the said failure is largely attributed to the inability of the corporations to render the type and quality of service that they are supposed to render (Anon 2006; Tschohl 2005). On the other hand, there are also researchers who have mentioned that the issue of service recovery is not confined to the experiences of service providers alone. Rather, service recovery is also applicable to suppliers who provide the companies with the services they also need (Jones & Farqhar 2007; Tschohl 2006; Zemke 1995). Thus, service recovery may also pertain to the methods by which suppliers respond to the quality of the services they offer to their clients (Jones and Farqhar 2007; Tschohl 2005; Yockel 1997; Zemke 1995). Also, there are other scholars who have written with respect to the topic at hand that define service recovery as that process wherein an unsatisfied customer is turned into a loyal customer (Kau & Loh 2006’ Nguyen 2006). Without a doubt, service recovery has the capacity to ensure customer loyalty in such a way that it involves apologizing, taking responsibility and compensating customers with something valuable in return for the damages that they may have suffered following the service failure (Jones & Farqhar 2007; Kau & Loh 2006). Thus, there are researchers who define service recovery as the set of efforts adopted by a service provide in the hopes of ensuring the aggrieved customers’ satisfaction with them and their services following the breakdown of a service. Hence, it is evident that service recovery is indeed one of the most important elements that the companies and suppliers must take into consideration in undertaking their duties to the customers (Osborne 2004). This is therefore necessary because of the fact that it does not merely ensure the return of previously dissatisfied customers into their businesses; but rather, it also helps in the attraction of new customers (Tschohl 2005). In this sense, service recovery positively impacts every business. To obtain a better understanding of the concept of service recovery, one of the studies reviewed by the researcher underscored the different elements that make up the said concept. According to the study reviewed, service recovery entails the establishment of an efficient feedback system wherein customers can voice out their comments, complaints and suggestions (Fitzsimmons & Fitzsimmons 2004; Young & Burgess 2010). The feedback system is also tapped for pertinent information that the service providers can use in order to facilitate the improvement of the services they render. In relation to these, the study reviewed also identifies the following as the important services that make up the concept of service recovery: first, identifying the expectation of the customers that the provider failed to meet; second, the manner by which they could effectively resolve the problem with the service they provide; third, classifying the main cause or causes of the problem; and lastly, the need to look for data that the company could use in the future assessment and improvement of their services. In this respect, the study also highlighted the importance of the attitude of the members of the staff in handling measures related to service recovery (DeWitt & Brady 2007; Young & Burgess 2010). Succinctly, it is of utmost significance for the members of the staff to display politeness and responsiveness in dealing with the problem in delivering the strategies related to service recovery in view of the fact that this is merely the second chance of the company in ensuring the retention of their customers (Boshoff & Staude 2003; DeWitt & Brady 2007; Tschohl 2005). Another definition relating to service recovery highlights the three aspects of justice that are involved therein; namely: distributive justice, procedural justice and interactional justice. Basically, distributive justice refers to the determination of the how the company should compensate the customers for the service failure they have experienced. Moreover, distributive justice is also concerned with the payment of the damages that the customers may have suffered following the service failure they have encountered (Fitzsimmons & Fitzsimmons 2004; Young and Burgess 2010). On the other hand, procedural justice pertains to the process by which the recovery process sis carried out. Under the procedural aspect, it is then of paramount importance in this particular process that the members of the staff are given an important role. Lastly, interactional justice refers to the way by which the proper treatment of the customers is ensured. Whilst the abovementioned researches focused on the different definitions provided in relation to service recovery, the studies reveal a common theme, service recovery is concerned with the proper response of the suppliers and service providers to the service failures encountered by the customers to ensure the latter’s loyalty to the company (Bosh & Staude 2003). The Importance of Service Recovery: Recovery Strategies and Customer Loyalty Having established the definitions provided by different researchers in relation to service recovery, this section then focuses on the importance of service recovery most especially as regards its effects on customer loyalty. Generally, the main aim of businesses is to attract customers and to retain them. However, it is of more important to ensure the retention and loyalty of the employees rather than merely focusing on attracting the customers as the latter is more expensive than the former. Service failure is commonly experienced by all companies. Undeniably, the service firms experience a number of problems in relation to the provision of effective services to the customers or in ensuring that the latter are taken cared of following a service failure. It is then in relation to the latter that customers are now more cautious in relation to the manner by which the service providers respond to their problems and mistakes. Thus, it is the main function of service recovery strategies to make sure that the firms act in a manner that is efficient and quick in solving the problems of their customers. As La and Kandampully (2004) posit, the proper management of service failures through the provision of service recovery strategies may be properly used by the corporations to inculcate the importance of learning within the entire organisation and to demonstrate the commitment of the company to enhance value. Succinctly, the said authors regard the importance of service recovery strategies as the driving force that inspires the adoption of innovations which in turn, positively affect the manner by which the entire organisation operates (La & Kandampully 2004). Nowadays, the complexity of the business environment and the presence of intense competition, customers have higher expectations nowadays as compared to in the past. Generally, poor customer service damages a company extensively in view of its tendency to promote customer turnovers. On the other hand, customer turnovers tend to be very expensive for a particular organisation as they have to find ways by which they could find new customers. Without a doubt then, service recovery is of paramount importance to every organisation as it tends to promote customer loyalty. In establishing the relationship between service recovery strategies and customer loyalty, researches pointed out that the customers do not immediately relate their experiences once the service has been rendered. Consequently, it is only when the customers experience a service failure that they communicate their dissatisfaction to potential customers. Another study focused on the relationship between effective recovery processes to customer loyalty. Succinctly, it was discovered that customers who receive experience efficient recovery strategies are positively correlated with the higher customer loyalty. In this regard, one of the most significant purposes of customer service is to enable the organisation to recover from their failures and to cater to the needs of their previously dissatisfied customers. It is in this regard that the said study expounds on the need to ensure the adoption of effective recovery strategies for without the former, customer loyalty may be highly compromised. Craighead, Karwan and Miller (2004) in their article entitled “The Effects of Severity of Failure and Customer Loyalty on Service Recovery Strategies,” have also looked into the importance of service recovery strategies in ensuring the loyalty of the customers. Basically, the main aim of the said research was to identify the different means related to the identification of common service failures that are encountered within a particular environment. Additionally, the study of Craighead et al. (2004) also sought to look into the different failure types and the manner by which these should also be treated. According to the said researchers, aside from the abovementioned, the significant absences of studies that have been conducted as regards recovery techniques have prompted them to undertake a study with respect to the said subject matter. To attain the goals of the research, Craighead et al. (2004) made use of the hierarchical and non-hierarchical cluster analysis of data coming from approximately eight hundred and sixty one instances of service failures. It is through the said data that the researchers were able to determine the most common types of failures that the service providers have encountered and how it has affected customer loyalty. Through the use of these methodologies, Craighead et al. (2004) identified four common precursors related to service recovery efforts; these are: (1) loyalty, (2) quality, (3) severity, and (4) guaranty. The researchers stipulate that the loyal customers are more likely to expect better service recovery strategies. Those who have been constantly guaranteed of the high quality of the products or the services have also higher expectations as regards service recovery strategies (Craighead, Karwan and Miller 2004). Conversely, the severity of the service failure should also be considered. Based on their research, Craighead et al. (2004) were able to discover that a severe service failure would negatively affect customer loyalty notwithstanding the fact that the company was able to render efficient service recovery strategies. Craighead et al. (2004) maintain the importance of service recovery strategies. For them, service failures are inevitable. Thus, to reduce the negative effects of the latter to the company, it is of paramount importance to resort to effective service recovery strategies which would also ensure the loyalty of key customers. Craighead et al. (2004) likewise enumerate the following as the activities that are essential to properly implementing service recovery strategies: (1) apology, (2) sincerity, (3) the provision of a “fair-fix” to a problem, (4) the provisional of additional value to the customer, (5) attempt, which signifies that the initial contact person should be able to address the problem at hand, (6) authority or the empowerment of the front-line employees to ensure their ability and readiness to solve problems, (7) seeking and fining quick ways to identify problems, and lastly, (8) the timely resolution of the problem once this has been discovered. Another study which has been conducted to ascertain the effects of service recovery on customer loyalty was Hocutt, Bowers and Donovan’s (2006) “The Art of Service Recovery: Fact or Fiction?” Generally, the main aim of the study was to look into the effects of service recover on the manner by which the customers evaluate the delivery of services (Hocutt et al. 2006). To attain the said objective, the authors conducted an experiment which evaluated the responses of customers to the three dimensions of recovery efforts: first, redress; second, responsiveness; and lastly, empathy and courtesy (Hocutt et al. 2006). In general, the findings of the study showed that consumers respond more positively when there are higher levels of redress rendered by a company complained of due to a service failure (Hocutt, Bowers and Donovan 2006). The three were also able to discover that the courteousness and responsiveness of the employees in their interaction with the customers complaining of the said service failure play an important role in enhancing consumer evaluations. Cogently, Hocutt, et al. (2006) found out that the level of satisfaction was highest and negative word-of-mouth tendencies were reduced once the interaction between the members of the staff and the complaining customers are marked with high levels of courteousness and responsiveness (Hocutt et al. 2006). Indeed, the study of Hocutt et al. (2006) is considered of paramount importance in the field of management research in view of its findings that have proven the so-called service recovery paradox. Parenthetically, the study of Hocutt et al. (2006) was able to show that recovery strategies are effective not only because they ensure proper response to bad service experiences and to increase customer satisfaction. In fact, Hocutt et al. (2006) even highlighted the fact that customer satisfaction following service recovery strategies may even be higher as compared with what has been experienced before the failure of the said service. Aside from what has been previously discussed, Kau and Loh (2006) were also successful in terms of determining the effects of service recovery on the customers. Generally, their study entitled “The Effects of Service Recovery on Customer Satisfaction: A Comparison between Complainants and Non-Complainants” aims to look into the effects of service recovery strategies on the satisfaction and loyalty of the customers. More importantly, the study also sought to examine the concept of “justice” in relation to the different undertakings in relation to service recovery together with its effects on satisfaction and behavioural outcomes. Cogently, Keng-Kau and Lau (2006) also aims to discover whether or not the concept of the so-called recovery paradox truly exists. To achieve these objectives, Keng-Kau and Lau (2006) collected data through the use of a structured survey questionnaire. Basically, four hundred and twenty-eight respondents have been subjected to the research, focusing on whether or not they have lodged a complaint with the service providers (Keng-Kau & Lau 2006). In general, the findings of the study were able to point out that the complainants’ level of satisfaction with the service recovery strategies depend greatly on their perceptions of justice. Similarly, Keng-Kau and Lau (2006) were able to find out that the customers’ satisfaction with the service recovery strategies was highly influenced by the following factors: (1) their level of trust, (2) word of mouth communication and (3) loyalty. It is in this regard that Keng-Kau and Lau (2006) were also able to find out that greater trust and positive word of mouth communication are expected from the respondents who have not experienced service failures as compared with the non-complainants. Lastly, the study also showed that the dissatisfied complainants tend to exhibit a lower level of trust and tend to engage in negative word of mouth behaviour as compared to those who have likewise experienced service failures but chose not to complain (Keng-Kau & Lau 2006). The importance of the study authored by Keng-Kau and Lau (2006) was premised on the fact that it was able to emphasize the importance of perceived justice in the analysis of service recovery. Undeniably, the satisfaction of the customers with service recovery strategies result to the following: first, the development of a higher level of trust within the organisation, positive word-of-mouth behaviour, and lastly, a significant increase in the degree of loyalty. However, Keng-Kau and Lau (2006) also noted of the failure of its study to establish the existence of the so-called recovery paradox. Parenthetically, the study of Keng-Kau and Lau (2006) showed that reliance on mere service recovery would not result to customer satisfaction. Hence, it is of paramount importance to render efficient customer service so that resort to service recovery strategies is not necessary (Keng-Kau & Lau 2006). While the previously reviewed researches merely focused on the relationship between service recovery strategies and customer loyalty, the study of Wirtz and Mattila (2004) entitled “Consumer Responses to Compensation, Speed of Recovery and Apology after a Service Failure” focused on the effectiveness of the most common types of service recovery strategies. The aim of the study was to examine the three aspects of fairness’ – distributive, procedural and interactional- effects on the customers most especially as regards their satisfaction and other behavioural responses (examples: word of mouth communication and repatronage intent). In general, the study conducted by Wirtz and Matilla (2004) was able to find out that recovery strategies such as procedures and interactional treatment significantly results to positive consumer behaviours. In contrast, compensation as a service recovery strategy has relatively failed in terms of ensuring the satisfaction of the customer. Hence, it can be deduced that service recovery processes must focus more on other types of strategies than the mere provision of compensation as the latter is ineffective in terms of ensuring the betterment of the situation arising from the service failure (Wirtz & Matilla 2004). Based on the abovementioned, it is evident that service recovery strategies must focus on other types rather than merely focusing on the provision of compensation. Evidently, compensation is not effective in terms of ensuring the satisfaction of the customers and reducing their tendency to engage in negative word of mouth communication. In this respect, it is of paramount importance for service providers to find ways by which they could carry out service recovery strategies aside from merely relying on compensation. As mentioned, this can be carried out by other methods of redress. Summary The literature reviewed by the researcher shows the importance of service recovery. Without a doubt, the literature reviewed has mentioned that service recovery strategies are employed by business nowadays upon their customers’ experience of service failure. Interestingly, service failure is inevitable. It is in this regard that companies must focus their attention in terms of making sure that they properly carry out the strategies pertaining to service recovery. Cogently, it is through the proper implementation of effective service recovery strategies that customer loyalty is ensured. Researchers, however, caution that, it is of utmost significance to take various aspects of service recovery strategies into consideration to ensure the maximization of their benefits. The role of the employees at the front line must be enhanced to guarantee the proper administration of service recovery strategies. Front line employees must likewise display sincerity, courteousness and responsiveness in dealing with the complaining customers. References Anon 2006. Competitive Horizon. Strategic Direction, vol. 22, p. 38. Boshoff, C. and Staude, G. 2003. Satisfaction with service recovery: Its measurement and its outcomes, South African Journal of Business Management, vol. 34, pp. 9-16. Craighead, C. W., Karwan, K. R. and Miller, J. L. 2004. The effects of severity of failure and customer loyalty on service recovery strategies. Production And Operations Management, vol. 13, pp. 307-322. DeWitt, T. and Brady, M. 2007. Rethinking service recovery strategies: lthe effect of rapport on consumer responses to service failure. Journal of Service Research, vol. 6, no 2, pp. 193-207. Fitzsimmons, J.A. and Fitzsimmons, M.J. 2004. Service Management: Operations, Strategy and Information Technology (4th edn) Irwin McGraw-Hill, NY. Hocutt, M. A., Bowers, M. R. and Donavan, D. T. 2006. The art of service recovery: fact or fiction? The Journal of Services Marketing, vol. 20, pp. 199-207. Jones, H. and Farquhar, J. D. 2007. Putting it right: service failure and customer loyalty in UK banks. The International Journal of Bank Marketing, vol. 25, pp. 161-172. Kau, A.-K. and Wan-Yiun Loh, E. 2006. The effects of service recovery on consumer satisfaction: A comparison between complainants and non-complainants. The Journal of Services Marketing, vol. 20, pp. 101-111. La, K. V. and Kamdampully, J. 2004. Market oriented learning and customer value enhancement through service recovery management. Managing Service Quality, vol. 14, pp. 390-401. Nguyen, D. 2006. Service Recovery: A Re-Conceptualization. University of Queensland, Australia. Osborne, L. 2004. Resolving Complaints. Jones and Bartlett Learning, UK. Tschohl, J. 2005. Service Recovery - Use it and you will have customers who are loyal for life. [Online] http://www.customer-service.com/articles/service_recovery.aspx. Wirtz, J. and Mattila, A. S. 2004.Consumer responses to compensation, speed of recovery and apology after a service failure. International Journal of Service Industry Management, vol. 15, pp. 150-166. Yockel, S.L. 1997. Service Recovery: A Case Study. Rochester Institute of Technology, UK. Young, L. and Burgess, B. 2010. Marketing Technology as a Service. John Wiley and Sons, UK. Zemke, R. 1995. Service Recovery: Fixing Broken Customers. Productivity Press, UK. Read More