Significance of Service Recovery Effects on Customer Satisfaction/Loyalty - Research Proposal Example

Significance of Service Recovery Effects on Satisfaction/Loyalty Executive Summary The research focuses on the impact of service recovery in the hotel industry. Specifically, the research investigates the impact of service recovery on customer satisfaction and loyalty. A sample of one hundred respondents were surveyed and filled in a questionnaire in order to evaluate the impact that service recovery had on them. The result of data analysis showed that service recovery has an impact on customer satisfaction. It was found out that customers appreciated effective service recovery and they were likely to become loyal clients if hotels sorted out their problems satisfactorily. Further, the research results showed that their was a correlation between service recovery and customer loyalty. 1. Introduction The concept of service recovery is both a business function and a critical focus point from the marketing perspective. The hotel industry is majorly based on offering intangible services and this makes service recovery an important business strategy. Essentially, service recovery entails the measures that an organization puts in place to respond to failures in service delivery. The hotel industry is prone to several variables that make it necessary to put in place service recovery strategies. Therefore, the effect of service recovery on customer satisfaction and loyalty becomes an important topic of research. To gain insight into this topic, the researcher used questionnaires to collect data which was used to analyze the impact of service delivery on customer loyalty and satisfaction in the hotel industry. 1.1 Research Aim This report aims to examine the impacts of service recovery on customer satisfaction and loyalty in the hotel industry. 1.2 Research Questions a) How does service recovery affect customer satisfaction in the hotel industry? b) What is the impact of customer satisfaction on their loyalty? 1.3 Research Objectives a) To understand how service recovery effects on satisfaction in hotel industry. b) To understand the extent impact of costumer satisfaction on loyalty in hotel industry.  1.4 Hypotheses a) Service recovery has impact on costumer satisfaction. b) The loyalty can be affected by costumer satisfaction. 2. Literature Review 2.1 Service Recovery According to Keith (2008), service recovery is the well thought out process solving the issues of aggrieved customer and returning the customer to a state of satisfaction with the product or company. Service delivery can also be thought of as the set of actions a firm takes as a response to poor service quality (Andreasson, 2000). Therefore, service recovery can be considered as the response of a firm to its clients after a product or service failure with the intention of appeasing the aggrieved client and maintain their business value. The ultimate goal of service recovery is to ensure that clients maintain their business relationships with the firm that caused them the initial problem. In every organization, things occur that may have undesired effect on the customer. Hence, a company needs to have systems in place to implement corrective measures when things go wrong. The ultimate test of a company’s commitment to quality service is how it handles issues concerning instances of provision of below per services (Craig. 1999). He further argues that organizations need to put in place effective recovery strategies to win back a customers trust after instances problems in service delivery. Service recovery strategies are necessary to ensure that the service failures do not fit into a pattern of failure which might have devastating effects on the business enterprise (Berry 1995). Some studies indicate that excellent initial service is much better than relying on service recovery. However, other studies point out that service recovery has a greater impact on the customer than even the initial service. According to Andreasson (2000), well thought out service recovery has the element of surprising the customer and making them feel valued. The effect service recovery increases the sense of loyalty by clients than if nothing had gone wrong initially. This phenomenon is usually referred to as the service recovery paradox. Although it is not advisable to allow things to go wrong, it is definitely important to have service recovery mechanisms in place just in case things go wrong. 2.2. Customer Satisfaction Customer satisfaction is a result of the fulfillment or exceeding of customer expectations. The benefits of customer satisfaction include client loyalty and improved long term client value. According to Baker and Garry (2009), service recovery plays an important role in customer satisfaction. The client already expects good service but the element of making up for a mistake in service delivery adds significant value to the business relationship between the client and the company. In the hotel industry, service delivery is the backbone of the business. Due to the numerous variables in service provision in the hotel industry, more often than not service failure occurs. It is advisable for the hotels to grasp the service failure opportunity to win the hearts of the clients. Clients are willing to forgive mistakes when they feel that the company has acknowledged the mistake and corrective measures have been taken. In fact, customers feel satisfied when there cases are handled in a humane manner (Davidson 2020). Keith (2008) highlights a typical case of a hotel that went out of its way to provide exemplary service to its clients after a hitch in their flight. The hotel organized for a red carpet of its clients at the airport and went ahead to serve them a sumptuous dinner for free. The aftermath of this service recovery is that the clients were elated and praised the hotel for its service. A check out survey taken showed that the clients rated themselves as “very satisfied” with the service they received; notwithstanding the flight hitch which ordinarily would have created a major backlash. Andreasson (2010) and Keith (2008) argue that service delivery has a positive effect on customer satisfaction. It is hard to measure the level of customer satisfaction because this is an emotional aspect. However, some researchers have tried to analyze the word of mouth aspect of evaluating the level of satisfaction that clients achieve. Samuel et al (2009) found out that customers whose problems were handled effectively had a positive impression of the hotel and actually encouraged their friends to visit the hotel. 2.3. Customer Loyalty Research has shown that it is far much cheaper and profitable to maintain existing clients than to acquire new ones (Gartner, 2011). This is even more important in the hotel industry that relies heavily on repeat clients to give it business. Service recovery plays an important in winning the trust and confidence of a customer. This translates to a satisfied customer who is more likely to return as a loyal customer. There is a definite link between customer satisfaction and customer loyalty. The issue of service delivery is the determinant factor on whether or not a customer will be satisfied. Sometimes service failure will occur but what matters most is what happens after the failure (Keith 2008). Customer loyalty can be gained by efficient service delivery and when mistakes happen, excellent service recovery has even a greater impact in obtaining life time loyalty of a client. It is important to realize that excellent service delivery and recovery precedes customer satisfaction and loyalty (Jude 2011). In the hotel industry, it is important to lay out service recovery strategies and empower the ground staff to undertake corrective measures whenever it is necessary without having to go through the superiors. Quick service recovery is vital to limit the negative impact that may have been caused and empowering the ground staff helps to expedite the process (Jones 2010) 3. Research Methodology Objectively, the research focuses on the influence that service recovery in the hotel industry has on customer satisfaction as well as loyalty (Keith, 2008). In carrying out the research, the methodology incorporated both quantitative techniques of data collection (George & Paul, 2009). Data was collected from a sampled one hundred respondents through an online survey. The survey was carried through closed ended questionnaires which compelled the respondents to give their answers in a yes or no format (George & Paul, 2009). In the course of the methodology, there are two variables identified; customer satisfaction and loyalty. In collecting data on the two variables, two questionnaires were given out. The closed ended questionnaires had their responses assigned weights depending on level of relevance and implication on the study. The first variable was service recovery which had 5 questions. For customer satisfaction as a variable, the questions were 5. On the other hand, for customer loyalty, the questions were 5. 3.1 Data Collection Instrument (Questionnaire) The use of questionnaires for research is beneficial in that the researcher can collect detailed information form the sources. This information comes in a standardized form hence it is much easier to analyze the data collected form the field. Another advantage of the questionnaire is that makes it possible for data to be collected from a potentially large pool of source. It is cost effective to use questionnaires to obtain data. The method of survey was also used to collect data and choose respondents for the research. In this research, the questionnaire was used as a quantitative method to collect data. Quantitative research was mainly used to evaluate the relationship among measured variables in order to explain the hypothesized relationship. The questionnaire was designed with the aim of asking the appropriate questions to achieve the aims of the research. Since the research was seeking information about how the respondent feels emotionally, the Likert scale approach was used. Each statement in the questionnaire had a five point agree-disagree scale. The questionnaire was divided into three parts with eight questions in each part. The first part of the questionnaire was aimed at collecting data about the experience the respondent has with service recovery in the hotel industry. Respondents were asked if they had ever experienced poor quality service in the hotel industry and then asked to rate their experience on the service recovery measures. In the second part of the questionnaire, the researcher aimed at gauging the level of satisfaction derived by the customer form the service recovery offered. The final part of the questionnaire aimed at collecting data on what impact the service recovery offered had on the respondents’ loyalty to the given hotel. The questionnaires were administered via the web by sending email to the respondents from various fields and the responses were submitted back through email or by post office. The use of email was preferred because it was fast and cheaper. 3.2 Sampling and Data Collection Methods Random sampling method was used to collect data. This method is advantageous since it helps the researcher to reduce expenses related to collecting data. It is also highly effective if all the selected participants participate. The sample selected was representative of the larger population which would otherwise not be fully accessed. The researcher had a sample of one hundred participants who were selected randomly form the region. Most importantly, the respondents were chosen strategically in order to ensure that the data collected is areal representation of the entire population. 4. Analysis and Findings The research utilized SPSS to analyze the objectives of the research and also test the hypothesis postulated in the introduction (George & Paul, 2009). The number of respondents considered for the research was one hundred with an equal distribution between male and female. Also, the educational level of the respondents was at a literate level beyond high school. The analysis of the frequencies showed that 46 percent of the respondents were not satisfied with the services that they received in the hotels that they had visited. The negative perceptions were further reinforced by the fact that 41% of the respondents said that they would not come back to the hotel and also 46% of the respondents would not refer their friends to the hotels that they had visited. Regression analysis showed that P Read More