KA & Auburn University Service Organizations Business Letter - Coursework Example

Heading: Business Letter and Literature Summary Customer Inserts His/Her Name Customer Inserts Grade Course Customer Inserts Tutor’s Name 17, 08, 2011 Virgin Atlantic Airways Ltd. Registered Office: Company Secretary, The Office, Manor Royal, Crawley, West Sussex, RH10 9NU Tel: Email: CC: Sir Richard Branson August 17 2011 29 Tea Tree Lane Salisbury Wiltshire, United Kingdom SP2 8JN Dear Bill Bryce, Re: Mumbai to Heathrow 7th December 2008 I was most concerned to receive your letter dated December 7 2008, regarding the flight services on your Mumbai-Hearthrow flight. Thank you for taking the time to communicate to us why our catering service did not meet your expectations. We have every desire to address your needs and provide the best solution available to resolve your issue as soon as possible. I appreciate how frustrating your flight must have been considering the hunger, discomfort and contempt you had to undergo throughout the flight. The situation must have been worsened when you opted to resort for refuge from the onboard entertainment. The company aims to consistently deliver a professional service to our customers and I would like to state that on this occasion the level of service you received was unacceptable. I will be in contact with you in the coming days to make our best attempt in regaining your confidence in our company; with an option of a compensation gesture in the offing. In addition, we will further evaluate how we can prevent this problem from occurring again in the future. Of primary concern is investigating the genesis of the problem and addressing it adequately. The results will be promptly relayed to you in time and in case you are not convinced, you should feel free to communicate the same to me. From your feedback, future failures will be promptly acted upon, or the appropriate alternatives provided in accordance with the customer’s needs. As for the complaint-reporting procedures, proper training will ensure superior customer service to our customers and increased communication thereof. Please accept our sincerest apology for any trouble or inconvenience we have caused you. Again, I highly appreciate your feedback as it will assist us in becoming better at what we do. As with any business like ours, the greatest advertising we can have is word of mouth from a satisfied customer. It’s my goal to retain you as a satisfied customer and will hope to serve you again in the future. Thank you for bringing this matter to my attention and that you will have no further cause for any complaint in relation to our service. The company is actively working to improve service levels and your feedback has proved to be invaluable. Yours sincerely [Customer’s Name] Marketing Manager, Virgin Atlantic Airways Ltd. Literature Summary As noted by Riscinto-Kozub, KA & Auburn University (2008, p.83) service organizations ought to appreciate the need to meet customer expectations in order to enhance their sustainability. According to Riscinto-Kozub, KA & Auburn University (2008, p.84) meeting the expectations of customers in the first instance is better than seeking new customers. With increased globalization through the internet, customer dissatisfaction is even more pronounced than ever in the current time. As much as meeting the expectations of all customers of the company is challenging, an organization ought to establish a foundational way of addressing the complaints of customers. As stated by Bassi & Guido (2006, p.34), when customers get dissatisfied about a service, they may seek redress or engage in a negative word of mouth. As pointed out by Riscinto-Kozub, KA & Auburn University (2008, p.82) about 77% of customers who experienced dissatisfying services engaged in a negative word of mouth while about 48% of the non-complainers engaged in a negative word of mouth after fruitlessly seeking company’s redress. From this basis, it is evident that customers who seek redress from the service provider are less likely to engage in negative word of mouth as compare to those who don’t seek redress. According to Cheng (2010, p.13) service recovery is a key tool in enhancing customer relationship, in essence the enabling customer loyalty involves taking into consideration the responses of the customer and consequently acting upon them in a sincere and a timely manner. This promotes customer loyalty as well as future behavioral intentions of the client. As noted by Jones (2006, p.17) successful service delivery failures resolutions makes customers stronger and even committed to the organization as opposed to when the service failure occurred in the first place. As identified by Levesque & McDougall (2000, p.15) a redress from the organization to explain the cause of customer dissatisfaction is the first step in providing a comprehensive and sincere solution to the customer. A company ought to address the issue internally before considering taking any appropriate action in order to ensure certainty of the solution and sincerity of the message relayed back to the customer (Thwaites & Williams 2006). Seeking the genesis of the problem is one of the most essential aspects of ensuring that a better problem solving strategy is developed and also appropriate response to the problem is achieved(Cho & Hiltz 2003). A problem cannot be addressed without first identifying its genesis or rather its root cause. The organization is responsible for the harms/bad-effects that its products or services have on the people. It is thus the responsibility of the organization to ensure that its services or products meet the expected standards of its clientele in order to avoid any customer dissatisfaction or legal action as a result of sub-standard products (Cheng, K 2010). In the event of customer dissatisfaction and the message of response by the customer is actually published in a news media such as the internet. There are ultimate consequences that the company could face as a result of such dissatisfaction. The initial setback will be decreased customer perception about the brand despite its popularity and hence decreased customer base. Riscinto-Kozub, KA & Auburn University (2008, p.89) statistics reveal that a positive and promising better services in future can actually contribute to increased customer loyalty as compared to when the service provider respond in defense of itself against its own mistakes. More so, considering that mistakes happen even with a strong brands, taking the blame and working through the media to inform clients on actions and ways that the company has established in order to reduce such incidences actually yield more positive results than expected or if the mistake had not occurred after all (Robbins & Miller 2004). According to Cho & Hiltz (2003, p.20) compensating dissatisfied customers is a way of acknowledging a company’s shortcomings and thus creating a foundation for trust from the customers. The rationale for the importance of the compensation problem is not limited to the affected customer but the overall presentation of the company in the media. As elaborated by White & Yanamandram (2007,p. 302) media response has a more positive profound effect for the company as compared to before the compensation was done, it not only builds the confidence of the customers but also drives a larger traffic of customers to the services of the company because of its sincerity. Wirtz & Mattila (2004, p. 156) notes that encouraging customer complain and openness subjects the involved service delivery company to less negative focus by the public and hence retaining its brand image. On the contrary, denying customer feedback information or ignoring the same results in increased customer dissatisfaction which goes against the company’s brand image. It is the responsibility of the company to ensure that it encourages customer complain as a way of demonstrating confidence in the service or products delivered by the company. Notably some food related issues can a times result in legal actions which may result in closure of the company. Avoiding such instances should thus be the first priority of a company that seeks to remain relevant and enhancing its sustainability in the public domain. As discussed by Riscinto-Kozub, KA & Auburn University (2008, p.89) a research conducted addressing the service recovery and also behavioral outcomes in the cellular industry. A research conducted investigated two major concepts. The initial one is the research view on the relationship between the perceptions based on complains of the service recovery process as compared to the justice theories. The second issue was the dissatisfaction or the satisfaction with the process of recovery and the degree of trust by the customer. As the findings revealed, even if the compensation was done adequately, the customers may feel that they have been unfairly treated. It was however evident that distributive and procedural justice was an imperative consideration in the service recovery process among the cellular customers. It was also evident that service recovery increased the levels of trust and also reduced significantly negative word of mouth which are essential aspects of customer retention (Riscinto-Kozub & Auburn University 2008, p.90). The research however failed to clearly associate the service recovery satisfaction with the loyalty of the impact it had. This however shades more light on the fact that a holistic approach should be considered while providing a comprehensive solution to the needs of the customer. As elaborated by Cheng (2010) Boshoff attributes shade more light on the implications of service recovery, he notes that the manner in which communication to the customer is handled is imperative, the feedback on the quality of the information about the cause of the problem and the resolution is important. Explanations on the reason behind the customer complain ought to be clear and concise. The atonement or value added compensation to restore the ratio of inputs is also essential in making up to the customer for the inconvenience caused as a result of service failure. The company also has to act with authority and refer to resources which employees ought to access and the possible decision that they should make (Bassi & Guido 2006). The rationale for these recommendations is to win back the loyalty of a customer after a service delivery failure. As also elaborated by Jones (2006) customer feedback should be used in the process of customer retention in order to ensure that the organization does not lose its customers but rather retain them given the competitive nature of the current business world. An immediate response shows that the organization is not only customer sensitive but also customer oriented and as such deserves the right to retain customers in the event of service delivery failure. A realistic approach to the problem is also encouraged from companies which face such dilemmas or challenges. “Service recovery” is the post service-failure measure adopted by the service providing firm to try and restore customer loyalty after the dissatisfying experience. Solutions to the customer problems are a critical part of the service recovery process and the recovery strategy so adopted. According to Smith, Bolton & Wanger (2008), early service failure results in lower customer satisfaction was perceived because a satisfactory service experience is not achieved. Different service recovery strategies are also noted to result in different outcomes, especially when used in different industries. For instance, an apology and subsequent compensation in a hair-dressing industry is an effective approach that positively impacts on the recovery of customer satisfaction and loyalty. Therefore, some of the appropriate solutions to the Virgin customer includes, acting quickly to recover the service failure, communicating with customers by providing feedback and adequate explanations for the service failure, assuring the customer of product quality, and ensuring that the service recovery personnel are professional in their actions. An apology to the dissatisfied customer will be instrumental in preventing the customer from mouth-to-mouth misrepresentation of the company. The Recovery Paradox which compares the satisfaction of a customer who has once received excellent service recovery, with that of a customer who hasn’t, is crucial while considering the appropriate solutions to the Virgin customer. Although service failure can either be progress failure (failure of service that occurs in the process of service delivery) or outcome failure (customer dissatisfaction that occurs after service delivery), resolution to the failure caters for relieving the customer’s ultimate dissatisfaction. According to Swanson & Kelley (2001, 55), the relatively quick and uncomplicated service recovery attempts proved to yield the best customer “behavioral intentions” (i.e. word-of-mouth and repurchase intentions). According to Wirtz & Mattila (2004), prompt action following such an experience would necessitate a verbal apology and taking up of the problem. The apology, ought to be made whether or not the mistake has been partially or entirely made by the company or the customer. The customers rarely pay attention as to whose fault it was; and instead expect an immediate apology and someone to champion their cause. It is also crucial at this point that the company trusts the customer’s claims, and conducts the investigation later on. The customer is likely to feel disloyal if there is doubt on their claims. However, once a customer has lodged a complaint through a letter to the company, the first and most crucial step is for the staff to respond promptly. The response should be sent on the same day if possible, and not later than 72 hours, beyond which studies have shown that 40 to 50 % of customer defected. A speedy response depicts a sense of urgency; and shows that the company really cares about the customer’s situation and feelings. Bejou & Palmer (2003, 18), suggest that communication to the dissatisfied customers is vital to the service recovery process, as shown by the 23 % of memorable satisfactory encounters in the airline, hotel and restaurant industries that were directly due to incidents of the way service employees responded to service failures. On the contrary, 43 % of dissatisfactory service encounters were associated with employees; inability or unwillingness to respond to service failures. From the two statistics, it was further deduced that dissatisfaction was not due to the initial service failure but rather due to employee’s response to the failure that caused the incident to be remembered unfavorably by the customer. Simply put, the failure by the employees to recover service failure was the cause for the dissatisfaction. This perceived inappropriate and/or inadequate response to service failures was referred to as a “double deviation” from customer expectation of service organizations. Depending on the service, the dissatisfied customers can either be provided with alternatives or options to the expected service or a complete replacement for the service. Additionally, if the service delivery has already been overtaken by circumstance, the customer should be given adequate explanations as to the cause and anticipated action to be taken for the dissatisfying service. According to Boshoff & Leong, (2006, p.35), service organizations should acknowledge that every customer’s problem presents an opportunity to prove its commitment to service even if the provider is not entirely to blame. From the study, it was discovered that the most critical success factor to service recovery was to develop an environment whereby customers are free to lodge complaints. It was further postulated that service organizations need to create an environment where customers are guaranteed their problems will be solved. However, while complaints might not surface as they would be anticipated, organization can literally solicit for complaints by allowing unhappy customers to openly tell of their problems; keeping records of why complaints occur; analyze the possible preventive mechanisms to complaints and make necessary changes in the services. Furthermore, companies should make it easy for customers to complain, such that even though customers may be satisfied the company has always reminded them that it cares. Such approaches include installing booths at Airport for travelers to tape their comments; offering incentives or discount to patrons to write suggestions on service improvement; and offering discounts to customers who wait for more than five minutes in a queue. Service encounters involving a failure and recovery provide the customer with new information so that he/she can update his/her satisfaction and repatronage intentions. Parasuraman, Zeithaml and Berry (2004, 118) suggest that transaction-specific satisfaction is generally considered to be a post-choice evaluative judgment of a specific purchase and consumption experience. For instance, from an organization’s recovery from a service failure, a customer might form a transaction-specific assessment of his/her satisfaction. On the contrary though, cumulative satisfaction reflects the customer’s feelings about multiple experiences or transactions with the service organization (Crosby and Stephens, 2007, 408). Thus from various studies, a customer’s satisfaction can be directly linked with different service encounters and evaluation of the service provider, evaluation of service organization, and evaluation of service quality. Therefore, in the event of a service failure, the customer should be allowed time to make adjustments to the post-failure expectations. Alternatively, the demands or specifications according to the customer should be considered as a representative opinion of the dissatisfied customer community. Lastly, the service recovery personnel should be professional in their actions. The service recovery process being the ‘second chance’ that the customer opts to prove that the organization is a failure, utmost care should be taken to ensure the customer is satisfied. Primarily, the customer should be guaranteed of quality in the delivery, as shown by the Citibank study that promised specifying time frames for proceeding steps, customer satisfaction increased by 40 %. The company should adequately train their employees to listen to customers and change attitudes toward complaints not as negative reactions but as opportunities for positive change (Magnini & Ford, 2004, 221). Thus from a British Airways study on training of employees on responding to customer complaints and trusting them, the retention rate among those complaining to customer relations more than doubled, and the department’s return on investment rose by 200 %. The training of employees should also ensure improved customer service so as to satisfy customer’s needs. Research has established that a well trained employee workforce that cares about their customers provide superior customer service. There is need to ensure adequate interaction between customers and frontline employers in order to portray a company’s reputation for good or bad customer service. Reference list Bassi, F & Guido G 2006, Measuring Customer Satisfaction: from Product Performance to Consumption Experience, Journal of Consumer Satisfaction, Dissatisfaction and Complaining Behavior, vol. 19, no.4.pp.34-39. Bejou, D. & Palmer, A, 2003, Service failure and loyalty: an exploratory empirical study of airline customers, Journal of Services Marketing, vol. 12, no. 1, pp. 7–22. Boshoff, C & Leong, J 2006, Empowerment, attribution and apologising as dimensions of service recovery: an experimental study, International Journal of Service Industry Management, vol. 9, no. 1, pp. 24–47. Cheng, K 2010, Application of the Six Sigma Process to Service Quality Improvement in Fitness Clubs: a Managerial Perspective, International Journal of Management, vol. 27, no.5. pp. 12-19. Cho, Y & Hiltz, R 2003, The Impact of E-services Failures and Customer Complaints on Electronic Commerce Customer Relationship Management, Journal of Consumer Satisfaction, Dissatisfaction and Complaining Behavior, vol. 16, no. 4. Pp. 19-29. Crosby, L & Stephens, N 2007, Effects of Relationship Marketing on Satisfaction, Retention, and Prices in the Life Insurance Industry, Journal of Marketing Research, vol. 24, pp. 404-411. Jones, MA 2006,A Content Analysis of Customer Satisfaction in Annual Reports, Journal of Consumer Satisfaction, Dissatisfaction and Complaining Behavior, vol. 19, no. 3. Pp. 15-21. Levesque, TJ & McDougall GH 2000, Service Problems and Recovery Strategies: an Experiment, Revue Canadienne des Sciences de l'Administration, vol. 17, no.3.pp.13-19. Magnini, VP, & Ford, JB, 2007, The service recovery paradox: justifiable theory or smoldering myth? Journal of Services Marketing, vol. 21, no. 3, pp. 213–225. Parasuraman, A, Valarie, A. Zeithaml, & Berry, LL 2004, Reassessment of Expectations as a Comparison Standard in Measuring Service Quality: Implications for Further Research, Journal of Marketing, vol. 58, no. 1, pp. 111-124. Riscinto-Kozub, KA & Auburn University 2008, The effects of service recovery satisfaction on customer loyalty and future behavioral intentions: An exploratory study in the luxury hotel industry, ProQuest, Michigan. PP. 80-100. Robbins, TL & Miller, JL 2004, Considering customer loyalty in developing service recovery strategies, Journal of Business Strategies, vol. 21,no,2 pp. 95-109. Smith, AK, Ruth, NB & Wagner, J 2008, A Model of Customer Satisfaction with Service Encounters Involving Failure and Recovery, Marketing Science Institute Working Paper Series, No. 98-100. Swanson, SR & Kelley, SW 2001, Attributions and Outcomes of the Service Recovery Process, Journal of Marketing Theory & Practice, vol. 9, No. 4, pp. 50-66. Thwaites & Williams, C 2006, Service recovery: a naturalistic decision-making approach. Managing Service Quality, 16, pp.641-653. White, L & Yanamandram, V 2007, A model of customer retention of dissatisfied business services customers. Managing Service Quality, 17,pp. 298-316. Wirtz, J. & Mattila, AS 2004, Consumer responses to compensation, speed of recovery and apology after a service failure, International Journal of Service Industry Management, 15, pp.150-166. Yim, CB & Gu,FF 2003, Justice-based Service Recovery Expectations: Measurement and Antecedents, Journal of Consumer Satisfaction, Dissatisfaction and Complaining Behavior, vol. 16, no. 5. Pp. 34-39. Read More