Service Failure Recovery

Although customer satisfaction is one of the ultimate goals of this company it is not always successful in achieving this. Service failures will always occur due to the nature of the business that we are in. This report reviews existing literature on the subject and shows that there have been many different philosophies written on the subject of service recovery, and, recommendations of what should be done when failure occurs. These papers all have a similar goal to be achieved through service recovery – to give ultimate customer satisfaction wherever reasonable to regain repeat trade and generate future business.

There is a focus on the work of Andrew Demind and Ni Deng – their journal article “Can service recovery help when failures occur”, Is a valuable source as it gives results of surveys undertaken in hotels where service recovery has been utilized and demonstrates the difference of customer satisfaction both before and after service recovery has been practiced.

In essence, once a service failure has been discovered, a clear strategy to recovery is desirable in order to minimise any risk and maximise recovery. It has been demonstrated that service recovery can have positive results including increased customer satisfaction, loyalty & repeat custom.

The conclusion of this paper is that service recovery is a valuable tool, and should be implemented thought the hotels operated by this company. This would involve training and interaction with all members of the team who face the public. The way to good service recovery is a team effort necessitating all departments dealing with the public to participate.

1.0 Introduction

As the management of a hotel it is important to realise that happy customers is linked to successful organisational performance. It is logical therefore to deduce that to achieve the aim of keeping customers happy and achieving good levels of customer retention, an obvious goal must be the achievement of exceptional customer service. How can a company win over customers who might become dissatisfied with their experience while staying in a hotel? What exactly is service failure and why is it important to pre-empt it?

Even though the vast majority of service encounters taking place each day end with customer satisfaction, it is inevitable that as a company who deals with the public on a daily basis, situations will arise where customers are dissatisfied and feel that service failures have eventuated. It is realized that many businesses (such as our own) are not giving complaint management the attention it deserves (Ennew and Shoefer, 2003). Zairi (2000) noted that most companies face challenges in complaint handling and do not realise its importance. He looked at business and their cultures and how open they were to complaints and investigated how they had embraced aspects of quality management.

2.0 Main Body

Much of what is written about customer service makes a point of discussing meeting customers’ expectations. It could be said that customer expectations of our quality of service act as benchmarks against which our true level will be judged. “If equilibrium between customers’ expectations and perceived service quality is not attained, the customer might experience dissatisfaction with the service” (Zeithaml et al, 2003). In other words, customers expectations serve as a standard against which they compare there subsequent experiences. In the increasingly competitive marketplace that we find ourselves in, it is often the differentiators as opposed to core products that customers judge a company by. Items such as service are of great importance.

Price is not the only factor that hotels are judged. Customers, with the invention of the internet and the modern media, are increasingly aware of a greater choice of products and it is increasingly difficult to gain and retain their custom. Reducing the cost of a product/service by a few pounds compared to that of competitors will not necessarily make a big difference to volume of trade, but it has been shown that customers are happy to pay a consistently high price for a high quality product with good levels of service – one such example in the hospitality industry would be Starbucks.

2.1 There have been many writers who have recommended that companies should aim for 100% defect free production/levels of service but is this realistic in the Hotel trade? It could be said that service breakdown is inevitable at some stage. It was stated that, “Despite efforts in ensuring delivery of consistent service to customers, the nature of service operations still makes breakdowns in the delivery of service unavoidable” (Lockwood & Deng, 2004). This outlines the underlying fact that service industry’s rely on people and no matter what you have planned it is impossible to ensure that things are carried out exactly as designed. This report aims to discuss the current trend in service failure and customers reactions to this.

2.2 W Edwards Deming – the quality guru, was of the opinion that if organisations did not accept product or service failures as a natural part of business then they would be doomed. Deming’s cycle of Plan, Do, Check and Act demonstrates that learning from mistakes and listening to feedback are key to achieving Total Quality.

2.3 Service failure is a breakdown in the level of service encountered by a customer. This can happen at any time/stage of service. “Service failure arises from the customers’ perception of a service experience and not from what the organisation has provided” (Ennew and Schoefer, 2003). It could be suggested that service failure is the difference between customer expectations and the received product, whether this be tangible or intangible.

It is unfortunate that a guest’s stay in a hotel is not only dependent on what happens in the hotel itself. Customers holidays are dependent on many factors such as travel, the weather and how attractions visited perform. Customers subjected to service failure usually result in dissatisfaction and this in turn will eventually show in one of many responses. This could take the form of a complaint, bad mouthing or a decision not to repurchase. Ennew and Schoefer, (2003) show that there is a growing body of evidence that suggest that effective customer complaint handling can result in customer satisfaction, with the way that the complaint was dealt with being seen as a key element in the process.

3.1 There are essentially three different types of service failure. These are documented here along with a practical industry example of how it can be seen in an environment such as ours:

3.1.1 Based on service availability –

a). Omission which is the non availability of a level of service. This could be a customer checking in to the hotel late at night and discovering that it is not possible to get anything to eat. A worse case scenario would be if a customer who had booked a room arrived to find out that there was an overbooking policy and that there were no rooms present on the night in question.

b) Commission is when the service provided does not meet the customers expectations. An example of this would be if the ensuite bathroom had clean towels but they were frayed around the edges. Likewise if the floor looked clean and mopped but there were hairs present on close inspection. It would be shown that the hotel had failed to meet the customers expectations.

3.1.2 Based on the nature of the problem –

a) Sporadic – This results from common operational problems. This could be cold plates in the restaurant, or streaks on the mirrors in the rooms.

b) Chronic – Is resultant from defects built into service such as

3.1.3 Based on the type of service/product affected

a) Core – This is failure associated with the core products

b) Peripheral – Is as the name hints, to do with faults peripheral to the core product

3.2 Once the type of service failure is discovered it is important to have some form of measurability. The dimensions of service failure used in measurability are severity, scope, time frame, frequency and avoidability. It is important to have these different forms of measurability to enable us to collate information and present it in a useful way to enable examination and interpretation to look for signs of chain or repetitions, or put another way, the main reason for trying to understand different types of service failure is that it is necessary to have an understanding in order to create an appropriate strategy for recovering the situation.

4.0 The main aim of service recovery is to address issues arising that prevents customer satisfaction. “While service failures may be inevitable, losing customers following these failures is not. Service recovery actions can be taken that may repair all or some of the damage done.” (Lockwood and Deng, 2004).

4.1 There are many benefits attached to making good practice of service recovery. It has been shown that by using this technique, “customers who have had a service failure resolved quickly and properly are more loyal to a company than are customers who have never had a service failure – significantly more loyal” (www.greatbook.com). Lockwood and Deng do not agree however, as they discovered that after successful service recovery has been taken, only 50% of customers would be likely to return “supporting the belief that dissatisfied service customers simply don’t come back”. This contradicts the former prediction of further loyalty via the service recovery method. Hospitality service providers such as ourselves have many options available to combat service failure incidents

4.2 There are lots of different strategies that could be put in place for recovery of situations turned sour. Lockwood and Deng (2004) were of the view that recovery could take the form of either replacement, prompt correction, managerial intervention, apology, rendering assistance or compensation.