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Recover Fully from Service Failures: A Case of Starbucks

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Introduction

Professor Brian Mathews Services Marketing Assignment - MAR10-3 Question One Recover Fully from Service Failures: A Case of Starbucks Student Name: Xiyue Wu Student Number: 0502131 Introduction When service failures occur, the service provider's reaction can potentially either reinforce a strong customer bond, or change a seemingly minor distraction into a major incident (Hoffman, Kelly and Rotalsky, 1995). Sometimes, this major incident would cost a company dearly as with the case of Starbucks. The original problem was as simple as a defective coffee machine. However, the situation was exacerbated by the poor response of Starbucks and the company received negative publicity across national media. This report intended to demonstrate how companies could recover from their failures by recommending effective service recovery strategies for Starbucks. Literature Review Since service failures are inevitable (Hart, Heskett and Sasser, 1999), how customers perceive the organisations' recovery effort plays an essential part in evaluating satisfaction. Many empirical researches have been done to explore customers' responses to complaint (for example, Blodgett, Hill and Tax, 1997). The results increasingly support the proposition that consumers will evaluate satisfaction with complaint handling in terms of perceived justice. ...read more.

Middle

In this case, the failure is an outcome one and an economic compensation is more effective. 3. Apologize to the customer. Front-line employees should apologize to the customer for the trouble the machine has caused in a sympathetic and sincere way. > Service Failure 2: The customer did not receive the 1/2 pound coffee promised with the machine (outcome failure) and was treated rudely by the employee (process failure). Recommended Action for Top Management: 1. Design easily accessible ways for customers to complain. In the case, it appeared that the customer did not complain for failure 2 until he found the second machine he bought is also defective. However, if his voices could be heard by the branch manager and dealt with properly, the customer would be less angry for the following failure. Therefore, there is a need for head office to put in place a mechanism to hear customer complaints. An 800-number or customer suggestion box could do the job. In addition, management must lay down rules to ensure that complaints received will be dealt with quickly for the scheme to take effect. Recommended Action for Branch Manager and Front-line Employee: 1. ...read more.

Conclusion

2. Negotiate compensation. If an apology can achieve its desired effects, it could avoid substantial costs for the organisation in compensation. In this case, if the customer and his friend are both satisfied about the manner Starbucks show its regret and willingness to make it up for them, the compensation detail could be negotiated to the amount that demand least cost for the company. For example, instead of replacing the defective machine with Starbucks' top-of-the-line cappuccino maker, the company could give out a less pricy model which is still better than the original one. However, suppose the negotiation failed and the advertisement is published on the newspaper, Starbucks should try to turn this thing into its advantage by publicly apologise to the customer to show the public that Starbucks care for its customers. Considering the substantial cost endured by the customer, the company have to suffer great loss to make him happy by funding his favourite charity. Conclusion The negative publicity for Starbucks could easily be avoided by successful recovery strategy and tactics with rather small costs for the company. However, the losses for the company can be substantial if they fail in recovery. Service companies should make great effort to recover from all service failures due to the significance of recovery in the service industry. ...read more.

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