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.
· Replacement – occurs if the service/product is faulty. A like for like is replaced. In some cases the replacement can be upgraded at the same time which enhances the customers satisfaction.
· Prompt correction – It has been proven that prompt correction is very important
· Managerial – It is shown that customers satisfaction is enhanced when managerial intervention occurs
· Apology – Often the easiest and cheapest means of service recovery technique
· Rendering Assistance – Shown by Lockwood and Deng to be a poor performer although it shows the goodwill of the hotel
· Compensation – Compensation yet again in the possibility of discounts, products for free or discounted enticements to bring a customer back in future to try the company again.
Service recover is essentially the process of addressing service failures - it is the way that complaints are handled. If a company were to plan service recovery this could be thought of as being a way of benchmarking service recovery. Different academic minds have produced different ways of what constitutes as being productive service recovery.
4.3 Bell and Zemke (1987) proposed five ingredients for recovery.
· Apology, in the first person as opposed to a corporate apology. It is to be made sure that the apology admits that failure has occurred.
· Urgent reinstatement, This is essentially trying to ensure a quick fix with the company being shown to gallantly try to sort out a breakdown even if it were not actually possible
· Empathy – Showing concern and sympathy for the customers plight
· Symbolic atonement – This is compensation which could be offering the product/service for free or offering future services for free or discounted
· Follow up – Contacting the consumer afterwards to ensure that they were satisfied with the service recovery.
4.4 Bitmer et al. (1990) conducted a survey of 700 service failure incidents in a bid to understand consumer behaviour. It was discovered that consumers do not usually become annoyed by the service failure itself. True to life it is accepted that things do go wrong occasionally. It was discovered that it is more often the company/organisations response (or the lack thereof) that causes dissatisfaction. They suggested that to achieve a successful response could include four key elements.
· Acknowledgement - That a failure has occurred
· Explanation – For the reason for the failure
· Apology – Where appropriate
· Compensation – Such as a free meal or drink
4.5 From looking at the above, it becomes apparent that there are similarities present. The same key ideas are repeated, these being, apologise, acknowledge and compensate. When looking to compare these findings to Lockwood and Deng first it is important to look at the validity of the research. There were only 79 surveys completed which is not a great number. It is also a possibility that the service given in China is rather different that that in the UK where the interests of this report lie. Due to these factors there is a possibility that these could be unintentialy biased and this has to be remembered. The study utilised was only exploratory and this is noted.
When looking at the most common response to service failure prompt response was the highest. This is fairly obvious as if there is a problem it is in everyone's interest for it to be rectified as soon as possible. This also achieved 67.9% retention which is second only to a free upgrade. The free upgrade seemingly is the best possible recovery tool to use in any situation where it is possible. This is as it achieved 100% retention when applied in the two hotels utilised. It is shown that customers receiving free food/drink or receiving managerial intervention were not particularly pleased and showed a relatively poor improvement in satisfaction.
Lockwood and Deng state that they find it hard to understand why some of the customers showing the poorest levels of satisfaction received nothing is hard to understand. Perhaps it is the case that the management decided that the customer seemed so dissatisfied with their experience that there was zero chance of repeat trade and that to try and use damage recovery would be a waste of time. The fact that these people are more likely to return that those who received an apology is indeed strange. It would be interesting to conduct research to those who received an apology to discover their exacting reasons for choosing not to return. Perhaps it is the perceived attitude of those who complained that is now the problem as opposed to the source of the original complaint. This demonstrates the fact that no customer is truly lost until they have left the premises. Lockwood and Deng state that "doing nothing is not an option", but it is interesting to note that this – according to their survey is more successful than offering assistance, no matter how terrible it might appear.
It is noteworthy that prompt correction has high regard amongst those surveyed, and as Lockwood and Deng point out it seems to support the notion of front line empowerment to take immediate action. This is of course what service recovery is all about and with the introduction of guidelines and training it should prove a relatively easy task to get members of staff to make the right decisions quickly when dealing with as customer. If this is not possible then it is necessary for managers to be instantly contactable to solve problems so as not to keep customers waiting. This is achieved in various hospitality establishments through the use of radios, mobile telephones or pagers.
It is unfortunately a matter of fact that different customers have differing levels of expectations of a hotel and what some people find acceptable others will be truly horrified by. Bitner et al (1990) stated that despite popular perception, not only is the customer not always right, but some are even abusive or out of control. Another (Royal et al, 1995) found that most companies agree that it is often the case that customers complain too much. In these cases it is sometimes the case that a termination of the customer relationship occurs.
5.0 Conclusion
"Service companies must become gymnasts, able to regain their balance after a slipup and continue their routines. Such grace is earned by focusing on the goal of customer satisfaction, adopting a customer focused attitude, and cultivating the special skills necessary to recover" (Hart et al, 1990).
From the investigation carried out in order to prepare this report on service recovery it has become apparent that Deming was right and it is inevitable that service failures will occur. This in turn demonstrates that the way that failures are recovered will be some part of customer's view of the company. With the exclusion of upgrading a customer's room, the best way to satisfy a customer is via quick resolution to failures and this would normally be from the front line staff as they are usually the first people to come into contact with customers. Although the staff at the front line are more used to following orders, there behaviour can be aided via education, training and empowerment. As well as the afore mentioned three, it is important to realise that the task of dealing with upset, abusive/rude customers is not pleasant and it is important for staff to have the right support infrastructure in place to enable discussion of any problems occurring.
The research has shown that there is valid cause to develop a service recovery strategy in order minimise the potential cost of service failure.
There are varying ideas as the best way to conquering these however. It is interesting to consider the fact of do all customers receive the same level of service recovery for the same service failure? It could be suggested that the service recovery that customers receive is dependent
on the level of complaining that they do and the way that it is presented to the staff. If two people had the a similar problem (e.g. a broken television remote control) and one person mentioned it in passing to the staff and another vocalised how disappointing this kind of service was and he would have expected more than the level of service received it is almost certain one customer would be happy with an apology, whereas the other would be satisfied with a potential discount/offer/upgrade. Is it fair for a company to treat customers in this way, and, if it is deemed that service recovery offer set items for service faults could the hotel be sometimes giving away more than is actually required?
Though at present I have no evidence of the complaints receiver throughout this hotel chain it would make good practise that all complaints are logged in future so as to enable them to be analysed in terms of numbers and trends to allow them to be addressed. The ultimate aim of logging service failures is to prevent them reoccurring in future. Staff should be consulted as to ways to combat service failure as it is they who experience it close to hand predominantly.
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.
6.0 Suggestions For Further Research
To carry out a survey amongst customers at the hotel to discover what service failures they encounter and how successfully they think these have been resolved.
To arrange a focus group of workers from different departments and to evaluate employees opinion of service recovery and staff empowerment
The implementation of customer comment cards in the rooms – this being a relatively cheap and easy way to see what guests think of the service received
To investigate further how similar hotels to ourselves have implemented service recovery and the degree of success achieved through different forms of customer compensation/repatriation
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