Creating a service recovery culture

Service recovery can be stated as management philosophy that adopts customer satisfaction as the ultimate goal of business. With this mindset managers understand the value of satisfied customers instead of thinking how much it costs to please a customer.

(Hart et al. 1990, 156) As stated earlier, mistakes on service delivery are a critical part of any service thus any company, no matter how well managed, should keep in mind that errors are unavoidable whereas dissatisfied customers are not. Preventing every single mistake is not possible, although companies can still increase their awareness on how to recover those situations. No matter how big the issue there are many opportunities to turn

a displeased customer into pleased like when frontline employees are able to solve mistakes on service encounters they have a chance to win the customer’s loyalty for a lifetime. Even though dismissing customer complaints is easy, it may have huge consequences as no company should afford to lose their customers. (Hart et al. 1990, 148-149)

As stated in previous chapters customer evaluates the total quality of the service through several lenses. In other words, even though the service concept itself is excellent mistakes on service encounters may damage the overall quality leading to dissatisfaction (Grönroos 2007, 76). In addition, Webster (1998, 153) stated that even the best service organizations with great strategies and tight quality control sometimes fail with customer interaction.

Service recovery culture is an internal system that supports organizations complaint handling practices (Gonzalez et al. 2014, 147) by offering clear guidelines for the frontline employees (Smith, Fox & Ramirez 2010, 448) and assists them to interact with customers in the most effective manner (Maxham & Netemeyer 2003, 58).

In other words, service recovery culture builds on the following: company’s management acknowledges they always cannot fulfill the customer expectations along with understanding the importance of solving these problems and are willing to re-establish customer satisfaction. To have efficient service recovery practices, the management supports employees’ recovery efforts and fosters service recovery culture throughout the organization. (Gonzalez et al. 2010, 224) However, as social media requires new skills and ways to think, it clearly has a positive effect on business. (Kaplan & Haenlein 2010, 67;

Balaji et al. 2015, 649)

Many researchers including Hart et al. (1990), Spreng (1995) and Grönroos (2007) have concluded that it is more expensive to acquire new clients than to retain the existing ones.

Whereas Hogan et al. (2003, 197) stated that instead of only focusing on the loss of direct purchases due to customers that exit, companies should notice the indirect effects (e.g.

word-of-mouth) caused by the lost customers. To solve the failure as fast as possible, it is not enough that only the managers take responsibility in solving service failures as they should take steps to insure that every employee in the organization has the empowerment, skills and willingness to recover dissatisfied customers as an integral part of their daily work.

(Hart et al. 1990, 149) It is well known for service industry companies that there is more variance between the outcomes compared to a fully automatized process. For example, an

air passenger can be upset due weather, other passengers or just by themselves. In other words, there are situations that cannot be controlled by the company. (Hart et al. 1990, 150)

Blodgett et al. (1993, 420-422) pointed out that a dissatisfied customer is more likely to give a second chance after mistake if the company sincerely stands behind its products or services and guarantees the satisfaction of every customer whereas companies without this attitude drive customers to voice their dissatisfaction among other consumers and will change to other service provider. (Bitner et al. 1990 75; Hart et al. 1990, 150)

Moreover, when customer faces a failure, for example when a recently repaired car breaks down again, correcting the situation is not as black and white as most companies would see it. The person not only has to spend their precious leisure time when the car is being repaired again but in the worst case an important meeting is missed or ends up paying the tow truck charges. These hidden costs are often ignored by the service provider which increases customer frustration. (Hart et al. 1990, 151) If the company has not planned how to respond to a service failure, they use reactive recovery strategies instead of proactive. In other words, typically reactive service recovery is used by the companies that have not implemented service recovery strategies but do their best to minimize the damage. (Bell &

Zemke 1987, 32)

Bitner et al. (1990) acknowledged that the company’s lack of service recovery systems as well as the lack of responses may lead to equal dissatisfaction as a mistake made by the company. Thus, companies should take responsibility on failures and recover dissatisfied customers. However, if the company is not willing or able to solve customer’s problem a double deviation occurs magnifying the customer’s unfavorable experience. (Bitner et al.

1990, 80; Grégoire et al. 2015, 175) Whereas Maxham & Netemeyer (2002, 67) concluded that the effect of double deviation is strong on dissatisfied customers since they may tolerate one failure but two consecutive failures are insufferable and thus harder to correct.

Moreover, Bitner et al. (1990, 75) found out that poorly handled service recovery efforts enlarge customer dissatisfaction. In more detail, over 40% of dissatisfaction on service encounters were due to personnel’s disinclination to handle service failures (Ibid.)

McCollough et al. (2000, 133) concluded that successfully completed service recovery practices may increase the market intelligence, but even the greatest recovery efforts are not comparable with flawless service encounter as mistakes always affect company’s reliability. Whereas Hart et al. (1990, 151) cited that even if service failures are caused by

the customers or third parties, they should be taken as opportunities to prove the company’s commitment and willingness to serve and solve problematic situations. Moreover, Halstead et al. (1996, 113) pointed out that failure identification not only assists to recover dissatisfied customers but also minimizes future failures and thus reduces the amount of complaints as well.

Researchers that have studied service recovery from the company’s point of view have found that shared values (Maxham & Netemeyer 2003, 46), organizational fairness (Bettencourt & Brown 1997, 39; Maxham & Netemeyer 2003, 46), job satisfaction (Robinson et al. 2011, 90), employee empowerment (Smith et al. 2010, 448) along with employee skills and training (Bitner, Booms & Mohr 1994, 103; Gonzalez, Hoffman & Ingram 2014, 150; Balaji et al. 2016, 538) are significant parts of effective service recovery.

As solving customer problems in a short time-frame is one of the top priorities to satisfy customers, companies have to empower their frontline employees to make decisions by themselves. When employees have the flexibility and trust to use their own judgement this also results as happier employees with increased confidence leading to better results in future. Effective training and clear guidelines assist employees to identify service recovery strategy for each individual. (Robinson 2011, 96) Whereas Maxham & Netemeyer (2003, 58) concluded that the employees who share values with the organization take more responsibility on their performance thus companies should make their service-oriented approach visible for example by regular training. Moreover, fair treatment of employees motivates them to assist the customers more effectively. Managers should for example listen to frontline employees, ask feedback and improve practices together with them to increase perceived justice. If the employees are willing to take extra-roles in solving customer problems, that may lead to high perceived fairness among the customers which is a significant factor on effective service recovery process. (Ibid.)

However, according to Bitner et al. (1994, 102) disappointment on service encounter may also be caused by the customer since they found that more than one-fifth of service failures are due to customer’s own fault. Thus it is important that managers not only recognize that the customer is not always right but also that from time to time customers may behave in a non-pleasant way. Sometimes employees have been working for the company for a long period of time and have skills to manage angry customers, yet this is not always the case.

Managers should provide proper training and tools to deal with these situations. (Ibid.)

Grönroos (2007, 396) pointed out that when dealing with an angry customer employee may feel helpless, frustrated or even humiliated if they are not empowered by the company to instantly deal with the failure. Moreover, unpleasant recoveries may cause stress to employees thus companies should actively recognize these situations and help their employees to recover. In other words, companies should have both external and internal recovery strategies to support their employees when needed. Moreover, to serve every customer with the best way possible, service companies need to be able to immediately regain their balance after recovering a customer to get back to the daily routine. This can be achieved by adopting a customer-centric mindset, by focusing on customer satisfaction and by improving skills that are needed on service recovery. (Hart et al. 1990, 149; Fan &

Niu 2016, 1031)

Figure 6 summarizes the components of service recovery culture that previous literature has suggested. The findings are divided into three groups including management skills and attributes, service recovery strategies and factors that support, educate and motivate employees to re-establish customer satisfaction and support employees for their valuable contribution to company. Components related to social media are highlighted with grey color.

As social media differs from traditional complaining channels in terms of publicity, companies have to adopt further components on their service recovery culture including choosing whether their presence on social media requires new service recovery strategies, whether to educate and train their employees to operate on social media as its culture and norms of communication differ from traditional platforms and to prepare the employees to interact with customers in real-time as social media customers expect a reply in shorter timeframe compared to traditional channels.

Figure 6: Components of service recovery culture (Bell & Zemke 1987; Hart et al. 1990;

Bitner et al. 1990; Blodgett et al. 1993; Maxham & Netemeyer 2003; Smith et al. 2010;

Gonzalez et al. 2010; Kaplan & Haenlein 2010; Robinson 2011; Hajli 2014; Balaji et al.

2015; Schaefers & Shamari 2015; Manika et al. 2016)

As this chapter focused on the components of service recovery culture creating the foundation to successful complaint handling on both offline and online service recovery, next chapter discusses how to manage and implement service recovery on social media.