In the service industry, it is only right to provide the service when the customer requires it. Failure to do this leads to customer dissatisfaction which in turn translates to service failure. The hotel industry is one of the fastest growing industries and the biggest contributors to the economy. Therefore, the delivery of services in this industry must be of the best quality, highly specialised as well as customised services from the hotel industry. In addition to that, competition in the industry has been on the rise, and therefore it is difficult for new participants in the market to adapt to new trends and claim their market share.
Due to this reason, the professionals in the industry need to put their focus on offering better quality services which are affordable to customers. They should make customer satisfaction their primary objective, and maintain a positive and stable relationship with their clients on a long-term basis. However, due to incompetence in the industry, some service providers encounter failures which need to be resolved. Service recovery is defined as the well planned and thought out procedure of returning aggrieved and dissatisfied customers to a state of satisfaction. It refers to the response of the service provider to the failure of service. Service recovery and complaint management are two different concepts which must be distinguished from each other. The former focuses on service failure and seeks to resolve it with immediate action.
On the other hand, complaint management focuses on the grievances and complaints from customers that might be brought about by service failure. Although is their right to receive quality service, most dissatisfied customers are reluctant to complain. Therefore, service recovery seeks to solve the problem at the time of the service before the customers leave the scene of service dissatisfied. All in all, both service recovery and complaint management are regarded as customer retention strategies.
This report narrows down service provision to the hotel industry, and more specifically two companies that operate in the United Kingdom. The Five Star Alliance that owns a string of 189 hotels across the country puts a strong emphasis on luxury and style and serves the elite in the society. The price is relatively high and thus puts them at the top of the market regarding price(Five Star Alliance, 2017: online). The other service provider is Good Night Inns which focuses on making their services available to the general public at a comparatively low cost. Their main focus is on convenience rather than comfort. Due to the contradictory positions and views that these two companies have in the market, the models and theories can be handled from different angles thus exposing any weak links and impracticalities.
2.0.0 Should a service firm encourage customers to complain?
Service providers are always in a dilemma when it comes to encouraging or discouraging customers to complain if they encounter poor service. If customers have a positive experience, they will share it with their family, friends, and connections which in turn will lead to new business opportunities at zero cost. However, if the experience is dissatisfactory, the customers are going to complain. Thirteen percent of the customers will share their experience with fifteen or more people(Kolsky, 2017). In addition to that only one in twenty-five, customers will complain directly to you.
As for the customers that do not complain, who are the majority by the way, they just halt doing business with you. The service recovery paradox is a model that was developed to help service providers to make that decision.
2.0.1 Service recovery paradox.
This is a situation in which a customer thinks highly of a company after the company has corrected a problem with their service, compared to how they would regard the company if good service that isn’t faulty was offered.
This model shows an increase in the loyalty of customers after the service failure through a successful service recovery. The graph shows customer loyalty over time. When things go wrong, that is service failure the level of allegiance goes down. However, if the service providers deal with it well, that performs service recovery the loyalty begins to rise. The graph rises to a point where it surpasses the curve for the customer that was offered excellent service without failure.
Service recovery is used as a way to assure customers of their importance. In the hotel industry, the customer’s expectation matters. The Good Night Inns services are based on convenience and affordability rather than a luxury. Therefore the expectations of their customers will be relatively low. This lower expectation makes it easier to achieve more positive impact through service recovery. On the other hand, the customers at the Five Star Alliance pay more for their services and hence expect the most from the service providers. Due to this high stature accorded to them, the strong premium brand they possess, a high perception of trust that comes with the name, there is less expectation of occurrence of service failure. Therefore, when it does occur the customer loyalty may decrease up to a level that makes it difficult to exceed the without service failure level via service recovery. A study conducted on the banking industry showed that the benefits of the service recovery paradox is only applicable to consumers expecting average quality service(Michel & Coughlan, 2009). This means that the higher the expectation, the greater the efforts that the service providers need to put in their service recovery efforts to restore as well as boost customer loyalty
2.0.2 Factors that contribute to improved customer relationships
Honesty is one important and vital aspect of customer relationships. Quickly admitting to failures, rather than trying to downplay, hide or deny will assure the customer that the service failure is an unintended mistake. Five Star Alliance due to its high reputation and the need to maintain their high stature will react promptly whereas Good Night Inns shows reluctance in acting on the situation. The customer should also be furnished with information as to what led to the service failure and the steps being taken to address the situation. A hotel that explains to its customers is likely to get higher ratings than one that keeps its customers in the dark. Furthermore, the hotel should show urgency in the service recovery process. This restores the confidence of the customer in both the employees and the management of the hotel. An apology is also an important aspect of the service recovery process because it serves as a bridge that fills the gap caused by dissatisfaction. The notion that the customer is always right should also be applied in service recovery situations. This is because, in service delivery, a perceived problem is a problem. Last but not least, the customer must be compensated for the inconveniences caused by the service failure.
In the hotel industry, the higher the reputation, the more the service providers will work hard to do away with the customer dissatisfaction. The Five Star Alliance will show urgency and precision because the customers do not expect service failure to be an issue to the service providers. However, hotels which focus on convenience rather than style such as Good Night Inns will be less inclined and sometimes uncooperative with the customer
2.0.3 Problems in service recovery
Even though service recovery has benefits to the service provider, it also comes with some financial costs. It is important to consider these disadvantages because they are a vital factor in the service recovery process. The requirement is that customers be given reasonable compensation for the inconveniences caused. However, some customers take whatever they can from the service provider, rather than claiming their right to a rational compensation(Harris and Reynolds, 2004).
Situations that require service recovery were less encountered in the past. However, these occurrences have become increasingly common due to the growth of the service industry(Fisk, 2010). The industry is growing rapidly, and this means that the financial magnitude of the issue consequently rises.
According to Ritz-Carlton, it is essential for the service providers to do everything in their power to never lose a guest(Tax and Brown, 1998). This is a possibility for a hotel such as The Five Star Alliance since they have the financial power and admit fewer customers. However, in the case of Good Night Inns which serves a significantly high number of customers on a daily basis. This implies that if the customers ask for unreasonable compensation, it may have adverse effects on the financial standing of the service provider. Some customers may interpret service recovery as an opportunity to dupe the service providers. Nevertheless, studies have observed that the opportunistic claims are likely to be less than the maximum amount possible for the claimants to maintain a positive image for themselves(Mazar, 2008).
2.0.4 Observations
Service recovery requires the service provider to accept that they have made a mistake. It is therefore up to each provider to determine the level of compensation that they are willing to give. To ensure customer loyalty, The Five Star Alliance will have a greater gap to bridge therefore putting them in a weaker position in their negotiation with consumers. However, asking customers for their suggestions on the necessary actions to be taken to rectify the service failure enhances satisfaction via recovery.
Therefore it is essential for each service provider to value the sentiments of their customers and put in efforts to implement their suggestions. This goes a long way to show that the service providers value customer loyalty. They should encourage the customers to be frank about their service and complain if necessary.
2.1.0 How does a customer’s perception on who is to blame affect service recovery?
Where a customer assigns blame should be an important consideration for the service provider whether it is to the employees, management or just the general services that they felt dissatisfied with. The commercial performance of a business may be affected by the cost of redoing activities through service recovery. Furthermore, this may consequently affect revenue due to loss of customers because of dissatisfaction.(Bruhn and Giorgi, 2005). The 1:10 principle helps to emphasize this fact. The principle claims that the cost of failure is ten times the cost of correcting that failure one stage earlier(Reichheld and Sasser, 1990).
The hotel industry agrees with the above claim that the cost of failure for The Five Star Alliance will be higher due to the high expectation that their customers have. Customers least expect service failure from a reputable firm such as this, and hence they could resolve not to use their services again due to the unexpected disappointment. However, in the case of Good Night Inns, a service failure may occur but id less likely to dissuade customers to desist from using their services. This can be further explained by looking at how customers assign blame for a service failure.
2.1.1 Attribution theory
This theory states that people attempt to understand the behaviour of others by attributing feelings, beliefs, and intentions to them. In the service industry, it implies that the service recovery process can have varying levels of success depending on where the customer attributes their blame(Bebko, 2001). This theory can be described in three dimensions; the locus, stability, and controllability.
The locus aspect refers to who the customer blames. The blame may land on the service provider as an entity, an employee of the service provider or themselves. In the hotel industry, the customers of The Five Star Alliance tend to lay most of their blame on employees. This is due to the high reputation that the hotel has, therefore the employees are expected to have received excellent training and thus less room for error and failure is given to them. On the other hand, Good Night Inns which has a reputation for providing cheap and affordable service will not receive the same connotations. Their customers are more likely to blame the service providers as an entity. Therefore, the prestige that a brand has is an asset that can help shield the provider from blame.
The next aspect of this theory is stability which is where the customers question whether the failure will be a repeated occurrence. If this is the case, then they would be inclined to blame the providers of the service as a whole.
The final feature of the attribution theory is the controllability aspect. This is defined as the intensification of the blame on the responsible party if the service failure could have been prevented. However, for instance, the roof at Good Night Inns leaks when it rains, it is up to the customer to decide whether it is their fault for booking a cheaper hotel or it is the provider’s fault for not mending the roof. This shows that the attribution of blame is highly dependent on the customer’s perception thereby making it difficult for the providers to put in measures to curb the service failure before its occurrence.
2.1.2 Observations
The attribution theory puts a strong emphasis on the cognitive behaviour of the consumer, rather than how they act in the course of their service. It takes customers acts in general, thereby not taking into account the fact that customers are a separate entity and are affected differently by small occurrences which may affect how they react to a service.
The theory may be deemed to be correct since it indicates who the blame is to be attributed to, be it the employee, the service provider or the customer. However, it faces certain constraints such as it is highly non-specific regarding why customers attribute blame the way they do. Furthermore, if it fails to take into account how the image of the brand will give them greater or less mileage in service failure.
2.2.0 How should service providers handle complaints effectively?
The process of complaint handling and eventually service recovery in the hotel industry is not only an opportunity to create a good relationship with clients but also a way that hotels can use to evaluate what systems failed to lead to the issue. It also offers the industry a chance to create raving and loyal fans as the process makes the service provider appear as if to go above and beyond for their customers. Complaint handling is essential considering that eight out of ten activities that draw complaints are from the service industry(NACAA, 2005). There are several logical steps to achieving a successful service recovery.
Anticipating customer needs
The first step is to anticipate the needs of the customers. The hotel industry offers services that require an understanding of the customer’s expectations along the course of offering service. Anticipating means that the service providers should have an idea what the customer’s expectations are and how they are to be satisfied. When there is the failure to understand and manage the expectations of a client, then dissatisfaction occurs(James, 2011). The key to conducting a successful service recovery lies in the ability of the service providers to anticipate the customer’s needs and put in place processes that will meet and sometimes even exceed their expectations.
Acknowledging customer’s feelings
Acknowledging that there was a service failure that needs to be rectified is the next step in service recovery. There is a notion that is popular in the hotel industry that the customer is always right. When expectations are not met, it is vital to accept and acknowledge the customer’s feelings of dissatisfaction(Mudie and Pirrie, 2006). This is not the time to argue and try to justify the actions that led to the service failure, but it is time to accept the responsibility and start acting on the customer’s complaints.
Apologizing and owning the responsibility
The next step in the service recovery process is apologizing and owning responsibility for the failure. When growing up most of us learned the art of saying I’m sorry and its importance. These words have the power to diffuse anger and bridge the gap created by the difference in emotions among people. As simple as an apology may seem, it is a crucial step in moving the situation from the negative and into the positive where dire action can be taken. However much an apology may be deemed as an admission of guilt, it is not, and it just means that the service providers regret what had transpired.
Offering alternatives.
This is an important step in service recovery as it allows dissatisfied consumers to regain their sense of control. The service providers offer the consumer a compensation of some sort that is meant to ease their grievances. The alternative should be one that returns the customer to satisfaction, thus giving them the assurance that the dissatisfaction has been dealt with. It is essential that the customer feels that they have regained the driver’s seat.
Making amends
The process of righting the wrongs caused to a person is referred to as making amends. It involves doing things which are as simple as sending a follow-up letter or giving a small gift or token of appreciation. However, making amends shouldn’t be just about resolving the effects of service failure, but should also be used to alter the systems and operations to prevent future occurrences.
Use the information to enforce change
Better complaint handling equals higher customer satisfaction, equals higher brand loyalty which results in higher profitability(Sellers et al, 1998). Information obtained from the service recovery process should be stored well. It is vital to record information such as the date, time, nature of complaints and parties involved. The contact information of the customer is also an important detail that must be obtained, to enable the service providers to delve further into the situation if need be.
2.2.1 Effective complaint handling model
The model starts with a complaint from the customer which triggers actions that follow the sequence of the arrows. The service provider must then acknowledge the service failure, and explain to the consumer how this should be handled. The provider then has to investigate what caused the failure and solve it by giving some form of remedial action. Moreover, it has to check if the remedy has been provided. Complete involves filling in of a complainant record which is then compiled into a general analysis of the complaints. This is then circulated to the management whose task is to integrate the complaints into the policies to avoid future occurrences. If at the investigation level it is found out that the complaint cannot be handled, it is moved to a different department, and the complainant is informed.
2.2.2 Complaint handling in the hotel industry
The hotel service industry can effectively utilize this model to enhance their economic performance. For instance, if The Five Star Alliance or the Good Nights Inn inconvenience a customer through double booking, and they are unable to spot the problem at the investigation level thereby forwarding it to the concerned department, it depicts poor customer service. Customers may be impatient as they wait for the solution to be found, thereby leading to a less probability of repurchasing the services. This is a show of poor professionalism especially when the expectations are high, as in the case of The Five Star Alliance. Customers dissatisfied with the speed of rectification are less likely to repurchase(Orsinger et al, 2010).
Checking whether the remedy has been provided should happen earlier, that is simultaneous with the solving of the issue. Having the check at a later stage gives room for further service failure. Combining the solving and the checking, precisely during the prior service encounter will ensure that service failure is less common.
2.2.3 Drivers of loyalty model
The effectiveness of the framework does not depend on how you follow the steps but depends on the utilization of the information coming out of it. Even though the effective handling of a complaint can increase the likelihood of brand loyalty, in the long run, there are other factors such as pricing, the intended quality, how frequent the customer visits and membership that influence whether or not the customer will absolve the service provider of the inconveniences caused(Rothenberger et al, 2008). Furthermore, there is no guarantee of customer retention no matter how well the complaint is handled. In the case of The Five Star Alliance, high levels of disposable income available to the customer can be credited for feeling that the compensation is a poor substitute for receiving goods or services that they intended to purchase.
3.0.0 Conclusion
In the course of this work, it is noticeable that service recovery is important to the service providers that focus mostly on commercial issues. However, when making this decision they should give the consumers priority when assigning resources to recovery. Despite this landscape, there is a myriad of factors that affect each service encounter and therefore alter the way providers and customers act. Service providers who receive a boost in customer loyalty due to service recovery are the ones that customers have low expectations of. On the other hand, service providers with a high reputation have a high premium brand which in turn may hinder the ability to be positively affected by service recovery. Blame from the consumer and who it is targeted to can change the expectations of what they can receive from a complaint.
Through this work, it is vivid that a vast number of variables are presented in the process of offering services, which includes individual consumer preferences. This coupled with the fact that services are produced in the present, suggests that service recovery solutions such as compensation, free stays and complimentary extras should be tailored to suit consumer preferences(Nguyen et al, 2012).
Although The Five Star Alliance and Good Night Inns differ in their cost, mistakes are possible for both, and by treating consumers as individuals, showing willingness to undertake service recovery and matching a consumer’s preference with a recovery solution, they will have a higher chance in ensuring a successful recovery(Hoffman and Kelley, 2000)