Service Failure, Recovery Management and Justice

When the Titanic embarked upon its maiden voyage, its captain is believed to have said, ‘I cannot imagine any condition which would cause a ship to founder. I cannot conceive of any vital disaster happening to this vessel. Modern ship building has gone beyond that.’ But then the unsinkable sank on its very first voyage, making history of a different kind.
Services, not withstanding extensive planning and preparations, have an inbuilt scope to fail in their very nature. Although firms attempt to ‘do it right the first time’ but they fail in their first attempt for a variety of reasons giving rise to an opportunity to ‘do it right the second time’. Many studies have found that overall satisfaction levels of customers who first encountered service failure, followed by a successful recovery, tend to be greater than customers who did not experience any problem in the first go. This is called service recovery paradox. This phenomenon makes a strong case for building service recovery capability. Getting the customer back into a state of satisfaction is not as easy as it may appear. Consider the following:
A customer bought a pair of trousers from a reputed store. After couple of washes the customer discovers that fabric is losing colour. In order to redress his problem the customer takes it to the shop and demands remedy of the problem. Upon discovering that here was a customer with a problem the staff first ignores and then engages in a conversation in a very cold manner. He is asked to approach somebody in the office behind the sales area. In order to establish the validity of the claim, the customer is asked to produce the receipt. Prima facie the customer is made to feel as if he is making an invalid claim for the merchandise purchased from elsewhere. Then a defense is built by the seller that they have not received complaint of this kind ever though tens of trousers of the same material have been sold. By now a number of employees are gathered around who in chorus counter the claims made by the hapless customer who finds himself ‘outnumbered’. Angered and insulted by the response the customer wants to leave the store without any claim. But now the matter has gone beyond a simple issue of return of poor merchandise to that of customer self esteem respect. Knowing that no amount of convincing would help, the customer asks the staff to test colour fastness by soaking the trousers in water. And the test actually proves that all along the customer has been right in his claim. At the end of the episode the customer is given an opportunity to choose another pair of trousers. After all this humiliation and poor treatment meted out to him he did not want to pick anything from the store but the staff asserted that they have ‘exchange only, no money back’ policy.
In another instance, a customer bought a dress for his wife from a store of a reputed chain. As it is generally said, if a thing can go wrong it will, the dress’s colour began to run. The problem in this case was compounded by the fact that the dress was altered and the receipt was lost. The only glimmer of hope for the customer was that somehow the bar code on the inside of the dress was intact. Since the receipt of the purchase was lost, the customer felt that in no way the store would entertain his problem. Nevertheless, with great reluctance he goes back to store to check if something could be done. Upon conveying his problem the door man directs him to the customer care department where he is not asked any questions about when he bought, what happened and how the dress was washed. The person on the counter scans the bar code and the customer is handed out a credit voucher of the amount of purchase which could be redeemed at any store of the chain.
The above two cases illustrate how firms recover from failure. Customer evaluation of recovery is based on his or her perception of fairness. The initial failure in itself implies unfairness on the part of the service provider. It is a breach. Customers are not only interested in the outcomes that are achieved by recovery process but also the manner in which these are reached. The manner of reaching the outcomes has two elements, one that involves the process and the second involves the interpersonal angle. Three dimensions of justice play crucial role in evaluation of recovery efforts: distributive fairness (perceived outcomes), procedural fairness (processes and systems) and interactional fairness (treatment and interpersonal aspects).
In both of the above cases, if purely seen from the perspective of distributive element, it appears that the customer received fair outcomes (replacement). But when two other elements of justices are incorporated then the first customer received very poor deal in terms of procedural (unfair redressal process) and interactional fairness (the treatment meted out to him). The perception of unfairness on these two dimensions is likely to adversely affect the distributive outcome. However the second case illustrates how recovery policy of the firm delivers effectively on all the three dimensions of justice. The process of arriving at the distributive outcome has been customer friendly and the interactions during the recovery process have been empathic, understanding and friendly.
Failures are inevitable in services. Service firms have huge opportunity to win back customers who suffer in the first instance. But to achieve this there is a need to broaden the recovery strategy beyond distributive justice (replacement assurance) to include procedural and interaction fairness (simple process and friendly dignified treatment).
Isn’t it true that many firms pay poor attention to the last two aspects in responding to failures?

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One thought on “Service Failure, Recovery Management and Justice

  1. Well-written. To give you an example of excellent customer service, I used to work at this bank in Canada where we were trained to always deliver the highest level of customer satisfaction. Once a client approached a teller and the client was in a bit of a hurry as he had a meeting. This was on a Monday morning so he had quickly jumped into the branch to get the limit on his debit card increased. The teller processed the transaction. The entire transaction must have taken about 2 minutes or so. The client had parked his car right outside the branch which happened to be a no-parking zone and he stepped out only to find an officer writing up a parking ticket for him. My manager happened to notice this through her office window. She waited for the officer to finish writing the ticket and as soon as the officer left, she approached the client and asked him what had happened. The client explained that in his rush to get to work, he had thought of withdrawing cash from the drive-through ATM but had forgotten that the limit on his card had been lowered recently. Thus, he had to step inside the branch to ask the teller to raise the withdrawal limit and also provide him with the amount of cash he needed.

    My manager invited the client in. The parking ticket was for $40. She looked up his account, and reimbursed $50 into his account and said “I would never want you to associate my branch with this unpleasant experience and I would like to make sure your morning is not upset by this incident. For this reason, the bank would like to reimburse the $40 for the ticket. The extra $10 is for your regular morning cup of coffee (which costs an average of $2) and the remaining $8 for the additional 4 cups of coffee you will buy for your colleagues so that you can share this story over coffee with all of them and distract them from the fact that you are now almost 10 minutes late for your meeting. You bank with us and that makes you family. And we treat our family good.”

    Talk about going the extra mile and being proactive for customer satisfaction.

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