Impact of Service Recovery Efforts on Consumer Loyalty

The true test of a firm’s commitment to satisfaction and service quality isn’t in the advertising promises, but in the way, it responds when things go wrong for the customer.
Success in this area includes employee training and motivation.
Simon Bell and James Luddington have found that although complaints generally tend to have a negative effect on service personnel’s commitment to customer service,
But employees with a positive attitude towards service and their own jobs may be more-likely to view complaints as a potential source of improvement.
Effective service recovery requires thoughtful procedures for resolving problems and handling disgruntled customers.
It is critical for firms to have effective recovery strategies, because even a single service problem under the following conations can destroy a customer’s confidence in a firm.
The failure can be totally outrageous (e.g., blatant dishonesty)
The problem fits a pattern of failure rather than an isolated incident.
The recovery efforts are weak serving to compound the original problem

Impact of Service Recovery Efforts on Consumer Loyalty
The risk of customer defection is high, especially when a variety of competing alternatives is available.
When complaints are satisfactorily resolved, there is a much higher chance that the customers involved will remain loyal.
Complaint handling should be seen as a profit center, not a cost center.
However, many organizations have yet to buy into the concept that it pays to invest in service recovery designed to protect those long-term profits.

Service Recovery Example – Ritz Carlton
Ritz Carlton – Service Recovery
Ritz-Carlton’s unique service recovery process involves proactively searching for new ways to make their guest’s happy and receive outstanding service.
Ritz famously empowers its employees wherein they are allowed an informal $2,000 allowance to fix service issues without having to speak to their manager.
Key metrics tracked by Ritz-Carlton are number of complaints, responses to complaints, customer satisfaction scores, employee turnover rates, and growth of revenue as a result of increase in quality.
Additionally, Ritz also measures room inspection results, room maintenance frequency, check-in time, and use of services such as room service, laundry service, and spa services.
Ritz Carlton – Quality Parameters
Ritz-Carlton Hotel Company was a recipient of the Malcolm Baldrige National Quality Award (MBNQA) in 1992 and 1999, which is the first hotel which was awarded this award.
Ritz-Carlton Hotel Company was a recipient of the Malcolm Baldrige National Quality Award (MBNQA) in 1992 and 1999, which is the first hotel which was awarded this award
The Malcolm Baldrige National Quality Award and the Baldrige Performance Excellence Program are managed by NIST (under the U.S. Department of Commerce)
Ritz-Carlton has ensured quality and improvement, implementing the Total Quality Management technique, and continuing their reputation of outstanding service.

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Time Stamps

0:00 What is consumer Loyalty?
0:46 Impact of Service Recovery Efforts on Consumer Loyalty
2:18 Components of an Effective Service Recovery System
3:19 Service Recovery Example – Ritz Carlton