Service failure and recovery in the presence of service guarantees

This paper presents a conceptual model and propositions outlining how, in a service recovery encounter, service guarantees (unconditional and specific) operate in conjunction with other organisational recovery variables (guarantee facilitation and service provider concern), to influence customers’ justice perceptions and subsequent satisfaction evaluations.

Powerlessness following service failure and its implications for service recovery

This research examines whether service failure in hospitality settings reduces situational power and whether feelings of powerlessness have implications for service recovery efforts. Three studies demonstrated that service failure reduced consumers’ situational power, but only among those with high dispositional power motivation (studies 1 and 2). Moreover, those with high dispositional power motivation evinced greater satisfaction with service recovery efforts that involved status-enhancing compensation as opposed to utility-enhancing compensation (study 2), and when status-enhancing compensation was presented in public as opposed to in private (study 3). These findings suggest that consumers with high dispositional power motivation prefer service recovery attempts that counteract the feelings of powerlessness they experience from service failure. Service managers can benefit from these findings by understanding how feelings of power interact with service recovery efforts.

Who chose this restaurant anyway? The effect of responsibility for choice, guarantees and failure stability on customer complaining

Customers often behave in the context of a group, with different behavior occurring in this context to that which transpires in an individual context. However, customer complaining behavior (CCB), including voice, negative word of mouth, in addition to that transmitted electronically, and exit, in a group setting has not been studied previously. A service failure during a group celebration at a restaurant and the pattern of CCB that ensues is examined. This is based on customers’ level of responsibility in restaurant selection on behalf of the group, the presence of an unconditional service guarantee, and the perceived stability of the failure. Findings suggest that customers are more inclined to exit when they have participated to a greater degree in choice and that the presence of an unconditional guarantee interacts with participation to influence negative word of mouth intentions. Perceived failure stability had the greatest influence on CCB.

An exploration of relational customers` response to service failure

Purpose – The purpose of this paper is to examine how customers with different relational bonds respond to the same service failure. In particular, the framework to service failure and recovery devised by Fournier and Mick is applied.
Design/methodology/approach – To uncover rich emotional and cognitive responses to service failure, in-depth interviews with eight former and current patrons of an Australian opera were used.
Findings – Three types of relationship were identified: satisfaction-as-love (SaL), satisfaction-as-trust (SaT) and satisfaction-as-control (SaC). Each responded to the same failure in different ways. SaL customers had emotional bonds with the product category and thus reaffiremed their loyalty following the failure. SaT customers saw the service failure and inadequate recovery as a breach of the brand's implied promise and thus excited the relationship. SaC customers took charge of the situation, using their status to improve their situation and then defended the brand.
Practical implications – The findings indicate the importance of customizing service recovery strategies, in this case to those customers with the strongest emotional bonds to the brand, not the product class.
Originality/value – This is the first paper to examine how relational customers respond to service failure and identify how different customer-brand relationships result in different post-failure reactions and expectations of service recovery.

Heterogeneity in service delivery and inequity in access are common characteristics of chronic heart failure management programs

Background: The prevalence of heart failure in Australia is similar to that of Europe. In Australia, chronic heart failure management programs (CHF-MPs) have become part of standard care for patients with Chronic Heart Failure (CHF). However, heterogeneity among programs is common which can result in variable patient outcomes.

Method: A national survey was undertaken of 59 post-discharge CHF-MPs identified from within the Australian health care system. Two had ceased operating and one centre declined to participate in the study. A 33-item investigator-developed questionnaire, examining the characteristics and interventions used within each CHF-MP, was sent to the remaining 56 CHF-MPs. A response rate of 100% was achieved.

Results: Our survey revealed a disproportional distribution of CHF-MPs across the Australian continent: the State of Victoria had 3.6 CHF-MPs/million population, New South Wales had 3.7 CHF-MPs/million population, Queensland had 1 program/million population, South Australia had 0.3 CHF-MPs/million population and Western Australia had 1 program/million population.Overall, 8000 postdischarge CHF pts (median: 126; IQR: 26-260) were managed via CHF-MPs. Approximately 40,000 CHF pts are discharged from metropolitan institutions nationally, this represents only 22% of the potential caseload for these cost-effective CHF-MPs. Only 8% of these programs were located within rural regions. The majority of CHF-MPs were located within an acute metropolitan hospital (52%) and 36% were community based (all associated with a hospital). Heterogeneity of CHF-MPs in applied models of care was evident with 75% of CHF-MPs offering CHF outpatient clinics and 77% conducting home visits. Of the programs offering home visits 78% were funded by regional government (p<0.048). There were no nurse-led CHF outpatient clinics. A hybrid approach to CHF-MPs was common with many CHF-MPs comprising an outpatient clinic, home visits and inpatient visits. Various medications were titrated by nurses in 43% of CHF-MPs. In the programs that allowed nurses to titrate medications 79% were located in an acute hospital (p<0.011).

Conclusion: Variability of service availability is of concern within the context of universal coverage. In addition, heterogeneity between programs and the diversity in models of care delivery highlights the inconsistency and questions the quality of health related outcomes. We are currently analysing health outcome data from the 1015 patients managed in these CHF-MPs to describe the relationship between quality of care and health outcomes.

Reducing consumer switching intentions following service failure : do empowerment and apology help?

This research explores the effectiveness of apology and empowerment as service recovery actions and their impact on consumers switching intentions within the hospitality industry. It also examines two different types of failure - process failure and outcome and whether consumer-switching intentions vary based on failure type. Results suggest that apology is effective in reducing switching intentions in both types of failure. Employee empowerment reduces switching intentions in outcome failure situations, but increases switching intentions in process settings. There is also an interaction effect of apology and empowerment in the outcome failure setting, but not in the process failure setting. Recommendations for managing service recovery are provided.

Role of organizational service recovery actions on sustomer switching intentions in a process based service failure : does speed of recovery matters?

The study examines how organizational activities of compensation and empowerment impact on consumers switching intentions and also whether these differ based on the speed of service recovery. Data is collected using hypothetical scenarios in a situation of process failure. It is found that there is no direct effect of either compensation or empowerment on switching intent, although the interaction effect is significant when recovery occurs quickly.

There's a fly in my soup : the influence of service guarantees and personal requests on customer voice

Anecdotal evidence suggests that service guarantees and personal requests by service workers encourage customers to voice following failure. However, empirical support for these tactics in facilitating complaints to the organisation is limited. To address this deficiency, a 3 (guarantee treatment: none, unconditional or combined) x 2 (personal request to voice: yes or no) x 2 (failure severity: minor or major) full factorial, between subjects experiment was conducted in a restaurant context. Findings suggest that offering a service guarantee, regardless of whether it is unconditional or combined, can encourage voice. Severity of the failure was also found to be associated with voice. Surprisingly, however, a personal request to voice was not related to customers’ voice intentions. Implications of the findings are discussed.

Corporate governance failure and its impact on National Australia Bank's performance

The National Australia Bank (NAB) is the largest financial services institution listed on the Australian stock exchange and is within the 30 most profitable financial services organisation in the world. In January 2004, the bank disclosed to the public that it had identified losses relating to unauthorised trading in foreign currency options amounting to AUD360 million. This foreign exchange debacle was classified as operational risk, the risk of loss resulting from inadequate or failed processes, people, or systems and reiterated the importance of corporate governance for banks. Concurrent issues of National Australia Bank’s AUD4.1 billion loss on US HomeSide loans in 2001, the degree of strength of their risk management practices and lack of auditor independence, were raised by the US Securities and Exchange Commission in 2004, reinforcing the view that corporate governance had not been given the priority it deserved over a number of years. This paper will assess and critically analyse the impact of corporate governance failure by management and Board of Directors on NAB’s performance over the years 2001-2005.

Relationship marketing and pay TV: satisfaction, complaining behavior, service recovery, and repurchase

The aims of this research included demonstrating the detenninants of Pay TV subscriber satisfaction, and displaying the relationships between key aspects of relationship marketing, such as perceptions of value, satisfaction, customer complaint behavior and service recovery, and the intention to repurchase. A survey of 171 Australian respondents suggested that the perceived quality of the variety of the programs available and the perceived quality of the monthly program guide were major contributors to value, and that value was the main driver of overall satisfaction, which in tum was the main driver of the likelihood of disconnection from the Pay TV service. Those respondents who reported having a problem but not complaining directly about it were significantly more likely to have the intention to disconnect in the future, but they were not significantly different in tenns of their value perceptions or overall satisfaction.

The dimensions of self-service technologies and the relation to 'self'

This paper assesses the “behavioural” notion of “self” across the various dimensions of self-service technologies (SSTs). In the context of SSTs, it is acknowledged that the customer role is extended to include that of “service employee”. Therefore, the authors propose the need to explore this new role, from the customer’s perspective, across a diverse range of SSTs. This proposition is supported in that prior research has looked generally across a broad range of SSTs, as opposed to drawing comparisons across the different types of SSTs. In bringing together two classification schemes of SSTs, which does not appear to have been done previously, the authors draw on past research and industry examples to explore the customer experience across different categories of SSTs. It is proposed that the dimensions of SSTs, including level of customer participation as influenced by the purpose of the SST, location of the SST, and type of technology employed, will uniquely influence the notion of “self”, and thus the customer’s SST experience. These propositions have implications for both future research and practice. Future research is needed to study empirically the characteristics of specific SSTs, and compare the many different types of SSTs, and how their unique characteristics influence the customer’s production/consumption experience. When marketers gain a better understanding of the dimensions of individual SSTs, and their influence on the customer, more effective management and use of SSTs will result.

Service guarantees and customer satisfaction: an empirical study of guarantee type and service experience

Scenario analysis was used to examine empirically the relationships between guarantee type and service experience, and consumer satisfaction, for the service of an Internet Service Provider (ISP). The scenarios involved hypothetical situations in which several factors were varied: the existence of a problem; the invocation of a guarantee, the identity of the invoker; and the manner of resolution of any problem. Alternative service guarantees were associated with each hypothetical experience: a specific guarantee, and an unconditional guarantee. Overall, consumer satisfaction related to the nature of the service experience much more strongly than it did to the difference in guarantee type.

Corporate governance failure and its impact on National Australia Bank's performance

The National Australia Bank (NAB) is the largest financial services institution listed on the Australian stock exchange and is within the 30 most profitable financial services organisation in the world. In January 2004, the bank disclosed to the public that it had identified losses relating to unauthorised trading in foreign currency options amounting to AUD360 million. Thisforeign exchange debacle was classified as operational risk, the risk of loss resulting from inadequate or failed processes, people, or systems and reiterated the importance of corporate governance for banks. Concurrent issues of National Australia Bank's AUD4.1 billion loss on US HomeSide loans in 2001, the degree of strength of their risk management practices and lack of auditor independence, were raised by the US Securities and Exchange Commission in 2004, reinforcing the view that corporate governance had not been given the priority it deserved over a number of years. This paper will assess and critically analyse the impact of corporate governance failure by management and Board of Directors on NAB's performance over the years 2001-2005.

Service guarantee redress options in a hotel environment

Unconditional service guarantees are a popular marketing tool in the hotel industry worldwide. They promise total satisfaction and guests are free to invoke the guarantee whenever they are dissatisfied. While many hotels offer “money-back” compensation following guarantee invocation, others vary the payout depending on the severity of the service failure and still others will only compensate the customer if the problem leading to invocation of the guarantee cannot be fixed. To the researcher’s knowledge, the influence of compensation and fix (i.e., taking action to resolve the problem) on consumers’ perceptions of distributive justice has not been examined previously in a service guarantee context. This paper begins to address this gap by presenting a conceptual model and related propositions, arguing that redress (compensation and fix) is an important predictor of consumers’ perceptions of distributive justice, and that this relationship is moderated by service failure severity.