Service Recovery Strategy PDF

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This assignment contains service recovery strategies for a hotel business...

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TERM PAPER

Bangladesh University of Professionals Department of Business Administration in Marketing Faculty of Business Administration (FBS)

Submitted By

Submitted To

Miskat Ahmed Ankur (19251024) Fateen Ishraq (19251040) SK Nafeez MD Nafiul Islam (19251058) Siddique Zaman Noor Akash (19251062)

Prof. Dr. Md. Jakir Hossain Course Instructor Services Marketing

Muttaqi Rifat (19251068)

28 May 2021

MKT 3102

Service Recovery Strategy Recommendations & Justification

Prepared by Team Quintet Bangladesh University of Professionals

Letter of Transmittal Date: 28/05/21 The Couse Instructor Services Marketing Faculty of Business Studies (FBS) Bangladesh University of Professionals Mirpur Cantonment, Dhaka-1216 Subject: Recommending Service Recovery Strategy to a Hotel. Dear Sir, We, the students of the department of Business Administration in Marketing, are pleased to conclude this report on the service recovery strategies of a 4-star hotel in cox’s bazar. All the members of the team have put their best effort in all the critical analysis and rational presentation of this report. We are fully accountable for the authenticity of the information presented in this report. The experience of working on this report has delighted us and we hope that you will be contented in reading it. Therefore, we hope you will overlook any unintentional error and oblige thereby.

Sincerely,

Miskat Ahmed Ankur On behalf of all the members of the team Department of Business Administration in Marketing Faculty of Business Studies (FBS) Bangladesh University of Professionals Mirpur Cantonment, Dhaka.

Acknowledgement Firstly, we would like to thank the Almighty for blessing us with the ability to successfully complete the assigned work.

The completion of this report could not have been possible without the participation and assistance of so many people whose names may not be mentioned. Their contributions are sincerely appreciated and acknowledged.

However, we would like to express our deep appreciation to our parents, who have taken good care of our needs and enable us to flawlessly finish our respective tasks. We would also like to express our deepest regard to all those who have provided us the assistance and possibility to complete this report.

Lastly, our heartfelt gratitude goes to the Course Instructor, Prof. Dr. Md. Jakir Hossain, who has invested his full effort in guiding our team in achieving the goal.

Declaration by the Candidates We hereby declare that the report titled “Service Recovery Strategy” is an outcome of our own effort under the guidance of the Course Teacher, Prof. Dr. Md. Jakir Hossain. The report has been submitted to the Department of Business Administration in Marketing at Bangladesh University of Professionals. This report is a partial fulfillment of the 3rd year, 1st semester Final Examination 2021 for the course Services Marketing (Course code: MKT 3102).

We further declare that the work projected in this report has not been previously submitted in this Institute or any other Institute.

Place: Mirpur Cantonment, Dhaka. Date: 28/05/2021

Signature of the Team Leader

Table of Contents 1. Introduction........................................................................................................1 1.1.

Why do (and don’t) customers complain? ....................................................................... 2

1.2.

When they complain, what do they expect?..................................................................... 2

2. Situation Analysis ..............................................................................................3 2.1.

Service Failures ................................................................................................................ 4

3. Service Recovery Strategies ..............................................................................5 3.1.

Fix the Customers............................................................................................................. 5

3.2.

Fix the problem ................................................................................................................ 7

4. Unique Services to Offer ...................................................................................9 5. Key Performance Indicators...........................................................................10 6. Appendices........................................................................................................11 6.1.

Survey Questionnaire ..................................................................................................... 11

6.2.

Bibliography ................................................................................................................... 12

Executive Summary This report is a study investigating the service failures of a 4-star hotel in cox’s bazar and recommending appropriate service recovery strategies for better functioning. Recently, service recovery has received a lot of attention in the services industry. Service recovery involves actions designed to resolve problems, alter negative attitudes of customers, and convert dissatisfied consumers into loyal ones. The ultimately goal of service recovery is to retain customers. During my recent visit to cox’s bazar, I was dissatisfied with the services of the hotel I stayed in. Later, with the help of the hotel management, I conducted a survey on satisfaction with the hotel guests being the sample. The survey result showed huge disappointment from the guests. Therefore, I have recommended some service recovery strategy to the hotel with proper justification. These recovery strategies have been presented in this report. The initial part of this report discusses what service failure is, what causes service failure and how organizations implement recovery strategies. The core of this report includes the failed services followed by the recovery strategies. Lastly, the report has been concluded with some key performance indicators. The appendix section at the end contains the questionnaire of the survey and appropriate references used for preparing this report.

Services Marketing

1. Introduction The American Marketing Association defines services as “Activities, benefits and satisfactions which are offered for sale or are provided in connection with the sale of goods.” Services are intangible and do not have a physical existence. Hence services cannot be touched, held, tasted, or smelt. In simple terms, service failure can be defined as service performance that fails to meet a customer’s expectations. Usually, when service failure occurs, a customer will expect to be compensated for the inconvenience they have faced in the form of refund, voucher, discount, apology, or a combination of numerous. In case of a service failure, organizations aim at service recovery by applying different service recovery strategies. Through service recovery, a company wants to resolve the problems of dissatisfied customers and convert them into loyal customers. Now a days, every service provider responds to service failure with service recovery. The whole service recovery process is a well thought-out and planned process of returning angry customers to a state of contentment with different strategies based on customer complaints. So, it can be said that service recovery is an organization’s immediate reaction to customer dissatisfaction. Complaint management is an integral aspect of service recovery strategies. However, most dissatisfied customers do not complain or are reluctant to complain because they think that it is insignificant to put up a complaint. As a result, it becomes very difficult for an organization to identify dissatisfied customers and offer necessary compensation. So it is highly advised to resolve a problem before a dissatisfied leave your reception. Service recovery is considered as a customer retention tactic by most of the service providers. It has been proven that strategies like value co-creation, follow up, etc. can improve the effectiveness of service recovery efforts. It has been seen that a well-designed service recovery strategy has a strong impact on customer satisfaction, customer loyalty, customer retention, customer trust, word of mouth, and the image of an organization. Some argue that service recovery is better than providing better service in the first place, which is known as the service recovery paradox. Researchers have provided evidence of the service recovery paradox.

1 Team Quintet

Services Marketing

1.1.

Why do (and don’t) customers complain?

When a service fails to provide the desired service, the customers take actions to get compensation for the service failure. They believe that they have the right to get proper treatment and expected service. They feel that they should complain to the service provider for not getting properly the due service they paid for. Normally, customers complain about services that are expensive and valuable to them, such as, hospitals, airlines, hotels etc. On the other hand, there are customers who don’t like complaining about a service failure. They hold the belief that, complaining is not an effective way to get over the service failure, in fact it is a waste of time. Some of them don’t know about how to complain and some hesitate to complain. Some of the customers even blame themselves for the service failure and think that it was fault, termed as emotion focused coping. Apart from this, if the service failure is negligible and don’t bear critical consequences, some customers avoid complaining.

1.2.

When they complain, what do they expect?

After complaining about a service failure, a customer expects fair treatment. They want justice and fairness. There are three specific types of justice to meet customer’s expectations: Outcome Fairness Customers want outcomes that equals to their level of dissatisfaction in the form of monetary compensation or an apology or free service in the future. Whatever the means of compensation is, they want equity in exchange. Service provider should give them choices in terms of compensation because it is appreciated by the customers but providing excess compensation can make the customer feel uncomfortable. Procedural Fairness Procedural fairness deals with policies, rules, and timeliness of the complaining process. Customers expect an easy access to the complaint process and want quick solution to their problem. Some characteristics of procedural fairness are clarity, speed, and lack of hassle.

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Services Marketing Interaction Fairness When they are about to complain, customers expect to be treated gently, with care and honesty by the service provider. Interaction fairness can make the customers more dissatisfied if they feel that the service provider has negligence and uncaring attitude toward their problem. As it is an important matter to consider, the service provider should train their employees to handle customer properly.

2. Situation Analysis Last year I visited Cox’s Bazar with my family for a respite from our daily busy life. We stayed in a 4-star hotel named “Sea View”, near the sea beach, for 4 nights. We decided to stay in that hotel because of the quality services they promised and the sea view from the hotel. Before deciding on the hotel, I did some research online and found out about “Sea View” hotel and their services. The following are some services that the hotel promised: •

Sea view from the room balcony.

•

24 hours room service.

•

Complimentary breakfast.

•

Walking distance from the hotel to the beach.

•

Wi-Fi service inside rooms.

•

Swimming pool service.

The promised services attracted me towards booking two rooms in the hotel. But as soon as we checked in, our miseries started. We checked in at around 11:30 A.M. but we had to wait for 2 hours before they handed over the rooms to us. Also, the distance from the hotel to the beach was about a 10-minute walking distance. As a result, we had the hire a “Auto-rickshaw” for reaching the beach. After a long day of exploring, we went back to our hotel rooms only to find out that the AC was not cooling properly. Immediately, we made a complaint to the reception, but they informed us that it will take 1 hour for the room service to arrive. We were already very upset with their service. The disappointment escalated when the next morning we found out that they were only serving 34 items as complimentary breakfast. 3 Team Quintet

Services Marketing After being fed up with the situation, I talked to the hotel manager about our troubles. The manager informed that they were short on resources, they do not have adequate staff to attend all the customers. He also informed that the hotel did not have any management team to ensure that their promised services are being fulfilled. The manager had informed the owners about the situation, but they (the owners) were reluctant to take necessary action. After realizing the complexity of the situation, I suggested the hotel manager to let us conduct a survey inside the hotel through a questionnaire. I, being a business student, promised the manager to design a service recovery strategy for the hotel if he let me conduct the survey. The manager seemed helpless and immediately agreed to assist me for the survey. I made a customized questionnaire keeping the hotel and their competitors in mind. The questionnaires were distributed to all the rooms with the help of the room service staff. All the customers were requested to fill up the questionnaire within 24 hours with utmost priority. The next day, we were elated to find out that 80% of the customers responded to the survey and had submitted the questionnaire to the reception. The next step was for me to fulfill my promise to the manager. I analyzed the questionnaires and found out that among all the customers, who had participated in the survey: •

75% were extremely dissatisfied.

•

20% were dissatisfied.

•

5% were slightly dissatisfied.

2.1.

Service Failures

The following service failures arose from the survey: 1. No bathroom geezer: The bathrooms had no geezer assuming that most of the people prefer cold water for a bath. 2. Swimming facility: The swimming pool was too dirty, and customers preferred not to swim in it. 3. Unsatisfactory room service: People could not order food to their room after 1 A.M and rooms were not cleaned regularly if not requested.

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Services Marketing 4. Slow Wi-Fi: Every customer expressed dissatisfaction on the internet connection. 5. Poor air conditioning: The air conditioners were very old and frequently stopped running. 6. No shuttle service: The hotel did not provide any inhouse transportation facility for customers who wanted to avoid the hassle of hiring outside transportation. 7. Empty fridge in the room: The mini fridge inside the room was always empty whereas other 4-star hotels provided drinks and chocolates. 8. Stinky bedsheets and pillows: Some customers spotted dark unhygienic marks in their bed sheets and pillows. 9. Complimentary breakfast: The hotel hardly offers any quality item for breakfast. Whereas competitors are preparing 10-15 items for their customers. 10. No sea view from the balcony: 30% of the rooms are located in the backside of the hotel and they don’t offer the sea view. But the hotel charges the same for those rooms too.

3. Service Recovery Strategies To deliver excellent service recovery, the hotel needs to apply a number of strategies. There strategies are grouped into two categories: •

Fix the customer

•

Fix the problem

3.1.

Fix the Customers

Respond Quickly: The hotel needs to respond quickly to complaints from customers. If a customer is complaining to the reception, then a room service staff should be sent to the room immediately. They need to handle the front-line problems by solving the problem firsthand, whether it is a telephone call to the reception or a personal visit to the reception. Call from the Reception: In order to speed up the resolution of complaints, a customer should be called immediately and assured that their problem is being taken under consideration with utmost priority. Also, the customer should be informed with another follow up call before a staff is sent to your room to resolve the problem. 5 Team Quintet

Services Marketing Empowering the Employees: The hotel employees (manager, receptionists, chefs, room service staff, guards) need to have the power to use resources/money to handle problems as soon as they arise. As a result, the time taken for service recovery will decrease. The employees should be given recovery trainings through workshops so that they can anticipate/predict a problem before it arises. Unsolved or ignored problems can quickly go out of control and result into bad word of mouth. So employees need to assure recovery o the customer in the first place. Consider a Scenario: A guest is taking shower in the hotel room and suddenly the water supply stops. Then he complains about this issue to the hotel manager. The problem must be solved as soon as possible because the guest is wet and waiting for water supply. So, the management team should always be ready to respond quickly to customer complaints. Responding quickly can create a positive image in the customer’s mind. Customers Solving their own Problems: If staffs are not able to attend any customers immediately then customers can be guided over the phone to solve their own issue. Provide Appropriate Communication & Accountability: Better communication can calm down a furious customer. First, make sure the customer gets appropriate attention they expect from the management. Listen to the complaint very carefully to avoid misunderstandings and state relevant facts to the customers. Proper interaction with the customer is often better than a recovery. Lastly, provide repair, replace, and refund if necessary. Consider a Scenario: Suddenly the Wi-Fi internet connection is out of order, and everybody starts to complain. Initially the guests would think that the hotel was responsible for this problem. But in reality, the problem resulted from the internet service provider. In this situation, the hotel authority should inform all the guests by providing appropriate communication and adequate information in order to make them understand the actual cause of the service failure. Treat Customers Fairly: Make sure that the problem has been fully resolved and the customer is satisfied with the recovery. During the recovery process the customer satisfaction should be the

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Services Marketing priority rather than saving money or time. Resolve a service failure even if the recovery costs you more that the service itself. Consider a Scenario: A customer ordered food using the room service. The customer found unhygienic stuff in the food and complained about it. Then the hotel management should cook another portion for that customer without charging for it. Build Relationship with the Customers: Try to talk your customers into an amicable relationship during check-in, breakfast or in the reception. Friendly customers are more likely to forgive you for a service failure and revisit you again. Consider a Scenario: A customer just checked in and the receptionist greeted him/her with a “good morning”. After completing all the paperwork, the receptionist informs him/her about all t...