Virgin Airways Corporation - Customer Service Failure Recovery - Case Study Example

A Business Apology letter Dear Mr. Bryce, I am writing on behalf of Virgin Airways Corporation to apologize for the frustration and inconvenience that you experienced with our services during your flight from Mumbai to Heathrow on 7th December 2008. We are very sorry that our in-flight meals that we offered to you during the trip did not meet your taste. The meals that we served you with are popular in Indian culture. In the past, we used to include the meals that we serve in our other routes. However, we decided to specialize on such tastes in our Indian routes after we realized that our customers in those routes preferred them to those that we serve in our other routes. We assure you that your comments regarding the meals that you were served with are of utmost importance to us. Our greatest objective is to provide satisfactory services to our customers and so, your report of a disturbing experience. Thus, we have undertaken incorporate all types of meals that we have on our general menu in all our routes. We hope this step will alleviate occurrences of such inconveniences in the future. To compensate you for the inconvenience we caused to you, we are going to afford you free meal during your next flight with us. To enhance your satisfaction, we are going to provide you with our updated menu for you to make choices based on your taste. Again, we are very sorry for your unfavourable experience with our in-flight entertainment. We understand that entertainment is critical in enhancing relaxation to our customers. We regret that we were unable meet the standards of entertainment that you deserved. We had a technical hitch with our entertainment devices for that particular aircraft but this has been rectified. We promise to make arrangements for constant checks and servicing of our entertainment devices for our aircrafts in order to avoid occurrences of such a failure in future. Once again we apologize for your unfavourable experience with us.  We hope to have the pleasure of welcoming you back onboard virgin Airlines to replace the negative impression with a positive one. You are very important to us and if there is anything else that we can do to ensure your future satisfaction, please feel free to contact me on 777-777-777 or virgin@ourcompany.com. We look forward to continue our valued association with you. Yours sincerely, Richard Branson. Customer service failure recovery 1.0 Introduction Customer satisfaction is the pillar to the success of any business. Precisely, the ability of the owner(s) of a business to understand customers experience and to turn it into customer care determines its success. Usually, a high level of customer satisfaction brings loyal customers and leads to a huge potential for an increase in demand of a brand. As such, businesses try all ways possible to enhance satisfaction to their customers. However, despite all attempts taken by firms, a mistake or a service failure does occur on occasion (McCole 2004, p. 346). When service failure occurs, the response of an organization has the potential of either restoring the satisfaction of the inconvenienced customer or to exacerbate and to drive the customer away. The efforts of a firm to restore customer’s satisfaction and to reinforce loyalty after a service performance failure are known as service recovery. As Edvardsson et al (2011, p. 332) explains, recovery management has a significant effect on customer evaluations mainly because customers are involved in and observant of a recovery service more emotionally than the service that they are offered routinely or for the first time. To be more precise, customers are often more dissatisfied by the failure of an organization to recover than in a first time service or a routine. According to Bo Edvardsson et al (2011, p. 332), the leading causes of customer switching from one firm to another in the service industry are customer service performance failures and failed recoveries. Thus, it is vital to enhance well-executed service recoveries in order to enhance customer satisfaction, prevent customer defections and to build customer relationships. In view of this, this paper focuses on issues relating to scenario where a customer was dissatisfied and consequently, launched a formal complain. In particular, the paper focuses on the response disclosed in a letter written by the Marketing Manager of the Virgin Airways, Mr Richard Branson to a customer, Mr Bill Bryce, who sent a letter expressing dissatisfaction on the type of food as well as entertainment services he experienced during a flight from Mumbai to Heathrow. In this respect, the paper seeks to examine and explain the strategies that were opted for by the Mr Richard Branson on behalf of Virgin Airways as solutions to counter the service failure as disclosed in a letter to customer. This will include an explanation of the choice of and the need for compensation that was provided to customer. But first, it will be prudent to explain why customer service recovery is essential after a service failure. Finally, the paper will seek to show that the success of customer recovery efforts after a service performance failure is highly dependent on each individual customer based on his or her prior expectations. 2.0 Argument for recovery As mentioned earlier, regardless of the precautions that are set forth to enhance proper service delivery, all firms including those that seemingly provide exceptional services are prone to some degree of service failure. In a firm’s service system, such failures may sometimes refer to customer perceived breakdown. If and when a service failure occurs, it is very likely for the deterred customer to move to another service provider in future. As Robinson et al (2011, P. 91) explains, to lose an customer can be very costly for a firm given that it costs up to five times as much to recruit a new customer than it does to retain the current customers. Johnston stresses that “disgruntled customers costs companies millions of dollars each year since 90% refuse to repurchase from an offending company from an offending company, if given a choice.” This explains how customer retention is critical to a firm. One way of enhancing retention of the current customers in a firm involves responding properly to service failures. According to Robinson et al (2011, P. 91), improper response to service failures results into a risk of intensifying dissatisfaction to the complaining customer. McCole (2004, p. 347) stresses further that service failures often lead to customer complaint behaviour. Numerous studies have shown that it is not unusual for firms to mishandle complaints from customers (McCole, 2004, p. 347). Normally, this deters the inconvenienced customer and makes him or her to lose trust in the quality of the services that are offered by a firm. As such, most firms strive to avoid the occurrence of service failure. As firms try to avoid the likelihood of service failures, they encounter constraints from time and resources. It is for this reason that it is very essential for a service provider to design appropriate service recovery strategies and then implement them effectively and efficiently in case service failure occurs. According to Magnini et al (2007, p. 215), an effective service recovery has various beneficial effects. Magnini and counterparts opine that “upgrades customer perceptions of the quality of service and the firm; enhances customers satisfaction; and builds customer relationships, loyalty and impact on profit. In addition to that, as Lorenzoni, & Lewis (2004, p. 12) points out, a good service recovery can lead to service recovery paradox. Service recovery paradox is a concept that describes the notion that apart from making up for a service failure, a good service recovery can also increase the level of customer satisfaction to a level that had not been reached before the service failed. But as La, & Kamdampully, (2004, p. 392) explains a recovery paradox is likely to occur if the customer perceives the customer failure not to be very severe. However, in cases where the failure seems to be very severe, it is possible that a good management of service recovery would lead a complainant to soften the ground and feel that the inconvenience was not severe. In this regard, it was very important for Mr. Richard Branson to employ essential customer recovery strategies in response to the complaining customer as the letter revea 3.0 The employed Service Recovery Strategies Usually, for a service recovery process to be effective, it requires a firm to employ a variety of strategies. In theory, various combinations of recovery strategies are proposed. Weun et al (2004, p. 134) disclose six strategies that would enhance effective recovery which involves welcoming and encouraging customer response, compensation, apology, urgent reinstatement, symbolic atonement, empathy and follow up. Lewis and Mccann (2004, p. 8) on the other hand point at eight strategies which they believe would enhance effective service recovery which are management/employee intervention, apology, discount, refund, correction, correction plus, guarantee and replacements. This paper focuses on only a few of the cited strategies, which are employed in the apology letter written by Richard Branson whose prime objective is to make up for a service failure. These are welcoming and encouraging complaints, compensation and apology. In addition to that, Mr Richard Branson applied the approaches of offering a service guarantee, responding politely and offering an explanation to the causes of the unfavourable experiences to the customer. 3.1 Welcoming and encouraging complaints One of the strategies employed by Mr. Richard Branson to enhance successful recovery is to Welcome and encourage complaints from the customer. Within the body of the letter, MR. Branson asserts that “We assure you that your comments regarding the meals that you were served with are of utmost importance to us. Our greatest objective is to provide satisfactory services to our customers and so, your report of a disturbing experience.” This does not only welcome the complaints from the customer, but it encourages the customer to feel that he was right in making the comment. As Tronvoll, (2011, p. 111) points out, despite the fact that firms aim at having standards that warrant zero defects in service provision, failures do occur. When that happens, a firm must greet and encourage complaints. According to Tronvoll, Welcoming and encouragement of complaints helps to make it easy for customers to bring complaints in future. This also assures the customer that the information that he gave is critical in providing market researching data which is necessary in enhancing improvements and thus avoid occurrences that might bad service in future. Tronvoll, (2011, p. 112) further explains that it is vital to acknowledge that there was a problem irrespective of the fact that the customer did not understand certain aspects that seem obvious from a firm’s perspective. Usually, trying to convince a customer that there was no problem is likely to create an impression that he or she is stupid. Therefore, it was vital for Mr. Richard Branson to welcome and encourage the complaints of the customer. 3.2 Courtesy Another strategy used by Mr. Richard Branson to address the unsatisfied customer is to respond with courtesy. Within the letter, it is quite evident that Mr Branson responded to the customer politely. He says, “I am very sorry that our in-flight meals that we offered to you during the trip did not meet your taste.” This sentence clearly shows a polite response to the customer. As well, Mr Branson avoided the use of negative or rude language throughout the letter. Remarkably, courtesy is an attribute which is not just nice, but it is expected by the complainant. When responding to a complaint induced by a bad service, politeness helps to diffuse the problem in the mind of the customer. A research conducted by Hui Liao showed that when a complaining customer feels like they are being treated with dignity, respect and sensitivity by a service provider, they feel that justice and fairness has been provided by the firm, (Jones & Farquhar, 2007, p. 162). Jones and Farquhar further explain that, if a service provider solves an issue but with rudeness or indifference, it is possible for the service recovery process to fail. As such, as simple as it may seem to be, politeness is a vital asset that has a very great impact on the success of the process of service recovery. This explains why Mr Brice needed to express courtesy in the letter to the customer. 3.3 Service Guarantee Another strategy opted for by Mr. Richard Branson is to give a service guarantee to the customer. Mr. Branson points out that “We promise to make arrangements for constant checks and servicing of our entertainment devices for our aircrafts in order to avoid occurrences of such a failure in future” in response to the complain relating to the failure with entertainment devices. This statement offers a guarantee to the customer to rectify the problem that led to the inconvenience. According to Costello, et al (2004, p. 8), a service guarantee greatly helps to restore a customer’s perception of reliability to the services provided by a firm. A guarantee is designed to give an assurance to the customer who is inconvenienced that the quality of a service is going to be improved in future to meet or surpass his or her expectations. As such, it is intended at changing the negative attitude of the complaining customer towards the service. Costello, et al (2004, p. 9) points out that there are several benefits that are associated with a service guarantee. First, a guarantee forces a company to provide it and thereby commits a company to error-free service. It forces a firm to know clearly what the customer wants and to focus on providing it. Usually, a guarantee targets the expectations of the customers in respect to the elements that they consider important. Consequently, it sets clear performance standards which helps to boost the morale and performance of the employees. That way it helps to make the commitment of the organization tangible to the customers and the employees. As well, the use of a guarantee helps to generate reliable data which in turn helps to rate the organization’s performance. In case the performance is rated as poor, an organization is forced to examine its service delivery system to avoid blaming the employees and customers falsely (Costello, et al, 2004, p. 9) Also, a guarantee helps to create a sense of urgency which forces an organization to focus on customer satisfaction. Generally, as the customers are quite costly to acquire and retain, the use of a guarantee is a good strategy that aids in customer retention. To the customer, a service guarantee has the potential of making an improvement in the level of customer satisfaction and thus they welcome them and perceive them to be of value. Therefore, application of a service guarantee to in the letter to the complaining customer by Mr. Richard Branson was necessary. 3.4 Explanation Explanation of how or why the problem occurred is another vital element of service recovery that is used by Mr Richard Branson. He explains to the customer that “The meals that we served you with are popular in Indian culture. In the past, we used to include the meals that we serve in our other routes. However, we decided to specialize on such tastes in our Indian routes after we realized that our customers in those routes preferred them to those that we serve in our other routes.” In addition, Mr. Branson stresses that “We had a technical hitch with our entertainment devices for that particular aircraft but this has been rectified.” These statements clearly offer explanations to the customer and explain the causes of failure in service delivery. According to Priluck (2003, p. 40) , it is essential to take time to explain to a customer what might have caused or was the cause of the problem as it helps the service provider to re-establish trust. According to Priluck, usually, a clear explanation as to why a failure in customer service performance occurred will at least mollify the customer and, in some cases, it may satisfy him or her. As well, offering an explanation in the context of service recovery helps to alleviate the negative attitude of a complainant towards the service failure. In this regard, Mr Richard Branson was right in giving explanations to the customer as to why there was a failure in service delivery. 3.5 Apology An apology is another element of service failure recovery that is evident in the letter written by Mr Richard Branson addressed to the complaining customer. He expresses that the aim of the letter is to “apologize for the frustration and inconvenience that you experienced with our services...” In addition, Branson maintains that “we are very sorry that our in-flight meals that we offered to you during the trip did not meet your taste.” These statements indicate an expression of apology to the addressed customer. As Kau and Wan-Yiun Loh (2006 102) asserts, presenting an apology to an offended customer is one of the most cost effective cost recovery measures. Usually, complainants expect a service provider would respond with politeness and respect and provide an apology after a negative experience. According to Kau and Wan-Yiun Loh (2006 102), supplying an apology signifies that the service provider has understood the dissatisfaction felt by the complainant. As such, this strategy is connected to the interpersonal treatment that the complainant receives during service recovery. Therefore, this was an essential component to be included by Mr Richard Branson in the letter. 3.6 Compensation Compensation is one of the most explicit elements of service recovery strategies within the letter addressed to the customer. Notably, Mr Richard Branson expresses to the customer that “To compensate you for the inconvenience we caused to you, we are going to afford you free meal during your next flight with us. To enhance your satisfaction, we are going to provide you with our updated menu for you to make choices based on your taste.” In other words, Mr Branson offers the customer free foods and drinks based on his/her choice as a way of compensation. According to Huang, and Lin, (2011, p. 203) compensation is vital as it helps to reduce conflict between the service provider and the customer. Research has shown that compensation is a quite effective strategy in making an angry customer happy (Huang, and Lin, 2011, p. 203). Effective compensation approach involves providing a token, refund or other compensation depending on the severity of the problem. However, according to Wirtz and Mattila (2004, p. 161), offering compensation may not be effective in enhancing post-recovery satisfaction if certain conditions are not met. Wirtz and Mattila (2004, p. 161) conducted a study to examine the elements that constitute fair treatment of a customer which lead to effective service recovery. They found that interactional treatment (e.g an apology), the procedures used (e.g. speed of recovery and recovery outcomes (e.g. compensation) have a joint effect on post-recovery satisfaction. Specifically, the findings of their study indicated that when the recovery process is delayed the use of recovery outcomes such as compensation would not make up for the poor recovery. In the same vein, it was noted that offering compensation was effective in enhancing recovery when combined with an apology even if there is delayed recovery or with speed in recovery but without an apology or when the other two factors are in place. In fact, the study found out that compensation might not add value to the recovery process in a situation where the recovery process is well implemented together with an apology (Lorenzoni, & Lewis (2004, p. 12). As well the results showed that compensation may not be a prerequisite though its effects are additive. Thwaites & Williams (2006, p. 642) found out that compensation only helps to make up for a short fall in any of the other two prerequisites. The scenario in this context represents a situation where the customer was responded to immediately after the complaints are received. As well, the letter addressed to the customer contains an apology. As such, the recovery process can be said to have been well implemented. In this regard, compensation may not play a big role in this case but to make up for a shortfall in the effect of apology and quick response. Further, Thwaites & Williams (2006, p 163) suggested that, offering a compensation whose value is too high compared to the extent of inconvenience to a customer may negatively affect the process of service recovery. The authors felt that such compensation may seem to be an admission of failure by a service provider. In addition, given that a service provider experiences cases of service failure constantly, this strategy can prove to be very costly to a firm in the long run. This explains why Mr Richard Branson on behalf of Virgin Airways decided to offer not more than a free meal to the customer as compensation. 4.0 The impact of customer’s perceptions of a service failure Hocutt et al, (2006, p. 199) argue the success of service recovery efforts depends on the customer’s perception and expectations of the firm. In other words, the severity of service failure as well as the strength of customer relationship highly impact on any effort to restore customer satisfaction. Research indicates that customers who expect the relationship with a firm to continue are easily satisfied after customer service performance recovery. In addition, such customers often do not demand much compensation to a service failure. Instead, they usually expect that a firm will undertake measures to correct the failure and thereby enhance strong future relations. A good example of this is a scenario where a long time customer complains to a restaurant server of being served with cold meal (Crick & Spencer, 2011, p. 468). If managed properly, this is not a severe customer failure. For a long-time customer who has always received excellent service in the past, he/she may not write off the failure in the event that the server fails to make a sufficient apology, but will expect that such failure will be countered with an excellent service in future. However, in case this happens to a first time customer, he or she may immediately be deterred to return and never return to that restaurant in future. Remarkably, a customer with long history of having received excellent services from a firm is usually more demanding in case of failure as illustrated in our case, Ward, Dagger (2007, p. 281). On the other hand, a new customer is expected to have high expectations than a long-time customer. The perception of a first time customer are impacted by only one experience where he was inconvenienced or customer service performance failed to meet his expectations. To enhance satisfaction of such a customer may not require less than a sufficient apology, refund and perhaps a future credit. But on the other hand, a long-time customer has expectations which are set by the long history of excellent dining experiences. As such it would be easier to satisfy such a customer in the wake of a customer services performance failure. White and Yanamandram (2007, p. 298) carried out a theoretical study to determine potential factors that influence dissatisfied customers to continue relying on their existing service provider after a service failure occurs. The findings of this study showed that interpersonal relationship was leading among other factors. In this concept, it is clear that Mr Bill Bryce is a long time and a loyal customer of Virgin Airways. As such, he is likely to be watchful of the recovery process though he may not be ready to deflect to another service provider. In other words, his expectations of a recovery process are quite high. This explains why it was vital for Mr Richard Branson enhance an effective recovery process to satisfy MR Brice. Conclusion This literature has demonstrated that firms try all ways possible to enhance satisfaction to their customers which is a key element to the success of any business. But as this discussion suggests, despite all attempts taken by firms, mistakes do occur during service delivery to customers leading to service failure. In order to regain the trust of an inconvenienced customer, it requires a firm to enhance a well implemented process of service recovery. As noted in this discussion, an effective service recovery process can benefit a firm by upgrading customer’s perceptions of the quality of service and the firm, enhancing customer’s satisfaction and building of customer relationships, loyalty and impact on profit. In addition, an effective process can satisfy a customer to greater heights than those that had been reached before the bad service. As it has been demonstrated in a letter from Mr Richard Branson to Mr Bill Bryce, it is vital for a firm to make use of available and effective recovery strategies in order to enhance post-recovery satisfaction to a customer. In this case, Mr Richard Branson employed the use of various strategies including welcoming and encouraging complaints, compensation, offering an apology, guarantee, responding politely and offering an explanation to solve the problem of service failure. Finally, the impact of interpersonal relationship on the success of a service recovery process cannot be undermined. It is vital for a service provider to evaluate the kind and extent of the relationship with the customer during the recovery process. References Bo Edvardsson, B., Tronvoll, B. & Höykinpuro, R. (2011) Complex service recovery processes: how to avoid triple deviation, Managing Service Quality, 21 (4), 331-346 Costello, T., Daly, E., McGrath, L., & Philbin, N., (2004), What is Service Recovery? 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