In hospitality, service failures refer to service performance that falls below a customer's expectations. Since service is human-related, zero-defect service is unrealistic, and service failure is inevitable. When a service failure occurs, customers get upset and also lose trust in the organization, which consequently leads to customer defection and dissatisfaction, as well as negative word-of-mouth (WOM). Dissatisfied customers also complain privately through negative word-of-mouth to family and friends.

Dissatisfied customers are likely to share the negative experience with 8-10 people; and 13% share the incident with at least 20 people (De Tienne et al.). Moreover, the rise of electronic or "digital word-of-mouth" (DWOM) channels has greatly increased customers' opportunity to publicly express their complaints. Such negative online reviews can attract wide audiences, are perceived as credible, and play a critical role in affecting views and purchasing behaviors of customers.

Service failures can have detrimental consequences for organizations including loss of revenue, time, and reputation. Therefore, service recovery plays an important role in changing customers' attitudes and behaviors toward service providers.

Service recovery is the strategic action a service provider takes to cope with the service failure and convert a previously dissatisfied customer into a loyal customer, and it is of course beneficial for hospitality organizations in many ways. Appropriate service recovery is the key to changing customer attitudes. An effective service recovery strategy is likely to increase customer trust toward the restaurant or hotel. Organizations gain more loyalty and favorable customer ratings from successful service recovery, and effective service recoveries after a failure can have significant impact on firm performance.

An organization's ability to produce repeat purchases / repeat guests has a critical monetary significance. The cost of retaining a customer is about 20% of the cost of earning a new customer, and an increase of 5% in returning customers can produce an increase of 25% to 125% in firm profitability (Kotler et al., 2006). Moreover, effective service recoveries can attract new customers since 72% of customers share a positive experience with 6 or more people (Kulbyte, 2019).

Traditional Service Recovery Strategies

Various types of service recovery is used in hospitality organizations including making an apology, speedy recovery, providing compensation, and using managerial intervention. Various service recoveries can have different influences on a customer's repurchase intentions, WOM, satisfaction, and loyalty. Outcomes of a specific type of service recovery may vary based on whether the recovery action was preferred by the customer.

Monetary compensation (e.g., a complimentary meal, discount) often make customers believe that the outcome of the failure situation has been fair. This recovery strategy is the most common in the hospitality industry. For example, when a wrong or unclean room is offered to guests, customers are provided free hotel points, or meals.

However, monetary compensation alone does not necessarily lead to higher rating of service recovery effort, repeat patronage intentions, or customer satisfaction if the processes are not well implemented (Mattila, 1999). The way in which service recovery is implemented can be more vital to the customer than material outcomes. A speedy recovery involving immediate problem resolution often lead to customer beliefs that the procedures adopted by the organization, to resolve the failure, has been fair.

Helpfulness, empathy, and apology from service professionals often make customers believe that they have been treated respectfully and fairly. Customers who receive process recovery communication including justifications and clarifications often make customers believe that the information provided to them is adequate, specific, and relevant, leading to higher perceptions of fairness.

However, all these recoveries occur following a complaint from the customer, that is, the customer identifies the service failure. Yet, most unhappy customers do not complain or voice their dissatisfaction (DeWitt et al., 2008); only 1 in 25 unhappy customers formally complain to an organization. About 46% of unhappy customers don't complain, they simply do not return (Ramshaw, 2018). All traditional service recovery strategies are reactive. This leads to a question: Can service recovery strategies be used proactively?

Stealing Thunder - A New Service Recovery Strategy

Stealing thunder, also called self-disclosure, exposes the failures or mistakes before external or internal stakeholders report the failure (Williams et al., 1993). Stealing thunder is a strategy for people who made a mistake to report it to the public before others expose the problem. It is a way to be the first to report the negative or damaging information about oneself.

Stealing thunder by an organization means that the organization brings the mistake to light to show the public about the negative, potentially damaging information. Research in communication, law, and crisis management has found that stealing thunder creates several benefits and positive outcomes for mistake makers:

An organization would get more positive reaction from consumers after the organization revealed potentially negative information about itself than if media or other parties reveal the damaging information (Arpan and Pompper, 2003). Defendants could get more positive decisions or lighter adjudication during jury trials when they took the initiative to report the mistake (Arpan and Roskos-Ewoldsen, 2005). When organizations use stealing thunder as a recovery strategy, it is likely to result in increased customer perceptions of the organization's trustworthiness and credibility, increased purchase intentions, lowered perceptions of failure/mistake severity, and restoration of reputation and consumer trust.

When a service failure occurs, stealing thunder by service providers would involve a quick identification of the problem and reporting it to the customer even before a customer realizes that a problem occurred. Therefore, stealing thunder is a way to demonstrate fast responsiveness, after a failure, leading to customer beliefs that the service provider used fair procedures to resolve the service failure proactively.

This strategy also involves transparent communication and truthfulness of information leading to customer beliefs that they have been provided fair information. Moreover, stealing thunder is a way for service providers to demonstrate trustworthiness through responsible recovery efforts (since customers may not be even aware of the service failure). For example, an Australian Bank uncovered overcharges in their credit card business and the bank proactively contacted the relevant government oversight group and customers to refund the excess fees (Herald Sun, 2016).

When service providers identify a defect in the service product before the customer identifies the problem, and then take actions to solve the problem, customers are likely to be more satisfied than if no failure occurred. The use of such proactive strategies alleviate the effects of service failures on customers' loyalty and repurchase/revisit intentions, lessening the need for subsequent reactive recovery strategies such as offering monetary compensation or apology.

Tips for Managers

When service failures occur, the restaurant or hotel can use stealing thunder as the first response (proactive/preemptive strategy) to show its competency, credibility, and high service standard toward the customer. The server or manager could be the first one to report the failure to the customer to ease the negative effect.

Managers can incorporate stealing thunder as a strategy in employee training for service delivery and recovery. A mindset needs to be created that service failures are inevitable and employees need to anticipate service failures. They should actively seek such instances and be ready to tackle such situations. The objective should be to identify the service failure and fix the problem before it leads to negative consequences. Just telling employees to apologize and offer compensation, when customers complain about service failure, is not enough. In fact, just about 40% of customers want to get a free product or future service or financial compensation for the inconvenience (Ramshaw, 2018).

In order to incorporate stealing thunder in training, managers may need to move away from conventional training techniques. Traditional trainings focus on teaching the correct way to perform the tasks and skills. Most training programs fail to incorporate service failures and proactive recoveries; contemporary training should prepare employees to anticipate and identify error occurrences and take preventive measures proactively to contain the error before it leads to severe negative consequences.

Such trainings also need to stress the importance of communication and reporting about service failures, so that a group effort is made to resolve the failure efficiently (rather than trying to cover up the service failures or blame others). Employees need to be trained on how to adapt and take spontaneous initiatives.

When service providers use stealing thunder as a proactive recovery strategy, they may choose not to offer monetary compensation. This can be a significant cost saving strategy for hospitality organizations. Whenever there is a service failure, what first comes to mind is offering customers a monetary compensation, which frankly does not always guarantee customer loyalty as customers care more about how the failure is handled (i.e., the service recovery process) instead of just the outcome (e.g., a free dessert).

Monetary compensation as a service recovery strategy costs (e.g., free meal, free stay, discounts). There may not be a need to use this as the first strategy to deal with a service failure; which, unfortunately, most organizations do. Perhaps an expeditor who notices that a wrong food order is about to be delivered or the food was not cooked properly and corrects it (quickly stops the delivery and ensures that the food was quickly recooked to perfection; and takes the initiative to inform the customer about the issue) even before the food reaches the customer.

In these situations, there may not be a need to offer compensation because although there was a failure, it was handled before it lead to negative consequences. However, when service providers choose not to use stealing thunder, or forget to use this strategy proactively, or realizes that use of this method is not applicable, compensation should be provided to influence customer loyalty.

It is highly recommended for hospitality organizations to use a combination of a proactive/preemptive strategies like stealing thunder and traditional service recoveries (apology and compensation) to soothe the customer and increase customer loyalty. Based on the research on respect for openness and disclosure (e.g., Pennebaker, 1995), using stealing thunder sends a message to the customers that the service provider is transparent, and the consumer feels respected for the disclosure, leading to loyalty. In addition, when service providers chose to offer apology and compensation post-recovery, it can enhance customer loyalty.

Reprinted from the Hotel Business Review with permission from www.HotelExecutive.com

Taylor Wiley
+1 713 743 4258
University of Houston