Reference no: EM131883188

Problem: Management Team Decision

Recovery Plan As you read in Chapter 5, crisis management planning is an important component of business planning and corporate communication.95 Typically, when you hear "crisis management," you think of a company responding to catastrophic publicity, but companies also need to think about managing smaller negative encounters because those encounters play a large role in customer retention. The retention rate for customers whose complaints or problems are resolved satisfactorily is 70 percent; when complaints are resolved quickly as well-typically on the spot-the retention rate soars to 95 percent. But when complaints are not resolved to the customer's satisfaction, customer retention falls to 46 percent. And research shows that for major purchases (defined as being over $100), customers whose complaints are unresolved stay with the company only 19 percent of the time. So, companies should have a plan for responding to customers' complaints and problems. Putting service recovery plans in place enables companies to respond quickly, the biggest factor in reversing the damage from negative customer experiences. In the spa industry, customer service and satisfaction are paramount. Spa services are very personal and can be very expensive.

It doesn't take long for a tab of services to surpass the $100 mark, which many consider the point at which an expenditure becomes a major purchase. And what would upset a customer more than a horrendous haircut, botched fingernails, or losing half an eyebrow during a wax! For this exercise, assemble four to five students to act as the management team for a local salon and day spa that is getting ready to expand by adding four salons in new neighborhoods. Your salon has always had a high reputation for service, but as you expand, your experienced staff will be spread thin. In the next month, your team plans to hire and train twenty-five new cosmetologists and estheticians (skin-care providers). To ensure that the new stores are successful, your team has decided to map out very clear service recovery procedures. After all, during the training periods and the first few months the new stores are open, mistakes are bound to happen. How you respond to them will mean the difference between a successful expansion and possible bankruptcy.

Questions: 1 As a team, brainstorm a list of service failures that could occur in a salon and day spa. (The examples of a bad haircut, damaged nails, and losing half an eyebrow during a wax job were mentioned above, but there are many more possibilities.) Then identify ways that you can resolve each problem on the list quickly and to the customer's satisfaction.

2. There are bound to be situations that you haven't planned for. How will you instruct your employees to handle unanticipated problems?

3. What kind of metric(s) can you create to measure the quality of your service delivery? Manufacturing companies typically measure things like on time delivery, defects per million, production rate (how many pieces per hour), and so forth. What can a spa measure to keep its service operation in control?