Developing strong service management within organizations is not easy. Some customers may like a particular approach while others will leave to other opportunities. The researchers Sivakumar, et. al. (2014) studied service failures and surprises to develop a model incorporating prospect theory to encourage positive service impressions. Their work will delve in to frequency of service failures/delights, timing of these failures/delights, proximity of failures/delights, and the sequence of failures/delights.
It is difficult to understand the totality of service if one is only focused on failures. To get a better picture of the patterns of service perceptions among customers it is beneficial to look at failures, success, and why these things are occurring. To know what the company is doing well and what it is failing at will provide better opportunities to enhance what works and minimize what doesn’t.
Their model is based off of prospect theory. Prospect theory explains a mental accounting system based upon heuristics that consumers use to judge winnings, losses, and mixtures of both (Kahneman and Tversky, 1979). Customers have a value proposition in mind when engaging in a particular service and if what is offered is less than that proposition they will be disappointed and possibly move onto another company. If the perceived value is higher than the customer will be satisfied and may stay.
It is important to remember that service loss or gain from the perspective of the customer is not equal. Research by Mittal, et. al. Baldasare (1998) found that when customers lose it has a greater impact on their psyche than when they win. This means that organizations should ensure that positive impressions are more forthcoming in their service delivery chains than the negative impressions.
They found that by suitably deploying resources and the amount of service personnel firms can gain direct and indirect control over the distribution of service failure occurrences and delights. Even with lay-offs and cuts to budgets it is possible to analyze where these occur and adjust the service process to ensure there are significantly more service positives that raise customer satisfaction. It requires an analysis of where service success and failure are being delivered and reconstructing to service process to improve upon the chances of positive outcomes. This leads to customer satisfaction, greater purchase amounts, and customer retention.
Kahneman, D. & Tversky, A. (1979). Prospect Theory: an analysis of decisions under risk. Econometrica, 47 (2).
Mittal, V. et. al. (1998). The asymmetrie impact of negative and positive attribute-level performance on overall satisfaction and repurchase intentions. Journal of Marketing, 63 (33).
Sivakumar, K. et. al. (2014). Service quality: the impact of frequency, timing, proximity and sequence of failures and delights. Journal of Marketing, 78 (1).