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The
highly-competitive environment of hospitality operations requires a solid
approach and a robust supporting system for customer retention. While concepts
like Customer Relations Management (CRM) and Total Quality Management (TQM)
proved to be vital to maintain such customer loyalty, a more critical and
supportive system, i.e., complaints management is also required to back up a
long-term customer-operation relationship (Samsona and Terziovskib, 1999;
Stone, 2011).
The significance of fostering a
complaints management system in hospitality operation stems from the fact that
retention of existing and loyal customers is a real marketing priority. In the
meantime, it is a key component of customer relationship management and an
explicit element of TQM system. Sustaining such a complaints management system
requires a distinctive response, effective, and systematic handling (Ro and
Wong, 2012).
It is also well-recognized that
the unique characteristics of hospitality services e.g. variability,
inseparability, and intangibility provokes failures while providing the
service, and hence complaints are unavoidable. Moreover, these characteristics
place an even more constraints on management to be more alert and develop
strategies that would allow them to recover from any operational failures that
might arise (Bosch and Enriquez, 2005; Rodie and Martin, 2001). It should also
be acknowledged that placing a complaint is not the end of the
customer-operation relationship. On the contrary, it could be a good chance to
develop and restore a better or even loyal relationship (Hoffman and Chung,
1999).
Although, the hospitality industry can be perceived as an industry vulnerable to customer-organization conflict due to the nature of the characteristics of the services provided, it can also be considered to be at an advantage to enhance and strengthen its ties with its customers even with those who had negative experience (Heung and Lam, 2003).
Furthermore,
complaints are not yet recognized as an operational value. Rationally,
complaints provide a real source of information and marketing intelligence for
the management that need to be properly investigated and analyzed. Therefore,
the main goal of this empirical research is to look at how significant is
complaints management for hospitality operations and how it impacts on
organizational performance (Johanson and Woods, 2008; Lee and Ko, 2012; Lo and
Lamm, 2005). Some of the potential impacts may include, inter alia, influences
on customer retention, competitive advantages and quality of the services
provided. Moreover, the moral aspect of frontline employees will be addressed
(Robbins and Miller, 2004).
Despite the growing interest in
receiving customers’ feedback as an effective tool to monitor the performance
of hospitality organization, very few operations consider a robust system of
complaints management. The knowledge about how to successfully develop and
implement a complaints management system is limited and not supported as an
organizational policy. It is mainly developed based on intuition or individual
initiatives from senior and top management. Therefore, the objectives of this
study are to investigate the current applications/standards of complaints
management system, to explore its value and impact on hospitality
organizations’ performance in Egypt, and finally, to emphasize the relevant
implications and recommendations for the hospitality industry practitioners for
improving the existing customers' complaints management systems and strategies.
Hence, the research problem can be stated in the following question: “What is
the impact of complaints management system on hospitality organizations’ performance?”
In an attempt to investigate the most
efficient and effective way to handle customer complaints, researchers like
Stauss and Seidel (2004) investigated the complaint management process; a
process that starts with complaint stimulation, complaint acceptance, complaint
processing, complaint reaction, complaint analysis, complaint management
controlling, and complaint reporting. It has been established that 5 to 10% of
unsatisfied customers complain directly to the company and, therefore, the management
has to maximize the number of direct customer feedback and remove any barrier
that hinder the customer feedback. The technology has further supported this
approach by using E-mails, or online complaint forms, or even by providing
IPADs at the lobby to communicate directly any complaint to the management on
the spot (Stauss and Seidel, 2004). It is also important to realize the
significance of the role of human resources; namely customer-contact employees
who receive at least 65% of filled complaints (Brown, 2000).
The different approaches for
complaints management extends to the conceptual branch of organizational
learning and development. According to La and Kandampully (2004), management of
service failure catalyzes organization-wide learning and triggers initiates at
various levels - operational, strategic, and conceptual - that guide the
implementation of value-enhancing and product innovations. In fact, service
recovery is not just a ‘damage-control’ mechanism affecting the first-line
service level, but part of the organization’s strategic planning to ensure that
its offerings are continuously improved.
The psychology of complaints and
service recovery along with customers’ expectations were also scrutinized to
understand the engagement and emotional attachment of customers associated with
the issue. Robbins and Miller (2004) addressed the phenomenon of engagement,
emotional attachment, and service recovery which means that the guest will be
more likely to return and spend more with the property if, and only if, proper
handling of the problems and service recovery was fulfilled. Additionally, the
emotional aspect extends to employees as well. Possession of effective
complaints management system and proper handling of complaints have proved to influence
the performance of employees in many areas. The association of emotional labor
and the influence of work environment in hospitality operations impact on
employees’ absenteeism rate, employees’ level of satisfaction and subsequently
on retention rate (Johanson and Woods, 2008; Lee and Ko, 2012; Lo and Lamm,
2005).
There is no doubt that
mishandling customers' complaints/dissatisfaction could ruin the reputation of
the hotel operation as most customers are likely to engage in private complaint
behaviors such as word‐of‐mouth communication and ceasing to patronize the
hospitality operation.
Further, it is quite important to
identify the pattern of complaints behavior (Heung and Lam, 2003). Participants
also confirmed the significance of “Net Promoter Score” (NPS) with
reference to customers feedback as regards how likely customers may recommend
the property to friends and colleagues and how likely they may return to the
hotel property. Overall measures of satisfaction and NPS are chiefly used as
internal and external benchmarks of performance. Holding of database for
customers' complaints is also of great eminence. The objective is to use “RECOVSAT”
instrument which measures satisfaction with six dimensions of service
recovery - communication, empowerment, feedback, atonement, explanation and
tangibles (Boshoff, 2005). Customers’ feedback is the best way to improve
performance and guest experience. How well a complaint is managed is a key
determinant of consumer satisfaction, which maybe correlated with loyalty
(Stone, 2011).
Regarding employees’ satisfaction
and employees’ retention rate, the results supported the compatibility with
positive employees’ moral as clear and established complaints procedures are in
place. The psychological and emotional impacts of conflict are significantly
minimized with an established handling of complaints’ system. Reduction in
numbers of complaints and improvements of operational performance impacted
positively on both employees’ retention and guest loyalty and repeat business.
An
interesting result was the transparency of communicating complaints to
corporate or head office. While the norm for some time was to hide/cover
operational problems from senior management, it has become more of a demand by
some Headquarters to receive customers’ feedback and complaints in many forms
and in various frequencies. This trend is growing and is being justified to
support both product development and marketing strategies.
A
key significant outcome was the role of social media reflecting the impact of
technological advances on many aspects of goods and service markets along with
the emergence of a new customer segment i.e. ‘millennials’. The term of
electronic customer relations management (e-CRM) with reference to handling
customers' complaints via the social media is a reflection of this trend (Cho
et al., 2002).
Authors
like Cambra-Fierro et al. (2015), Stauss and Schoeler (2004), and Stone (2011)
have confirmed that designing effective complaints management system would
maximum financial performance from many perspectives. They also emphasized that
the system needs to focus on process improvement and employees’ motivation and
moral, rather than customer satisfaction per se. Respondents also confirmed a
strong relationship and link between operational financial performance and
complaints’ processes, satisfaction, retention, process/product improvement,
employee attitude and retention.
Finally,
successful complaints handling and recovery tend to counterbalance service
failure and produce good return on investment. More specifically, excellent
service recovery can enhance customer satisfaction and loyalty, increases
re-patronage, market share, and positive word-of-mouth. Benefits also extend to
improved branding and superior design of the service/product. Service failure
should be considered an opportunity to impress customers with good service
performance.
In conclusion, this research
paper highlighted the significance of sponsoring a complaints management system
to support the operational quality and enhance the organization-customer
relationship. The primary implications for this research for practitioners
could be accentuated as developing a robust and reliable complaints management
system and feedback. This system should be a top-management priority and must
be monitored regularly and dealt with effectively. Further, a statistical
record should also be maintained and communicated to key operational management
figures and associated members of staff. Lastly, technology applications should
be considered for the purpose of efficiency and effectiveness of handling customers'
complaints. Software applications will definitely facilitate monitoring,
follow-up, and more importantly establish efficient channels of communication
with hospitality operations' customers in general and complainants in
particular.
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