Branch Manager and Frontline employee

Recommended Action for Branch Manager and Frontline employee: 1. Replace the defective machine immediately and without question. This resolves the main economic loss suffered by the customer. 2. Offer a high quality Starbucks Travel mug as a free gift to the customer. The service failure cost the customer additional trouble: time wasted to revisit the store, cost of transportation and psychological pressure of the possibility of having to argue with the employee. Thus, replacing the machine is not enough to compensate the customer. Additional compensation should be matched with the kind of failure experienced. In this case, the failure is an outcome one and an economic compensation is more effective.

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3. Apologize to the customer. Front-line employees should apologize to the customer for the trouble the machine has caused in a sympathetic and sincere way. Service Failure 2: The customer did not receive the 1/2 pound coffee promised with the machine (outcome failure) and was treated rudely by the employee (process failure).Recommended Action for Top Management:1. Design easily accessible ways for customers to complain.

In the case, it appeared that the customer did not complain for failure 2 until he found the second machine he bought is also defective. However, if his voices could be heard by the branch manager and dealt with properly, the customer would be less angry for the following failure. Therefore, there is a need for head office to put in place a mechanism to hear customer complaints. An 800-number or customer suggestion box could do the job. In addition, management must lay down rules to ensure that complaints received will be dealt with quickly for the scheme to take effect.

Recommended Action for Branch Manager and Front-line Employee:1. Compensation: Assuming the branch manager is made aware of the customer’s complaint through the customers’ suggestion box, s/he should send double amount of coffee than promised to the customer’s home immediately. This will ensure outcome justice that the customer will perceive after an outcome failure. 2. Apology: According to Smith et al, process failure has an even more negative effect to customer satisfaction than outcome failure and to compensate the customer, the branch manager need to apologize to customers to restore his social esteem. This could be in a written format-an apology letter sent together with the coffee.

3. Taking corrective measures: This could include a meeting with employees to clarify company policy and procedures. In this case, employees should be told to follow strictly company policy and give every customer the promised coffee. Whether the employee did treat the customer rudely should be investigated. If it is true, disciplinary measures should be taken. Other employees should also be made aware of the actions that will be taken if they treat customer rudely.

4. Follow-up call: This is what Hart et al phrased ‘closing the loop’. The branch manager should call the customer after he sent the letter of apology and coffee to tell the customer about improvement being made, thank him for helping in improving their service quality and ask for more suggestions. Service Failure 3: The coffee maker the customer bought and gave a friend as a gift is also defective.

Recommended Action for Top Management: 1. Give authority to branch managers to make use of necessary resources to recover from serious outcome failures. This could increase the speed of recovery significantly. According to Smith et al, a speedy recovery will have a greater effect on customers’ perceptions of procedural justice when an outcome failure than a process failure occurs. In this case, the customer suffered from a serious outcome failure. If slowed by bureaucracy and complex procedures to get approval from the head office, the possibility of successful recovery will be reduced sharply.

Recommended Action for Branch Managers and Front-line Employees: 1. Apology to both the customer and his friend immediately: This mishap has indirectly made the customer suffer from a grave social loss. A gift is bought as the medium to express a special feeling to friends and relatives. In the case, the defective machine fails to communicate the intended message and may cause damage to the customer’s friendship with his friend. An apology must be directed at both the friend and the customer. Due to the seriousness of the situation, the branch manager should pay a visit to the friend’s home and apologise to him or her in person. To demonstrate the organisation’s sincerity, the manager should bring small gifts like flowers or chocolates depending on the personal circumstances of the recipient.

2. Negotiate compensation. If an apology can achieve its desired effects, it could avoid substantial costs for the organisation in compensation. In this case, if the customer and his friend are both satisfied about the manner Starbucks show its regret and willingness to make it up for them, the compensation detail could be negotiated to the amount that demand least cost for the company. For example, instead of replacing the defective machine with Starbucks’ top-of-the-line cappuccino maker, the company could give out a less pricy model which is still better than the original one.

However, suppose the negotiation failed and the advertisement is published on the newspaper, Starbucks should try to turn this thing into its advantage by publicly apologise to the customer to show the public that Starbucks care for its customers. Considering the substantial cost endured by the customer, the company have to suffer great loss to make him happy by funding his favourite charity.


The negative publicity for Starbucks could easily be avoided by successful recovery strategy and tactics with rather small costs for the company. However, the losses for the company can be substantial if they fail in recovery. Service companies should make great effort to recover from all service failures due to the significance of recovery in the service industry.