From time to time, even the best companies fail to deliver a great customer experience.  Business is a human pursuit and mistakes are inevitable.  So, when bad experiences happen businesses shouldn’t be surprised; they should be ready to make things right.

The return on recovery is compelling. Negative customer experiences can lead to attrition and lost revenue in the short term, as well as longer lasting reputation impacts from negative word-of-mouth.  Effective service recovery efforts can mitigate these problems and, in the right situations, even result in stronger customer loyalty than before the mistake was made.  It’s a win-win for both company and customer.  Customer experience lemons become lemonade.

If Service Recovery is So Great, Why isn’t It Happening?

Dismal recent data from the American Customer Satisfaction Index (ACSI), below, indicates US business may not recognize the opportunity to turn service failures into positive customer relationship experiences, or if they do, they’re struggling to execute on it.

 Source: ACSI Q2 2015, “Another Stumbling Block for the Economy as Customer Satisfaction Erodes at the National Level”

A 2009 academic paper suggests that service recovery execution is often hampered by tension between competing internal business interests.  Customer complaints create unavoidable internal tension between a company’s short-term productivity, profitability, and morale versus its ability to retain customers and maintain a positive reputation.

Let’s face it: resolving issues is painful.  As a company, you’re burning time and labor cost engaged in a process in which customers vent their dissatisfaction and you often must credit them money or goods.  It feels like a lose-lose-lose situation.  You lose time, money, and your employees get beaten up… and the customer still might walk away unhappy!

On the other hand, if you don’t resolve customer issues, customers may switch to a competitor and engage in negative word-of-mouth, which hits short-term and long-term sales and profits.

First, Address Internal Tension: it’s the Elephant in the Room

What to do?  The first step is to accept that service recovery tension exists and won’t go away on its own.  In other words, address the elephant in the room.

Elephantinroom

These key steps can help minimize internal tension and clear a path for effective service recovery execution:

  • Calculate return-on-recovery: Get clear about the cost/benefit associated with issue resolution. Chances are, the long-term value of retaining a customer and benefitting from positive word of mouth justifies the time and expense necessary for resolution.
  • Include recovery in your playbook: Include complaint management and recovery in your service process maps and playbooks as legitimate, defined activities and train employees accordingly.
  • Reward resolution: Recognize and reward employees for successfully resolving issues. At the very least, remove cultural and performance measurement disincentives which may lead staff to sweep issues under the rug, or worse, pit them against the customer.
  • Empower your front lines: Give your employees and frontline managers the authority to make things right for the customer, without “giving away the store”. Chances are, they’ll responsibly exercise the power entrusted to them and feel like valued members of the company team.

Best PracticesComplaint gift.jpg

After addressing internal tensions that may hamper service recovery efforts, you’re ready to apply best practices:

  • Treat complaints as gifts! This may sound strange, but the complaining customer is doing you a real favor.  You now have an opportunity to get the relationship back on track and retain the customer’s business.  Customers don’t have to do this, and many will take their business elsewhere without investing the time and effort needed to complain.
  • Manage the emotion first. When customers are angry or upset, it overrides any objective discussion of the issue and can increase the risk of customer switching.  The emotion must be addressed first.  To diffuse anger:
    • Listen to the customer
    • Acknowledge specific issues
    • Apologize for the negative experience, and
    • Let them vent while staying engaged.
    • If the customer feels like someone is listening and truly cares about their problems, they often quickly make the switch from enemy to ally.
  • Take action… fast and fair. Sometimes an apology is enough to put a relationship back on track.  In other cases, it’s fair and appropriate to compensate the customer.  In these cases, make sure the compensation is issued quickly and is proportional with the problem.
  • Learn from mistakes. Part of your service recovery process should include capturing and data about the root cause(s) of the issue (including previous failed service recovery attempts) and debriefing internally on future prevention. This step is often overlooked in service failures: using your mistakes to drive continuous improvement.

Avoid Common Pitfalls

While the following pitfalls may seem obvious, you’d be surprised how often businesses fall into them.  Make sure these don’t undo the hard work you have put into your service recovery program:

  • Deny there’s problem. Even when you believe customers are off base, if your communication or body language signals that their emotions or concerns are not valid, the situation can escalate quickly until they feel like you really understand their point of view.  Hear them out fully first and acknowledge their issues first, before diving into the merits of the case.
  • Ignore the problem. If you listen to the customer’s concern, but fail to follow up quickly to resolve the issue there’s a good chance the customer will conclude that their issue and hence their relationship is not a high priority.  Ignoring will quickly erode whatever trust and goodwill might have been recovered in the first service recovery conversation.
  • Offer token gestures. Token gestures, especially offered at the wrong time, just adds fuel to the fire.  If a customer suffers a material malfunction with your product while it’s under warranty, don’t offer them a free coffee mug.  Apologize and fix the issue.
  • Make the same mistake twice. While it’s often possible to recover after a single service failure to a point where the customer relationship is even better than it was before the failure, research (and common sense) indicates that this is not the case after a second failure.  In service recovery, you’re out on the second strike.

Customer experience failures are moments of truth in the customer relationship, and excellent recovery can restore customer satisfaction and boost loyalty to new heights.  How well does your business turn customer experience lemons into lemonade?  Is the elephant in the room getting in the way, or are you fully prepared to receive and manage the gift of customer complaints?

Doug

Doug Fowler

Doug Fowler, COO, The Daniel Group

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