Let’s imagine an irate customer calls your business and is being transferred to you. Now, fast-forward to the end of your call and imagine that this once disgruntled customer says, “Thank you, I am a customer-for-life and will tell all my friends.”
OK, I’ll admit service recovery is seldom that extreme, but when you manage breakdowns well, you are likely to benefit from the “service recovery paradox.” That paradox is one where breakdowns turn into breakthroughs that can ACTUALLY STRENGTHEN customer loyalty.
According to research conducted by Vincent Magnini and colleagues published in the Journal of Service Marketing,
A service recovery paradox is most likely to occur when the failure is not considered by the customer to be severe, the customer has had no prior failure with the firm, the cause of the failure was viewed as unstable by the customer, and the customer perceived that the company had little control over the cause of the failure.
Even though we might not emerge with a stronger relationship (especially if the error is perceived by customers as severe, recurring, or controllable), we should always strive, at least, to restore the relationship.
Here are four tips for relationship-restoring and relationship-enhancing service recovery:
- View Service Recovery as Your Superpower – Since few brands effectively recover from service errors, service recovery is a powerful differentiator for your company. Teach your teams how to sidestep blame and focus on cost-effective solutions that mend customer relationships. Develop service recovery toolkits to be used as needed once the core issue is addressed.
- Develop a ZERO Avoidance Policy – Put differently, ensure your team responds to every issue raised by customers. Research suggests approximately 4% of disgruntled customers actually complain. So, view each complaint as an opportunity to address the needs of the complaining customer and the root cause affecting many others.
- Speed Matters – A Harvard Business Review article by Wayne Huang and colleagues demonstrates the tangible benefits of expedited service recovery, “As important as it is to respond to every customer issue, it is even more important to respond quickly. We observed that a brand can capture substantially more value by replying right away. When an airline responded to a customer’s tweet in five minutes or less, that customer was willing to pay almost $20 more for a ticket on that airline in future months.”
- Make It Personal – Customers take service breakdowns personally. From the customer’s perspective, you “did something negative to me.” Empathy, compassion, and personalization make an inordinate difference. Research by Huang and colleagues found, “Customers who received an unsigned response showed no detectable increase in willingness to pay compared to the general population. But, when a customer service agent added their name or initials in their first reply to a customer, we observed that their willingness to pay increased by $14 for a future flight on that airline compared to those who received an unsigned response.”
How well are you recovering from service breakdowns?
Are you benefitting from the service recovery paradox? and
What are your customers saying about the way you handle their complaints?
To learn more about ways to flip customers from detractors to advocates, please contact me at josephmichelli.com/contact.