Article

Niraj Ranjan
Niraj Ranjan 9 January 2018

Service recovery: turn unhappy customers into loyal fans

The post talks in great detail about various tactics you can adopt to stop customers from leaving.

Zero defects is attainable in manufacturing, but not in service delivery systems. You add the components at the right places in a standardized process and achieve the desired output — impossible to achieve this feat when you're dealing with customers.

Businesses, for long, have tried to model their services after assembly line principles. They designed extremely standardized processes and introduced sophisticated technologies to control employee behavior and foster customer centricity. They did everything to ensure that even the most uninitiated of service reps deliver exemplary service with the help of standardized processes.

While these production-oriented service systems have certainly helped deliver great customer service consistently, they have not been able to eliminate variation completely. Flights keep getting canceled despite sophisticated scheduling systems. SaaS companies keep receiving complaints no matter how study the self-serve is. Customer churn owing to bad service is rampant.

More so, with easier-than-ever access to information, and consumer apps setting sky-high standards for experiences, managing customer expectations becomes harder with every passing day. 

Today, a typical customer expects delivery times and service standards they would never have imagined 10 years ago. During a recent study, 82 percent of corporate executives said that customers expect “somewhat” (47%) or “much” (35%) higher than they did three years ago.

Service delivery systems are bound to displease a few even when they are at the top of their game. What is the right thing to do when it goes down? It will cost a lot of time and money to please a disgruntled customer. Will it be worth it? Would they start trusting you again?

Research over the years has shown that customers who have had a service failure resolved tend to be more loyal than ones who have never faced a failure — significantly more loyal. We call it the service recovery paradox.

What is the service recovery paradox?

It is a situation where a customer starts to think highly of a company after it has managed to resolve the problem, as compared to how they would if the problem did not occur in the first place.

The reason this occurs is that a special kind of a relationship develops between a company and a customer during the service recovery process.

The company displays empathy for the customer by going an extra mile to satisfy them. They display a genuine desire to solve a problem.

The customer begins to feel a sense of trust. They know that if something goes wrong, it will be fixed — the biggest assurance every customer needs.

service recovery paradox

If the service recovery paradox exists, shouldn’t companies start creating a few small problems and then resolve them with utmost sincerity to gain the loyalty of the customer?

Well, it does NOT ALWAYS work.

A recent study tells us that service recovery depends on a few attributes. Let’s dig in.

It does not work if the customer has faced failures in the past. A customer will give you only one chance to make up for a failure. You do it again and they will lose faith in you for good.

It does not work when the failure is BIG. Mistaken billings and late deliveries make a person angry but are not life-altering. If someone misses a wedding because you canceled their flight, you’ve lost them for good.

It does not work if the customer believes you could have averted it. They will be comfortable to trust you again only when they know you tried your best. Go ahead and provide a third party explanation for the failure if that helps.

It works if customers see the issue as unforeseeable. They will trust you only when they understand you could not have been prepared for the situation.

Basically, you should not rely on the service recovery paradox as a service delivery strategy. It exists as a special response to situations and that’s the only way you should rely on it.

At the same time, service breakdowns will happen anyway whether you like them or not. It is for you to take the right steps to bring a customer closer to you even in the worse moments.

A good service recovery begins much before the actual failure — here’s how you keep yourself prepared and do the right things at the moment of truth:

  1. Fostering the right mindset — you have to develop a few empathetic fundamental principles in mind to steer the customer on the path to recovery.
  2. Laying a solid foundation — you have to keep the emergency response system ready to deal with a lapse in service.
  3. The stepwise sequence — train your employees to respond to a failure in a stepwise sequence.

Service recovery: fostering the right mindset

When you do spot an opportunity to regain the trust of a customer, you cannot afford to falter. A failed service recovery is a sure-shot way of losing your customer for good.

Micah Solomon, a seasoned customer service professional, advises keeping a few service recovery principles in mind — they will help you cultivate the right thought process for the moment of truth:

1. Do not make excuses

Most customers do understand that a few things will go wrong every now and then. What they don’t understand, accept or find interesting are excuses.

For example, they do not want to know if the problem originated from another department. They do not want to know of the internal disputes that caused a problem. The moment you shy away from taking responsibility, they are going to lose it.

2. Do not panic

No matter how bad the situation looks, remind yourself that the customer looks up to you to get their problem solved.

You have to work with the customer and a little composure will go a long way in re-establishing their trust in you during the service recovery process.

3. Do not dismiss them

Do not be surprised if a customer makes a request that sounds extreme or absurd. You have to be mentally prepared not to dismiss it immediately.

If you're not in rhe position to give them what they want, get them to settle for something almost like it. Show them that you went an extra mile for them.

4. Don’t stop at being fair

You can be fair to a customer only if nothing has gone wrong. When you’re dealing with a disgruntled customer, you will have to treat them extremely well.

Do not stop at making up for what they have lost. Go a step ahead and create a memory for them. Always remember that the service breakdown was caused by you and you should be glad to have the opportunity to correct it. Most customers would rather abandon you in the face of failure.

5. Remember you aren’t doing them a favor

You’re not doing anything special for the customer. You’re just making things the way they were supposed to be in the first place.

Because you wasted their time, you have to do a little extra for them in order to make up for it. Work with them to determine what is that extra they need, but do tell them you are ready to go an extra mile.

6. Always remind yourself of the lifetime value of the customer

You will have to learn to think beyond the present transaction. A happy customer is much more than the revenue you earn from them.

They can become a vocal supporter of your product. They can influence their own networks to try it. It’s a well-known fact that word of mouth works more than anything you can ever do.

Remember, the customer, over a decade, is almost like a small fortune for your company.

With the right mindset, you will be able to empathize with the customer and are ready to build the foundation for service recovery.

Service recovery: laying a solid foundation

After the right mindset comes organizational preparedness. Facing an unhappy customer should not come as a surprise to your employees. Spot the areas which are prone to breaking down and empower your employees to deal with confidence.

1. Anticipate areas prone to breakdowns

Fixing problems when they crop up is good and absolutely necessary. However, when it comes to service recovery, a little preparation before things actually go south has the power to make all the difference.

Practically speaking, you cannot be prepared for anything and everything that can ever go wrong with your delivery. A better approach is to narrow the search for problems: identify your weakest spots — parts in your delivery which are prone to failures.

This is again not an easy exercise. How do you determine what can break easily?

Processes which involve complex scheduling are generally prone to breaking. Airline cancellations are a common example. Every time a flight is canceled, customers are forced to wait for hours, at times without any assurance. People going bonkers at the airport is not rare at all.

Businesses need to be ready with a plan B for processes involving many departments, at times in different locations, coordinating to deliver something on time.

New services and products are always a little prone to breaking. A lot of things can go wrong quickly. You misjudge the market and go on to build something nobody likes it. You make extravagant claims and the product does not live up to it.

Microsoft reportedly spent a whopping 500 million USD into the launch of Windows Vista and even the most loyal fans disapproved of it. It was laden with compatibility and performance issues — a big failure.

Was Microsoft ready with a Plan B? They were not. Who gained the most from this debacle? Apple. Their ad campaign “I’m a Mac” criticised Vista ruthlessly leading consumers to believe Vista had more problems than it actually did. Only if Microsoft had, well….  a Plan B.

Areas where turnover is high and employees are inexperienced are enormously prone to breaking. This is the most relevant to airports. The first employee you meet is the security.

They are the least paid and the least experienced in handling people — yet they are responsible to create the first positive experience. It is imperative that the airports spend time and money on training the security to handle lapses in service with elan.

2. Train your frontline employees to tackle failures without their manager’s help

These folks are always the closest to the customers. They are the first ones to know when a problem occurs. They are the ones who need to maintain composure in the heat of the moment. They are the ones who will have to pacify the unrelenting chaos. They are the ones to assure disgruntled customers that all will be well.

How they behave in the face of an angry customer will set the tone for the service recovery process. They are obviously the important guys.

Despite all of that, the frontline is much often an untrained lot in the face of failure. They sure know how to run things smoothly on a day to day basis, but lack the creative thinking you need to contain an anomaly.

Can they be trained to think like the top management when delivery fails? Yes. Why doesn’t that happen more often then?

Well, for starters, they are the bottom of the chain and empowering them can be threatening, especially to the middle-level managers, who may see it as an erosion of their own authority and worth. This needs to change.

Given that the customer-facing workforce is the first to know when something goes wrong, they are in the best position to determine what needs to be done to satisfy the customer.

They should have the authority to take a few out of the ordinary decisions on their own. You should have incentives to reward them for the same.

With training, the customer-facing employees can develop the essential communication skills and creative thinking to deal with angry customers. The principles we spoke of in ‘the right mindset’ section earlier — all of that can be taught — it’s not rocket science!

Simple role-playing exercises in real-life situations are a great way to get your employees thinking about what might happen and discussing and planning for all the possible contingencies.

Service recovery: the stepwise sequence

With the right bent of mind and the foundations laid out well, you are ready to deal with a service failure.

Keep in mind that you have a brief window to make or break. What you do in the face of a failure will decide whether you lose a customer or gain a loyal one for life.

Here’s a stepwise sequence to help you make the most out of service failures:

  1. Acknowledge with a zen mind, and apologize
  2. Understand the problem
  3. Solve the problem + go an extra mile
  4. Follow up

Let’s learn more about these steps:

1. Acknowledge (with a zen mind) and apologize

In situations when a customer is angry, our first natural reaction is usually the first thing that goes wrong. The human brain perceives an angry customer as a threat and enters a stress and defense mode. Well, throwing a punch at a customer is a sure-shot way of losing them.

When you are dealing with an irate customer, you will have to learn to keep a zen mind. You have to let go of the idea that you have to solve the problem right away — start by just listening to them.

Let them vent as much as they want. More often than not, the customer would be angry about something that was never under your control. The human tendency is to shrug shoulders off the blame — you do this and it’s over.

You have to remember that you are the face of the company. Whether it was your fault or somebody else’s is not the customer’s concern. Service delivery fails are not the time to make rational arguments with the customer.

Acknowledge that there is a problem. Tell them you are on their side.

Start with “I am sorry. I understand this must be frustrating for you. Let me quickly see what I can do for you” — goes a long in pacifying the customer when they are at their worst.

Oh, the most important lesson: Use the word ‘I’. Tell them that YOU will make things better, and not your manager.

I can help you with that” — the power phrase to set you on the track to a great service recovery.

2. Understand the problem

It is important to finish stage 1 before you jump to problem-solving which would most likely involve asking some rudimentary questions in the beginning.

Questions that can sound insulting at times — are you sure you clicked the right link? These questions would be considered offensive if you haven’t worked on building a rapport first.

By acknowledging and apologizing, you would have established some understanding with the customer. Once you see them calm down a bit, you can now start focusing on the questions. The same questions would not sound so offensive now.

Remember to not cast any judgment at this stage. All you have to do is understand the details of the problem.

Being listened to will make the customer feel that you take them seriously. The act of talking and explaining the problem brings their minds to a rational state. They will be calmer than they were when they initially called.

This is also a good time to thank them for pointing you to the issue. A bit of ego-boosting will open doors to a rational conversation.

3. Solve the problem + go an extra mile

Once you have understood the problem, do not move to resolution straightaway — work a little on reinstating their trust in you.

Start with a positive statement such as ‘We’re going to solve this together’. The irate customer will start to feel assured about the resolution process.

Then, put them in the driver’s seat. Ask ‘What would you consider a fair solution?’. Asking a customer what they would consider a fair deal is very important to set the expectations right from the get-go.

Give them exactly what they wanted. Do not stop there. It’s only half the problem solved. Remember you have caused them stress by slowing them down. They were never supposed to face the problem in the first place. Fixing what was wrong does not compensate for their time you wasted.

If you seek customer loyalty after a lapse in service, you will have to resolve their sense of injustice. You will have to go that extra mile to make them feel compensated.

Give them a free upgrade. Waive shipping charges. Go out of your way to accommodate the customer. By delivering even the smallest bit more than what they expected, you can make them feel like a valued customer.

When a customer’s Christmas gift for his son, a $500 PlayStation, was stolen from their apartment building, the customer support rep from Amazon did not put the blame on the customer. The package was signed for by a neighbor and she has put it down in the hallway. Even though it wasn’t Amazon’s fault, they sent the customer a replacement free of cost.

The news of their generosity traveled far and wide. Almost all the news channels in the US carried the story. It generated goodwill and publicity far more than the cost of the replacement.

4. Follow up

Following-up is a crucial part of service recovery processes. The actual measure of success is whether you have been able to preserve the investment you’ve made in the customer.

Everything you have done up to this point will be for nothing if the customer feels “out of sight is out of mind.”

It’s surprising to see most companies in a hurry to close the ticket. The most common parting note I have come across is ‘Is there something else we can do for you?’. You do not have to sound like you’re doing the customer a favor by solving their problem!

Instead, ask your customer if they are satisfied with your solution. It shows that you care. It shows that you are concerned about their wellbeing.

The next step is to get in touch again after a few days to see if everything is working the way it is meant to. This is also the time to solidify your relationship with the customer.

Send a handwritten note that says you are sorry for what happened and that you are pleased to have them as a customer.

Every time there is a new feature, reach out to them to know what they think. Keep them engaged any way you can.

You want them to remember you? Keep reminding that you care.

Wrapping up: document it for the future

While it’s alright to give yourself a breather after you have managed to pacify and satisfy an irate customer, go ahead and record what went wrong and what you did.

It will help you identify trends and patterns you can use to prevent further breakdowns. For example, you might notice a spike in complaints between 9 am and 10 am when Mark is on the job. See if he has missed a certain training module.

You might notice more customers facing issues after every upgrade to a certain component of your product. You can contain this by creating more resources for customers to understand what’s changed.

Recovery is fundamental to service excellence. Be prepared to go an extra mile for every unhappy customer and you are on the right track.

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