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Jul 10, 2008

Strategies and Tactics for Successful Service Recovery
by Bernhard Schindlholzer, follow me on Twitter
It is easy to focus on creating always better and more differentiated
products and services when designing for remarkable customer
experiences. Maybe it is simply human, that we tend to not look at
situations when a product or service fails (think positive!) your customer’s
loyalty will be negatively impacted.
I see a huge opportunity for improvement and a chance to create remarkable experiences that
create word-of-mouth marketing in situations when products and services fails – if sophisticated
service recovery programs are in place.
Can you imagine one of your customers telling a friend:
"You know, the product (or service) of company XYZ broke down the other day. But when I
contacted the company, they did everything possible to solve the problem in a fast and friendly
manner and now it is fixed. I understand problems can happen, but I feel that this company is
taking care of me."
Every service (human or technology driven) as well as product will eventually fail one day and
put your customer in a uncomfortable situation. Smart organizations will understand this and
develop a service recovery program which ensures that their customers are satisfied even after
things have gone wrong.
When organizations plan to implement recovery programs it is helpful to differentiate
between (1) the strategic initiatives that should be in place before the actual problem occurs
and (2) the tactical activities that should happen after a problem has occurred and the
customer contacted the company.
Let’s start with the strategic initiatives that will ensure that the right environment for
remarkable service recovery is in place.
Anticipate the needs for recovery
Whenever you roll out a product or service, the people related with it are probably well aware of
potential problems or obstacles that might occur. It is probably not so much arrogance than
probably more wishful thinking that limits the ability of companies to foresee potential problems
with a product. Accepting that even the best designed product or service will fail one day in
specific situations is the first step. Anticipating potential problems will help organizations to be
prepared when the first customer contacts the company with a problem.
Build an organization that is fast in decision making, and fast to response.
One of the key success factors to win back customers and restore their satisfaction is to act fast.
While your front-line employees might be working hard (and fast) already, the whole
organization that deals with service recovery has to be “designed for agility”. This includes clear
escalation and decision-making processes. One key principle should be that the fastest decision-
making happens when the front-line employee can make the decision. So the real goal is not to
define better escalation processes, but to define processes that empower employees so that
escalation processes are not necessary anymore.
Empower front-line employees
In most companies, the employees that are actually interacting with customers are the ones that
receive the lowest salary in an organization. While increasing the salaries (compared to other
competitors) is one way to attract and retain talent that is able to deliver exceptional service,
empowering employees and giving them the freedom to do whatever is necessary to ensure that
customers are satisfied is probably even more economically meaningful.
Train employees
Ensure that your training program includes not just lessons on delivering service when
everything works out as planned but also to include lessons that teach employees to improvise or
to set recovery programs into action if something goes wrong.
While these strategic initiatives are important to define the long-term
direction of your service recovery programs, the "moment of truth"
happens when a customer contacts a company and interacts with an
employee to discuss the problem and possible solutions.
In these moments the following seven rules should be applied by
employees that are actually interacting with your customers:
1. Acknowledgement
Acknowledge that there is a problem. It doesn’t matter whether the customer didn’t understand
certain aspects that are obvious from an organization’s perspective. He is the one that has a
problem and if you want to keep this customer he needs to be taken serious. If one tries to
convince customers that there is no problem, you are actually telling them they are stupid. This
applies also to situations when the customer is following the wrong steps to perform a task –
never blame the customer.
2. Empathy
Understand the problem from a customer’s point of view and also understand that he might be
upset after a problem has occurred. While it is not necessary to listen to a customer when he
starts cursing at employees, front-line employees should try to create an atmosphere that supports
and enables a positive solution of a problem. Confronting the customer with his anger and
frustration will not lead to an escalation of the problem, communicating that one can understand
his situation will.
3. Apology
Saying sorry in the name of the company occurred is essential. Whether the employee should
apologize in his name or in the name of his company depends on the context of the service
recovery. If the employee (or a direct colleague) was involved when the problem occurred, he
should apologize for himself. If the employee is in a call-center and a problem happened at a
completely different location in the organization, he should apologize in the name of the
organization – everything else is not authentic.
4. Own the problem
Taking ownership of the problem by the employee that is confronted with the problem (no matter
in what position he is in) ensures that customers feel that they are taken care of. And even if your
job is not to resolve the problem ultimately, telling customers to go somewhere else (and not
"bringing" them there) sends the message that they don’t care.
5. Fix The Problem
Obviously fixing or at leasing trying to fix the problem for the customer should be the top
priority. This might be easy in some situations (maybe just replacing the defect product) it
becomes a challenge when the problem is not a real problem. Let’s say the customer was simply
using the product in a wrong way, fixing the problem in such a situation means re-educating the
customer so that he uses the product or service in the supposed way.
6. Provide assurance
When Customers get in touch with you to report a problem and to demand a fix their most
important need is to be taken serious. Giving them a feeling of assurance that the problem will be
sorted out and should (hopefully) not occur again will leave a professional impression and help
rebuild the customer’s confidence a company’s products and services.
7. Provide compensation
If you want to make angry customers happy, give them money. Providing a refund, token or
other compensation depending on the severity of the problem remains to be a powerful method
for service recovery. Increasing the amount of money that a company pays to company to fix
problems requires a rigorous control but it can indeed ensure that your customers are satisfied. It
is important to note that just "handing out money" is not enough – if money is handed out
unfriendly or even worse, in a tedious discussion with the customers, satisfaction will not be
restored.
References:
Hart, C.W.L.; Heskett, J.L.; Sasser, W.E.: The profitable act of service recovery. Harvard
Business Review 68 (4), 1990, pp, 148–156
Johnston, R.; Michel, S.: Three outcomes of service recovery: Customer recovery, process
recovery and employee recovery, International Journal of Operations & Production Management
28 (4), 2008, pp. 79 – 99
Posted in checklist, service design | Permalink
Related Posts:
• The service recovery paradox: Increased loyalty through effective service recovery
• WSJ: Making the Most Of Customer Complaints
• What happens when your self-service system fails?
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