success

The Service Recovery Paradox – Customer Service At Its Best

Let’s say you buy a coffee machine. You go home, plug it in and it does what it’s supposed to do – make coffee. Depending on how easy it is to use, how well the coffee tastes, etc … you experience a certain level of satisfaction. Now suppose one day the coffee machine suddenly stops working. Obviously, your satisfaction will drop sharply. You call customer service and after a lot of try this and try that, all eating up your precious time, it works again. Your satisfaction will rise again, but not to the initial level. You might even decide that next time you’ll not buy from this company again, they don’t seem to be able to provide functioning machines.

This is how the story usually goes. But there’s a very interesting paradox that can lead to a surprising outcome. Given certain conditions (see below) and an exceptional customer service, studies have shown that after the failure the level of satisfaction can rise above the initial level. In other words: customers who have experienced a problem with the product and have been successfully helped by the manufacturer’s customer service can be more satisfied with the company than those customers who have not experienced any problem at all. This is called the service recovery paradox. A widely cited work regarding this paradox by Hart et al. (1990) in the Harvard Business Review states: “A good recovery can turn angry, frustrated customers into loyal ones. It can, in fact, create more goodwill than if things had gone smoothly in the first place”.

I made a crude graph to visualize this situation. Note that in a standard recovery the level of satisfaction rises, but not beyond the initial value. This is the situation we usually experience. A paradoxical recovery propels the level of satisfaction past this initial value.

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There are some conditions that need to be met in order for the paradox to be able to occur.

The effect of the severity of the failure

 According to McCollough et al. (2000), satisfaction varies with the severity of the failure. Many service problems that customers experience are only mildly annoying, while others can be very severe. Hoffman et al. (1995) state that the higher the severity of the failure, the lower the level of customer satisfaction. Consequently, the existence of a recovery paradox depends on the magnitude of the failure. For example, perhaps an apology, empathy, and compensation could create a paradoxical satisfaction increase after a 20-minute wait at the front desk of a hotel. But would this paradoxical increase occur if the wait caused the guest to miss a flight? It is unlikely that any realistic recovery is capable of completely erasing the harm caused by such a severe failure.

In the event of a service failure, a recovery paradox is more likely to occur if the service failure is less severe than if the failure is more severe.

The effect of a prior failure

 A person’s satisfaction is a cumulative evaluation of all experiences with the firm (Cronin and Taylor, 1994). If the service failure occurred in a one-time only use, then the satisfaction judgment would be transaction-specific. However, an individual generally has a history of interactions with the firm, in which case satisfaction reflects the cumulative interactions over time between the individual and that firm (Bitner and Hubbert, 1994; Crosby and Stephens, 1987).

In the event of a service failure, a recovery paradox is more likely to occur if it is the firm’s first failure with the customer.

 The effect of the cause of the failure

 Service failures with persistant causes are more likely to repeat than failures with temporary causes. For example, when a hotel guest is assigned to an incorrect room category due to an outdated computer system, this could be considered a failure with a persistent cause. On the other hand, if the guest’s room assignment was botched because the front desk associate is in the initial stages of training, this could be viewed as an temporary cause. Customers are likely to be more forgiving of failures with temporary causes (Kelley et al., 1993). This is because the likelihood of a future inconvenience is minimal. Thus:

In the event of a service failure, a recovery paradox is more likely to occur if the customer perceives that the failure had a temporary cause.

The effect of perceived control

A service failure is any situation where something goes wrong, irrespective of responsibility (Palmer et al., 2000). Nevertheless, “the perceived reason for a product’s failure influences how a consumer responds” (Folkes, 1984, p. 398). Customers are more forgiving if they perceive that the firm had little control over the occurrence of the failure (Maxham and Netemeyer, 2002). Conversely, customers are less forgiving when they feel that the failure was foreseeable and should have been prevented (Folkes, 1984). For instance, did a wait occur because of a random spike in demand, or did it occur because the firm did a poor job in forecasting, planning or staffing? A bank customer may be understanding of a wait inside a bank lobby if there is an unexpected inflow of customers during a typically slow hour. On the other hand, the same customer may be less understanding if there is only one teller working during lunch hour on a Friday afternoon. Thus:

In the event of a service failure, a recovery paradox is more likely to occur if the customer perceives that the firm had little control over the cause of the failure.

For more on customer service, check out the 7 Laws of Customer Service.

The 7 Laws of Customer Service

If you want to provide solid and helpful customer service, you should stick to a number of basic rules that make you stand out from the crowd. Here are 7 rules that can help in doing so:

1. Roll Out The Red Carpet For Everyone. If there’s one thing people hate about poor service, it’s getting treated differently from others. It makes them feel inferior and second-class. Gary Richter says you should roll out the red carpet for everyone, but particularly those who don’t expect it. “I tell my employees, if we roll out the red carpet for a billionaire, they won’t even notice. If we roll it out for millionaires, they expect it. If we roll it out for thousandaires, they appreciate it. And, if we roll out the red carpet for hundredaires, they’ll tell everyone they know.”

2. Take Time To Know Your Customers. The fast pace of modern living together with advances in technology have together put a non-human face on much of our customer service. If you can find a way to re-connect with your customers one-on-one, you’ll strike a chord with your customers that will be like a streak of gold. Kathy Burns remembers a time when people took time to care and listen. “Some of you may remember, and others may have heard stories about, a time in life when the doctor would come to your home to check on you if you were ill. Or maybe you’ve heard about going down to your local pharmacy and having the owner greet you by name and ask how you’re doing. Not only did they ask, but they really wanted to know the answer and they took the time to listen to what you had to say. That’s customer service – taking the time to know your customers, really caring about how they feel, and wanting to go the extra mile to make sure they’re happy.”

3. Be Easy To Do Business With. One of the problems with modern businesses is that the systems we use to save time and money are often devised for the company’s benefit and not the customers. As a result, the customer experience is frustrating and difficult. Tracey Lowrance says this needs to be reversed. “Customers expect single source service. Customers don’t want to be transferred to every unit of your business to have their problems solved. They want to be able to do business with you with the slightest amount of discomfort. You must be easy to do business with.”

4. Go Out Of Your Way To Make Sure They’re Happy. One of the most important things your customers want from you is a guarantee that your product or service will work. So move heaven and earth to make sure it does. Bob Leduc suggests you shouldn’t make people pay until they are fully happy. “Instead of offering a money back guarantee, a service business can provide a guarantee to solve the customer’s problem. For example, a plumber can guarantee to come back without charge as often as necessary to stop the leak. A landscaper can replace without charge any plants that don’t survive for at least 6 months. A sales consultant can continue working without charge until the promised sales results are achieved.”

5. Notice What Customers See. A big part of what customers think about you comes from what they see and believe. Personal Selling Power noticed the following difference in two candy stores. “Although two competing candy stores had the same prices, neighbourhood kids preferred one store to the other. When asked why, they said, “Because the person in the good store always gives us more candy. The girl in the other store takes candy away.” True? Not really. In the good store the owner would always make sure to put a small amount of candy on the scale and then keep adding to it. In the bad store, the owner would pile a heaping amount of candy on the scale, and then take it off until it hit the right weight. The same amount of candy was sold, but perception is everything.”

6. Work On Everything The Customer Experiences. The customer experience isn’t just receiving the service or buying the goods. It’s about all the other little bits and pieces in-between. Such as the manner of the receptionist, the state of the floors and tables, the attitude of other staff, the ease of parking, the tone of the notices, the smile or lack of it on the face of the checkout team. Be like the Mirage hotel in Las Vegas who have a slogan that says: “We spend 600 hours a week pampering the plants. Imagine what we’ll do for our guests.”

7. Believe In Customer Service. To become a great service organization, you have to believe in customer service from the bottom of your soul. It has to be part of the way you work. Anita Roddick, founder of retail cosmetic franchise group Body Shop puts it like this: “I am still looking for the modern equivalent of those Quakers who ran successful businesses, made money because they offered honest products and treated people decently, worked hard, spent honestly, saved honestly, gave honest value for money, put back more than they took out and told no lies. This business creed, sadly, seems long forgotten.”

If you’re interested in learning more about customer service, be sure to check out the Service Recovery Paradox.