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How to Completely Restore Customer Confidence After Things Go Wrong
Introduction
Every year, the average company loses 20 to 40 percent of its customers. Service failures and an inability to successfully handle problems and complaints are a leading cause for this annual exodus, yet less than 10% of companies have a plan for how to respond to customers when things go wrong. A solid customer recovery strategy helps organizations increase profits by retaining more customers and therefore, keeping the growth they’ve already earned.
Analysis
For the last ten years I have studied service failure and service recovery from every possible angle and I have benchmarked best-in-service companies throughout the world. My research has led to me uncovering a series of 6 simple, but remarkably effective strategies that will position organizations to keep customers coming back after even the worst has happened. Each of the 6 strategies is scientifically proven and surprisingly easy to execute.
I present to you How to Completely Restore Customer Confidence After Things Go Wrong: A simple 6-step customer recovery strategy.
1. Courtesy. If you solve the customer’s issue, but are rude or indifferent in the process, you can still negatively impact the relationship. When customers feel like they are being treated with respect, dignity, and sensitivity by employees, they feel a sense of justice and fairness from the company.
2. Apology. Making an apology to customers after things go wrong is positively related to satisfaction with the recovery. When a service employee apologizes to a customer, she conveys politeness, courtesy, concern, effort, and empathy. An apology needs to be offered whether the problem is the fault of the company, customer, a third-party, or an act of nature.
3. Justification. A vital, but often overlooked element of customer recovery is to provide an explanation for how or why the problem happened. Taking the time to explain to a customer what might have caused the problem helps organizations re-establish trust with customers.
4. Resolution. One of the gifts of a voiced complaint is that if offers the company an opportunity to re-perform the service. When given this second chance, companies must bend over backwards to fix the problem and restore customer confidence.
5. Immediateness. Research reveals that ninety-five percent of complaining customers will remain loyal if their complaint is resolved on the first contact. That number drops to seventy percent when the complaint is not immediately resolved.
6. Compensation. Reparation (in the form of discounts, free merchandise, refunds, gift cards, coupons, and product samples) after a service failure has been found to restore equity and improve customer satisfaction.
Studies show that 58% of complaining consumers who received something in the mail following their contact with consumer affairs departments were delighted, versus only 40% of those who did not receive anything.
Conclusion
Quickly and satisfactorily resolving problems customers experience is a significant growth opportunity for organizations. Equip your employees with the skills and empowerment to respond to problems swiftly using the 6 steps here. When you do, you’ll find that employees are regaining customer goodwill and retaining more customers. And you will improve profits by keeping the growth you’ve already earned.
The 20-40% stat is from: The Loyalty Effect: The Hidden Force Behind Growth, Profits, and Lasting Value by Frederick Reichheld.
The "Less than 10%" comes from a Myra Golden Media 2007 survey of 400 consumer affairs/customer service divisions of companies.
Please join me on June 14, 2010 for Dynamic Business Week as I discuss developing a customer recovery plan in my "Making Your Contact Center a Strategic Goldmine for the Enterprise" presention.
Events
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3 Comments
Myra, I read your article and clearly understand the premise, but I think you may have missed a very important point, just my opinion.
When I purchase a product or service, I have an expectation that you will deliver the service as promised or that the product will behave as you promised it would in your advertisement. If it doesn't then I default to, you lied to me. This is one of the most important tenants of service and service recovery, it's about the break in trust.
I don't believe in service recovery being simple, if that was the case, why isn't every company able to deliver using your excellent model, or any model for that fact. Here's the reason, it's much more complex than recovery, it has to do with the core values of the organization and it's beliefs in building strong relationships with their customers.
If you have a problem with an Apple product, you can e-mail Steve Jobs and he will respond, you might not like what he says, but he will respond. What does that tell you about Apple and about Steve Jobs.
Customer loyalty is built on a trust platform, I believe that you will say what you do and when you do, I trust you and am willing to do business with you. Don't get me wrong, how you handle my service or product issue is important, but less important than the values that drive the organization.
If you don't treat your internal customers well, how can you expect them to treat your external customers well, it's a paradox.
Customer Service is Imporant
I'm important
I'm more important than the customer
This is what happens in many organizations, the expectation is to have the internal customers treat the external customers, better than they are being treated, how can that possibly work, well, it can't and doesn't.
At the end of the day there is a conflict in values between the organization and employees, I've seen it a hundred times, but, it's become more prevalent with the younger generations who pride themselves in doing what they believe is right, not what the company tells them is right, which tends to be quite the contradiction.
I was in a bar and ordered a glass of wine, it was $8 and I received a six ounce portion. I told the young bartender that the wine was pricey, she agreed and poured me some more wine. Clearly a difference of opinion, but more importantly, a difference of commitment and loyalty and perceived fairness.
Completely restoring customer confidence will take more than having a great recovery process, it's not that simple, unless you've built a very strong relationship with the customer, Toyota is a prime example. Another good example is the recent Apple faux pas with the 4G Iphone and the reception issue. Steve Jobs should have admitted to the problem and worked on developing a solution which he did, but his initial posturing was to deny, a very bad move. The only difference with Apple is their strong track record with the consumer, everyone can make a mistake.
Every day things go wrong in the service world and we are faced with the challenge of turning service failures into service recoveries. But what does it really take to restore customer confidence and regain goodwill? I began to explore that question more than 10 years ago and since that time I have studied service failure and service recovery from every possible angle and I have benchmarked best-in-service companies throughout the world.
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Every day due to poor customer service relationship, an average number of customers are not satisfied especially in the bank. More so,government policies (CBN) have in so manys ways driven customers confidence in some banks.But i ask; how will a customers confidence be restored after reading a publication against his bank by central bank?
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